Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Apr. 04, 2023 | Jun. 30, 2022 | |
Document Information Line Items | |||
Entity Registrant Name | FAZE HOLDINGS INC. | ||
Trading Symbol | FAZE | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 73,545,617 | ||
Entity Public Float | $ 171,810,000 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001839360 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Shell Company | false | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-40083 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 85-2081659 | ||
Entity Address, Address Line One | 720 N. Cahuenga Blvd., | ||
Entity Address, City or Town | Los Angeles | ||
Entity Address, Country | CA | ||
Entity Address, Postal Zip Code | 90038 | ||
City Area Code | (818) | ||
Local Phone Number | 688-6373 | ||
Title of 12(b) Security | Common stock, par value $0.0001 per share | ||
Security Exchange Name | NASDAQ | ||
Entity Interactive Data Current | Yes | ||
Auditor Firm ID | 688 | ||
Auditor Name | Marcum LLP | ||
Auditor Location | Costa Mesa, California |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash | $ 37,207 | $ 17,018 |
Accounts receivable, net | 8,525 | 6,266 |
Contract assets | 6,223 | 4,118 |
Inventory | 6 | |
Content asset, net | 474 | |
Prepaid expenses and other assets | 6,768 | 6,190 |
Total Current Assets | 58,723 | 34,072 |
Restricted cash | 600 | 600 |
Property, equipment and leasehold improvements, net | 3,821 | 925 |
Operating lease right-of-use assets | 2,693 | |
Intangible assets, net | 848 | 738 |
Other long-term assets | 553 | 733 |
TOTAL ASSETS | 67,238 | 37,068 |
Current liabilities: | ||
Accounts payable and accrued expenses | 14,397 | 28,381 |
Short-term debt | 3,148 | |
Contract liabilities | 3,494 | 7,902 |
Operating lease liabilities, current | 1,488 | |
Other current liabilities | 7 | |
Total Current Liabilities | 19,379 | 39,438 |
Long-term debt, net of discounts (Note 5) | 70,854 | |
Warrant liabilities | 24 | |
Operating lease liabilities, non-current | 1,084 | |
Total Liabilities | 20,487 | 110,292 |
COMMITMENTS AND CONTINGENCIES (Note 11) | ||
MEZZANINE EQUITY: | ||
Series A preferred stock, $0.00001 par value, 3,545,529 shares authorized at December 31, 2022 and 2021, respectively, zero share and 3,237,800 shares issued and outstanding at December 31, 2022 and 2021, respectively. | 33,705 | |
STOCKHOLDERS’ EQUITY (DEFICIT): | ||
Preferred stock, $0.0001 par value; 1,000,000 shares of the Company’s preferred stock authorized at December 31, 2022; zero share of the Company’s preferred stock issued and outstanding at December 31, 2022 | ||
Common stock, $0.0001 par value at December 31, 2022 and December 31, 2021, respectively; 500,000,000 and 71,033,146 shares of common stock authorized at December 31, 2022 and December 31, 2021, respectively; 71,551,887 and 18,841,538 shares of common stock issued and outstanding at December 31, 2022 and December 31, 2021, respectively | 7 | 2 |
Additional paid-in capital | 327,686 | 5,477 |
Accumulated deficit | (280,942) | (112,408) |
Total Stockholders’ Equity (Deficit) | 46,751 | (106,929) |
TOTAL LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ 67,238 | $ 37,068 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Preferred Stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series A Preferred Stock [Member] | ||
Preferred Stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 3,545,529 | 3,545,529 |
Preferred stock, shares issued | 0 | 3,237,800 |
Preferred stock, shares outstanding | 0 | 3,237,800 |
Class B Common Stock | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 71,033,146 |
Common stock, shares issued | 71,551,887 | 18,841,538 |
Common stock, shares outstanding | 71,551,887 | 18,841,538 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Revenues | $ 70,021 | $ 52,852 |
Cost of revenues | 54,876 | 43,876 |
Gross profit | 15,145 | 8,976 |
Operating expenses: | ||
General and administrative | 59,436 | 37,078 |
Sales and marketing | 3,307 | 3,352 |
Impairment of content assets | 1,073 | |
Loss from operations | (48,671) | (31,454) |
Other expense: | ||
Interest expense, net | 4,483 | 5,467 |
Change in fair value of warrant liabilities | (90) | |
Loss on debt extinguishment | 115,292 | |
Other, net | 178 | (55) |
Total other expense: | 119,863 | 5,412 |
Net loss | $ (168,534) | $ (36,866) |
Net loss per common share basic (in Dollars per share) | $ (4.23) | $ (1.92) |
Weighted-average number of common shares outstanding basic (in Shares) | 39,872,308 | 19,187,873 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parentheticals) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Net loss per common share diluted | $ (4.23) | $ (1.92) |
Weighted-average number of common shares outstanding diluted | 39,872,308 | 19,187,873 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Equity (Deficit) - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2020 | $ 2 | $ 3,084 | $ (75,542) | $ (72,456) |
Balance (in Shares) at Dec. 31, 2020 | 16,470,897 | |||
Issuance of common stock options and stock option reprice | 1,635 | 1,635 | ||
Issuance of restricted stock awards | 2 | 2 | ||
Issuance of common stock | 720 | 720 | ||
Issuance of common stock (in Shares) | 2,226,683 | |||
Issuance of common stock upon vesting of restricted stock awards | ||||
Issuance of common stock upon vesting of restricted stock awards (in Shares) | 50,028 | |||
Exercise of stock option | 36 | 36 | ||
Exercise of stock option (in Shares) | 93,930 | |||
Net loss | (36,866) | (36,866) | ||
Balance at Dec. 31, 2021 | $ 2 | 5,477 | (112,408) | (106,929) |
Balance (in Shares) at Dec. 31, 2021 | 18,841,538 | |||
Issuance of common stock upon vesting of restricted stock awards | ||||
Issuance of common stock upon vesting of restricted stock awards (in Shares) | 1,466,639 | |||
Exercise of stock option | 220 | 220 | ||
Exercise of stock option (in Shares) | 576,426 | |||
Exercise of common and preferred warrants | 101 | 101 | ||
Exercise of common and preferred warrants (in Shares) | 2,332,127 | |||
Conversion of preferred stock to FaZe common stock | $ 1 | 33,704 | 33,705 | |
Conversion of preferred stock to FaZe common stock (in Shares) | 7,209,555 | |||
Conversion of convertible debt to FaZe common stock | $ 2 | 195,115 | 195,117 | |
Conversion of convertible debt to FaZe common stock (in Shares) | 19,545,406 | |||
Issuance of earn-out shares | $ 1 | 1 | ||
Issuance of earn-out shares (in Shares) | 5,312,098 | |||
Conversion of B Riley Class B stock to FaZe common stock | ||||
Conversion of B Riley Class B stock to FaZe common stock (in Shares) | 4,832,500 | |||
Recapitalization transaction, net of equity issuance costs | (17,391) | (17,391) | ||
Recapitalization transaction, net of equity issuance costs (in Shares) | 1,366,604 | |||
Proceeds from PIPE offerings | $ 1 | 99,999 | 100,000 | |
Proceeds from PIPE offerings (in Shares) | 10,000,000 | |||
Net loss | (168,534) | (168,534) | ||
Balance at Dec. 31, 2022 | $ 7 | 327,686 | (280,942) | 46,751 |
Balance (in Shares) at Dec. 31, 2022 | 71,511,887 | |||
Stock based compensation expense | 10,167 | 10,167 | ||
Issuance of common stock in connection with litigation settlement | $ 294 | $ 294 | ||
Issuance of common stock in connection with litigation settlement (in Shares) | 28,994 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (168,534) | $ (36,866) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debt expense | 441 | 75 |
Additions to content asset | (599) | (474) |
Depreciation & amortization expense | 1,837 | 1,021 |
Amortization of operating lease right of use assets | 1,338 | |
Content asset impairments | 1,073 | |
Stock-based compensation expense | 10,167 | 1,637 |
Change in fair value of warrant liabilities | (90) | |
Non-cash interest expense | 4,493 | 5,467 |
Loss on debt extinguishment | 115,292 | |
Other | (37) | (73) |
Change in operating assets and liabilities: | ||
Accounts receivable | (2,698) | (4,174) |
Inventory | 6 | 53 |
Prepaid expenses and other assets | 9,824 | (481) |
Contract assets | (2,105) | (2,770) |
Accounts payable and accrued expenses | (18,997) | 4,685 |
Contract liabilities | (4,408) | 6,790 |
Other current liabilities | (7) | (70) |
Operating lease liabilities | (1,279) | |
NET CASH USED IN OPERATING ACTIVITIES | (54,283) | (25,180) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property, plant and equipment | (4,148) | (730) |
Purchase of intangible assets | (666) | (840) |
Issuance of note receivable | (135) | |
NET CASH USED IN INVESTING ACTIVITIES | (4,814) | (1,705) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments of loan principal | (21,123) | (385) |
Proceeds from issuance of loans payable | 20,000 | |
Proceeds from issuance of convertible debt | 40,675 | |
Issuance of common stock in connection with exercise of stock options | 220 | 36 |
Payments of transaction fees by Legacy FaZe | (25,146) | |
Proceeds from recapitalization of B. Riley 150, net of B. Riley 150 redemptions and transaction costs | 5,654 | |
Proceeds from PIPE offering | 100,000 | |
Proceeds from exercise of preferred and common warrants | 101 | |
Short-term debt | (420) | |
Payment of debt issuance costs | (254) | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 79,286 | 40,072 |
NET CHANGE IN CASH AND RESTRICTED CASH | 20,189 | 13,187 |
Cash and restricted cash at beginning of period | 17,618 | 4,431 |
CASH AND RESTRICTED CASH AT END OF PERIOD | 37,807 | 17,618 |
RECONCILIATION TO CONSOLIDATED BALANCE SHEETS | ||
Cash | 37,207 | 17,018 |
Restricted cash | 600 | 600 |
Cash and restricted cash | 37,807 | 17,618 |
SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES: | ||
Cash paid for interest | 3,027 | |
SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Issuance of common stock in connection with litigation settlement | 294 | 720 |
Capitalization of deferred transaction costs included in accounts payable | 4,899 | |
Purchase of property, plant and equipment in accrued expenses | 28 | |
Conversion of convertible notes and accrued interest into common stock under original contractual terms | 195,177 | |
Conversion of redeemable convertible preferred stock to common stock pursuant to Business Combination | 33,705 | |
Issuance of earnout shares | $ 1 |
Description of the Business
Description of the Business | 12 Months Ended |
Dec. 31, 2022 | |
Description of the Business [Abstract] | |
DESCRIPTION OF THE BUSINESS | 1. DESCRIPTION OF THE BUSINESS FaZe Holdings Inc. (“FaZe” or the “Company”), is a lifestyle and media platform rooted in gaming and youth culture. The Company’s premium brand, talent network, and large audience can be monetized across a variety of products and services. On July 19, 2022 (the “Closing Date”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated as of October 24, 2021 (as amended in December 2021 and March 2022), by and among B. Riley 150 Merger Corp. (“B. Riley 150”), a special purpose acquisition company, and BRPM Merger Sub, Inc., a directly wholly owned subsidiary of B. Riley 150 (“Merger Sub”) and FaZe Clan, Inc. (“Legacy FaZe”), the parties consummated the merger of Merger Sub with and into Legacy FaZe, with Legacy FaZe continuing as the surviving corporation (the “Merger”), as well as the other transactions contemplated by the Merger Agreement (the Merger and such other transactions, the “Business Combination”). In connection with the closing of the Business Combination (the “Closing”), Legacy FaZe became a wholly owned subsidiary of B. Riley 150, which changed its name to “FaZe Holdings Inc.” The Merger is further described in Note 4, Business Combination. Legacy FaZe determined that it was the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805, Business Combinations. The Merger was accounted for as a reverse recapitalization, in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Under this method of accounting, B. Riley 150 was treated as the acquired company for financial reporting purposes. Accordingly, the Business Combination was treated as the equivalent of Legacy FaZe issuing stock for the net assets of B. Riley 150, accompanied by a recapitalization. The net assets of B. Riley 150 were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of Legacy FaZe. In accordance with guidance applicable to these circumstances, the equity structure has been retroactively restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s common stock issued to Legacy FaZe’s common stockholders in connection with the Business Combination. As a result, these financial statements represent the continuation of Legacy FaZe and the historical shareholders’ deficit. Common stock, preferred stock and loss per share of Legacy FaZe prior to the Business Combination have been retrospectively adjusted for the Business Combination using an exchange ratio of 2.2267 (“Equity Value Exchange Ratio”). The accumulated deficit of Legacy FaZe has been carried forward after the Business Combination. |
Liquidity
Liquidity | 12 Months Ended |
Dec. 31, 2022 | |
Liquidity Abstract | |
LIQUIDITY | 2. LIQUIDITY As shown in the accompanying consolidated financial statements, the Company has incurred significant recurring losses resulting in an accumulated deficit. The Company anticipates further losses in the development of its business. The Company also had negative cash flows used in operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Based on its cash resources and positive working capital as of December 31, 2022, the Company has sufficient resources to fund its operations at least until the end of April 3, 2024. The positive working capital as of December 31, 2022 was mainly due to funds from the PIPE offering and from the business combination. Absent generation of sufficient revenue from the execution of the Company’s business plan, the Company will need to obtain debt or equity financing by April 3, 2024. Because of these factors, the Company believes that this alleviates the substantial doubt in connection with the Company’s ability to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements include the accounts and operations of the Company. All intercompany accounts and transactions have been eliminated. The consolidated financial statements have been prepared in accordance with U.S. GAAP The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates and assumptions. Principles of consolidation The consolidated financial statements include the accounts of FaZe Holdings Inc. and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated. Voluntary Change in Accounting Principle During the year ended December 2022, we made a voluntary change in accounting principle to classify certain talent costs and talent acquisition amortization costs reported in prior periods have been reclassified from general and administrative to cost of goods sold to conform with the current presentation, to better identify costs related to revenue generation. In accordance with U.S. GAAP, the change has been reflected in the consolidated statements of operations through retrospective application. For the twelve months ended (in thousands) Prior to change Effect of Change As Adjusted Cost of revenues $ 41,553 $ 2,323 $ 43,876 General and administrative 39,401 (2,323 ) 37,078 Gross profit 11,299 (2,323 ) 8,976 Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the consolidated financial statements. The inputs into certain of these estimates and assumptions include the consideration of the economic impact of the COVID-19 pandemic. Significant estimates include revenue recognition, allowance for doubtful accounts, warrant liabilities, valuation of the Company’s common stock before the Business Combination, stock-based compensation expense, and income taxes. These estimates generally involve complex issues and require management to make judgments, involve analysis of historical and future trends, can require extended periods of time to resolve, and are subject to change from period to period. In all cases, actual results could differ materially from management’s estimates. COVID-19 The continuing presence of COVID-19 around the world has affected the United States and global economies and has affected the Company’s operations and those of third parties upon which the Company relies, including disruption in staffing, order fulfillment, and demand for product. In addition, the COVID-19 pandemic has and may continue to affect the Company’s revenues. Additionally, while the duration and potential economic impact brought by the COVID-19 pandemic are difficult to assess or predict, the COVID-19 pandemic may reduce the Company’s ability to access capital, which could negatively impact the Company’s short-term and long-term liquidity. The continuing impact of the COVID-19 pandemic is highly uncertain and subject to change. The Company continues to monitor COVID-19 and the extent to which the continued spread of the virus adversely affects the Company’s customer base and revenue. As COVID-19 is complex and evolving, the Company’s plans as described above may change. At this point, the Company cannot reasonably estimate the duration and severity of this pandemic, which could have a material adverse impact on the business, results of operations, financial position, and cash flows. Content Asset, net The Company produces programming content which it plans to broadcast on online video and streaming platforms. Costs of produced content consist of development and production costs. These costs are capitalized as “Content Asset, net” on the Consolidated Balance Sheets. Each title is predominantly monetized on its own. At the specific title level, the Company tests the content asset for impairment when events and circumstances indicate that its fair value may be less than its unamortized cost. If the carrying value of a content asset exceeds its estimated fair value, an impairment charge will be recorded in the amount of the difference. In April 2022, the Company performed an evaluation of its content asset and determined that the underlying programming of the content asset will not be released. In addition, the Company determined that the content asset has no further utility. Accordingly, the Company recorded an impairment loss of $1.1 million to write off the entire carrying value of content asset. As such, the Company has no content asset balance as of December 31, 2022. Content asset balance as of December 31, 2021 was $0.5 million. The Company’s policy is to amortize the content asset once the content airs. Given that the content was fully written off prior to airing, no amortization expense was recorded for the years ended December 31, 2022 and 2021. The Company does not own any purchased or licensed programming content. Exploitation costs such as marketing, advertising, publicity, promotion, and other distribution expenses directly connected with the distribution of the content asset are expensed as incurred. Fixed Assets Fixed assets are stated at cost less accumulated depreciation. Cost includes expenditures for furniture, computer equipment, vehicles, leasehold improvements, and other assets. Maintenance and repairs are charged to expense as incurred. When assets are sold, retired, or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in operations. The costs of fixed assets are depreciated using the straight-line method over the estimated useful lives or lease life of the related assets. Revenue Recognition and Contract Balances Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s payment terms and conditions vary by customer and contract type. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company does not adjust the promised amount of consideration for the effects of a significant financing component when the Company expects, at contract inception, that the period between the Company’s transfer of a promised product or service to the Company’s customer and payment for that product or service will be one year or less. The Company generally records a receivable related to revenue when the Company has an unconditional right to invoice and receive payment. Contract assets arise from contracts when revenue is recognized over time and the amount of revenue recognized, including management’s estimate of variable consideration that has been included in the transaction price exceeds the amount billed to the customer. These amounts are included in contract assets until the right to payment is no longer conditional on events other than the passage of time. These contract assets are reclassified to receivables when the right to consideration becomes unconditional. For the year ending December 31, 2022, and 2021, no impairment was recorded from contract assets. The Company’s allowances for doubtful accounts are typically immaterial and, if required, are based on management’s best estimate of expected credit losses inherent in the Company’s accounts receivable balance. Contract liabilities are recorded in the event that the Company bills for services in advance of the time the services are performed, or when cash payments are received or due in advance of satisfying the Company’s performance obligations, even if amounts are refundable. Contract liabilities recorded at December 31, 2022, and December 31, 2021, represent the Company’s accounting for the timing difference between when the customer is billed or funds are received and when the performance obligation is satisfied. During the year ended December 31, 2022 and 2021, the Company recognized $7.8 million and $0.8 million as revenue that was relating to the contract liability balance as of January 1, 2022 and 2021, respectively. The following table disaggregates the Company’s revenue by major type for the year ended December 31, 2022, and 2021: (in thousands) Year ended December 31, 2022 2021 Brand sponsorships $ 42,096 $ 24,867 Content 14,497 16,068 Consumer products 3,455 5,751 Esports 9,385 5,846 Other 588 320 Total revenue $ 70,021 $ 52,852 The section below describes the Company’s revenue recognition policies and significant judgments in further detail for each major revenue source of the Company. Brand Sponsorships The Company offers advertisers a full range of promotional vehicles, including but not limited to online advertising, livestream announcements, content generation, social media posts, logo placement on the Company’s official merchandise, and special appearances of members of the Company’s talent roster. The Company’s brand sponsorship agreements may include multiple services that are capable of being individually distinct, however the intended benefit is an association with the Company’s brand and the services are not distinct within the context of the contracts. Revenues from brand sponsorship agreements are recognized ratably over the contract term. Payment terms and conditions vary, but payments are generally due periodically throughout the term of the contract. In instances where the timing of revenue recognition differs from the timing of billing, management has determined the brand sponsorship agreements generally do not include a significant financing component. Content The Company generates and produces original content which the Company monetizes through Google’s AdSense service. Revenue is variable and is earned when the visitor views or “clicks through” on the advertisement. The amount of revenue earned is reported to the Company monthly and is recognized upon receipt of the report of viewership activity. Payment terms and conditions vary, but payments are generally due within 30 to 45 days after the end of each month. The Company grants exclusive licenses to customers for certain content produced by the Company’s talent. The Company grants the customer a license to the intellectual property, which is the content and its use in generating advertising revenues, for a pre-determined period, for an amount paid by the customer upon execution of the contract. The Company’s only performance obligation is to license the content for use in generating advertising revenues, and recognizes the full contract amount at the point at which the Company provides the customer access to the content, which is at the execution of the contract. The Company has no further performance obligations under these types of contracts and does not anticipate generating any additional revenue from these arrangements apart from the contract amount. Principal Versus Agent Considerations A significant amount of the Company’s brand sponsorship and content revenues are generated from the Company’s talent, who are under exclusive, multi-year contracts. The Company’s talent consists of highly trained independent contractors, whose compensation is tied to the revenue that they generate. Management has evaluated the terms of the Company’s brand sponsorship and content agreements and has concluded the Company is the principal. Brand sponsorship and content revenues are reported on a gross basis, while revenue-sharing and other fees paid to the Company’s talent are recorded as cost of revenues. The Company owns the brand and intellectual property, takes primary responsibility for delivery of services, and exercises control over content generation and monetization. The Company contracts directly with Google on its Company operated channels, and the talent contracts directly with Google on their own channels. As part of the Company’s contracts with its talent, the Company agrees to serve as the talent’s exclusive management company as it relates to any and all type of work the talent may perform, including content creation and advertising revenue generated from the content. While the talent owns the content they create while they are under contract with the Company, the talent grants the Company an exclusive perpetual license to the content, and the Company grants limited usage rights of that content back to the talent, conditional upon them complying with their contract. Furthermore, all income earned from services provided by the talent related to gaming, Esports, content creation, or the business of the Company, which includes revenue from advertising via talent content, is subject to the talent agreement and is payable to the Company. In addition, the Company’s contracts with its talent specify rules and restrictions on the content the talent can create and post. As such, through its contracts with talent, the Company is the principal because the Company is the entity exercising primary control over the content generated in the YouTube channels being monetized. Consumer Products The Company earns consumer products revenue from sales of the Company’s consumer products on the Company’s website or at live or virtual events. Revenues are recognized at a point in time, as control is transferred to the customer upon shipment. The Company offers customer returns and discounts through a third-party distributor and accounts for this as a reduction to revenue. The Company does not offer loyalty programs or other sales incentive programs that are material to revenue recognition. Payment is due at the time of sale. The Company has outsourced the design, manufacturing, fulfillment, distribution, and sale of the Company’s consumer products to a third party in exchange for royalties based on the amount of revenue generated. Management evaluated the terms of the agreement to determine whether the Company’s consumer products revenues should be reported gross or net of royalties paid. Key indicators that management evaluated in determining whether the Company is the principal in the sale (gross reporting) or an agent (net reporting) include, but are not limited to: ● the Company is the party that is primarily responsible for fulfilling the promise to provide the specified good or service, ● the Company has inventory risk before the good is transferred to the customer, and ● the Company is the party that has discretion in establishing pricing for the specified good or service. Based on management’s evaluation of the above indicators, the Company reports consumer products revenues on a gross basis. Esports League Participation: Player Transfer Fees: Licensing of Intellectual Property: Transaction Price Allocated to the Remaining Performance Obligations For the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2022, the Company applies the allowable practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less. Revenue expected to be recognized in the future related to performance obligations that have original expected durations greater than one year that are unsatisfied (or partially unsatisfied) as of December 31, 2022 were not material. Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. Warrants that meet the definition of a derivative financial instrument and the equity scope exception in ASC 815-10-15-74(a) are classified as equity, and are not subject to remeasurement provided that the Company continues to meet the criteria for equity classification. Warrants that are accounted for as equity-classified are further discussed in Note 9, Equity. Warrants that are classified as liabilities are accounted for at fair value and remeasured at each reporting date until exercise, expiration, or modification that results in equity classification. Any change in the fair value of the warrants is recognized as change in fair value of warrant liabilities in the Consolidated Statements of Operations. The classification of warrants, including whether warrants should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The fair value of liability-classified warrants is determined using the Black-Scholes options pricing model (“Black-Scholes model”) which includes Level 3 inputs as further discussed in Note 7, Private Placement Warrants and Recurring Fair Value Measurements. Stock-Based Compensation The Company accounts for its stock-based awards in accordance with ASC 718, Compensation – Stock Compensation, which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards. Legacy FaZe has issued stock options before there was an active market for the Company’s common stock. The Board of Directors (the “Board”) was required to estimate the fair value of the Company’s common stock at the time of each award. The Board considered numerous objective and subjective factors in determining the value of the Company’s common stock at each grant date, including the following: (1) the per-share price of issuances of the Company’s preferred stock, which the Company sold to outside investors in arm’s-length transactions, and the rights, preferences, and privileges of the Company’s preferred stock and common stock; (2) valuations performed by an independent valuation specialist; (3) the Company’s stage of development and revenue growth; (4) the fact that the awards involved illiquid securities in a private company; and (5) the likelihood of achieving a liquidity event for the shares of common stock underlying the awards, such as an initial public offering or sale of the Company, given prevailing market conditions. The Company believed this to have been a reasonable methodology based on certain arm’s-length transactions involving the Company’s preferred stock, supported by the results produced by this valuation methodology. Since the Business Combination, the Company’s common stock is now actively traded, so the fair value of the common stock is readily available. For stock options, the Company estimates the fair value using the Black-Scholes model. The fair value is expensed over the requisite service periods of the awards (usually one to four years), in the period of grant for awards that vest immediately and have no future service condition, or in the period the awards vest immediately after meeting a performance condition becomes probable (i.e., the occurrence of a change in control event). As there was no public market for its common stock at the time of the stock option grant, the Company determined the volatility for options granted based on an analysis of reported data for a peer group of companies. The expected volatility of options granted has been estimated based on an average of the historical volatility measures of this peer group of companies. The expected life of options has been estimated utilizing the “simplified method” due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. As the Company’s stock is now publicly traded after the Business Combination, the fair value of the Company’s stock and the volatility is readily available. The Black-Scholes model requires the input of certain assumptions that require the Company’s judgment, including the fair value of common shares before the Business Combination, expected term, and the expected price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future. The Company accounts for forfeitures of stock-based awards as they occur. Fair Value Measurement The fair value hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy consists of the following three levels: Level 1: Quoted prices in active markets for identical assets or liabilities Level 2: Quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities Level 3: Unobservable inputs which are supported by little or no market activity The carrying amount of the Company’s financial instruments, including cash, accounts receivable, notes receivable, and accounts payable, approximate fair value due to their short-term nature. The Company’s private placement warrants (the “Private Placement Warrants”) are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the Consolidated Balance Sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the Consolidated Statements of Operations. See Note 7, Private Placement Warrants and Recurring Fair Value Measurements, for additional information on the Company’s liabilities measured at fair value. Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net earnings (loss) attributable to the Company by the number of weighted average shares of the Company’s common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing net earnings (loss) attributable to the Company by the number of weighted-average shares of the Company’s common stock outstanding during the period after adjusting for the impact of securities that would have a dilutive effect on earnings (loss) per share. As the Company has incurred losses in all periods presented, all potentially dilutive securities are antidilutive. See Note 13, Loss Per Share, for additional information on dilutive securities. Segment Reporting Operating segments are defined as components of an entity for which separate financial information is available and is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company has determined that its Chief Executive Officer is the CODM. The Company operates and reports financial information in one segment, as the CODM reviews financial information presented on a consolidated basis, at the Company level, for the purposes of making operating decisions, allocation of resources, and evaluating financial performance. As of December 31, 2022 and December 31, 2021, the Company did not have material assets located outside of the United States. For the years ended December 31, 2022 and 2021, the Company had $1.8 million and $4.0 million of revenue, respectively, earned outside of the United States. Recently Adopted Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock as well as amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. The ASU is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted for fiscal years beginning after December 15, 2020. Adoption of the ASU can either be on a modified retrospective or full retrospective basis. The Company adopted the standard with an effective date of January 1, 2022 using the modified retrospective approach. The adoption of this ASU impacted the Company’s accounting for the conversion of convertible debt under original contractual terms at the Merger on July 19, 2022 as discussed in Note 8, Debt. In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The amendments are designed to clarify an issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options that remain equity- classified after modification or exchange. The ASU provides guidance on how an issuer would measure and recognize the effects of these transactions. The standard provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense. The ASU is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. The Company adopted the standard with an effective date of January 1, 2022. The adoption of this ASU did not have a material impact on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use (“ROU assets”) asset and a lease liability for all leases with terms greater than 12 months and requires disclosures by lessees and lessors about the amount, timing, and uncertainty of cash flows arising from leases. After the issuance of ASU 2016-02, the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as “ASC 842”. The ASU is effective for annual periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted ASC 842 as of January 1, 2022 using the optional transition method to apply the standard as of the effective date. Accordingly, previously reported financial statements, including footnote disclosures, have not been recast to reflect the application of the new standard to all comparative periods presented. The new standard also provides practical expedients for an entity’s ongoing accounting as a lessee. The Company elected to utilize the practical expedient to not separate lease and non-lease components for all its existing leases. The Company has also elected not to present short-term leases on the condensed consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that the Company is reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Company’s leases do not provide an implicit rate of return, it used its incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments. Adoption of the new lease standard on January 1, 2022 had a material impact on the Company’s consolidated financial statements. The most significant impacts related to the recognition of ROU assets of $2.7 million and lease liabilities of $2.6 million for operating leases on the condensed consolidated balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The standard did not materially impact the Company’s consolidated statement of operations and consolidated statement of cash flows. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic-740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The guidance is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures. Accounting Pronouncements Not Yet Adopted As an emerging growth company, the JOBS Act allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an emerging growth company. The adoption dates discussed below reflect this election. In September 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance requires the measurement of all expected credit losses for financial assets held at the reporting data based on historical experience, current conditions, and reasonable and supportable forecasts. This guidance also requires enhanced disclosures regarding significant estimates and judgements used in estimating credit losses. The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2022 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATION | 4. BUSINESS COMBINATION As discussed in Note 1, Description of the Business, on July 19, 2022, the Business Combination was consummated. The following transactions occurred in connection with the Business Combination: ● Redemption of 15,883,395 shares of B. Riley 150 public shares that occurred subsequent to B. Riley 150 stockholders exercising their right to redeem public shares for their pro rata share of the trust account; ● 10,000,000 shares of the Company’s common stock at a purchase price of $10.00 per share were sold and issued for an aggregate purchase price of $100.0 million pursuant to the subscription agreements entered in connection with the PIPE investment, including purchases made by the Company PIPE investor, sponsor related PIPE investors, and third-party investors, and inclusive of shares issued to the sponsor pursuant to the backstop commitment under the sponsor support agreement, representing the portion of the PIPE investment not purchased by third-party investors; ● 525,782 shares of Legacy FaZe’s options to its executives, 1,450,914 shares of Legacy FaZe options, representing 75% of the unvested Legacy FaZe’s options outstanding under its existing incentive plans that remain unvested as of the effective time were vested; ● 42,441 shares of the Company’s restricted stock awards were vested at the Closing, pursuant to existing contractual terms. In addition, 923,886 shares of the Company’s restricted stock awards vested 90 days after the Closing, pursuant to amendments to certain restricted stock awards entered prior to the Closing; ● 1,047,623 shares of Legacy FaZe’s warrants (including 292,790 shares of preferred stock warrants and 754,833 shares of common stock warrants) were exercised into Legacy FaZe’s common stock and preferred stock, respectively; ● 3,237,800 shares of Legacy FaZe’s preferred stock were converted into Legacy FaZe common stock on a one-to-one basis; ● $72.9 million of Legacy FaZe’s convertible debt (including 2021 Cox Convertible Promissory Notes, 2021 Convertible Promissory Notes, 2020 Secured Convertible Note Purchase Agreements and Secured Convertible Promissory Notes, and 2020 Convertible Promissory Notes) were converted into Legacy FaZe common stock, with $6.9 million accrued interest converted into the common stock, and $2.6 million accrued interest settled in cash; ● All 22,902,063 shares of issued and outstanding Legacy FaZe’s common stock (including shares of its common stock issued pursuant to the exercise of common stock and preferred stock purchase warrants and the conversion of its convertible debts and the preferred stocks) were surrendered and exchanged into 50,995,637 shares of the Company’s common stock calculated using the Equity Value Exchange Ratio; ● The Company entered into earn-out agreements to remove restrictions of legally outstanding shares if certain share price milestones are achieved. Refer to Note 9, Equity; and ● The Company assumed public and private placement warrants from B. Riley 150. Refer to Note 9, Equity, for the public warrants (the “Public Warrants”) and Note 7, Private Placement Warrants and Recurring Fair Value Measurements, for the Private Placement Warrants. As of the Closing Date and following the completion of the Business Combination, the Company had the following outstanding securities: ● 70,132,639 shares of common stock, with a par value of $0.0001 per share. ● 5,923,333 warrants, consisting of 5,750,000 Public Warrants and 173,333 Private Placement Warrants. As a result of the Business Combination, Legacy FaZe received net cash consideration of $57.8 million. Legacy FaZe and B. Riley 150 incurred costs that were considered direct and incremental costs associated with the transaction. These costs amounted to $25.9 million and were treated as a reduction of additional paid-in capital. Cash flows provided to or paid by Legacy FaZe or the Company in connection with the Business Combination are included in the Company’s Consolidated Statements of Cash Flows as financing activities. |
