Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 03, 2023 | |
Document Information Line Items | ||
Entity Registrant Name | FAZE HOLDINGS INC. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 77,501,183 | |
Amendment Flag | false | |
Entity Central Index Key | 0001839360 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Sep. 30, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Document Quarterly 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 | |
Entity Interactive Data Current | Yes | |
Common stock, par value $0.0001 per share | ||
Document Information Line Items | ||
Trading Symbol | FAZE | |
Title of 12(b) Security | Common stock, par value $0.0001 per share | |
Security Exchange Name | NASDAQ | |
Warrants, each whole warrant exercisable for one share of common stock | ||
Document Information Line Items | ||
Trading Symbol | FAZEW | |
Title of 12(b) Security | Warrants, each whole warrant exercisable for one share of common stock | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash | $ 16,623 | $ 37,207 |
Accounts receivable, net | 3,095 | 8,525 |
Employee retention tax credit | 1,695 | |
Contract assets | 8,220 | 6,223 |
Prepaid expenses and other assets | 4,850 | 6,768 |
Total Current Assets | 34,483 | 58,723 |
Restricted cash | 600 | 600 |
Property, equipment and leasehold improvements, net | 2,550 | 3,821 |
Operating lease right-of-use assets | 1,560 | 2,693 |
Intangible assets, net | 462 | 848 |
Other long-term assets | 606 | 553 |
TOTAL ASSETS | 40,261 | 67,238 |
LIABILITIES: | ||
Accounts payable and accrued expenses | 14,308 | 14,397 |
Contract liabilities | 2,183 | 3,494 |
Operating lease liabilities, current | 1,488 | 1,488 |
Total Current Liabilities | 17,979 | 19,379 |
Warrant liabilities | 2 | 24 |
Operating lease liabilities, non-current | 93 | 1,084 |
Total Liabilities | 18,074 | 20,487 |
COMMITMENTS AND CONTINGENCIES (Note 9) | ||
MEZZANINE EQUITY: | ||
Series A preferred stock, $0.00001 par value, 3,545,529 shares authorized at September 30, 2023 and 2022, respectively, zero share shares issued and outstanding at September 30, 2023 and 2022. | ||
STOCKHOLDERS’ EQUITY: | ||
Preferred stock, $0.0001 par value; 1,000,000 shares of the Company’s preferred stock authorized at September 30, 2023; zero share of the Company’s preferred stock issued and outstanding at September 30, 2023 and December 31, 2022 | ||
Common stock, $0.0001 par value at September 30, 2023 and December 31, 2022, respectively; 500,000,000 and 500,000,000 shares of common stock authorized at September 30, 2023 and December 31, 2022, respectively; 75,688,236 and 71,511,887 shares of common stock issued and outstanding at September 30, 2023 and December 31, 2022 respectively | 8 | 7 |
Additional paid-in capital | 338,718 | 327,686 |
Accumulated deficit | (316,539) | (280,942) |
Total Stockholders’ Equity | 22,187 | 46,751 |
TOTAL LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS’ EQUITY | $ 40,261 | $ 67,238 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
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 | ||
Preferred stock, shares outstanding | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 75,688,236 | 71,511,887 |
Common stock, shares outstanding | 75,688,236 | 71,511,887 |
Series A Preferred Stock | ||
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 | ||
Preferred stock, shares outstanding |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenues | $ 12,510 | $ 14,012 | $ 36,749 | $ 48,621 |
Cost of revenues | 11,659 | 10,470 | 33,579 | 34,647 |
Gross profit | 851 | 3,542 | 3,170 | 13,974 |
Operating expenses: | ||||
General and administrative | 9,324 | 16,928 | 39,336 | 39,025 |
Sales and marketing | 148 | 1,479 | 503 | 3,557 |
Impairment of content asset | 1,073 | |||
Loss from operations | (8,621) | (14,865) | (36,669) | (29,681) |
Other expense: | ||||
Interest (income) expense, net | (137) | 459 | (497) | 4,491 |
Change in fair value of warrant liabilities | (10) | (19) | (23) | (19) |
Other, net | (1,273) | 1 | (552) | 17 |
Loss on debt extinguishment | 115,292 | 115,292 | ||
Total other (income)/expense: | (1,420) | 115,733 | (1,072) | 119,781 |
Net loss | $ (7,201) | $ (130,598) | $ (35,597) | $ (149,462) |
Net loss per common share - basic and diluted (in Dollars per share) | $ (0.1) | $ (2.39) | $ (0.54) | $ (4.65) |
Weighted-average number of common shares outstanding - basic and diluted (in Shares) | 68,234,009 | 54,590,538 | 66,315,727 | 32,144,653 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Net loss per common share diluted | $ (0.10) | $ (2.39) | $ (0.54) | $ (4.65) |
Weighted-average number of common shares outstanding diluted | 68,234,009 | 54,590,538 | 66,315,727 | 32,144,653 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2021 | $ 2 | $ 5,477 | $ (112,408) | $ (106,929) |
Balance (in Shares) at Dec. 31, 2021 | 18,841,538 | |||
Stock based compensation expense | 1,150 | 1,150 | ||
Issuance of common stock upon vesting of restricted stock awards | ||||
Issuance of common stock upon vesting of restricted stock awards (in Shares) | 4,084 | |||
Exercise of stock option | 64 | 64 | ||
Exercise of stock option (in Shares) | 74,768 | |||
Net loss | (9,542) | (9,542) | ||
Balance at Mar. 31, 2022 | $ 2 | 6,691 | (121,950) | (115,257) |
Balance (in Shares) at Mar. 31, 2022 | 18,920,390 | |||
Balance at Dec. 31, 2021 | $ 2 | 5,477 | (112,408) | (106,929) |
Balance (in Shares) at Dec. 31, 2021 | 18,841,538 | |||
Net loss | (149,462) | |||
Balance at Sep. 30, 2022 | $ 7 | 322,724 | (261,870) | 60,861 |
Balance (in Shares) at Sep. 30, 2022 | 70,258,004 | |||
Balance at Mar. 31, 2022 | $ 2 | 6,691 | (121,950) | (115,257) |
Balance (in Shares) at Mar. 31, 2022 | 18,920,390 | |||
Stock based compensation expense | 1,509 | 1,509 | ||
Issuance of common stock in connection with litigation settlement | 294 | 294 | ||
Issuance of common stock in connection with litigation settlement (in Shares) | 13,021 | |||
Issuance of common stock upon vesting of restricted stock awards | ||||
Issuance of common stock upon vesting of restricted stock awards (in Shares) | 16,108 | |||
Exercise of stock option | 36 | 36 | ||
Exercise of stock option (in Shares) | 43,104 | |||
Net loss | (9,322) | (9,322) | ||
Balance at Jun. 30, 2022 | $ 2 | 8,530 | (131,272) | (122,740) |
Balance (in Shares) at Jun. 30, 2022 | 18,992,623 | |||
Stock based compensation expense | 2,546 | 2,546 | ||
Exercise of common and preferred warrants | 101 | 101 | ||
Exercise of common and preferred warrants (in Shares) | 2,332,117 | |||
Recapitalization transaction | 311,427 | 311,432 | ||
Recapitalization transaction (in Shares) | 48,266,163 | |||
Issuance of common stock upon vesting of restricted stock awards | ||||
Issuance of common stock upon vesting of restricted stock awards (in Shares) | 167,806 | |||
Exercise of stock option | 120 | 120 | ||
Exercise of stock option (in Shares) | 313,962 | |||
Net loss | (130,598) | (130,598) | ||
Balance at Sep. 30, 2022 | $ 7 | 322,724 | (261,870) | 60,861 |
Balance (in Shares) at Sep. 30, 2022 | 70,258,004 | |||
Balance at Dec. 31, 2022 | $ 7 | 327,686 | (280,942) | $ 46,751 |
Balance (in Shares) at Dec. 31, 2022 | 71,511,887 | 71,511,887 | ||
Stock based compensation expense | 2,673 | $ 2,673 | ||
Issuance of common stock upon vesting of restricted stock awards | ||||
Issuance of common stock upon vesting of restricted stock awards (in Shares) | 483,251 | |||
Exercise of stock option | 783 | 783 | ||
Exercise of stock option (in Shares) | 2,050,920 | |||
Net loss | (14,040) | (14,040) | ||
Balance at Mar. 31, 2023 | $ 7 | 331,142 | (294,982) | 36,167 |
Balance (in Shares) at Mar. 31, 2023 | 74,046,058 | |||
Balance at Dec. 31, 2022 | $ 7 | 327,686 | (280,942) | $ 46,751 |
Balance (in Shares) at Dec. 31, 2022 | 71,511,887 | 71,511,887 | ||
Net loss | $ (35,597) | |||