Property, Equipment and Leaseho
Property, Equipment and Leasehold Improvements | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS | 5 . PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS Property, equipment and leasehold improvements as of December 31, 2022 and December 31, 2021 consisted of the following: (in thousands) December 31, December 31, 2022 2021 Furniture / Fixtures $ 897 $ 159 Computer equipment 3,640 708 Vehicles 106 106 Leasehold improvements 801 731 Subtotal 5,444 1,704 Less: Accumulated depreciation (1,623 ) (779 ) Property, equipment and leasehold improvements, net $ 3,821 $ 925 Depreciation expense totaled $1.3 million and $0.5 million for the year ended December 31, 2022 and 2021, respectively, During the year ended December 31, 2022, the Company disposed of certain leasehold improvements that were fully depreciated at the time of disposal, and there was no gain or loss on disposal. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | 6 . INTANGIBLE ASSETS Intangible assets as of December 31, 2022 and December 31, 2021 consisted of the following: (in thousands) Gross Net Carrying Accumulated Carrying As of December 31, 2022 Useful Life Value Amortization Value Website development 3 years $ 377 $ 175 $ 202 Talent acquisition 2 – 3 years 1,201 555 646 Intangible assets, net $ 1,578 $ 730 $ 848 (in thousands) Gross Net Carrying Accumulated Carrying As of December 31, 2021 Useful Life Value Amortization Value Website development 3 years $ 211 $ 75 $ 136 Talent acquisition 2 – 3 years 1,653 1,051 602 Intangible assets, net $ 1,864 $ 1,126 $ 738 Amortization expense totaled $0.6 million and $0.5 million for the year ended December 31, 2022 and 2021, respectively. The following table presents the estimated future amortization of intangible assets: Years ending December 31, (in thousands) 2023 $ 478 2024 332 2025 38 2026 — Total future amortization of amortizable intangible assets $ 848 During the year ended December 31, 2022, the Company removed $1.0 million of intangible assets, that were fully amortized from intangible assets and accumulated amortization, and there was no gain or loss on the removal. The Company did not have any fully amortized intangible assets as of December 31, 2022. |
Private Placement Warrants and
Private Placement Warrants and Recurring Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
PRIVATE PLACEMENT WARRANTS AND RECURRING FAIR VALUE MEASUREMENTS | 7 . PRIVATE PLACEMENT WARRANTS AND RECURRING FAIR VALUE MEASUREMENTS Warrant Liability Prior to the Business Combination, B. Riley 150 issued 173,333 Private Placement Warrants with an exercise price of $11.50 per share. The Private Placement Warrants are identical to the Public Warrants, as described in Note 9, Equity, except that the Private Placement Warrants (including the common stock underlying the Private Placement Warrants) were not transferable, assignable or salable until August 18, 2022 and they are not redeemable by the Company for cash so long as they are held by the sponsor or its permitted transferees. The sponsor, or its permitted transferees, has the option to exercise the Private Placement Warrants on a cashless basis. If the Private Placement Warrants are held by holders other than the sponsor or its permitted transferees, the Private Placement Warrants can be redeemable by the Company in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants. Upon the Closing of the Business Combination, the Company has determined that the Private Placement Warrants are classified as liabilities and marked to market at each reporting period. A Black-Scholes model is used to value the Private Placement Warrants at each reporting period. The change in fair value of warrants is recognized as part of change in fair value of warrant liabilities in the Consolidated Statements of Operations. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate, discount rate and dividend yield. The Company estimates the volatility of its common stock based on a binomial lattice model using the stock price and the price of the Public Warrants as of the valuation date, risk-free interest rate, and the expected 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 Private Placement 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. The key inputs into the Black-Scholes model in determining the fair value of the Private Placement Warrants were as follows at December 31, 2022 and December 31, 2021: December 31, December 31, 2022 2021 Risk-free interest rate 4.0 % 1.3 % Expected term (years) 4.5 5.5 Expected volatility 53.3 % 18.5 % Exercise price $ 11.50 $ 11.50 Dividend yield 0 0 The following table presents a summary of the changes in the fair value of the Private Placement Warrants liability since the Closing Date: (in thousands) Warrant liabilities at July 19, 2022 $ 114 Change in fair value of warrant liabilities (90 ) Warrant liabilities at December 31, 2022 $ 24 The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. As of December 31, 2021, no assets and liabilities were measured at fair value on a recurring basis. (in thousands) Quoted Prices in Significant Other Significant Other December 31, Active Markets Observable Inputs Observable Inputs 2022 (Level 1) (Level 2) (Level 3) Liabilities: Private Placement Warrants $ 24 $ — $ — $ 24 Total $ 24 $ — $ — $ 24 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt [Abstract] | |
DEBT | 8 . DEBT As of December 31, 2022, there is no debt outstanding as all outstanding debts have been paid off or converted into Legacy FaZe common stock and eventually to Company common stock as a result of the Business Combination. Debt as of December 31, 2021 consisted of the following: (in thousands) Unamortized Net Unpaid Short- Long- Issuance Carrying As of December 31, 2021 Principal term term Costs Value 2021 Cox Convertible Promissory Note $ 15,000 $ — $ 15,000 $ — $ 15,000 2021 Convertible Promissory Notes 675 — 675 — 675 2020 Secured Convertible Promissory Note 55,000 — 55,000 (358 ) 54,642 2020 Convertible Promissory Notes 2,525 2,025 500 — 2,525 2020 PPP Loan 1,123 1,123 — 1,123 Other loans 37 — 37 — 37 Total principal amount outstanding $ 74,360 $ 3,148 $ 71,212 $ (358 ) $ 74,002 2021 Cox Convertible Promissory Notes In August 2021, Legacy FaZe entered into an agreement with Cox Investment Holdings, Inc. (“Cox”) to which the Legacy FaZe sold convertible promissory notes totaling $10.0 million. The maturity date is the earliest of (a) December 15, 2023, (b) the consummation of an initial public offering, (c) the merger of Legacy FaZe with another entity, (d) a transaction pursuant to which more than 50% of Legacy FaZe’s equity securities come to be owned by an unrelated third party, (e) a sale of all or substantially all of the assets of Legacy FaZe, or (f) the consummation of a private round of equity financing resulting in aggregate gross proceeds to Legacy FaZe of at least $15.0 million (“Cox Qualified Financing”). In addition, Cox exercised its right to purchase an additional $5.0 million in Cox Convertible Promissory Notes in October 2021. The convertible promissory notes are convertible, at the investor’s election, into shares of common stock or shares of the series or class of capital stock most recently sold in a Cox Qualified Financing consummated prior to such time. The conversion price is equal to the lesser of (a) the imputed pre-money enterprise value of Legacy FaZe with respect to the Cox Qualified Financing most recently consummated prior to the time of determination, and (b) $250.0 million minus the then outstanding debt of Legacy FaZe in excess of $25.0 million, divided by the total number of shares of capital stock of Legacy FaZe then currently issued and outstanding, calculated on an as-exercised, as-converted, fully diluted basis, but excluding (a) shares of capital stock of Legacy FaZe issuable upon the conversion of the note, and (b) shares of capital stock issuable upon conversion of other convertible notes or indebtedness then outstanding. The 2021 Cox Convertible Promissory Notes, which cannot be prepaid without consent of the holder, bear interest at a rate of 10.00% per annum and are secured against substantially all assets of Legacy FaZe. Legacy FaZe evaluated the embedded conversion feature in accordance with ASC 815 and determined that embedded conversion feature did not meet the definition of a derivative and therefore did not account for it as a separate derivative liability. As a result of the Business Combination, on the Closing Date, $15.0 million of Legacy FaZe’s 2021 Cox Convertible Promissory Notes with $1.3 million accrued interest were converted into 3,096,908 shares of the Company’s common stock pursuant to original contractual terms and derecognized at the carrying amount of the debt. 2021 Convertible Promissory Notes In June and August 2021, Legacy FaZe entered into Convertible Promissory Note agreements with accredited investors pursuant to which Legacy FaZe sold Promissory Notes totaling $0.7 million. For each note issued, the maturity date is the second anniversary of the date of the Purchase Agreement. The conversion price is equal to 90% of the price per share sold in a preferred stock financing, provided the price is subject to adjustment in the event Legacy FaZe’s enterprise value is greater than $250.0 million on that date. The 2021 Convertible Promissory Notes, which cannot be prepaid without consent of the holder, bear interest at a rate of 4.00% per annum and are subordinate and junior in right of payment to any senior indebtedness of Legacy FaZe. Legacy FaZe evaluated the embedded conversion feature in accordance with ASC 815 and determined that embedded conversion feature did not meet the definition of a derivative and therefore did not account for it as a separate derivative liability. As a result of the Business Combination, on the Closing Date, $0.7 million of Legacy FaZe’s 2021 Convertible Promissory Notes with $26,770 accrued interest were converted into 133,276 shares of the Company’s common stock pursuant to original contractual terms and derecognized at the carrying amount of the debt. 2020 Secured Convertible Note Purchase Agreements and Secured Convertible Promissory Notes In December 2020, Legacy FaZe entered into a Secured Convertible Note Purchase Agreement as amended on February 22, 2021, April 23, 2021, and August 16, 2021 (together, the “Purchase Agreement”) with CPH Phase II SPV L.P. and CPH Phase III SVP L.P., accredited investors, (collectively referred to as “CPH Noteholders”) pursuant to which Legacy FaZe agreed to sell Secured Convertible Promissory Notes (the “CPH Notes”), for a total of up to $91.7 million, to the investors. Legacy FaZe issued Secured Convertible Promissory Notes to the investors for a total of $55.0 million. In October 2021, Legacy FaZe entered into an agreement with the CPH Noteholders, for the settlement of the accrued interest on the CPH Notes and the settlement of the purchaser’s right, but not obligation, to purchase additional CPH Notes from Legacy FaZe for up to $36.7 million expiring in June 2022 (“CPH Right”). The CPH Right has an anti-dilution feature and survives beyond a change-in-control event, including a merger transaction with a special purpose acquisition company. Legacy FaZe settled the accrued interest through February 1, 2022 and the CPH Right for 523,763 and 4,800,000 shares of the Company’s common stock, respectively, issuable upon the close of the Merger. The accrued interest after February 1, 2022 was paid in cash. The common stock and cash for accrued interest and the common stock for the CPH Right was settled upon close of the Merger on July 19, 2022. For each note issued under the Purchase Agreement, the maturity date is the earlier of December 15, 2023 of either (i) an initial public offering, (ii) a transaction or series of related transactions pursuant to which more than 50% of Legacy FaZe’s equity securities come to be owned by an unrelated third party or (iii) the sale of all or substantially all of the assets of Legacy FaZe (a “Liquidity Event”). The CPH Notes are convertible, at the investor’s election, into shares of common stock or shares of the series or class of capital stock (“Conversion Shares”) sold in a private round of equity financing consummated after January 1, 2021 that result in gross proceeds of at least $15.0 million (a “CPH Qualified Financing”). The conversion price is equal to the imputed pre-money enterprise value of Legacy FaZe with respect to the CPH Qualified Financing divided by the total number of shares of capital stock then currently issued and outstanding, calculated on an as-exercised, as-converted, fully diluted basis, but excluding shares of capital stock of Legacy FaZe issuable to the investor upon conversion of the CPH Notes. The conversion price is subject to adjustment in the event Legacy FaZe’s enterprise value is greater than $250.0 million at the time of conversion. Legacy FaZe may prepay the CPH Notes in whole or in part at any time without penalty, provided the investor has the right to utilize the proceeds to purchase the Conversion Shares at the conversion price prior to the maturity date. The CPH Notes bear interest at 10.00% per annum and are secured against substantially all assets of Legacy FaZe. Legacy FaZe evaluated the embedded conversion feature in accordance with ASC 815 and determined that embedded conversion feature did not meet the definition of a derivative and therefore did not account for it as a separate derivative liability. As a result of the Business Combination, on the Closing Date, $54.7 million of Legacy FaZe’s 2020 Secured Convertible Note Purchase Agreements and Secured Convertible Promissory Notes, with $5.3 million accrued interest, were converted into 15,769,002 shares of the Company’s common stock. In addition, $2.6 million of accrued interest was settled by cash. Upon the conversion of such debts under the Merger Agreement terms, approximately $112.9 million of loss on debt extinguishment was recognized in the year ended December 31, 2022. 2020 Convertible Promissory Notes In March — June 2020, Legacy FaZe entered into Convertible Promissory Note agreements with accredited investors pursuant to which Legacy FaZe sold Convertible Promissory Notes totaling $2.5 million. Subsequent to the execution of the Merger Agreement, in November and December 2021, Legacy FaZe entered into consent letters with each of the 2020 Convertible Promissory Note Holders wherein each note was converted into a number of shares of Legacy FaZe’s common stock immediately prior to the Merger. The conversion price was equal to $250.0 million or $200.0 million divided by the total number of shares of capital stock of Legacy FaZe issued and outstanding, calculated on an as-exercised, as-converted, fully diluted basis, but excluding shares of capital stock of Legacy FaZe issued or issuable upon conversion of the note and other convertible notes of Legacy FaZe. The 2020 Convertible Promissory Notes, which cannot be prepaid without consent of the holder, bear interest at a rate of 4.00% per annum and are subordinate and junior in right of payment to any senior indebtedness of Legacy FaZe. Legacy FaZe evaluated the embedded conversion feature in accordance with ASC 815 and determined that embedded conversion feature did not meet the definition of a derivative and therefore did not account for it as a separate derivative liability. As a result of the Business Combination, on the Closing Date, $2.5 million of Legacy FaZe’s 2020 Convertible Promissory Notes, with $0.2 million accrued interest, were converted into 546,220 shares of the Company’s common stock. Upon the conversion of such debts under the Merger Agreement terms, approximately $2.4 million of loss on debt extinguishment was recognized in the year ended December 31, 2022. 2022 B. Riley Term Loan In March 2022, Legacy FaZe entered into a Bridge Loan Agreement with B. Riley Commercial Capital, LLC (“B. Riley Lender”), an affiliate of B. Riley 150, pursuant to which Legacy FaZe received a term loan in the amount of $10.0 million in a single advance (“Initial Term Loan”). Upon receipt of a borrowing notice from Legacy FaZe to B. Riley Lender in April 2022, B. Riley Lender issued Legacy FaZe a second advance of $10.0 million (“Final Term Loan”). The maturity date is the Closing Date of the Merger Agreement. The 2022 B. Riley Term Loan accrues interest at a rate of 7.00% per annum, compounded quarterly, with such interest accrued on the last business day of each calendar quarter, and shall be paid in cash on the maturity date and is secured against substantially all assets of Legacy FaZe. As a result of the Business Combination, on the Closing Date, the Company paid the $20.0 million 2022 B. Riley Term Loan and $0.4 million of accrued interest with the proceeds of the Merger. 2020 Paycheck Protection Program Loan In May 2020, Legacy FaZe entered into a Promissory Note dated May 4, 2020 (the “PPP Loan”) with Harvest Small Business Finance, LLC (“Harvest”), pursuant to which Harvest agreed to make a loan to Legacy FaZe under the Paycheck Protection Program offered by the U.S. Small Business Administration in a principal amount of $1.1 million pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The PPP Loan proceeds are available to be used to pay for payroll costs, including salaries, commissions and similar compensation, group health care benefits and paid leaves, rent, utilities, and interest on certain other outstanding debt. Legacy FaZe is required to make principal and interest payments in monthly installments, beginning ten months after the last day of the covered period, on the balance that is not forgiven. The loan matures in May 2022 and bears interest at a rate of 1.00% per annum. As a result of the Business Combination, on the Closing Date, the Company paid the $1.1 million of outstanding PPP Loan and $24,760 of accrued interest with the proceeds of the Merger. Interest Expense Interest expense for the year ended December 31, 2022 and 2021 was $4.5 million and $5.5 million, respectively, includes $0.1 million and $0.1 million of amortization of debt issuance costs, respectively. |
Equity
Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