Balance at Sep. 30, 2023 | $ 8 | 338,718 | (316,539) | $ 22,187 |
Balance (in Shares) at Sep. 30, 2023 | 76,988,356 | 75,688,236 | ||
Balance at Mar. 31, 2023 | $ 7 | 331,142 | (294,982) | $ 36,167 |
Balance (in Shares) at Mar. 31, 2023 | 74,046,058 | |||
Stock based compensation expense | $ 1 | 5,964 | 5,964 | |
Issuance of common stock in connection with SEPA agreement | 253 | 253 | ||
Issuance of common stock in connection with SEPA agreement (in Shares) | 487,995 | |||
Issuance of common stock upon vesting of restricted stock units | ||||
Issuance of common stock upon vesting of restricted stock units (in Shares) | 479,755 | |||
Issuance of common stock upon vesting of restricted stock awards | ||||
Issuance of common stock upon vesting of restricted stock awards (in Shares) | 574,501 | |||
Exercise of stock option | ||||
Exercise of stock option (in Shares) | 99,927 | |||
Net loss | (14,356) | (14,356) | ||
Balance at Jun. 30, 2023 | $ 8 | 337,359 | (309,338) | 28,029 |
Balance (in Shares) at Jun. 30, 2023 | 75,688,236 | |||
Stock based compensation expense | 1,359 | 1,359 | ||
Issuance of common stock upon vesting of restricted stock units | ||||
Issuance of common stock upon vesting of restricted stock units (in Shares) | 1,300,120 | |||
Net loss | (7,201) | (7,201) | ||
Balance at Sep. 30, 2023 | $ 8 | $ 338,718 | $ (316,539) | $ 22,187 |
Balance (in Shares) at Sep. 30, 2023 | 76,988,356 | 75,688,236 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (35,597) | $ (149,462) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Provision for doubtful accounts | 1,444 | 378 |
Additions to content asset | (599) | |
Depreciation & amortization expense | 1,805 | 1,230 |
Amortization of operating lease right of use assets | 1,132 | |
Content asset impairments | 1,073 | |
Stock-based compensation expense | 9,996 | 4,996 |
Change in fair value of warrant liabilities | (23) | (19) |
Non-cash interest expense | 4,491 | |
Loss on debt extinguishment | 115,292 | |
Other | (37) | |
Change in operating assets and liabilities: | ||
Accounts receivable | 3,986 | (9,642) |
Inventory | 6 | |
Prepaid expenses and other assets | 1,919 | (6,127) |
Employee retention tax credit | 1,695 | |
Other long-term assets | 200 | |
Contract assets | (5,386) | (2,100) |
Accounts payable and accrued expenses | (88) | (9,728) |
Contract liabilities | (1,311) | 2,197 |
Other current liabilities | (7) | |
Operating lease liabilities | (991) | |
Short-term debt | (420) | |
Other long-term liabilities | 36 | |
NET CASH USED IN OPERATING ACTIVITIES | (21,219) | (48,442) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property, plant and equipment | (116) | (3,804) |
Purchase of intangible assets | (32) | (607) |
Issuance of note receivable | ||
NET CASH USED IN INVESTING ACTIVITIES | (148) | (4,411) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of loans principal | (21,123) | |
Proceeds from issuance of term loan | 20,000 | |
Issuance of common stock in connection with exercise of stock options | 783 | 220 |
Payments of transaction fees by Legacy FaZe | (25,146) | |
Proceeds from recapitalization of B. Riley 150 redemptions and transaction costs | 5,655 | |
Proceeds from PIPE offering | 100,000 | |
Proceeds from conversion of preferred and common warrants | 101 | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 783 | 79,707 |
NET CHANGE IN CASH AND RESTRICTED CASH | (20,584) | 26,854 |
Cash and restricted cash at beginning of period | 37,807 | 17,618 |
CASH AND RESTRICTED CASH AT END OF PERIOD | 17,223 | 44,472 |
RECONCILIATION TO CONSOLIDATED BALANCE SHEETS | ||
Cash | 16,623 | 43,872 |
Restricted cash | 600 | 600 |
Cash and restricted cash | 17,223 | 44,472 |
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 | |
Purchase of property, plant and equipment in accrued expenses | 28 | |
Conversion of convertible notes and accrued interest into common stock under original contractual terms | 17,551 | |
Conversion of redeemable convertible preferred stock to common stock pursuant to Business Combination | 33,705 | |
Issuance of common stock in connection with SEPA agreement | $ 253 |
Description of the Business
Description of the Business | 9 Months Ended |
Sep. 30, 2023 | |
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.” 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. 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 must 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). On September 20, 2023, the Company received a letter from Nasdaq granting the Company an additional compliance period of 180 calendar days, or until March 18, 2024, in which to regain compliance. Nasdaq granted the additional compliance period based on the Company’s continuing to meet the continued listing requirement for market value of publicly held shares and all other initial listing requirements of the Nasdaq Capital Market, with the exception of the Bid Price Requirement, and the Company’s furnishing of written notice to Nasdaq of its intent to cure this deficiency during the additional compliance period by effecting a reverse stock split, if necessary. 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. |
Liquidity
Liquidity | 9 Months Ended |
Sep. 30, 2023 | |
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 cash reserve as of September 30, 2023, together with the SEPA described below, the Company does not believe it has sufficient resources to fund its operations at least until twelve months from the date of issuance of these financial statements. The positive working capital as of September 30, 2023 was mainly due to funds from the PIPE offering and from the Business Combination. On May 10, 2023, the Company and YA II PN, Ltd., a Cayman Islands exempt limited partnership managed by Yorkville Advisors Global, LP (the “Investor”), entered into a Standby Equity Purchase Agreement (the “SEPA”). The Company will have the right to issue and sell to the Investor, from time to time, as provided in the SEPA, and the Investor shall purchase from the Company, up to $25 million in aggregate gross purchase price (the “Commitment Amount”) of the newly issued shares of the Company’s common stock, par value $0.0001 (the “Common Stock”) (each such sale, an “Advance”) by delivering written notice to the Investor (each, an “Advance Notice” and the date on which the Company is deemed to have delivered an Advance Notice, the “Advance Notice Date”). The Common Stock purchased pursuant to an Advance will be purchased at a price equal to 97% of the lowest daily VWAP of the Common Stock during the three consecutive trading days commencing on the Advance Notice Date. “VWAP” means, for any trading day, the daily volume weighted average price of the Common Stock for such trading day on the Nasdaq Stock Market during regular trading hours as reported by Bloomberg L.P. The issuance of the Common Stock under the SEPA will be subject to certain limitations, including that (i) the Investor may not purchase any Common Stock that would result in it owning more than 4.99% of the Company’s Common Stock or (ii) the aggregate number of Common Stock issued pursuant to the SEPA cannot exceed 19.9% of the Company’s Common Stock as of as of the date of the SEPA (referred to as the “Exchange Cap”). The Exchange Cap shall not be applicable if: (i) the Company’s stockholders have approved the issuance of Common Stock in excess of the Exchange Cap in accordance with the applicable rules of the Principal Market or (ii) to the extent that (and only for so long as) the average price for the issuance of Common Stock equals or exceed the lower of (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the date of the SEPA; or (ii) the average Nasdaq Official Closing Price for the five Trading Days immediately preceding the date of the SEPA. Pursuant to the terms of the SEPA, the Company shall prepare and file with the SEC a registration statement (the “Registration Statement”) or multiple Registration Statements registering for resale of the Common Stock issuable to the Investor under the SEPA. The Company in its sole discretion may choose when to file such Registration Statements; provided, however, that the Company shall not have the ability to request any Advances until the effectiveness of a Registration Statement. As consideration for the Investor’s commitment to purchase Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the SEPA, the Company issued 487,995 shares of Common Stock to the Investor. The SEPA shall terminate automatically on the earliest of (i) the first day of the month next following the 36-month anniversary of the date of the SEPA and (ii) the date on which the Investor shall have made payment of Common Stock pursuant to the SEPA for Common Stock equal to the Commitment Amount. The SEPA may be terminated at any time by the mutual written consent of the parties to the SEPA, effective as of the date of such mutual written consent unless otherwise provided in such written consent, or by the Company upon five trading days’ prior written notice to the Investor subject to the terms of the SEPA. Despite these mitigating factors, the Company believes that there is still substantial doubt in connection with the Company’s ability to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying interim Condensed Consolidated Financial Statements of the Company have been prepared in conformity with U.S. GAAP and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on April 4, 2023. These Condensed Consolidated Financial Statements are unaudited and have been prepared by the Company following the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted by such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading. The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Interim results are not necessarily indicative of the results for a full year. The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and judgements that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Significant items subject to such estimates and assumptions include revenue recognition, allowance for doubtful accounts, and intangible asset impairments, share-based compensation expense, valuation allowance for deferred income taxes and amortization of intangible assets. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgements and estimates. Actual results may differ from these estimates. There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts of FaZe Holdings Inc. and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated. Use of Estimates The preparation of the Company’s Condensed 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. 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. 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 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. Employee Retention Tax Credit The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provided an employee retention credit which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the "Appropriations Act") extended and expanded the availability of the employee retention credit through December 31, 2021. The Appropriations Act amended the employee retention credit to be equal to 70% of qualified wages paid to employees during the 2021 fiscal year. The Company qualified for the employee retention credit beginning in June 2020 for qualified wages through September 2021 and filed a cash refund claim during the fiscal year ended December 31, 2023. As of September 30, 2023, the tax credit receivable of $1.7 million has been included in the Employee retention tax credit line on the Company's Condensed Consolidated Balance Sheet. 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 three and nine months ending September 30, 2023, and 2022, no 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 September 30, 2023, and December 31, 2022, 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 three months ended September 30, 2023 and 2022, the Company recognized $3.5 million and $6.1 million as revenue that was relating to contract liability, respectively. During the nine months ended September 30, 2023 recognized $10.6 million and $26.5 million as revenue that was relating to the contract liability, respectively. The following table disaggregates the Company’s revenue by major type for the three and nine months ended September 30, 2023, and 2022: (In thousands) (In thousands) Three months ended Nine months ended 2023 2022 2023 2022 Brand sponsorships $ 4,225 $ 7,072 $ 14,616 $ 28,054 Content 3,316 4,098 9,658 10,641 Consumer products 439 471 852 2,328 Esports 4,482 2,322 11,537 7,285 Other 48 49 86 313 Total revenue $ 12,510 $ 14,012 $ 36,749 $ 48,621 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, event 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 and its talent roster generate and produce 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, in most instances, upon execution of the contract. The Company’s only performance obligation is to license the content for use in generating advertising revenues, and the Company 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 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 September 30, 2023, 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 September 30, 2023 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 7, 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 6, Private Placement Warrants and Recurring Fair Value Measurements. The value of the warrant is de minimis and as such the company did not revalue the warrants as of September 30, 2023. 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 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 6, 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 11, 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 September 30, 2023 and December 31, 2022, the Company did not have material assets located outside of the United States. For the three months ended September 30, 2023 and 2022, the Company had international Esports revenue of $0.9 million and $1.2 million, respectively, earned outside of the United States. For the nine months ended September 30, 2023 and 2022, the Company had international Esports revenue of $4.4 million and $4.7 million, respectively, earned outside of the United States. Recently Adopted Accounting Pronouncements 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 date 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 adoption of this standard did not have a material impact on the Company’s financial statements and related disclosures. |
Property, Equipment and Leaseho
Property, Equipment and Leasehold Improvements | 9 Months Ended |
Sep. 30, 2023 | |
Property, Equipment and Leasehold Improvements [Abstract] | |
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS | 4. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS Property, equipment and leasehold improvements as of September 30, 2023 and December 31, 2022 consisted of the following: (In thousands) September December 31, 2023 2022 Furniture / Fixtures $ 897 $ 897 Computer equipment 3,683 3,640 Vehicles 106 106 Leasehold improvements 874 801 Subtotal 5,560 5,444 Less: Accumulated depreciation (3,010 ) (1,623 ) Property, equipment and leasehold improvements, net $ 2,550 $ 3,821 Depreciation expense totaled $0.3 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively. Depreciation expense totaled $1.4 million and $0.8 million for the nine months ended September 30, 2023 and 2022, respectively. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | 5. INTANGIBLE ASSETS Intangible assets as of September 30, 2023 and December 31, 2022 consisted of the following: (In thousands) Gross Net Carrying Accumulated Carrying As of September 30, 2023 Useful Life Value Amortization Value Website development 3 years $ 450 $ 276 $ 174 Talent acquisition 2 – 3 years 1,054 766 288 Intangible assets, net $ 1,504 $ 1,042 $ 462 (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 Amortization expense totaled $0.1 million and $0.2 million for the three months ended September 30, 2023 and 2022, respectively. Amortization expense totaled $0.3 million and $0.4 million for the nine months ended September 30, 2023 and 2022 respectively. The following table presents the estimated future amortization of intangible assets: Years ending December 31, (In thousands) 2023 (remainder) $ 85 2024 310 2025 60 2026 7 Total future amortization of amortizable intangible assets $ 462 The Company did not have any fully amortized intangible assets as of September 30, 2023 and as of September 30, 2022. |