EQUITY | 9 . EQUITY Prior to the Business Combination, Legacy FaZe had two classes of capital stock outstanding: common stock and preferred stock. Following the Business Combination, the Company has one class of capital stock outstanding: common stock. The following summarizes the terms of the Company’s capital stock. Preferred Stock The Company had 3,545,529 shares of Legacy FaZe preferred stock authorized for issuance with a par value of $0.00001 per share as of December 31, 2021 and prior to the Closing of the Business Combination. Pursuant to the Company’s second amended and restated certificate of incorporation, the Company is authorized to issue up to 1,000,000 shares of preferred stock with a par value of $0.0001. The Company had 3,237,800 shares of Legacy FaZe’s preferred stock issued and outstanding as of December 31, 2021. As a result of the Business Combination, 3,237,800 shares of Legacy FaZe’s preferred stock outstanding as of the Closing Date were converted into shares of Legacy FaZe’s common stock on a one-to-one basis. As of December 31, 2022, the Company had no shares of preferred stock issued and outstanding. Common Stock The Company had 31,900,878 shares of Legacy FaZe common stock authorized for issuance with a par value of $0.00001 per share as of December 31, 2021 and prior to the Closing of the Business Combination. Pursuant to the Company’s second amended and restated certificate of incorporation, the Company is authorized to issue up to 500,000,000 shares of common stock with a par value of $0.0001 per share. The Company had 71,511,887 of common stock and 8,461,706 shares of Legacy FaZe’s common stock issued and outstanding as of December 31, 2022 and December 31, 2021 respectively. Earn-out Shares As a result of the Business Combination, a number of the Company’s common stock (the “Seller Earn Out”) equal to 6% of the sum of i) the total number of the Company’s common stock issued and outstanding as of immediately after the Closing and ii) the total number of shares of the Company’s common stock equal to the product of the total number of net vested company option shares calculated as of immediately prior to the Closing and the Equity Value Exchange Ratio were issued and is subject to vesting and forfeiture conditions upon reaching certain volume-weighted average price (“VWAP”) per share during the period commencing 90 days after the Closing Date and ending five years after the Closing Date (“Earn-out Period”). Among other things further disclosed in the Merger Agreement, if the following events (“Trigger Event”) occurs on or before the five-year anniversary of the Business Combination: ● the VWAP per share of the Company’s common stock at any point during the trading hours of a trading day is equal to or greater than $12.00 for any 20 trading days within any period of 30 consecutive trading days, one-third (“First Target Earn- Out Shares”) shall immediately vest and no longer be subject to the forfeiture conditions; ● the VWAP per share of the Company’s common stock at any point during the trading hours of a trading day is equal to or greater than $14.00 for any 20 trading days within any period of 30 consecutive trading days, one-third (“Second Target Earn-Out Shares”) shall immediately vest and no longer be subject to the forfeiture conditions; ● the VWAP per share of the Company’s common stock at any point during the trading hours of a trading day is equal to or greater than $16.00 for any 20 trading days within any period of 30 consecutive trading days, one-third (“Third Target Earn-Out Shares”) shall immediately vest and no longer be subject to the forfeiture conditions; ● in the event of a sale during the Earn-out Period, to the extent that the holders of the Company’s common stock receive sale price that is greater than or equal to the applicable closing price, any Earn-out Shares that have not previously vested shall be deemed to have vested immediately prior to the closing of such sale, and the holders of any Earn-out Shares deemed vested shall be eligible to participate in such sale with respect to the sponsor Earn-out Shares on the same terms, and subject to the same conditions, as apply to the holders of the Company’s common stock. Upon the consummation of the sale, the Earn-out Period shall terminate. As a result of the Business Combination, among other things further disclosed in the Sponsor Support Agreement, the sponsors agreed that (x) an aggregate of 2,156,250 sponsor shares shall be fully vested and (y) an aggregate of 2,156,250 sponsor shares (the “Sponsor Earn-Out Shares”) shall be subject to vesting or forfeiture, during the Earn-out Period, at the event the Trigger Event mentioned above occurs. The Earn-out Shares meet the accounting definition of a derivative financial instrument, are considered to be indexed to the Company’s common stock and meet other the conditions in ASC 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, to be classified as equity. As of December 31, 2022, the Earn-Out Period had begun but vesting conditions had not yet been met. Public Warrants to Acquire Common Stock Prior to the Business Combination, there were 5,750,000 Public Warrants issued and outstanding in connection with the initial public offering of B. Riley 150 with an exercise price of $11.50 per share. The Public Warrants became exercisable 30 days after the Business Combination. Each whole share of the warrant is exercisable for one share of the Company’s common stock. The Company may redeem the outstanding Public Warrants for $0.01 per warrant upon at least 30 days’ prior written notice of redemption given after the warrants become exercisable, if the reported last sale price of the common stock equals or exceeds $18.00 per share (as adjusted for stock dividends, sub-divisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after the warrants become exercisable and ending on the third trading day before the Company sends the notice of redemption to the warrant holders. Upon issuance of a redemption notice by the Company, the warrant holders may, at any time after the redemption notice, exercise the Public Warrants on a cashless basis. The Public Warrants meet the definition of a derivative financial instrument and the equity scope exception in ASC 815-10-15-74(a) to be classified as equity, and are not subject to remeasurement provided that the Company continues to meet the criteria for equity classification. As of December 31, 2022, all 5,750,000 Public Warrants remain outstanding. |
Stock Compensation Expense
Stock Compensation Expense | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK COMPENSATION EXPENSE | 10. STOCK COMPENSATION EXPENSE 2022 Omnibus Incentive Plan On October 24, 2021, the stockholders of the Company approved the 2022 Omnibus Incentive Plan (the “OIP”), which became effective as of the Closing Date of the Business Combination. The OIP allows grants of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stocks, restricted stock units, stock bonuses, other stock-based awards, cash awards, and substitute awards (“the “OIP Awards”) to selected officers, employees, partners, non-employee directors, independent contractors, and consultants. The Company has 12,358,689 shares of common stock, $0.0001 par value per share, reserved for issuance pursuant to awards that may be granted under OIP. As of December 31, 2022, 655,000 shares of the Company’s common stock are subject to restricted stock award. 2022 Employee Stock Purchase Plan On October 24, 2021, the stockholders of the Company approved the 2022 Employee Stock Purchase Plan (the “ESPP”), which became effective as of the Closing Date of the Business Combination. An aggregate of 1,791,416 shares of the Company’s common stock has been reserved for issuance or transfer pursuant to rights granted under the ESPP (“Aggregate Number”). The Aggregate Number represents 2% of the aggregate number of shares of the Company’s fully diluted shares outstanding immediately after the Closing and is subject to increase each year over a ten-year period. The maximum aggregate number of shares of common stock available for issuance under ESPP shall not exceed 75,000,000 shares. The ESPP will be implemented through a series of offerings of purchase rights to eligible employees. Each eligible employee may authorize payroll deductions at a minimum of 1% up to a maximum of 15% on a pro rate basis for each pay period during an offering. Under the ESPP, the Company’s Board may designate the period of each offering but no offering shall exceed 27 months in duration. Unless otherwise determined, the offering shall be for a purchase period of 6 months, beginning on the offering date and ending on the exercise date. The purchase price for each share shall be 85% of the fair market value of the Company’s common stock on the offering date or the exercise date, whichever is less. As of December 31, 2022, no awards have been granted under this plan. Amended and Restated 2019 Equity Incentive Plan The Company maintains an equity incentive plan established in October 2019, the 2019 Equity Incentive Plan (the “Legacy FaZe Plan”). The Legacy FaZe Plan allows grants of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units, generally to directors, employees, consultants and service providers. In July 2021, the Company’s Board amended the Legacy FaZe Plan and increased the maximum aggregate number of shares authorized to be issued to 10,500,000 shares of Legacy FaZe common stock, which is equivalent to 23,380,173 shares of the Company’s common stock calculated using the Equity Value Exchange Ratio. As of December 31, 2022, 18,863,654 shares of the Company’s common stock are issuable upon the vesting and exercise of stock options originally granted under the Legacy FaZe Plan, and 1,649,962 shares of the Company’s common stock are subject to restricted stock awards originally granted under the Legacy FaZe Plan. The following table contains information about the plan as of December 31, 2022: Awards Awards Reserved for Awards Available for Issuance Outstanding Grant 2022 Omnibus Incentive Plan 12,358,689 1,238,667 11,120,022 2022 Employee Stock Purchase Plan 75,000,000 — 75,000,000 Amended 2019 Equity Incentive Plan 23,380,173 19,977,366 3,402,807 Stock Compensation Expense Stock-based compensation expense for the periods presented was comprised of the following, which were included in general and administrative expenses within the Consolidated Statements of Operations: (in thousands) For the year ended December 31, 2022 2021 Stock options $ 469 $ 1,635 Restricted stock awards 9,698 2 Total stock–based compensation expense $ 10,167 $ 1,637 Options The following is an analysis of the stock option grant activity: Vested and Nonvested Stock Options Number Weighted Weighted Outstanding December 31, 2021 19,912,281 $ 0.38 4.86 Granted - - - Exercised (1,048,627 ) 0.38 - Expired or forfeited - - - Outstanding December 31, 2022 18,863,654 $ 0.38 4.13 Nonvested Stock Options Number Weighted- Nonvested on December 31, 2021 6,867,852 $ 0.38 Granted - - Vested (6,197,824 ) 0.38 Forfeited - - Nonvested on September 30, 2022 670,008 $ 0.38 The Company recognized stock-based compensation expense related to options granted and vesting expense of $0.5 million during the year ended December 31, 2022, which is included in general and administrative expenses. The Company recognized stock-based compensation expense related to options issued and vesting of $1.6 million during the year ended December 31, 2021, which is included in general and administrative expenses. During the years ended December 31, 2022 and 2021, the Company granted a total of 0 and 11,545,084 options, respectively. Warrants The following is an analysis of the warrant grant activity: Vested and Nonvested Stock Warrants Number Weighted Weighted Outstanding December 31, 2021 6,575,284 $ 10.41 5.79 Granted - - - Exercised (651,951 ) 0.53 - Expired or forfeited - - - Outstanding December 31, 2022 5,923,333 $ 11.50 4.55 Nonvested Stock Warrants Number Weighted- Nonvested on December 31, 2021 - $ - Granted - - Vested - - Forfeited - - Nonvested on December 31, 2022 - $ - During the years ended December 31, 2022 and 2021, the Company granted a total of 0 and 0 warrants, respectively. Restricted Stock Awards A summary of Restricted Stock Awards (“RSAs”) issuances are as follows: Nonvested RSAs Number Weighted Nonvested December 31, 2021 167,277 $ 5.78 Granted 1,774,698 6.30 Vested (289,013 ) 5.99 Forfeited - Nonvested December 31, 2022 1,649,962 $ 6.27 The Company recognized stock-based compensation expense related to RSAs granted and vesting expense of $9.0 million and $0.1 million during the years ended December 31, 2022 and 2021, respectively, which is included in general and administrative expenses. During the years ended December 31, 2022 and 2021, the Company granted a total of 2,899,372 and 1,391,930 RSAs, respectively. Restricted Stock Units A summary of Restricted Stock Units (“RSUs”) issuances are as follows: Nonvested RSUs Number Weighted Nonvested December 31, 2021 - $ - Granted 1,124,674 2.68 Vested (422,257 ) 2.50 Forfeited - Nonvested December 31, 2022 702,417 $ 2.79 The Company recognized stock-based compensation expense related to RSUs granted and vesting expense of $1.6 million and $0 during the years ended December 31, 2022 and 2021, respectively, which is included in general and administrative expenses. During the years ended December 31, 2022 and 2021, the Company granted a total of 1,124,674 and 0 RSUs, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases certain business and residential facilities under operating lease agreements that specify minimum rentals with lease terms ranging from two to two and a half years. The Company’s rent expense for the year ended December 31, 2022 and 2021 was $1.5 million and $0.9 million, respectively. Rent expense is included in general and administrative expense in the Consolidated Statements of Operations. Scheduled rent increases, if any, are amortized on a straight-line basis over the lease term. Our lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. We used the incremental borrowing rate on December 31, 2022 and December 31, 2021 for all leases that commenced prior to that date. In determining this rate, which is used to determine the present value of future lease payments, we estimate the rate of interest we would pay on a collateralized basis, with similar payment terms as the lease and in a similar economic environment. Lease Costs (in thousands) Year Ended Year Ended Components of total lease costs: Operating lease expense $ 1,544 $ 902 Total lease costs $ 1,544 $ 902 Lease Positions as of December 31, 2022 and December 31, 2021 ROU lease assets and lease liabilities for our operating leases are recorded on the balance sheet as follows: December 31, December 31, (in thousands) 2022 2021 Assets Right of use asset – long term $ 2,693 $ — Total right of use asset $ 2,693 $ — Liabilities Operating lease liabilities – short term $ 1,488 $ — Operating lease liabilities – long term 1,084 — Total lease liability $ 2,572 $ — Lease Terms and Discount Rate Weighted average remaining lease term (in years) – operating leases 1.7 Weighted average discount rate – operating leases 4 % Future minimum lease payments, which include non-cancelable operating leases at December 31, 2022, are as follows: Years ending December 31, (in thousands) 2023 $ 1,577 2024 1,087 2025 5 2026 3 Thereafter - Total minimum lease payment $ 2,672 |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2022 | |
Litigation [Abstract] | |
LITIGATION | 12. LITIGATION From time to time, in the normal course of operations, the Company is subject to litigation matters and claims, including claims relating to employee relations and business practices. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity, or results of operations. On August 12, 2020, Greg Selkoe, President of the Company until May 2020, filed suit against the Company for severance and sums related to his termination from the Company, which was initiated in January 2020. The Company and Mr. Selkoe reached a settlement, including a severance payment to Mr. Selkoe and forfeiture by Mr. Selkoe of the entirety of his stock options. The Company accrued $3.2 million for the year ended December 31, 2020. The Company paid $2.9 million of the severance payments to Mr. Selkoe in 2021. In May 2022, the Company made a payment of $0.3 million for the remainder of the balance. On November 30, 2020, Adult Use Holdings, Inc. (“Adult Use”) and Zola Ventures Ltd. (“Zola”) initiated arbitration claiming that the Company owed CA$ 3 million to Adult Use and Zola in connection with alleged funding to the Company of CA$ 30.0 million by Bridging Finance Group. On December 21, 2020, the Company brought counterclaims against Adult Use, Zola, and their principals Adam Salman and Igor Gimelshtein. On May 14, 2021, the Company applied for summary disposition of the claim for CA$ 3 million brought by Adult Use and Zola. On August 4, 2021, the arbitrator granted the Company’s application and issued a Partial Final Award dismissing Adult Use’s and Zola’s claim. The United States District Court for the Southern District of New York subsequently affirmed the Partial Final Award and its dismissal of Adult Use’s and Zola’s claims against the Company in a decision issued September 28, 2022. On November 8 and November 11, 2022, the arbitrator held hearings in connection with the Company’s counterclaims. On December 23, 2022, the Company filed an application for costs and attorneys’ fees. The Company does not believe a material loss is probable at this time. As result, the Company has not recorded a reserve with respect to this litigation. On December 7, 2020, the Company filed an arbitration demand against its former Chief Legal Officer, Phillip Gordon (“Gordon”), alleging claims for fraud, breach of fiduciary duty, breach of duty of loyalty, and breach of employment agreement. The Company terminated Gordon effective as of December 5, 2020 based on the results of an internal investigation. Gordon has denied that the Company had cause to terminate him and filed counterclaims seeking payment of severance under his employment agreement in the total amount of $3.0 million, plus payment of $0.5 million in bonus compensation. Subsequent to December 31, 2021, as a result of arbitration proceedings, the Company has entered into a settlement agreement whereby Gordon agreed to the cancellation of 90,000 of the 790,000 outstanding stock options previously issued to him and to release any actions, claims, damages, judgments or agreements arising out of his relationship with the Company in exchange for $1.9 million in cash. The Company recorded a legal accrual for $1.9 million as of December 31, 2021. The initial payment of $0.4 million was made in the first quarter of 2022. The outstanding balance was settled as of the third quarter of 2022. On May 21, 2021, Alissa Violet Marie Butler filed suit in the Superior Court of the State of California for the County of Los Angeles against FaZe Clan Inc., Dentons US LLP, and Wilson Sonsini Goodrich & Rosati, P.C. Ms. Butler alleges that she is entitled to shares of the Company’s stock. Subsequent to December 31, 2021, the Company has reached a preliminary settlement with Ms. Butler for a total of $0.8 million payable in a combination of cash and common stock to settle Ms. Butler’s claim. The Company recorded a legal accrual for $0.8 million as of December 31, 2021. The outstanding balance was settled as of the third quarter of 2022. In 2021, the Company was made aware of a claim from Treschow-Fritzoe AS that the Company repaid the wrong party for certain funds received by the Company in 2017 and recorded a legal accrual of $1.2 million as of December 31, 2020. In October 2021, the Company entered into a settlement agreement with Treschow-Fritzoe AS and adjusted its legal accrual to $0.8 million as of December 31, 2021. The Company paid $0.8 million in April 2022. |
Loss Per Share
Loss Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | 13. LOSS PER SHARE In accordance with the provisions of ASC 260, Earnings Per Share, net loss per share is computed by dividing net loss by the weighted-average shares of common stock outstanding during the period. The results of operations were net losses for the year ended December 31, 2022 and 2021. The following table sets forth the computation of basic and diluted earnings per share attributable to common stockholders for the year ended December 31, 2022 and 2021: (in thousands, except shares and per-share information) Years ended December 31, 2022 2021 Basic and diluted loss per share: Net loss attributable to FaZe Holdings Inc., basic and diluted $ (168,534 ) $ (36,866 ) Weighted-average common shares outstanding, basic and diluted 39,872,308 19,187,873 Net loss per share, basic and diluted $ (4.23 ) $ (1.92 ) During a loss period, the effect of the potential exercise of stock options, warrants, convertible preferred stock, and convertible debt are not considered in the diluted loss per share calculation since the effect would be antidilutive. The Company did not have any participating securities in the periods presented. The Company had 1,680,774 fully vested warrants in which common shares were issuable for little to no consideration outstanding as of the Closing Date and for the year ended December 31, 2021. These warrants were exercised during the Business Combination. The Company considered these warrants outstanding in the context of basic loss per share and included these warrants in the weighted-average shares of common stock outstanding for the period until converted. The Company had antidilutive shares for the year ended December 31, 2022 and 2021. The following securities were not included in the computation of diluted shares outstanding for the year ended December 31, 2022, and 2021 because the effect would be antidilutive: As of December 31, As of December 31, Convertible preferred stock — 7,209,555 Public Warrants 5,750,000 5,750,000 Private Placement Warrants 173,333 173,333 Seller Earn-out 5,312,098 — Sponsor Earn-out Shares 2,156,250 — Legacy FaZe preferred warrant — 651,951 Unvested restricted stock award 1,649,962 49,426 Stock options 18,863,654 19,912,281 Total potentially dilutive common stock equivalents 33,905,297 33,746,546 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes [Abstract] | |