Private Placement Warrants and
Private Placement Warrants and Recurring Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Private Placement Warrants and Recurring Fair Value Measurements [Abstract] | |
PRIVATE PLACEMENT WARRANTS AND RECURRING FAIR VALUE MEASUREMENTS | 6. 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 7, 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 value of the warrant is de minimis and as such the company did not revalue the warrants as of September 30, 2023. The key inputs into the Black-Scholes model in determining the fair value of the Private Placement Warrants were as follows at September 30, 2023 and December 31, 2022: September December 31, 2023 2022 Risk-free interest rate 4.1 % 4.0 % Expected term (years) 3.8 4.5 Expected volatility 98.2 % 53.3 % 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 Change in fair value of warrant liabilities (13 ) Warrant liabilities at March 31, 2023 11 Change in fair value of warrant liabilities — Warrant liabilities at June 30, 2023 $ 11 Change in fair value of warrant liabilities (9 ) Warrant liabilities at September 30, 2023 $ 2 The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. (In thousands) Quoted Prices in Significant Other Significant Other September 30, Active Markets Observable Inputs Observable Inputs 2023 (Level 1) (Level 2) (Level 3) Liabilities: Private Placement Warrants $ 2 $ — $ — $ 2 Total $ 2 $ — $ — $ 2 (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 |
Equity
Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
EQUITY | 7. 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. 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. 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. As of September 30, 2023, the Company had no 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 76,988,356 and 71,511,887 shares of common stock issued and outstanding as of September 30, 2023 and December 31, 2022 respectively. Earn-out Shares As a result of the Business Combination, a number of shares of the Company’s common stock (the “Seller Earn Out”) equal to 6% of the sum of i) the total number of shares 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 (A) the total number of net vested company option shares calculated as of immediately prior to the Closing and (B) the Equity Value Exchange Ratio were issued and are 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 Events”) occur on or before the five-year anniversary of the Business Combination, then the following vesting events will occur: ● 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” and, together with the First Target Earn-Out Shares and the Second Target Earn-Out Shares, the “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 (as defined below) 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, dated as of October 24, 2021, by and among B. Riley Principal 150 Merger Corp., B. Riley Principal 150 Sponsor Co. LLC, and FaZe Clan Inc., 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 the same vesting or forfeiture provisions during the Earn-out Period, and subject to the same Trigger Events mentioned above. 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 September 30, 2023, 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 September 30, 2023, all 5,750,000 Public Warrants remain outstanding. |
Stock Compensation Expense
Stock Compensation Expense | 9 Months Ended |
Sep. 30, 2023 | |
Stock Compensation Expense [Abstract] | |
STOCK COMPENSATION EXPENSE | 8. 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 stock, 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 the Company’s common stock reserved for issuance pursuant to awards that may be granted under the OIP. As of September 30, 2023, 2,570,125 shares of the Company’s common stock are subject to restricted stock awards. 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 rata 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 September 30, 2023, 27,711 shares have been granted under this plan. Amended and Restated 2019 Equity Incentive Plan The Company maintained an equity incentive plan established in October 2019, the Amended 2019 Equity Incentive Plan (the “Legacy FaZe Plan”). The Legacy FaZe Plan allowed 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 21,371,301 shares of the Company’s common stock calculated using the Equity Value Exchange Ratio. As of September 30, 2023, 16,712,807 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 149,171 shares of the Company’s common stock are subject to restricted stock awards originally granted under the Legacy FaZe Plan. Following the Closing of the Business Combination, no further awards may be awarded under the Legacy FaZe Plan, and any outstanding awards granted under the plan will remain subject to the terms of the Legacy FaZe Plan and the applicable award agreement. The following table contains information about the Company’s equity compensation plans as of September 30, 2023: Shares Shares Reserved for Awards Available for Issuance Outstanding Grant 2022 Omnibus Incentive Plan 12,358,689 3,876,658 8,482,031 2022 Employee Stock Purchase Plan 75,000,000 — 75,000,000 Amended 2019 Equity Incentive Plan 23,380,173 21,371,301 2,008,872 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) (In thousands) For the three months ended For the nine months ended 2023 2022 2023 2022 Stock options $ 7 $ 336 $ 19 $ 454 Restricted stock awards 1,341 2,001 9,966 4,542 Total stock-based compensation expense $ 1,348 $ 2,337 $ 9,985 $ 4,996 Options The following is an analysis of the stock option grant activity during the nine months ended September 30, 2023: Vested and Nonvested Stock Options Number Weighted Weighted Outstanding December 31, 2022 18,863,654 $ 0.38 4.13 Granted - - - Exercised (2,150,847 ) 0.38 - Expired or forfeited - - - Outstanding September 30, 2023 16,712,807 $ 0.38 3.38 Nonvested Stock Options Number Weighted- Nonvested on December 31, 2022 670,008 $ 0.38 Granted - - Vested (262,944 ) 0.38 Forfeited - - Nonvested on September 30, 2023 407,064 $ 0.38 The Company recognized stock-based compensation expense related to options granted and vesting expense of $7 thousand during the three months ended September 30, 2023, which is included in general and administrative expenses. The Company recognized stock-based compensation expense related to options issued and vesting of $336 thousand during the three months ended September 30, 2022, which is included in general and administrative expenses. The Company recognized stock-based compensation expense related to options granted and vesting expense of $19 thousand during the nine months ended September 30, 2023, which is included in general and administrative expenses. The Company recognized stock-based compensation expense related to options issued and vesting of $454 thousand during the nine months ended September 30, 2022, which is included in general and administrative expenses. During the three months ended September 30, 2023 and 2022, the Company granted a total of 0 and 0 options, respectively. During the nine