INCOME TAXES | 14. INCOME TAXES The Company’s income and losses before income taxes in 2022 and 2021, respectively, consist of income and losses from domestic operations. Income / (Loss) before income tax expense for the years ended December 31, 2022 and 2021, respectively, consisted of the following: (in thousands) Year Ended Year Ended December 31, December 31, United States (168,534 ) (36,866 ) Foreign — — Income / (Loss) before income taxes (168,534 ) (36,866 ) The table below presents the components of the provision for income taxes: Year Ended Year Ended December 31, December 31, Current Federal 0 0 State 0 0 Foreign 0 0 Total Current 0 0 Deferred US Federal 0 0 US State 0 0 Foreign 0 0 Total Deferred 0 0 Total Provision / (Benefit) 0 0 A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to income taxes as reflected in the consolidated financial statements is as follows: Year Ended Year Ended December 31, December 31, Tax provision at statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 2.0 % 6.9 % Permanent Items (0.0 )% (0.2 )% 162(m) Limitations (0.6 )% 0.0 % Equity Compensation 0.2 % (0.1 )% Deferred Adjustments (1.7 )% (0.1 )% Return to provision adjustments (0.1 )% (0.0 )% Nondeductible Loss on Debt Extinguishment (14.4 )% 0.0 % Increase/(decrease) in valuation reserve (6.4 )% (27.5 )% Effective income tax rate 0.0 % 0.0 % Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021 are comprised of the following (in thousands): As of 2022 2021 Deferred tax assets: Net operating loss carryforwards 34,934 20,840 Capitalized Sec. 174 Costs 67 — Equity based compensation 1,272 1,115 Accruals 953 3,156 Lease Liability 720 — Nondeductible Interest Carryover 2,089 1,148 Deferred Rent — 2 Deferred Revenue — 2,211 Fixed Assets 99 85 Other 173 140 Total Deferred Tax Assets 40,307 28,697 Less: Valuation Allowance (39,553 ) (28,697 ) Deferred tax asset, net $ 754 $ — Deferred tax Liabilities: Right of Use Asset (754 ) — Total deferred tax liabilities (754 ) — Deferred taxes — — The Company has evaluated the positive and negative evidence, bearing upon its ability to realize its deferred tax assets, which are comprised primarily of net operating loss carryforwards and tax credits. Management has considered the Company’s history of cumulative net losses in the United States, estimated future taxable income and prudent and feasible tax planning strategies and has concluded that it is more likely than not that the Company will not realize the benefits of its US federal and state deferred tax assets. Accordingly, a full valuation allowance has been established against these net deferred tax assets as of December 31, 2022 and 2021, respectively. The Company reevaluates the positive and negative evidence at each reporting period. The Company’s valuation allowance increased during 2022 by approximately $10.9 million, primarily due to net operating losses that were generated in the current year. As of December 31, 2022 and 2021, the Company had U.S. federal net operating loss carryovers of $123.8 million and $73.3 million respectively, which may be available to reduce future taxable income. The 2017 Tax Cuts and Jobs Act (“TCJA”) will generally allow losses incurred after 2017 to be carried over indefinitely but will generally limit the net operating loss deduction to the lesser of the net operating loss carryover or 80% of a corporation’s taxable income (subject to Section 382 of the Internal Revenue Code of 1986, as amended). Also, there will be no carryback for losses incurred after 2017. Losses incurred prior to 2018 will generally be deductible to the extent of the lesser of a corporation’s net operating loss carryover or 100% of a corporation’s taxable income and be available for twenty years from the period the loss was generated. The Company has federal net operating losses generated following 2017 of $122.8 million, which do not expire. The federal net operating losses generated prior to 2018 of $1.0 million will expire at various dates through 2037. As of December 31, 2022 and 2021, the Company also had U.S. state net operating loss carryovers of $128.0 million and $129.4 million respectively, which may be available to offset future income tax liabilities and expire at various dates through 2038. The utilization of the Company’s NOLs are subject to annual Internal Revenue Code Section 382 limitations. The Company has not yet completed a 382 study as of December 31, 2022 At December 31, 2022 and December 31, 2021, the Company did not have any significant uncertain tax positions. The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2022 and 2021, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statement of operations. The Company does not anticipate a material change to unrecognized tax benefits in the next twelve months. All of the Company’s tax years will remain open for examination by the Federal and state tax authorities to the extent that the Company’s tax attributes are utilized in future years to offset income or income taxes. The Company is currently not under examination from any taxing authority. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer’s social security payments, net operating loss utilization and carryback periods and modifications to the net interest deduction limitations. The CARES Act did not have a material impact on the Company’s income tax provision for 2022 or 2021. The Company will continue to evaluate the impact of the CARES Act on its financial position, results of operations and cash flows. On December 27, 2020, the President of the United States signed the Consolidated Appropriations Act, 2021 (“Consolidated Appropriations Act”) into law. The Consolidated Appropriations Act is intended to enhance and expand certain provisions of the CARES Act, allows for the deductions of expenses related to the Payroll Protection Program funds received by companies, and provides an update to meals and entertainment expensing for 2021 and 2022. The Consolidated Appropriations Act did not have a material impact to the Company’s income tax provision for 2022 or 2021. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 15. RELATED PARTY TRANSACTIONS On February 17, 2022, Legacy FaZe entered into a collaboration agreement with Spanky’s Clothing Inc., Cordell Broadus, Boss Lady Entertainment and SMAC Entertainment for an initial term of two years, pursuant to which Snoop Dogg became a member of FaZe’s talent network and joined the board of directors on the Closing Date of the Business Combination and agreed to (i) exclusively, except for companies not in direct competition with FaZe, promote FaZe for three years, and (ii) grant FaZe license to use his name and likeness in connection with certain content and services to be produced by him for FaZe, including (w) social media posts, (x) brand campaigns with FaZe sponsors, (y) hosting of events and (z) merchandise collaborations. Snoop Dogg is the Chief Executive Officer of Spanky’s Clothing Inc. Cordell Broadus is the son of Snoop Dogg. Shante Broadus, the spouse of Snoop Dogg, is the Chief Executive Officer of Boss Lady Entertainment. Constance Schwartz- Mornio, the manager of Snoop Dogg, is the Chief Executive Officer of SMAC Entertainment. The Company granted Legacy FaZe’s restricted stock, which converted into Company restricted stock awards, equal in value to (i) $1,857,154 to Snoop Dogg, (ii) $247,615 to Cordell Broadus, (iii) $247,615 to Boss Lady Entertainment and (iv) $247,615 to SMAC Entertainment, each of which will vest as follows: (x) one-third on August 17, 2022, (y) one-third in monthly installments through February 17, 2023 and (z) one-third in monthly installments through February 17, 2024. In addition, FaZe agreed to consider in good faith further equity bonuses and committed $50,000 in value for community outreach, including for the Snoop Youth Football League, scholarships or other charitable causes. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 16. SUBSEQUENT EVENTS In preparing the consolidated financial statements, the Company has evaluated subsequent events through April 4, 2023, which is the date the consolidated financial statements were issued. On February 16, 2023, the Company announced to its employees a reduction in workforce to streamline its team structure in support of its business priorities. The severance for the first quarter of 2023 related to the reduction in workforce is estimated at $0.1 million. On March 29, 2023, Calvin “Snoop Dogg” Broadus, Jr. notified the Company that he is resigning from the Board of Directors of the Company effective immediately. Mr. Broadus’s resignation was not the result of any disagreement with the Company or any of its subsidiaries. Notice of Delisting On March 23, 2023, the Company received a letter (the “Letter”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market (“Nasdaq”) informing the Company that its common stock, par value $0.0001 per share (the “Common Stock”), failed to comply with the $1 minimum bid price required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) based upon the closing bid price of the Common Stock for the 30 consecutive business days prior to the date of the Letter. The notice has no immediate effect on the listing of the Common Stock or warrants, and the Common Stock and warrants will continue to trade on The Nasdaq Capital Market under the symbols “FAZE” and “FAZEW,” respectively. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has been provided an initial period of 180 calendar days, or until September 19, 2023 (the “Compliance Date”), by which the Company has to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of the Common Stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days at any time prior to the Compliance Date, unless the Staff exercises its discretion to extend this ten-day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H). If the Company does not regain compliance with the minimum bid price requirement by the Compliance Date, the Company may be eligible for an additional 180-calendar day compliance period. If the Company does not qualify for, or fails to regain compliance during, the second compliance period, then the Staff will provide written notification to the Company that the Common Stock will be subject to delisting. At that time, the Company may appeal the Staff’s delisting determination to the Nasdaq Hearings Panel. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the accounts and operations of the Company. All intercompany accounts and transactions have been eliminated. The consolidated financial statements have been prepared in accordance with U.S. GAAP The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates and assumptions. |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the accounts of FaZe Holdings Inc. and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated. |
Voluntary Change in Accounting Principle | Voluntary Change in Accounting Principle During the year ended December 2022, we made a voluntary change in accounting principle to classify certain talent costs and talent acquisition amortization costs reported in prior periods have been reclassified from general and administrative to cost of goods sold to conform with the current presentation, to better identify costs related to revenue generation. In accordance with U.S. GAAP, the change has been reflected in the consolidated statements of operations through retrospective application. For the twelve months ended (in thousands) Prior to change Effect of Change As Adjusted Cost of revenues $ 41,553 $ 2,323 $ 43,876 General and administrative 39,401 (2,323 ) 37,078 Gross profit 11,299 (2,323 ) 8,976 |
Use of Estimates | Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the consolidated financial statements. The inputs into certain of these estimates and assumptions include the consideration of the economic impact of the COVID-19 pandemic. Significant estimates include revenue recognition, allowance for doubtful accounts, warrant liabilities, valuation of the Company’s common stock before the Business Combination, stock-based compensation expense, and income taxes. These estimates generally involve complex issues and require management to make judgments, involve analysis of historical and future trends, can require extended periods of time to resolve, and are subject to change from period to period. In all cases, actual results could differ materially from management’s estimates. |
COVID-19 | COVID-19 The continuing presence of COVID-19 around the world has affected the United States and global economies and has affected the Company’s operations and those of third parties upon which the Company relies, including disruption in staffing, order fulfillment, and demand for product. In addition, the COVID-19 pandemic has and may continue to affect the Company’s revenues. Additionally, while the duration and potential economic impact brought by the COVID-19 pandemic are difficult to assess or predict, the COVID-19 pandemic may reduce the Company’s ability to access capital, which could negatively impact the Company’s short-term and long-term liquidity. The continuing impact of the COVID-19 pandemic is highly uncertain and subject to change. The Company continues to monitor COVID-19 and the extent to which the continued spread of the virus adversely affects the Company’s customer base and revenue. As COVID-19 is complex and evolving, the Company’s plans as described above may change. At this point, the Company cannot reasonably estimate the duration and severity of this pandemic, which could have a material adverse impact on the business, results of operations, financial position, and cash flows. |
Content Asset, net | Content Asset, net The Company produces programming content which it plans to broadcast on online video and streaming platforms. Costs of produced content consist of development and production costs. These costs are capitalized as “Content Asset, net” on the Consolidated Balance Sheets. Each title is predominantly monetized on its own. At the specific title level, the Company tests the content asset for impairment when events and circumstances indicate that its fair value may be less than its unamortized cost. If the carrying value of a content asset exceeds its estimated fair value, an impairment charge will be recorded in the amount of the difference. In April 2022, the Company performed an evaluation of its content asset and determined that the underlying programming of the content asset will not be released. In addition, the Company determined that the content asset has no further utility. Accordingly, the Company recorded an impairment loss of $1.1 million to write off the entire carrying value of content asset. As such, the Company has no content asset balance as of December 31, 2022. Content asset balance as of December 31, 2021 was $0.5 million. The Company’s policy is to amortize the content asset once the content airs. Given that the content was fully written off prior to airing, no amortization expense was recorded for the years ended December 31, 2022 and 2021. The Company does not own any purchased or licensed programming content. Exploitation costs such as marketing, advertising, publicity, promotion, and other distribution expenses directly connected with the distribution of the content asset are expensed as incurred. |
Fixed Assets | Fixed Assets Fixed assets are stated at cost less accumulated depreciation. Cost includes expenditures for furniture, computer equipment, vehicles, leasehold improvements, and other assets. Maintenance and repairs are charged to expense as incurred. When assets are sold, retired, or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in operations. The costs of fixed assets are depreciated using the straight-line method over the estimated useful lives or lease life of the related assets. |
Revenue Recognition and Contract Balances | Revenue Recognition and Contract Balances Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company’s payment terms and conditions vary by customer and contract type. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company does not adjust the promised amount of consideration for the effects of a significant financing component when the Company expects, at contract inception, that the period between the Company’s transfer of a promised product or service to the Company’s customer and payment for that product or service will be one year or less. The Company generally records a receivable related to revenue when the Company has an unconditional right to invoice and receive payment. Contract assets arise from contracts when revenue is recognized over time and the amount of revenue recognized, including management’s estimate of variable consideration that has been included in the transaction price exceeds the amount billed to the customer. These amounts are included in contract assets until the right to payment is no longer conditional on events other than the passage of time. These contract assets are reclassified to receivables when the right to consideration becomes unconditional. For the year ending December 31, 2022, and 2021, no impairment was recorded from contract assets. The Company’s allowances for doubtful accounts are typically immaterial and, if required, are based on management’s best estimate of expected credit losses inherent in the Company’s accounts receivable balance. Contract liabilities are recorded in the event that the Company bills for services in advance of the time the services are performed, or when cash payments are received or due in advance of satisfying the Company’s performance obligations, even if amounts are refundable. Contract liabilities recorded at December 31, 2022, and December 31, 2021, represent the Company’s accounting for the timing difference between when the customer is billed or funds are received and when the performance obligation is satisfied. During the year ended December 31, 2022 and 2021, the Company recognized $7.8 million and $0.8 million as revenue that was relating to the contract liability balance as of January 1, 2022 and 2021, respectively. The following table disaggregates the Company’s revenue by major type for the year ended December 31, 2022, and 2021: (in thousands) Year ended December 31, 2022 2021 Brand sponsorships $ 42,096 $ 24,867 Content 14,497 16,068 Consumer products 3,455 5,751 Esports 9,385 5,846 Other 588 320 Total revenue $ 70,021 $ 52,852 The section below describes the Company’s revenue recognition policies and significant judgments in further detail for each major revenue source of the Company. Brand Sponsorships The Company offers advertisers a full range of promotional vehicles, including but not limited to online advertising, livestream announcements, content generation, social media posts, logo placement on the Company’s official merchandise, and special appearances of members of the Company’s talent roster. The Company’s brand sponsorship agreements may include multiple services that are capable of being individually distinct, however the intended benefit is an association with the Company’s brand and the services are not distinct within the context of the contracts. Revenues from brand sponsorship agreements are recognized ratably over the contract term. Payment terms and conditions vary, but payments are generally due periodically throughout the term of the contract. In instances where the timing of revenue recognition differs from the timing of billing, management has determined the brand sponsorship agreements generally do not include a significant financing component. Content The Company generates and produces original content which the Company monetizes through Google’s AdSense service. Revenue is variable and is earned when the visitor views or “clicks through” on the advertisement. The amount of revenue earned is reported to the Company monthly and is recognized upon receipt of the report of viewership activity. Payment terms and conditions vary, but payments are generally due within 30 to 45 days after the end of each month. The Company grants exclusive licenses to customers for certain content produced by the Company’s talent. The Company grants the customer a license to the intellectual property, which is the content and its use in generating advertising revenues, for a pre-determined period, for an amount paid by the customer upon execution of the contract. The Company’s only performance obligation is to license the content for use in generating advertising revenues, and recognizes the full contract amount at the point at which the Company provides the customer access to the content, which is at the execution of the contract. The Company has no further performance obligations under these types of contracts and does not anticipate generating any additional revenue from these arrangements apart from the contract amount. Principal Versus Agent Considerations A significant amount of the Company’s brand sponsorship and content revenues are generated from the Company’s talent, who are under exclusive, multi-year contracts. The Company’s talent consists of highly trained independent contractors, whose compensation is tied to the revenue that they generate. Management has evaluated the terms of the Company’s brand sponsorship and content agreements and has concluded the Company is the principal. Brand sponsorship and content revenues are reported on a gross basis, while revenue-sharing and other fees paid to the Company’s talent are recorded as cost of revenues. The Company owns the brand and intellectual property, takes primary responsibility for delivery of services, and exercises control over content generation and monetization. The Company contracts directly with Google on its Company operated channels, and the talent contracts directly with Google on their own channels. As part of the Company’s contracts with its talent, the Company agrees to serve as the talent’s exclusive management company as it relates to any and all type of work the talent may perform, including content creation and advertising revenue generated from the content. While the talent owns the content they create while they are under contract with the Company, the talent grants the Company an exclusive perpetual license to the content, and the Company grants limited usage rights of that content back to the talent, conditional upon them complying with their contract. Furthermore, all income earned from services provided by the talent related to gaming, Esports, content creation, or the business of the Company, which includes revenue from advertising via talent content, is subject to the talent agreement and is payable to the Company. In addition, the Company’s contracts with its talent specify rules and restrictions on the content the talent can create and post. As such, through its contracts with talent, the Company is the principal because the Company is the entity exercising primary control over the content generated in the YouTube channels being monetized. Consumer Products The Company earns consumer products revenue from sales of the Company’s consumer products on the Company’s website or at live or virtual events. Revenues are recognized at a point in time, as control is transferred to the customer upon shipment. The Company offers customer returns and discounts through a third-party distributor and accounts for this as a reduction to revenue. The Company does not offer loyalty programs or other sales incentive programs that are material to revenue recognition. Payment is due at the time of sale. The Company has outsourced the design, manufacturing, fulfillment, distribution, and sale of the Company’s consumer products to a third party in exchange for royalties based on the amount of revenue generated. Management evaluated the terms of the agreement to determine whether the Company’s consumer products revenues should be reported gross or net of royalties paid. Key indicators that management evaluated in determining whether the Company is the principal in the sale (gross reporting) or an agent (net reporting) include, but are not limited to: ● the Company is the party that is primarily responsible for fulfilling the promise to provide the specified good or service, ● the Company has inventory risk before the good is transferred to the customer, and ● the Company is the party that has discretion in establishing pricing for the specified good or service. Based on management’s evaluation of the above indicators, the Company reports consumer products revenues on a gross basis. Esports League Participation: Player Transfer Fees: Licensing of Intellectual Property: Transaction Price Allocated to the Remaining Performance Obligations For the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2022, the Company applies the allowable practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less. Revenue expected to be recognized in the future related to performance obligations that have original expected durations greater than one year that are unsatisfied (or partially unsatisfied) as of December 31, 2022 were not material. |
Warrants | Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. Warrants that meet the definition of a derivative financial instrument and the equity scope exception in ASC 815-10-15-74(a) are classified as equity, and are not subject to remeasurement provided that the Company continues to meet the criteria for equity classification. Warrants that are accounted for as equity-classified are further discussed in Note 9, Equity. Warrants that are classified as liabilities are accounted for at fair value and remeasured at each reporting date until exercise, expiration, or modification that results in equity classification. Any change in the fair value of the warrants is recognized as change in fair value of warrant liabilities in the Consolidated Statements of Operations. The classification of warrants, including whether warrants should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The fair value of liability-classified warrants is determined using the Black-Scholes options pricing model (“Black-Scholes model”) which includes Level 3 inputs as further discussed in Note 7, Private Placement Warrants and Recurring Fair Value Measurements. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for its stock-based awards in accordance with ASC 718, Compensation – Stock Compensation, which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards. Legacy FaZe has issued stock options before there was an active market for the Company’s common stock. The Board of Directors (the “Board”) was required to estimate the fair value of the Company’s common stock at the time of each award. The Board considered numerous objective and subjective factors in determining the value of the Company’s common stock at each grant date, including the following: (1) the per-share price of issuances of the Company’s preferred stock, which the Company sold to outside investors in arm’s-length transactions, and the rights, preferences, and privileges of the Company’s preferred stock and common stock; (2) valuations performed by an independent valuation specialist; (3) the Company’s stage of development and revenue growth; (4) the fact that the awards involved illiquid securities in a private company; and (5) the likelihood of achieving a liquidity event for the shares of common stock underlying the awards, such as an initial public offering or sale of the Company, given prevailing market conditions. The Company believed this to have been a reasonable methodology based on certain arm’s-length transactions involving the Company’s preferred stock, supported by the results produced by this valuation methodology. Since the Business Combination, the Company’s common stock is now actively traded, so the fair value of the common stock is readily available. For stock options, the Company estimates the fair value using the Black-Scholes model. The fair value is expensed over the requisite service periods of the awards (usually one to four years), in the period of grant for awards that vest immediately and have no future service condition, or in the period the awards vest immediately after meeting a performance condition becomes probable (i.e., the occurrence of a change in control event). As there was no public market for its common stock at the time of the stock option grant, the Company determined the volatility for options granted based on an analysis of reported data for a peer group of companies. The expected volatility of options granted has been estimated based on an average of the historical volatility measures of this peer group of companies. The expected life of options has been estimated utilizing the “simplified method” due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. As the Company’s stock is now publicly traded after the Business Combination, the fair value of the Company’s stock and the volatility is readily available. The Black-Scholes model requires the input of certain assumptions that require the Company’s judgment, including the fair value of common shares before the Business Combination, expected term, and the expected price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future. The Company accounts for forfeitures of stock-based awards as they occur. |
Fair Value Measurement | Fair Value Measurement The fair value hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy consists of the following three levels: Level 1: Quoted prices in active markets for identical assets or liabilities Level 2: Quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices which are observable for the assets or liabilities Level 3: Unobservable inputs which are supported by little or no market activity The carrying amount of the Company’s financial instruments, including cash, accounts receivable, notes receivable, and accounts payable, approximate fair value due to their short-term nature. The Company’s private placement warrants (the “Private Placement Warrants”) are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the Consolidated Balance Sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the Consolidated Statements of Operations. See Note 7, Private Placement Warrants and Recurring Fair Value Measurements, for additional information on the Company’s liabilities measured at fair value. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net earnings (loss) attributable to the Company by the number of weighted average shares of the Company’s common stock outstanding during the period. Diluted earnings (loss) per share is computed by dividing net earnings (loss) attributable to the Company by the number of weighted-average shares of the Company’s common stock outstanding during the period after adjusting for the impact of securities that would have a dilutive effect on earnings (loss) per share. As the Company has incurred losses in all periods presented, all potentially dilutive securities are antidilutive. See Note 13, Loss Per Share, for additional information on dilutive securities. |
Segment Reporting | Segment Reporting Operating segments are defined as components of an entity for which separate financial information is available and is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company has determined that its Chief Executive Officer is the CODM. The Company operates and reports financial information in one segment, as the CODM reviews financial information presented on a consolidated basis, at the Company level, for the purposes of making operating decisions, allocation of resources, and evaluating financial performance. As of December 31, 2022 and December 31, 2021, the Company did not have material assets located outside of the United States. For the years ended December 31, 2022 and 2021, the Company had $1.8 million and $4.0 million of revenue, respectively, earned outside of the United States. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2020, the FASB issued ASU 2020-06, Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock as well as amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. The ASU is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted for fiscal years beginning after December 15, 2020. Adoption of the ASU can either be on a modified retrospective or full retrospective basis. The Company adopted the standard with an effective date of January 1, 2022 using the modified retrospective approach. The adoption of this ASU impacted the Company’s accounting for the conversion of convertible debt under original contractual terms at the Merger on July 19, 2022 as discussed in Note 8, Debt. In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The amendments are designed to clarify an issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options that remain equity- classified after modification or exchange. The ASU provides guidance on how an issuer would measure and recognize the effects of these transactions. The standard provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense. The ASU is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. The Company adopted the standard with an effective date of January 1, 2022. The adoption of this ASU did not have a material impact on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use (“ROU assets”) asset and a lease liability for all leases with terms greater than 12 months and requires disclosures by lessees and lessors about the amount, timing, and uncertainty of cash flows arising from leases. After the issuance of ASU 2016-02, the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as “ASC 842”. The ASU is effective for annual periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted ASC 842 as of January 1, 2022 using the optional transition method to apply the standard as of the effective date. Accordingly, previously reported financial statements, including footnote disclosures, have not been recast to reflect the application of the new standard to all comparative periods presented. The new standard also provides practical expedients for an entity’s ongoing accounting as a lessee. The Company elected to utilize the practical expedient to not separate lease and non-lease components for all its existing leases. The Company has also elected not to present short-term leases on the condensed consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that the Company is reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Company’s leases do not provide an implicit rate of return, it used its incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments. Adoption of the new lease standard on January 1, 2022 had a material impact on the Company’s consolidated financial statements. The most significant impacts related to the recognition of ROU assets of $2.7 million and lease liabilities of $2.6 million for operating leases on the condensed consolidated balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The standard did not materially impact the Company’s consolidated statement of operations and consolidated statement of cash flows. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic-740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The guidance is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures. |
Accounting Pronouncements Not Yet Adopted | Accounting Pronouncements Not Yet Adopted As an emerging growth company, the JOBS Act allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an emerging growth company. The adoption dates discussed below reflect this election. In September 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance requires the measurement of all expected credit losses for financial assets held at the reporting data based on historical experience, current conditions, and reasonable and supportable forecasts. This guidance also requires enhanced disclosures regarding significant estimates and judgements used in estimating credit losses. The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of consolidated statements of operations | For the twelve months ended (in thousands) Prior to change Effect of Change As Adjusted Cost of revenues $ 41,553 $ 2,323 $ 43,876 General and administrative 39,401 (2,323 ) 37,078 Gross profit 11,299 (2,323 ) 8,976 |
Schedule of revenue by major type | (in thousands) Year ended December 31, 2022 2021 Brand sponsorships $ 42,096 $ 24,867 Content 14,497 16,068 Consumer products 3,455 5,751 Esports 9,385 5,846 Other 588 320 Total revenue $ 70,021 $ 52,852 |
Property, Equipment and Lease_2
Property, Equipment and Leasehold Improvements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, equipment and leasehold improvements | (in thousands) December 31, December 31, 2022 2021 Furniture / Fixtures $ 897 $ 159 Computer equipment 3,640 708 Vehicles 106 106 Leasehold improvements 801 731 Subtotal 5,444 1,704 Less: Accumulated depreciation (1,623 ) (779 ) Property, equipment and leasehold improvements, net $ 3,821 $ 925 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets [Abstract] | |
Schedule of Intangible assets | (in thousands) Gross Net Carrying Accumulated Carrying As of December 31, 2022 Useful Life Value Amortization Value Website development 3 years $ 377 $ 175 $ 202 Talent acquisition 2 – 3 years 1,201 555 646 Intangible assets, net $ 1,578 $ 730 $ 848 (in thousands) Gross Net Carrying Accumulated Carrying As of December 31, 2021 Useful Life Value Amortization Value Website development 3 years $ 211 $ 75 $ 136 Talent acquisition 2 – 3 years 1,653 1,051 602 Intangible assets, net $ 1,864 $ 1,126 $ 738 |
Schedule of estimated future amortization of intangible assets | Years ending December 31, (in thousands) 2023 $ 478 2024 332 2025 38 2026 — Total future amortization of amortizable intangible assets $ 848 |
Private Placement Warrants an_2
Private Placement Warrants and Recurring Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of the private placement warrants | December 31, December 31, 2022 2021 Risk-free interest rate 4.0 % 1.3 % Expected term (years) 4.5 5.5 Expected volatility 53.3 % 18.5 % Exercise price $ 11.50 $ 11.50 Dividend yield 0 0 |
Schedule of changes in the fair value of the private placement warrants liability | (in thousands) Warrant liabilities at July 19, 2022 $ 114 Change in fair value of warrant liabilities (90 ) Warrant liabilities at December 31, 2022 $ 24 |
Schedule of assets and liabilities were measured at fair value on a recurring basis | (in thousands) Quoted Prices in Significant Other Significant Other December 31, Active Markets Observable Inputs Observable Inputs 2022 (Level 1) (Level 2) (Level 3) Liabilities: Private Placement Warrants $ 24 $ — $ — $ 24 Total $ 24 $ — $ — $ 24 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt [Abstract] | |
Schedule of debt outstanding | (in thousands) Unamortized Net Unpaid Short- Long- Issuance Carrying As of December 31, 2021 Principal term term Costs Value 2021 Cox Convertible Promissory Note $ 15,000 $ — $ 15,000 $ — $ 15,000 2021 Convertible Promissory Notes 675 — 675 — 675 2020 Secured Convertible Promissory Note 55,000 — 55,000 (358 ) 54,642 2020 Convertible Promissory Notes 2,525 2,025 500 — 2,525 2020 PPP Loan 1,123 1,123 — 1,123 Other loans 37 — 37 — 37 Total principal amount outstanding $ 74,360 $ 3,148 $ 71,212 $ (358 ) $ 74,002 |
Stock Compensation Expense (Tab
Stock Compensation Expense (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of equity incentive plan | Awards Awards Reserved for Awards Available for Issuance Outstanding Grant 2022 Omnibus Incentive Plan 12,358,689 1,238,667 11,120,022 2022 Employee Stock Purchase Plan 75,000,000 — 75,000,000 Amended 2019 Equity Incentive Plan 23,380,173 19,977,366 3,402,807 |
Schedule of stock-based compensation expense | (in thousands) For the year ended December 31, 2022 2021 Stock options $ 469 $ 1,635 Restricted stock awards 9,698 2 Total stock–based compensation expense $ 10,167 $ 1,637 |
Schedule of Nonvested RSUs | Vested and Nonvested Stock Options Number Weighted Weighted Outstanding December 31, 2021 19,912,281 $ 0.38 4.86 Granted - - - Exercised (1,048,627 ) 0.38 - Expired or forfeited - - - Outstanding December 31, 2022 18,863,654 $ 0.38 4.13 Vested and Nonvested Stock Warrants Number Weighted Weighted Outstanding December 31, 2021 6,575,284 $ 10.41 5.79 Granted - - - Exercised (651,951 ) 0.53 - Expired or forfeited - - - Outstanding December 31, 2022 5,923,333 $ 11.50 4.55 Nonvested Stock Warrants Number Weighted- Nonvested on December 31, 2021 - $ - Granted - - Vested - - Forfeited - - Nonvested on December 31, 2022 - $ - |
Schedule of Nonvested Stock Options | Nonvested Stock Options Number Weighted- Nonvested on December 31, 2021 6,867,852 $ 0.38 Granted - - Vested (6,197,824 ) 0.38 Forfeited - - Nonvested on September 30, 2022 670,008 $ 0.38 Nonvested RSAs Number Weighted Nonvested December 31, 2021 167,277 $ 5.78 Granted 1,774,698 6.30 Vested (289,013 ) 5.99 Forfeited - Nonvested December 31, 2022 1,649,962 $ 6.27 |
Schedule of Nonvested RSUs | Nonvested RSUs Number Weighted Nonvested December 31, 2021 - $ - Granted 1,124,674 2.68 Vested (422,257 ) 2.50 Forfeited - Nonvested December 31, 2022 702,417 $ 2.79 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of lease costs | (in thousands) Year Ended Year Ended Components of total lease costs: Operating lease expense $ 1,544 $ 902 Total lease costs $ 1,544 $ 902 |