months ended September 30, 2023 and 2022, the Company granted a total of 0 and 0 options, respectively. Warrants The following is an analysis of the warrant grant activity during the nine months ended September 30, 2023: Vested and Nonvested Stock Warrants Number Weighted Weighted Outstanding December 31, 2022 5,923,333 $ 11.50 4.55 Granted - - - Exercised - - - Expired or forfeited - - - Outstanding September 30, 2023 5,923,333 $ 11.50 3.80 During the three months ended September 30, 2023 and 2022, the Company granted a total of 0 and 0 warrants, respectively. During the nine months ended September 30, 2023 and 2022, the Company granted a total of 0 and 0 warrants, respectively. As of September 30, 2023 there are no Nonvested stock Warrants outstanding. Restricted Stock Awards A summary of Restricted Stock Awards (“RSAs”) issuances during the nine months ended September 30, 2023 is as follows: Nonvested RSAs Number Weighted Nonvested December 31, 2022 1,649,962 $ 6.27 Granted 1,925,856 0.42 Vested (1,083,291 ) 6.49 Forfeited - Nonvested September 30, 2023 2,492,527 $ 1.35 The Company recognized stock-based compensation expense related to RSAs granted and vesting expense of $0.3 million and $2.5 million during the three months ended September 30, 2023 and 2022, respectively, which is included in general and administrative expenses. The Company recognized stock-based compensation expense related to RSAs granted and vesting expense of $10.0 million and $3.7 million during the nine months ended September 30, 2023 and 2022, respectively, which is included in general and administrative expenses. During the three months ended September 30, 2023 and 2022, the Company granted a total of 1,925,856 and 0 RSAs, respectively. During the nine months ended September 30, 2023 and 2022, the Company granted a total of 1,925,856 and 1,119,698 RSAs, respectively. Restricted Stock Units A summary of Restricted Stock Units (“RSUs”) issuances during the nine months ended September 30, 2023 is as follows: Nonvested RSUs Number Weighted Nonvested December 31, 2022 702,417 $ 2.79 Granted 2,885,984 1.82 Vested (578,535 ) 1.59 Forfeited (324,250 ) 2.75 Nonvested September 30, 2023 2,685,616 $ 1.31 The Company recognized stock-based compensation expense related to RSUs granted and vesting expense of $1.1 million and $0.2 million during the three months ended September 30, 2023 and 2022, respectively, which is included in general and administrative expenses. The Company recognized stock-based compensation expense related to RSUs granted and vesting expense of $2.5 million and $0.5 million during the nine months ended September 30, 2023 and 2022, respectively, which is included in general and administrative expenses. During the three months ended September 30, 2023 and 2022, the Company granted a total of 750,000 and 0 RSUs, respectively. During the nine months ended September 30, 2023 and 2022, the Company granted a total of 2,885,984 and 0 RSUs, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 9. 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 three months ended September 30, 2023 and 2022 was $0.8 million and $0.6 million, respectively. The Company’s rent expense for the nine months ended September 30, 2023 and 2022 was $1.2 million and $1.7 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 September 30, 2023 and December 31, 2022 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) Three months Ended Three months Ended Components of total lease costs: Operating lease expense $ 791 $ 826 Total lease costs $ 791 $ 826 (In thousands) Nine months Ended September 30, Nine months Ended September 30, Components of total lease costs: Operating lease expense $ 1,188 $ 1,192 Total lease costs $ 1,188 $ 1,192 Lease Positions as of September 30, 2023 and December 31, 2022 Right of use, or ROU, lease assets and lease liabilities for our operating leases are recorded on the balance sheet as follows: September December 31, (In thousands) 2023 2022 Assets Right of use asset – long term $ 1,560 $ 2,693 Total right of use asset $ 1,560 $ 2,693 Liabilities Operating lease liabilities – short term $ 1,488 $ 1,488 Operating lease liabilities – long term 93 1,084 Total lease liability $ 1,581 $ 2,572 Lease Terms and Discount Rate Weighted average remaining lease term (in years) – operating leases 1.0 Weighted average discount rate – operating leases 4 % Future minimum lease payments, which include non-cancelable operating leases at September 30, 2023, are as follows: Year ending December 31, (In thousands) 2023 (remainder) $ 502 2024 1,071 2025 5 2026 3 Thereafter - Total minimum lease payment $ 1,581 |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2023 | |
Litigation [Abstract] | |
LITIGATION | 10. 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 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. On June 3, 2023, the Company was awarded $399 thousand of costs and attorneys’ fees for prevailing against the CA$ 3 million claim brought against the Company and for the Counterclaim Respondents’ conduct that unnecessarily increased the costs of the arbitration. As result, the Company has not recorded a reserve with respect to this litigation. |
Loss Per Share
Loss Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Loss Per Share [Abstract] | |
LOSS PER SHARE | 11. 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 three and nine months ended September 30, 2023 and 2022. The following table sets forth the computation of basic and diluted earnings per share attributable to common stockholders for the three and nine months ended September 30, 2023 and 2022: (In thousands, except shares and per-share information) Three months ended Nine months ended September 30, September 2023 2022 2023 2022 Basic and diluted loss per share: Net loss attributable to FaZe Holdings Inc., basic and diluted $ (7,201 ) $ (130,598 ) $ (35,597 ) $ (149,462 ) Weighted-average common shares outstanding, basic and diluted 68,234,009 54,590,538 66,315,727 32,144,653 Net loss per share, basic and diluted $ (0.10 ) $ (2.39 ) $ (0.54 ) $ (4.65 ) 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 pursuant to 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 three and nine months ended September 30, 2023 and 2022. The following securities were not included in the computation of diluted shares outstanding for the three and nine months ended September 30, 2023 and 2022 because the effect would be antidilutive: As of As of Convertible preferred stock — — Public Warrants 5,750,000 5,750,000 Private Placement Warrants 173,333 173,333 Seller Earn-out 5,312,098 5,312,098 Sponsor Earn-out Shares 2,156,250 2,156,250 Legacy FaZe preferred warrant — — Unvested restricted stock award 2,492,527 2,248,834 Unvested restricted stock units 2,685,616 — Stock options 18,859,673 18,055,159 Total potentially dilutive common stock equivalents 37,429,497 33,695,674 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 12. SUBSEQUENT EVENTS In preparing the consolidated financial statements, the Company has evaluated subsequent events through November 13, 2023, which is the date the Condensed Consolidated Financial Statements were available for issuance. GameSquare Merger Agreement On October 19, 2023, the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”), with GameSquare Holdings, Inc., a British Columbia corporation (“GameSquare”), and GameSquare Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of GameSquare ( “Merger Sub”), pursuant to which, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving such Merger as a wholly-owned subsidiary of GameSquare. On the terms and subject to the conditions of the Merger Agreement, each share of common stock, par value $0.0001 per share, of the Company (the “FaZe Common Stock”) issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than shares held in treasury by FaZe or