Schedule of lease assets and lease liabilities | December 31, December 31, (in thousands) 2022 2021 Assets Right of use asset – long term $ 2,693 $ — Total right of use asset $ 2,693 $ — Liabilities Operating lease liabilities – short term $ 1,488 $ — Operating lease liabilities – long term 1,084 — Total lease liability $ 2,572 $ — |
Schedule of lease terms and discount rate | Weighted average remaining lease term (in years) – operating leases 1.7 Weighted average discount rate – operating leases 4 % |
Schedule of future minimum lease payment | Years ending December 31, (in thousands) 2023 $ 1,577 2024 1,087 2025 5 2026 3 Thereafter - Total minimum lease payment $ 2,672 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted earnings per share | (in thousands, except shares and per-share information) Years ended December 31, 2022 2021 Basic and diluted loss per share: Net loss attributable to FaZe Holdings Inc., basic and diluted $ (168,534 ) $ (36,866 ) Weighted-average common shares outstanding, basic and diluted 39,872,308 19,187,873 Net loss per share, basic and diluted $ (4.23 ) $ (1.92 ) |
Schedule of antidilutive shares in the computation of diluted shares outstanding | As of December 31, As of December 31, Convertible preferred stock — 7,209,555 Public Warrants 5,750,000 5,750,000 Private Placement Warrants 173,333 173,333 Seller Earn-out 5,312,098 — Sponsor Earn-out Shares 2,156,250 — Legacy FaZe preferred warrant — 651,951 Unvested restricted stock award 1,649,962 49,426 Stock options 18,863,654 19,912,281 Total potentially dilutive common stock equivalents 33,905,297 33,746,546 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes [Abstract] | |
Schedule of income (loss) before income tax expense | Year Ended Year Ended December 31, December 31, United States (168,534 ) (36,866 ) Foreign — — Income / (Loss) before income taxes (168,534 ) (36,866 ) |
Schedule of provision for income taxes | Year Ended Year Ended December 31, December 31, Current Federal 0 0 State 0 0 Foreign 0 0 Total Current 0 0 Deferred US Federal 0 0 US State 0 0 Foreign 0 0 Total Deferred 0 0 Total Provision / (Benefit) 0 0 |
Schedule of reconciliation of income tax expense (benefit) | Year Ended Year Ended December 31, December 31, Tax provision at statutory rate 21.0 % 21.0 % State taxes, net of federal benefit 2.0 % 6.9 % Permanent Items (0.0 )% (0.2 )% 162(m) Limitations (0.6 )% 0.0 % Equity Compensation 0.2 % (0.1 )% Deferred Adjustments (1.7 )% (0.1 )% Return to provision adjustments (0.1 )% (0.0 )% Nondeductible Loss on Debt Extinguishment (14.4 )% 0.0 % Increase/(decrease) in valuation reserve (6.4 )% (27.5 )% Effective income tax rate 0.0 % 0.0 % |
Schedule of deferred tax asset and liabilities | As of 2022 2021 Deferred tax assets: Net operating loss carryforwards 34,934 20,840 Capitalized Sec. 174 Costs 67 — Equity based compensation 1,272 1,115 Accruals 953 3,156 Lease Liability 720 — Nondeductible Interest Carryover 2,089 1,148 Deferred Rent — 2 Deferred Revenue — 2,211 Fixed Assets 99 85 Other 173 140 Total Deferred Tax Assets 40,307 28,697 Less: Valuation Allowance (39,553 ) (28,697 ) Deferred tax asset, net $ 754 $ — Deferred tax Liabilities: Right of Use Asset (754 ) — Total deferred tax liabilities (754 ) — Deferred taxes — — |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Impairment loss | $ 1.1 | |
Content asset | $ 0.5 | |
Company recognized | 7.8 | $ 0.8 |
Lease liabilities | 2.7 | |
Assets | 2.6 | |
Maximum [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Revenue | 1.8 | |
Minimum [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Revenue | $ 4 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of consolidated statements of operations $ in Thousands | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Prior to change [Member] | |
Condensed Income Statements, Captions [Line Items] | |
Cost of revenues | $ 41,553 |
General and administrative | 39,401 |
Gross profit | 11,299 |
Effect of Change [Member] | |
Condensed Income Statements, Captions [Line Items] | |
Cost of revenues | 2,323 |
General and administrative | (2,323) |
Gross profit | (2,323) |
As Adjusted [Member] | |
Condensed Income Statements, Captions [Line Items] | |
Cost of revenues | 43,876 |
General and administrative | 37,078 |
Gross profit | $ 8,976 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of revenue by major type - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 70,021 | $ 52,852 |
Brand sponsorships [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 42,096 | 24,867 |
Content [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 14,497 | 16,068 |
Consumer products [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 3,455 | 5,751 |
Esports [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 9,385 | 5,846 |
Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 588 | $ 320 |
Business Combination (Details)
Business Combination (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combinations [Abstract] | |
Business combination, description | Redemption of 15,883,395 shares of B. Riley 150 public shares that occurred subsequent to B. Riley 150 stockholders exercising their right to redeem public shares for their pro rata share of the trust account; ●10,000,000 shares of the Company’s common stock at a purchase price of $10.00 per share were sold and issued for an aggregate purchase price of $100.0 million pursuant to the subscription agreements entered in connection with the PIPE investment, including purchases made by the Company PIPE investor, sponsor related PIPE investors, and third-party investors, and inclusive of shares issued to the sponsor pursuant to the backstop commitment under the sponsor support agreement, representing the portion of the PIPE investment not purchased by third-party investors; ●525,782 shares of Legacy FaZe’s options to its executives, 1,450,914 shares of Legacy FaZe options, representing 75% of the unvested Legacy FaZe’s options outstanding under its existing incentive plans that remain unvested as of the effective time were vested; ● 42,441 shares of the Company’s restricted stock awards were vested at the Closing, pursuant to existing contractual terms. In addition, 923,886 shares of the Company’s restricted stock awards vested 90 days after the Closing, pursuant to amendments to certain restricted stock awards entered prior to the Closing; ●1,047,623 shares of Legacy FaZe’s warrants (including 292,790 shares of preferred stock warrants and 754,833 shares of common stock warrants) were exercised into Legacy FaZe’s common stock and preferred stock, respectively; ●3,237,800 shares of Legacy FaZe’s preferred stock were converted into Legacy FaZe common stock on a one-to-one basis; ●$72.9 million of Legacy FaZe’s convertible debt (including 2021 Cox Convertible Promissory Notes, 2021 Convertible Promissory Notes, 2020 Secured Convertible Note Purchase Agreements and Secured Convertible Promissory Notes, and 2020 Convertible Promissory Notes) were converted into Legacy FaZe common stock, with $6.9 million accrued interest converted into the common stock, and $2.6 million accrued interest settled in cash; ●All 22,902,063 shares of issued and outstanding Legacy FaZe’s common stock (including shares of its common stock issued pursuant to the exercise of common stock and preferred stock purchase warrants and the conversion of its convertible debts and the preferred stocks) were surrendered and exchanged into 50,995,637 shares of the Company’s common stock calculated using the Equity Value Exchange Ratio; ●The Company entered into earn-out agreements to remove restrictions of legally outstanding shares if certain share price milestones are achieved. Refer to Note 9, Equity; and ●The Company assumed public and private placement warrants from B. Riley 150. Refer to Note 9, Equity, for the public warrants (the “Public Warrants”) and Note 7, Private Placement Warrants and Recurring Fair Value Measurements, for the Private Placement Warrants. As of the Closing Date and following the completion of the Business Combination, the Company had the following outstanding securities: ●70,132,639 shares of common stock, with a par value of $0.0001 per share. ●5,923,333 warrants, consisting of 5,750,000 Public Warrants and 173,333 Private Placement Warrants. As a result of the Business Combination, Legacy FaZe received net cash consideration of $57.8 million. Legacy FaZe and B. Riley 150 incurred costs that were considered direct and incremental costs associated with the transaction. These costs amounted to $25.9 million and were treated as a reduction of additional paid-in capital. |
Property, Equipment and Lease_3
Property, Equipment and Leasehold Improvements (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 1.3 | $ 0.5 |
Property, Equipment and Lease_4
Property, Equipment and Leasehold Improvements (Details) - Schedule of property, equipment and leasehold improvements - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 5,444 | $ 1,704 |
Less: Accumulated depreciation | (1,623) | (779) |
Property, equipment and leasehold improvements, net | 3,821 | 925 |
Furniture / Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 897 | 159 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 3,640 | 708 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 106 | 106 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 801 | $ 731 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Intangible Assets [Abstract] | ||
Amortization expense | $ 0.6 | $ 0.5 |
Intangible assets | $ 1 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of Intangible assets - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Website development [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Website development, Useful Life | 3 years | 3 years |
Website development, Gross Carrying Value | $ 377 | $ 211 |
Website development, Accumulated Amortization | 175 | 75 |
Website development, Net Carrying Value | $ 202 | $ 136 |
Talent acquisition [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Talent acquisition, Useful Life | 2 years | 2 years |
Talent acquisition, Gross Carrying Value | $ 1,201 | $ 1,653 |
Talent acquisition, Accumulated Amortization | 555 | 1,051 |
Talent acquisition, Net Carrying Value | 646 | 602 |
Intangible assets, net [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, net Gross Carrying Value | 1,578 | 1,864 |
Intangible assets, net Accumulated Amortization | 730 | 1,126 |
Intangible assets, net Net Carrying Value | $ 848 | $ 738 |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of estimated future amortization of intangible assets $ in Thousands | Dec. 31, 2022 USD ($) |
Schedule of Estimated Future Amortization of Intangible Assets [Abstract] | |
2023 | $ 478 |
2024 | 332 |
2025 | 38 |
2026 | |
Total future amortization of amortizable intangible assets | $ 848 |
Private Placement Warrants an_3
Private Placement Warrants and Recurring Fair Value Measurements (Details) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Fair Value Disclosures [Abstract] | |
Private Placement | shares | 173,333 |
Exercise price | $ / shares | $ 11.5 |
Private Placement Warrants an_4
Private Placement Warrants and Recurring Fair Value Measurements (Details) - Schedule of fair value of the private placement warrants - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Fair Value Of The Private Placement Warrants Abstract | ||
Risk-free interest rate | 4% | 1.30% |
Expected term (years) | 4 years 6 months | 5 years 6 months |
Expected volatility | 53.30% | 18.50% |
Exercise price (in Dollars per share) | $ 11.5 | $ 11.5 |
Dividend yield | 0% | 0% |
Private Placement Warrants an_5
Private Placement Warrants and Recurring Fair Value Measurements (Details) - Schedule of changes in the fair value of the private placement warrants liability $ in Thousands | 5 Months Ended |
Dec. 31, 2022 USD ($) | |
Schedule Of Changes In The Fair Value Of The Private Placement Warrants Liability Abstract | |
Private warrant liability at January 1, 2022 | $ 114 |
Change in fair value of private warrant liability | (90) |
Private warrant liability at June 30, 2022 | $ 24 |
Private Placement Warrants an_6
Private Placement Warrants and Recurring Fair Value Measurements (Details) - Schedule of assets and liabilities were measured at fair value on a recurring basis $ in Thousands | Dec. 31, 2022 USD ($) |
Private Placement Warrants and Recurring Fair Value Measurements (Details) - Schedule of assets and liabilities were measured at fair value on a recurring basis [Line Items] | |
Private Placement Warrants | $ 24 |
Total | 24 |
Quoted Prices In Active Markets (Level 1) [Member] | |
Private Placement Warrants and Recurring Fair Value Measurements (Details) - Schedule of assets and liabilities were measured at fair value on a recurring basis [Line Items] | |
Private Placement Warrants | |
Total | |
Significant Other Observable Inputs (Level 2) [Member] | |
Private Placement Warrants and Recurring Fair Value Measurements (Details) - Schedule of assets and liabilities were measured at fair value on a recurring basis [Line Items] | |
Private Placement Warrants | |
Total | |
Significant Other Observable Inputs (Level 3) [Member] | |
Private Placement Warrants and Recurring Fair Value Measurements (Details) - Schedule of assets and liabilities were measured at fair value on a recurring basis [Line Items] | |
Private Placement Warrants | 24 |
Total | $ 24 |
Debt (Details)
Debt (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||||||
Feb. 01, 2022 | Aug. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2022 | Oct. 31, 2021 | Dec. 31, 2020 | |
Debt (Details) [Line Items] | ||||||||||
Convertible promissory notes | $ 10,000,000 | |||||||||
Cox convertible promissory notes, description | (a) December 15, 2023, (b) the consummation of an initial public offering, (c) the merger of Legacy FaZe with another entity, (d) a transaction pursuant to which more than 50% of Legacy FaZe’s equity securities come to be owned by an unrelated third party, (e) a sale of all or substantially all of the assets of Legacy FaZe, or (f) the consummation of a private round of equity financing resulting in aggregate gross proceeds to Legacy FaZe of at least $15.0 million (“Cox Qualified Financing”). In addition, Cox exercised its right to purchase an additional $5.0 million in Cox Convertible Promissory Notes in October 2021. | |||||||||
Conversion price | $ 250,000,000 | |||||||||
Capital stock | $ 25,000,000 | |||||||||
Interest rate | 10% | |||||||||
Business combination | $ 15,000,000 | |||||||||
Accrued interest | $ 1,300,000 | |||||||||
Converted shares (in Shares) | 3,096,908 | |||||||||
Promissory notes | $ 700,000 | $ 700,000 | $ 2,500,000 | $ 2,500,000 | ||||||
Conversion percentage | 90% | |||||||||
Enterprise value | $ 250,000,000 | |||||||||
Bear interest | 4% | |||||||||
Closing amount | $ 700,000 | |||||||||
Accredited investors | $ 91,700,000 | |||||||||
Convertible promissory notes investors | $ 55,000,000 | |||||||||
Purchase additional | $ 36,700,000 | |||||||||
Accrued interest shares (in Shares) | 523,763 | |||||||||
Maturity date | Dec. 15, 2023 | |||||||||
Secured convertible note purchase agreements, description | (i) an initial public offering, (ii) a transaction or series of related transactions pursuant to which more than 50% of Legacy FaZe’s equity securities come to be owned by an unrelated third party or (iii) the sale of all or substantially all of the assets of Legacy FaZe (a “Liquidity Event”). The CPH Notes are convertible, at the investor’s election, into shares of common stock or shares of the series or class of capital stock (“Conversion Shares”) sold in a private round of equity financing consummated after January 1, 2021 that result in gross proceeds of at least $15.0 million (a “CPH Qualified Financing”). The conversion price is equal to the imputed pre-money enterprise value of Legacy FaZe with respect to the CPH Qualified Financing divided by the total number of shares of capital stock then currently issued and outstanding, calculated on an as-exercised, as-converted, fully diluted basis, but excluding shares of capital stock of Legacy FaZe issuable to the investor upon conversion of the CPH Notes. The conversion price is subject to adjustment in the event Legacy FaZe’s enterprise value is greater than $250.0 million at the time of conversion. | |||||||||
Business combination, description | As a result of the Business Combination, on the Closing Date, $54.7 million of Legacy FaZe’s 2020 Secured Convertible Note Purchase Agreements and Secured Convertible Promissory Notes, with $5.3 million accrued interest, were converted into 15,769,002 shares of the Company’s common stock. In addition, $2.6 million of accrued interest was settled by cash. Upon the conversion of such debts under the Merger Agreement terms, approximately $112.9 million of loss on debt extinguishment was recognized in the year ended December 31, 2022. | |||||||||
Convertible promissory, description | The conversion price was equal to $250.0 million or $200.0 million divided by the total number of shares of capital stock of Legacy FaZe issued and outstanding, calculated on an as-exercised, as-converted, fully diluted basis, but excluding shares of capital stock of Legacy FaZe issued or issuable upon conversion of the note and other convertible notes of Legacy FaZe.The 2020 Convertible Promissory Notes, which cannot be prepaid without consent of the holder, bear interest at a rate of 4.00% per annum and are subordinate and junior in right of payment to any senior indebtedness of Legacy FaZe. Legacy FaZe evaluated the embedded conversion feature in accordance with ASC 815 and determined that embedded conversion feature did not meet the definition of a derivative and therefore did not account for it as a separate derivative liability. As a result of the Business Combination, on the Closing Date, $2.5 million of Legacy FaZe’s 2020 Convertible Promissory Notes, with $0.2 million accrued interest, were converted into 546,220 shares of the Company’s common stock. Upon the conversion of such debts under the Merger Agreement terms, approximately $2.4 million of loss on debt extinguishment was recognized in the year ended December 31, 2022. | |||||||||
Term loan | $ 10,000,000 | |||||||||
Final term loan | $ 10,000,000 | |||||||||
Interest rate percentage | 7% | |||||||||
Company paid | $ 20,000,000 | |||||||||
Paycheck protection program loan, description | Business Administration in a principal amount of $1.1 million pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The PPP Loan proceeds are available to be used to pay for payroll costs, including salaries, commissions and similar compensation, group health care benefits and paid leaves, rent, utilities, and interest on certain other outstanding debt.Legacy FaZe is required to make principal and interest payments in monthly installments, beginning ten months after the last day of the covered period, on the balance that is not forgiven. The loan matures in May 2022 and bears interest at a rate of 1.00% per annum. As a result of the Business Combination, on the Closing Date, the Company paid the $1.1 million of outstanding PPP Loan and $24,760 of accrued interest with the proceeds of the Merger. | |||||||||
Interest expense | $ 4,500,000 | $ 5,500,000 | ||||||||
Debt issuance costs | $ 100,000 | $ 100,000 | ||||||||
CPH [Member] | ||||||||||
Debt (Details) [Line Items] | ||||||||||
Accrued interest shares (in Shares) | 4,800,000 | |||||||||
Bear interest | 10% | |||||||||
B. Riley Term Loan [Member] | ||||||||||
Debt (Details) [Line Items] | ||||||||||
Term loan | $ 400,000 | |||||||||
2021 Convertible Promissory Notes [Member] | ||||||||||
Debt (Details) [Line Items] | ||||||||||
Accrued interest | $ 26,770 | |||||||||
Converted shares (in Shares) | 133,276 |
Debt (Details) - Schedule of de
Debt (Details) - Schedule of debt outstanding $ in Thousands | Dec. 31, 2021 USD ($) |
Debt (Details) - Schedule of debt outstanding [Line Items] | |
Unpaid Principal | $ 74,360 |
Short-term | 3,148 |
Long-term | 71,212 |
Unamortized Issuance Costs | (358) |
Net Carrying Value | 74,002 |
2021 Cox Convertible Promissory Note [Member] | |
Debt (Details) - Schedule of debt outstanding [Line Items] | |
Unpaid Principal | 15,000 |
Short-term | |
Long-term | 15,000 |
Unamortized Issuance Costs | |
Net Carrying Value | 15,000 |
2021 Convertible Promissory Notes [Member] | |
Debt (Details) - Schedule of debt outstanding [Line Items] | |
Unpaid Principal | 675 |
Short-term | |
Long-term | 675 |
Unamortized Issuance Costs | |
Net Carrying Value | 675 |
2020 Secured Convertible Promissory Note [Member] | |
Debt (Details) - Schedule of debt outstanding [Line Items] | |
Unpaid Principal | 55,000 |