held directly by GameSquare or Merger Sub) will be converted into the right to receive 0.13091 (the “Exchange Ratio”) of a fully paid and non-assessable share of common stock, no par value, of GameSquare (the “GameSquare Common Stock”) and, if applicable, cash in lieu of fractional shares of FaZe Common Stock, subject to any applicable withholding. At the Effective Time, (i) all of the Company’s equity awards outstanding immediately prior to the Effective Time, including options to purchase shares of FaZe Common Stock and each share of FaZe Common Stock subject to vesting, repurchase, or other lapse of restrictions will be assumed by GameSquare and converted into GameSquare equity awards on substantially the same terms, except that the assumed equity awards will cover a number of shares of GameSquare Common Stock, and, if applicable, have an exercise price, determined using the Exchange Ratio and (ii) all outstanding FaZe warrants exercisable for shares of FaZe Common Stock will be assumed by GameSquare and converted into GameSquare warrants on substantially the same terms, except that the assumed warrants will cover a number of shares of GameSquare Common Stock, and, if applicable, have an exercise price, determined using the Exchange Ratio. Under the Merger Agreement, GameSquare has agreed to appoint to its board of directors two persons determined by the Company, and a third member to be mutually agreed upon by the Company and GameSquare prior to the Effective Time, as of the Effective Time, with such directors to hold office until the earliest to occur of the appointment or election and qualification of his or her respective successor or his or her death, resignation, disqualification or proper removal. In addition, in connection with the Merger, GameSquare is to complete a financing involving the raising of additional capital or commitments to be made available to it following the Merger consisting of (i) a private placement in public equity to raise $10,000,000 through the sale of GameSquare Common Stock (the “Pipe Financing”), subject to reduction to the minimum extent necessary based on applicable restrictions pertaining to GameSquare’s issuance of shares of GameSquare Common Stock under NASDAQ Listing Rule 5635, or any other applicable rule imposed by applicable stock exchanges, which financing is supported by the backstop obligation by Goff & Jones Lending Co, LLC (the “Backstop Investor”) under the Backstop Agreement; (ii) GameSquare shall have entered into an asset-based loan facility agreement (the “Financing and Security Agreement”) with SLR Digital Finance LLC, as lender (the “Lender”), having a three (3) year term and providing for maximum aggregate borrowings thereunder at any one time of not less than $10,000,000, and such facility agreement shall be in full force and effect as of the Closing with no principal amounts drawn thereunder; and (iii) GameSquare shall have consummated after the date of the Merger Agreement and prior to closing of the Merger a disposition of non-core assets of GameSquare having a gross sales price of approximately $4,000,000 (subject to certain earnout provisions). |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim Condensed Consolidated Financial Statements of the Company have been prepared in conformity with U.S. GAAP and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on April 4, 2023. These Condensed Consolidated Financial Statements are unaudited and have been prepared by the Company following the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted by such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading. The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Interim results are not necessarily indicative of the results for a full year. The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and judgements that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Significant items subject to such estimates and assumptions include revenue recognition, allowance for doubtful accounts, and intangible asset impairments, share-based compensation expense, valuation allowance for deferred income taxes and amortization of intangible assets. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgements and estimates. Actual results may differ from these estimates. There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. |
Principles of consolidation | Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts of FaZe Holdings Inc. and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of the Company’s Condensed 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. |
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. 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 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. |
Employee Retention Tax Credit | Employee Retention Tax Credit The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provided an employee retention credit which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the "Appropriations Act") extended and expanded the availability of the employee retention credit through December 31, 2021. The Appropriations Act amended the employee retention credit to be equal to 70% of qualified wages paid to employees during the 2021 fiscal year. The Company qualified for the employee retention credit beginning in June 2020 for qualified wages through September 2021 and filed a cash refund claim during the fiscal year ended December 31, 2023. As of September 30, 2023, the tax credit receivable of $1.7 million has been included in the Employee retention tax credit line on the Company's Condensed Consolidated Balance Sheet. |
Employee Retention Tax Credit | 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 three and nine months ending September 30, 2023, and 2022, no 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 September 30, 2023, and December 31, 2022, 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 three months ended September 30, 2023 and 2022, the Company recognized $3.5 million and $6.1 million as revenue that was relating to contract liability, respectively. During the nine months ended September 30, 2023 recognized $10.6 million and $26.5 million as revenue that was relating to the contract liability, respectively. The following table disaggregates the Company’s revenue by major type for the three and nine months ended September 30, 2023, and 2022: (In thousands) (In thousands) Three months ended Nine months ended 2023 2022 2023 2022 Brand sponsorships $ 4,225 $ 7,072 $ 14,616 $ 28,054 Content 3,316 4,098 9,658 10,641 Consumer products 439 471 852 2,328 Esports 4,482 2,322 11,537 7,285 Other 48 49 86 313 Total revenue $ 12,510 $ 14,012 $ 36,749 $ 48,621 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, event 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 and its talent roster generate and produce 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, in most instances, upon execution of the contract. The Company’s only performance obligation is to license the content for use in generating advertising revenues, and the Company 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 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 September 30, 2023, 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 September 30, 2023 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 7, 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 6, Private Placement Warrants and Recurring Fair Value Measurements. The value of the warrant is de minimis and as such the company did not revalue the warrants as of September 30, 2023. |
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 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 6, 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 11, 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 September 30, 2023 and December 31, 2022, the Company did not have material assets located outside of the United States. For the three months ended September 30, 2023 and 2022, the Company had international Esports revenue of $0.9 million and $1.2 million, respectively, earned outside of the United States. For the nine months ended September 30, 2023 and 2022, the Company had international Esports revenue of $4.4 million and $4.7 million, respectively, earned outside of the United States. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements 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 date 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 adoption of this standard did not have a material impact on the Company’s financial statements and related disclosures. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Disaggregates the Company’s Revenue by Major Type | The following table disaggregates the Company’s revenue by major type for the three and nine months ended September 30, 2023, and 2022: (In thousands) (In thousands) Three months ended Nine months ended 2023 2022 2023 2022 Brand sponsorships $ 4,225 $ 7,072 $ 14,616 $ 28,054 Content 3,316 4,098 9,658 10,641 Consumer products 439 471 852 2,328 Esports 4,482 2,322 11,537 7,285 Other 48 49 86 313 Total revenue $ 12,510 $ 14,012 $ 36,749 $ 48,621 |
Property, Equipment and Lease_2
Property, Equipment and Leasehold Improvements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Equipment and Leasehold Improvements [Abstract] | |
Schedule of Property, Equipment and Leasehold Improvements | Property, equipment and leasehold improvements as of September 30, 2023 and December 31, 2022 consisted of the following: (In thousands) September December 31, 2023 2022 Furniture / Fixtures $ 897 $ 897 Computer equipment 3,683 3,640 Vehicles 106 106 Leasehold improvements 874 801 Subtotal 5,560 5,444 Less: Accumulated depreciation (3,010 ) (1,623 ) Property, equipment and leasehold improvements, net $ 2,550 $ 3,821 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Intangible Assets [Abstract] | |
Schedule of Intangible Assets | Intangible assets as of September 30, 2023 and December 31, 2022 consisted of the following: (In thousands) Gross Net Carrying Accumulated Carrying As of September 30, 2023 Useful Life Value Amortization Value Website development 3 years $ 450 $ 276 $ 174 Talent acquisition 2 – 3 years 1,054 766 288 Intangible assets, net $ 1,504 $ 1,042 $ 462 (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 |
Schedule of Estimated Future Amortization of Intangible Assets | The following table presents the estimated future amortization of intangible assets: Years ending December 31, (In thousands) 2023 (remainder) $ 85 2024 310 2025 60 2026 7 Total future amortization of amortizable intangible assets $ 462 |
Private Placement Warrants an_2
Private Placement Warrants and Recurring Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Private Placement Warrants and Recurring Fair Value Measurements [Abstract] | |
Schedule of Fair Value of the Private Placement Warrants | The key inputs into the Black-Scholes model in determining the fair value of the Private Placement Warrants were as follows at September 30, 2023 and December 31, 2022: September December 31, 2023 2022 Risk-free interest rate 4.1 % 4.0 % Expected term (years) 3.8 4.5 Expected volatility 98.2 % 53.3 % Exercise price $ 11.50 $ 11.50 Dividend yield 0 0 |
Schedule of Changes in the Fair Value of the Private Placement Warrants Liability | 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 Change in fair value of warrant liabilities (13 ) Warrant liabilities at March 31, 2023 11 Change in fair value of warrant liabilities — Warrant liabilities at June 30, 2023 $ 11 Change in fair value of warrant liabilities (9 ) Warrant liabilities at September 30, 2023 $ 2 |
Schedule of Assets and Liabilities that Were Measured at Fair Value on A Recurring Basis | The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. (In thousands) Quoted Prices in Significant Other Significant Other September 30, Active Markets Observable Inputs Observable Inputs 2023 (Level 1) (Level 2) (Level 3) Liabilities: Private Placement Warrants $ 2 $ — $ — $ 2 Total $ 2 $ — $ — $ 2 (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 |
Stock Compensation Expense (Tab
Stock Compensation Expense (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stock Compensation Expense [Abstract] | |
Schedule of Equity Compensation Plans | The following table contains information about the Company’s equity compensation plans as of September 30, 2023: Shares Shares Reserved for Awards Available for Issuance Outstanding Grant 2022 Omnibus Incentive Plan 12,358,689 3,876,658 8,482,031 2022 Employee Stock Purchase Plan 75,000,000 — 75,000,000 Amended 2019 Equity Incentive Plan 23,380,173 21,371,301 2,008,872 |
Schedule of Stock-Based 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) (In thousands) For the three months ended For the nine months ended 2023 2022 2023 2022 Stock options $ 7 $ 336 $ 19 $ 454 Restricted stock awards 1,341 2,001 9,966 4,542 Total stock-based compensation expense $ 1,348 $ 2,337 $ 9,985 $ 4,996 |
Schedule of Stock Option Grant Activity | The following is an analysis of the stock option grant activity during the nine months ended September 30, 2023: Vested and Nonvested Stock Options Number Weighted Weighted Outstanding December 31, 2022 18,863,654 $ 0.38 4.13 Granted - - - Exercised (2,150,847 ) 0.38 - Expired or forfeited - - - Outstanding September 30, 2023 16,712,807 $ 0.38 3.38 Vested and Nonvested Stock Warrants Number Weighted Weighted Outstanding December 31, 2022 5,923,333 $ 11.50 4.55 Granted - - - Exercised - - - Expired or forfeited - - - Outstanding September 30, 2023 5,923,333 $ 11.50 3.80 |
Schedule of Nonvested Stock Options | Nonvested Stock Options Number Weighted- Nonvested on December 31, 2022 670,008 $ 0.38 Granted - - Vested (262,944 ) 0.38 Forfeited - - Nonvested on September 30, 2023 407,064 $ 0.38 Nonvested RSAs Number Weighted Nonvested December 31, 2022 1,649,962 $ 6.27 Granted 1,925,856 0.42 Vested (1,083,291 ) 6.49 Forfeited - Nonvested September 30, 2023 2,492,527 $ 1.35 |
Schedule of Restricted Stock Units | A summary of Restricted Stock Units (“RSUs”) issuances during the nine months ended September 30, 2023 is as follows: Nonvested RSUs Number Weighted Nonvested December 31, 2022 702,417 $ 2.79 Granted 2,885,984 1.82 Vested (578,535 ) 1.59 Forfeited (324,250 ) 2.75 Nonvested September 30, 2023 2,685,616 $ 1.31 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies [Abstract] | |
Schedule of Lease Costs | (In thousands) Three months Ended Three months Ended Components of total lease costs: Operating lease expense $ 791 $ 826 Total lease costs $ 791 $ 826 (In thousands) Nine months Ended September 30, Nine months Ended September 30, Components of total lease costs: Operating lease expense $ 1,188 $ 1,192 Total lease costs $ 1,188 $ 1,192 |
Schedule of Lease Assets and Lease Liabilities | Right of use, or ROU, lease assets and lease liabilities for our operating leases are recorded on the balance sheet as follows: September December 31, (In thousands) 2023 2022 Assets Right of use asset – long term $ 1,560 $ 2,693 Total right of use asset $ 1,560 $ 2,693 Liabilities Operating lease liabilities – short term $ 1,488 $ 1,488 Operating lease liabilities – long term 93 1,084 Total lease liability $ 1,581 $ 2,572 |
Schedule of Lease Terms and Discount Rate | Weighted average remaining lease term (in years) – operating leases 1.0 Weighted average discount rate – operating leases 4 % |