Short-term | |
Long-term | 55,000 |
Unamortized Issuance Costs | (358) |
Net Carrying Value | 54,642 |
2020 Convertible Promissory Notes [Member] | |
Debt (Details) - Schedule of debt outstanding [Line Items] | |
Unpaid Principal | 2,525 |
Short-term | 2,025 |
Long-term | 500 |
Unamortized Issuance Costs | |
Net Carrying Value | 2,525 |
2020 PPP Loan [Member] | |
Debt (Details) - Schedule of debt outstanding [Line Items] | |
Unpaid Principal | 1,123 |
Short-term | 1,123 |
Long-term | |
Net Carrying Value | 1,123 |
Other loans [Member] | |
Debt (Details) - Schedule of debt outstanding [Line Items] | |
Unpaid Principal | 37 |
Short-term | |
Long-term | 37 |
Unamortized Issuance Costs | |
Net Carrying Value | $ 37 |
Equity (Details)
Equity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Equity (Details) [Line Items] | ||
Preferred stock share authorized | 1,000,000 | 1,000,000 |
Preferred stock per share (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock share issued | 0 | 0 |
Preferred stock share outstanding | 0 | 0 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Purchase Price of Common Stock, Percent | 6% | |
Sponsor shares | 2,156,250 | |
Exercise price (in Dollars per share) | $ 11.5 | |
Common stock equals per share (in Dollars per share) | 18 | |
Preferred Stock [Member] | ||
Equity (Details) [Line Items] | ||
Preferred stock share authorized | 3,545,529 | |
Preferred stock per share (in Dollars per share) | $ 0.0001 | $ 0.00001 |
Preferred stock share issued | 3,237,800 | |
Preferred stock share outstanding | 3,237,800 | 3,237,800 |
Common Stock [Member] | ||
Equity (Details) [Line Items] | ||
Common stock share authorized | 500,000,000 | 31,900,878 |
Common stock per share (in Dollars per share) | $ 0.0001 | $ 0.00001 |
Common stock share issued | 71,511,887 | 8,461,706 |
Common stock share outstanding | 71,511,887 | 8,461,706 |
First Target Earn [Member] | Common Stock [Member] | ||
Equity (Details) [Line Items] | ||
Common stock per share (in Dollars per share) | $ 12 | |
Second Target Earn [Member] | Common Stock [Member] | ||
Equity (Details) [Line Items] | ||
Common stock per share (in Dollars per share) | 14 | |
Third Target Earn [Member] | Common Stock [Member] | ||
Equity (Details) [Line Items] | ||
Common stock per share (in Dollars per share) | $ 16 | |
Sponsor Earn-Out Shares [Member] | ||
Equity (Details) [Line Items] | ||
Sponsor shares | 2,156,250 | |
Public Warrants [Member] | ||
Equity (Details) [Line Items] | ||
Issued | 5,750,000 | |
Outstanding | 5,750,000 | |
Exercise price (in Dollars per share) | $ 11.5 | |
Per warrant (in Dollars per share) | $ 0.01 | |
Remain outstanding | 5,750,000 |
Stock Compensation Expense (Det
Stock Compensation Expense (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Oct. 24, 2021 | Jul. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Compensation Expense (Details) [Line Items] | ||||
Options granted and vesting expense (in Dollars) | $ 500,000 | $ 100 | ||
Stock based compensation expense (in Dollars) | 1,600,000 | |||
Stock based compensation expense (in Dollars) | $ 1,600,000 | $ 0 | ||
2022 Omnibus Incentive Plan [Member] | ||||
Stock Compensation Expense (Details) [Line Items] | ||||
Common stock, reserved for issuance | 12,358,689 | |||
Common stock, reserved for issuance per share (in Dollars per share) | $ 0.0001 | |||
Shares of common stock are subject to restricted stock award | 655,000 | |||
2022 Employee Stock Purchase Plan [Member] | ||||
Stock Compensation Expense (Details) [Line Items] | ||||
Common stock, reserved for issuance | 1,791,416 | |||
Percentage of diluted shares outstanding | 2% | |||
Percentage of fair market value | 85% | |||
Amended and Restated 2019 Equity Incentive Plan [Member] | Common Stock [Member] | ||||
Stock Compensation Expense (Details) [Line Items] | ||||
Aggregate number of shares authorized | 10,500,000 | |||
Number of share equity value exchange ratio | 23,380,173 | |||
Shares of vesting and exercise of stock options | 18,863,654 | |||
Shares of restricted stock awards | 1,649,962 | |||
Maximum [Member] | 2022 Employee Stock Purchase Plan [Member] | ||||
Stock Compensation Expense (Details) [Line Items] | ||||
Common stock, reserved for issuance | 75,000,000 | |||
Percentage of employee authorize payroll deduction | 15% | |||
Minimum [Member] | 2022 Employee Stock Purchase Plan [Member] | ||||
Stock Compensation Expense (Details) [Line Items] | ||||
Percentage of employee authorize payroll deduction | 1% | |||
Nonvested Stock Options [Member] | ||||
Stock Compensation Expense (Details) [Line Items] | ||||
Granted | 0 | 11,545,084 | ||
Nonvested Stock Warrants [Member] | ||||
Stock Compensation Expense (Details) [Line Items] | ||||
Granted | 0 | 0 | ||
Nonvested RSAs [Member] | ||||
Stock Compensation Expense (Details) [Line Items] | ||||
Granted | 2,899,372 | 1,391,930 | ||
Nonvested RSUs [Member] | ||||
Stock Compensation Expense (Details) [Line Items] | ||||
Granted | 1,124,674 | 0 | ||
Restricted Stock Units (RSUs) [Member] | ||||
Stock Compensation Expense (Details) [Line Items] | ||||
Options granted and vesting expense (in Dollars) | $ 9,000,000 |
Stock Compensation Expense (D_2
Stock Compensation Expense (Details) - Schedule of equity incentive plan | 12 Months Ended |
Dec. 31, 2022 shares | |
Stock Compensation Expense (Details) - Schedule of equity incentive plan [Line Items] | |
2022 Omnibus Incentive Plan | 12,358,689 |
2022 Employee Stock Purchase Plan | 75,000,000 |
Amended 2019 Equity Incentive Plan | 23,380,173 |
Awards Outstanding [Member] | |
Stock Compensation Expense (Details) - Schedule of equity incentive plan [Line Items] | |
2022 Omnibus Incentive Plan | 1,238,667 |
2022 Employee Stock Purchase Plan | |
Amended 2019 Equity Incentive Plan | 19,977,366 |
Awards Available for Grant [Member] | |
Stock Compensation Expense (Details) - Schedule of equity incentive plan [Line Items] | |
2022 Omnibus Incentive Plan | 11,120,022 |
2022 Employee Stock Purchase Plan | 75,000,000 |
Amended 2019 Equity Incentive Plan | 3,402,807 |
Stock Compensation Expense (D_3
Stock Compensation Expense (Details) - Schedule of stock-based compensation expense - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Compensation Expense (Details) - Schedule of stock-based compensation expense [Line Items] | ||
Total stock–based compensation expense | $ 10,167 | $ 1,637 |
Stock options [Member] | ||
Stock Compensation Expense (Details) - Schedule of stock-based compensation expense [Line Items] | ||
Total stock–based compensation expense | 469 | 1,635 |
Restricted stock awards [Member] | ||
Stock Compensation Expense (Details) - Schedule of stock-based compensation expense [Line Items] | ||
Total stock–based compensation expense | $ 9,698 | $ 2 |
Stock Compensation Expense (D_4
Stock Compensation Expense (Details) - Schedule of Vested and Nonvested Stock - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Vested and Nonvested Stock Options [Member] | ||
Stock Compensation Expense (Details) - Schedule of Vested and Nonvested Stock [Line Items] | ||
Number, Outstanding Begining balance (in Shares) | 19,912,281 | |
Weighted Average Exercise Price, Outstanding Begining balance | $ 0.38 | |
Weighted Average Remaining Life, Begining balance | 4 years 10 months 9 days | |
Number, Granted (in Shares) | ||
Weighted Average Exercise Price, Granted | ||
Weighted Average Remaining Life, Granted | ||
Number, Exercised (in Shares) | (1,048,627) | |
Weighted Average Exercise Price, Exercised | $ 0.38 | |
Weighted Average Remaining Life, Exercised | ||
Number, Expired or forfeited (in Shares) | ||
Weighted Average Exercise Price, Expired or forfeited | ||
Weighted Average Remaining Life, Expired or forfeited | ||
Number, Outstanding Ending balance (in Shares) | 18,863,654 | 19,912,281 |
Weighted Average Exercise Price, Outstanding Ending balance | $ 0.38 | $ 0.38 |
Weighted Average Remaining Life, Ending balance | 4 years 1 month 17 days | |
Vested and Nonvested Stock Warrants [Member] | ||
Stock Compensation Expense (Details) - Schedule of Vested and Nonvested Stock [Line Items] | ||
Number, Outstanding Begining balance (in Shares) | 6,575,284 | |
Weighted Average Exercise Price, Outstanding Begining balance | $ 10.41 | |
Weighted Average Remaining Life, Begining balance | 5 years 9 months 14 days | |
Weighted Average Exercise Price, Granted | ||
Weighted Average Remaining Life, Granted | ||
Number, Exercised (in Shares) | (651,951) | |
Weighted Average Exercise Price, Exercised | $ 0.53 | |
Weighted Average Remaining Life, Exercised | ||
Number, Expired or forfeited (in Shares) | ||
Weighted Average Exercise Price, Expired or forfeited | ||
Weighted Average Remaining Life, Expired or forfeited | ||
Number, Outstanding Ending balance (in Shares) | 5,923,333 | 6,575,284 |
Weighted Average Exercise Price, Outstanding Ending balance | $ 11.5 | $ 10.41 |
Weighted Average Remaining Life, Ending balance | 4 years 6 months 18 days | |
Nonvested Stock Warrants [Member] | ||
Stock Compensation Expense (Details) - Schedule of Vested and Nonvested Stock [Line Items] | ||
Number, Outstanding Begining balance (in Shares) | ||
Weighted Average Exercise Price, Outstanding Begining balance | ||
Number, Granted (in Shares) | 0 | 0 |
Weighted Average Exercise Price, Granted | ||
Number,Vested (in Shares) | ||
Weighted- Average Exercise Price, Vested | ||
Number, Expired or forfeited (in Shares) | ||
Weighted Average Exercise Price, Expired or forfeited | ||
Number, Outstanding Ending balance (in Shares) | ||
Weighted Average Exercise Price, Outstanding Ending balance |
Stock Compensation Expense (D_5
Stock Compensation Expense (Details) - Schedule of Nonvested Stock Options | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Nonvested Stock Options [Member] | |
Stock Compensation Expense (Details) - Schedule of Nonvested Stock Options [Line Items] | |
Number, Nonvested beginning balance | 6,867,852 |
Weighted- Average Exercise Price, Nonvested beginning balance (in Dollars per share) | $ / shares | $ 0.38 |
Number, Granted | |
Weighted- Average Exercise Price, Granted (in Dollars per share) | $ / shares | |
Number, Vested | (6,197,824) |
Weighted- Average Exercise Price, Vested (in Dollars per share) | $ / shares | $ 0.38 |
Number, Forfeited | |
Weighted- Average Exercise Price, Forfeited (in Dollars per share) | $ / shares | |
Number, Nonvested ending balance | 670,008 |
Weighted- Average Exercise Price, Nonvested ending balance (in Dollars per share) | $ / shares | $ 0.38 |
Nonvested RSAs [Member] | |
Stock Compensation Expense (Details) - Schedule of Nonvested Stock Options [Line Items] | |
Number, Nonvested beginning balance | 167,277 |
Weighted- Average Exercise Price, Nonvested beginning balance (in Dollars per share) | $ / shares | $ 5.78 |
Number, Granted | 1,774,698 |
Weighted- Average Exercise Price, Granted (in Dollars per share) | $ / shares | $ 6.3 |
Number, Vested | (289,013) |
Weighted- Average Exercise Price, Vested (in Dollars per share) | $ / shares | $ 5.99 |
Number, Forfeited | |
Number, Nonvested ending balance | 1,649,962 |
Weighted- Average Exercise Price, Nonvested ending balance (in Dollars per share) | $ / shares | $ 6.27 |
Stock Compensation Expense (D_6
Stock Compensation Expense (Details) - Schedule of Nonvested RSUs - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Nonvested Rsus Abstract | ||
Number, Nonvested ,Beginning balance | ||
Weighted Average Price, Beginning balance (in Dollars per share) | ||
Number, Granted | 1,124,674 | |
Weighted Average Price, Granted (in Dollars per share) | $ 2.68 | |
Number, Vested | (422,257) | (1,680,774) |
Weighted Average Price, Vested (in Dollars per share) | $ 2.5 | |
Number, Forfeited | ||
Number, Nonvested, Ending balance | 702,417 | |
Weighted Average Price, Nonvested, Ending balance (in Dollars per share) | $ 2.79 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 1.5 | $ 0.9 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of lease costs - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Components of total lease costs: | ||
Operating lease expense | $ 1,544 | $ 902 |
Total lease costs | $ 1,544 | $ 902 |
Commitments and Contingencies_4
Commitments and Contingencies (Details) - Schedule of lease assets and lease liabilities - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Assets | ||
Right of use asset – long term | $ 2,693 | |
Total right of use asset | 2,693 | |
Liabilities | ||
Operating lease liabilities – short term | 1,488 | |
Operating lease liabilities – long term | 1,084 | |
Total lease liability | $ 2,572 |
Commitments and Contingencies_5
Commitments and Contingencies (Details) - Schedule of lease terms and discount rate | Dec. 31, 2022 |
Schedule of Lease Terms and Discount Rate [Abstract] | |
Weighted average remaining lease term (in years) – operating leases | 1 year 8 months 12 days |
Weighted average discount rate – operating leases | 4% |
Commitments and Contingencies_6
Commitments and Contingencies (Details) - Schedule of future minimum lease payment $ in Thousands | Dec. 31, 2022 USD ($) |
Schedule Of Future Minimum Lease Payment Abstract | |
2023 | $ 1,577 |
2024 | 1,087 |
2025 | 5 |
2026 | 3 |
Thereafter | |
Total minimum lease payment | $ 2,672 |
Litigation (Details)
Litigation (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
May 01, 2022 | May 14, 2021 | Dec. 07, 2020 | Apr. 30, 2022 | Oct. 31, 2021 | May 21, 2021 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Nov. 30, 2020 | |
Litigation (Details) [Line Items] | |||||||||||
Alleged funding amount | $ 3 | ||||||||||
Disposition | $ 3 | ||||||||||
Agreement total amount | $ 3 | ||||||||||
Plus payment | $ 0.5 | ||||||||||
Settlement agreement | the Company has entered into a settlement agreement whereby Gordon agreed to the cancellation of 90,000 of the 790,000 outstanding stock options previously issued to him and to release any actions, claims, damages, judgments or agreements arising out of his relationship with the Company in exchange for $1.9 million in cash | ||||||||||
Legal accrual | $ 1.9 | ||||||||||
Initial payment | $ 0.4 | ||||||||||
Mr. Selkoe [Member] | |||||||||||
Litigation (Details) [Line Items] | |||||||||||
Accrued amount | $ 3.2 | ||||||||||
Severance payments | $ 0.3 | $ 2.9 | |||||||||
Bridging Finance Group [Member] | |||||||||||
Litigation (Details) [Line Items] | |||||||||||
Alleged funding amount | $ 30 | ||||||||||
Ms. Butler [Member] | |||||||||||
Litigation (Details) [Line Items] | |||||||||||
Legal accrual | $ 0.8 | ||||||||||
Preliminary settlement payable | $ 0.8 | ||||||||||
Treschow-Fritzoe [Member] | |||||||||||
Litigation (Details) [Line Items] | |||||||||||
Legal accrual | $ 0.8 | $ 1.2 | |||||||||
Subsequently paid in cash | $ 0.8 |
Loss Per Share (Details)
Loss Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Vested warrants outstanding | 422,257 | 1,680,774 |
Loss Per Share (Details) - Sche
Loss Per Share (Details) - Schedule of basic and diluted earnings per share - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Basic and Diluted Earnings Per Share [Abstract] | ||
Net loss attributable to FaZe Holdings Inc., basic and diluted | $ (168,534) | $ (36,866) |
Weighted-average common shares outstanding, basic | 39,872,308 | 19,187,873 |
Net loss per share, basic | $ (4.23) | $ (1.92) |
Loss Per Share (Details) - Sc_2
Loss Per Share (Details) - Schedule of basic and diluted earnings per share (Parentheticals) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Basic and Diluted Earnings Per Share [Abstract] | ||
Weighted-average common shares outstanding, diluted | 39,872,308 | 19,187,873 |
Net loss per share, diluted | $ (4.23) | $ (1.92) |
Loss Per Share (Details) - Sc_3
Loss Per Share (Details) - Schedule of antidilutive shares in the computation of diluted shares outstanding - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Antidilutive Shares in the Computation of Diluted Shares Outstanding [Abstract] | ||
Convertible preferred stock | $ 7,209,555 | |
Public Warrants | 5,750,000 | 5,750,000 |
Private Placement Warrants | 173,333 | 173,333 |
Seller Earn-out | 5,312,098 | |
Sponsor Earn-out Shares | 2,156,250 | |
Legacy FaZe preferred warrant | 651,951 | |
Unvested restricted stock award | 1,649,962 | 49,426 |
Stock options | 18,863,654 | 19,912,281 |
Total potentially dilutive common stock equivalents | $ 33,905,297 | $ 33,746,546 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes [Abstract] | ||
Valuation allowance increased | $ 10.9 | |
Federal net operating loss carryovers | $ 123.8 | $ 73.3 |
Net operating loss carryforwards, description | The 2017 Tax Cuts and Jobs Act (“TCJA”) will generally allow losses incurred after 2017 to be carried over indefinitely but will generally limit the net operating loss deduction to the lesser of the net operating loss carryover or 80% of a corporation’s taxable income (subject to Section 382 of the Internal Revenue Code of 1986, as amended). Also, there will be no carryback for losses incurred after 2017. Losses incurred prior to 2018 will generally be deductible to the extent of the lesser of a corporation’s net operating loss carryover or 100% of a corporation’s taxable income and be available for twenty years from the period the loss was generated. The Company has federal net operating losses generated following 2017 of $122.8 million, which do not expire. The federal net operating losses generated prior to 2018 of $1.0 million will expire at various dates through 2037. | |
State net operating loss carryovers | $ 128 | $ 129.4 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of income (loss) before income tax expense - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Income Loss Before Income Tax Expense Abstract | ||
United States | $ (168,534) | $ (36,866) |
Foreign | ||
Income / (Loss) before income taxes | $ (168,534) | $ (36,866) |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of provision for income taxes - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current | ||
Federal | $ 0 | $ 0 |
State | 0 | 0 |
Foreign | 0 | 0 |
Total Current | 0 | 0 |
Deferred | ||
US Federal | 0 | 0 |
Total Deferred | 0 | 0 |
US State | 0 | 0 |
Foreign | 0 | 0 |
Total Provision / (Benefit) | $ 0 | $ 0 |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of reconciliation of income tax expense (benefit) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Reconciliation Of Income Tax Expense Benefit Abstract | ||
Tax provision at statutory rate | 21% | 21% |
State taxes, net of federal benefit | 2% | 6.90% |
Permanent Items | 0% | (0.20%) |
162(m) Limitations | (0.60%) | 0% |
Equity Compensation | 0.20% | (0.10%) |
Deferred Adjustments | (1.70%) | (0.10%) |
Return to provision adjustments | (0.10%) | 0% |
Nondeductible Loss on Debt Extinguishment | (14.40%) | 0% |
Increase/(decrease) in valuation reserve | (6.40%) | (27.50%) |
Effective income tax rate | 0% | 0% |
Income Taxes (Details) - Sche_4
Income Taxes (Details) - Schedule of deferred tax asset and liabilities - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 34,934 | $ 20,840 |
Capitalized Sec. 174 Costs | 67 | |
Equity based compensation | 1,272 | 1,115 |
Accruals | 953 | 3,156 |
Lease Liability | 720 | |
Nondeductible Interest Carryover | 2,089 | 1,148 |
Deferred Rent | 2 | |
Deferred Revenue | 2,211 | |
Fixed Assets | 99 | 85 |
Other | 173 | 140 |
Total Deferred Tax Assets | 40,307 | 28,697 |
Less: Valuation Allowance | (39,553) | (28,697) |
Deferred tax asset, net | 754 | |
Deferred tax Liabilities: | ||
Right of Use Asset | (754) | |
Total deferred tax liabilities | (754) | |
Deferred taxes |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 17, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transactions (Details) [Line Items] | |||
Stock issued during period, value, restricted stock awards | |||
Related party transaction, amount of transaction | $ 50,000 | ||
Snoop Dogg [Member] | |||
Related Party Transactions (Details) [Line Items] | |||
Stock issued during period, value, restricted stock awards | 1,857,154 | ||
Cordell Broadus [Member] | |||
Related Party Transactions (Details) [Line Items] | |||
Stock issued during period, value, restricted stock awards | 247,615 | ||
Boss Lady Entertainment [Member] | |||
Related Party Transactions (Details) [Line Items] | |||
Stock issued during period, value, restricted stock awards | 247,615 | ||
SMAC Entertainment [Member] | |||
Related Party Transactions (Details) [Line Items] | |||
Stock issued during period, value, restricted stock awards | $ 247,615 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | |
Feb. 16, 2023 | Mar. 23, 2023 | |
Subsequent Event [Member] | ||
Subsequent Events (Details) [Line Items] | ||
Severance amount (in Dollars) | $ 0.1 | |
Forecast [Member] | ||
Subsequent Events (Details) [Line Items] | ||
Common stock, par valu | $ 0.0001 | |
Bid price | 1 | |
Exceed price par share | $ 1 |