Schedule of Future Minimum Lease Payment | Future minimum lease payments, which include non-cancelable operating leases at September 30, 2023, are as follows: Year ending December 31, (In thousands) 2023 (remainder) $ 502 2024 1,071 2025 5 2026 3 Thereafter - Total minimum lease payment $ 1,581 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Loss Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share attributable to common stockholders for the three and nine months ended September 30, 2023 and 2022: (In thousands, except shares and per-share information) Three months ended Nine months ended September 30, September 2023 2022 2023 2022 Basic and diluted loss per share: Net loss attributable to FaZe Holdings Inc., basic and diluted $ (7,201 ) $ (130,598 ) $ (35,597 ) $ (149,462 ) Weighted-average common shares outstanding, basic and diluted 68,234,009 54,590,538 66,315,727 32,144,653 Net loss per share, basic and diluted $ (0.10 ) $ (2.39 ) $ (0.54 ) $ (4.65 ) |
Schedule of Antidilutive Shares | The following securities were not included in the computation of diluted shares outstanding for the three and nine months ended September 30, 2023 and 2022 because the effect would be antidilutive: As of As of Convertible preferred stock — — Public Warrants 5,750,000 5,750,000 Private Placement Warrants 173,333 173,333 Seller Earn-out 5,312,098 5,312,098 Sponsor Earn-out Shares 2,156,250 2,156,250 Legacy FaZe preferred warrant — — Unvested restricted stock award 2,492,527 2,248,834 Unvested restricted stock units 2,685,616 — Stock options 18,859,673 18,055,159 Total potentially dilutive common stock equivalents 37,429,497 33,695,674 |
Description of the Business (De
Description of the Business (Details) | Sep. 30, 2023 $ / shares | Mar. 23, 2023 $ / shares | Dec. 31, 2022 $ / shares | Dec. 31, 2021 $ / shares |
Description of the Business [Line Items] | ||||
Equity value exchange ratio | 2.2267 | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||
Minimum bid price | $ 1 | |||
Common Stock [Member] | ||||
Description of the Business [Line Items] | ||||
Common stock, par value | 0.0001 | $ 0.0001 | $ 0.00001 | |
Exceed per share | $ 1 |
Liquidity (Details)
Liquidity (Details) $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Liquidity [Line Items] | |
Aggregate gross purchase price | $ | $ 25 |
Purchase percentage | 97% |
Common stock,description | (i) the Investor may not purchase any Common Stock that would result in it owning more than 4.99% of the Company’s Common Stock or (ii) the aggregate number of Common Stock issued pursuant to the SEPA cannot exceed 19.9% of the Company’s Common Stock as of as of the date of the SEPA (referred to as the “Exchange Cap”). |
Common Stock [Member] | |
Liquidity [Line Items] | |
Common stock, par value | $ / shares | $ 0.0001 |
Investor [Member] | |
Liquidity [Line Items] | |
Common stock issued | shares | 487,995 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2021 | |
Summary of Significant Accounting Policies [Line Items] | |||||
Amortization expense | |||||
Employee retention credit | 70% | ||||
Tax credit receivable | 1.7 | 1.7 | |||
Impairment contract assets | |||||
Revenue contract liability balance | 3.5 | 6.1 | 10.6 | ||
Revenue earned outside of the united states | $ 0.9 | $ 1.2 | 4.4 | $ 4.7 | |
Revenue Recognition [Member] | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Revenue contract liability balance | $ 26.5 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Disaggregates the Company’s Revenue by Major Type - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 12,510 | $ 14,012 | $ 36,749 | $ 48,621 |
Brand Sponsorships [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 4,225 | 7,072 | 14,616 | 28,054 |
Content [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 3,316 | 4,098 | 9,658 | 10,641 |
Consumer Products [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 439 | 471 | 852 | 2,328 |
Esports [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 4,482 | 2,322 | 11,537 | 7,285 |
Other Revenue [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 48 | $ 49 | $ 86 | $ 313 |
Property, Equipment and Lease_3
Property, Equipment and Leasehold Improvements (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Property, Equipment and Leasehold Improvements [Abstract] | ||||
Depreciation expense | $ 0.3 | $ 0.3 | $ 1.4 | $ 0.8 |
Property, Equipment and Lease_4
Property, Equipment and Leasehold Improvements (Details) - Schedule of Property, Equipment and Leasehold Improvements - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 5,560 | $ 5,444 |
Less: Accumulated depreciation | (3,010) | (1,623) |
Property, equipment and leasehold improvements, net | 2,550 | 3,821 |
Furniture / Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 897 | 897 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 3,683 | 3,640 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 106 | 106 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 874 | $ 801 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Intangible Assets [Abstract] | ||||
Amortization expense | $ 0.1 | $ 0.2 | $ 0.3 | $ 0.4 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of Intangible Assets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Website development [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 3 years | 3 years |
Intangible assets, Gross Carrying Value | $ 450 | $ 377 |
Intangible assets, Accumulated Amortization | 276 | 175 |
Intangible assets, Net Carrying Value | 174 | 202 |
Talent acquisition [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, Gross Carrying Value | 1,054 | 1,201 |
Intangible assets, Accumulated Amortization | 766 | 555 |
Intangible assets, Net Carrying Value | $ 288 | $ 646 |
Talent acquisition [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 2 years | 2 years |
Talent acquisition [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, Useful Life | 3 years | 3 years |
Intangible assets, net [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, Gross Carrying Value | $ 1,504 | $ 1,578 |
Intangible assets, Accumulated Amortization | 1,042 | 730 |
Intangible assets, Net Carrying Value | $ 462 | $ 848 |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of Estimated Future Amortization of Intangible Assets $ in Thousands | Sep. 30, 2023 USD ($) |
Schedule of Estimated Future Amortization of Intangible Assets [Abstract] | |
2023 (remainder) | $ 85 |
2024 | 310 |
2025 | 60 |
2026 | 7 |
Total future amortization of amortizable intangible assets | $ 462 |
Private Placement Warrants an_3
Private Placement Warrants and Recurring Fair Value Measurements (Details) | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Private Placement Warrants and Recurring Fair Value Measurements [Abstract] | |
Private placement warrants | 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 | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Schedule of Fair Value of the Private Placement Warrants [Abstract] | ||
Risk-free interest rate | 4.10% | 4% |
Expected term (years) | 3 years 9 months 18 days | 4 years 6 months |
Expected volatility | 98.20% | 53.30% |
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 - Private Placement Warrants [Member] - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2023 | |
Warrant liabilities | $ 11 | $ 11 | $ 24 | $ 114 | $ 24 |
Change in fair value of warrant liabilities | (9) | (13) | (90) | ||
Warrant liabilities | $ 2 | $ 11 | $ 11 | $ 24 | $ 2 |
Private Placement Warrants an_6
Private Placement Warrants and Recurring Fair Value Measurements (Details) - Schedule of Assets and Liabilities that Were Measured at Fair Value on A Recurring Basis - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Liabilities: | ||
Total | $ 2 | $ 24 |
Private Placement Warrants [Member] | ||
Liabilities: | ||
Private Placement Warrants | 2 | 24 |
Quoted Prices In Active Markets (Level 1) [Member] | ||
Liabilities: | ||
Total | ||
Quoted Prices In Active Markets (Level 1) [Member] | Private Placement Warrants [Member] | ||
Liabilities: | ||
Private Placement Warrants | ||
Significant Other Observable Inputs (Level 2) [Member] | ||
Liabilities: | ||
Total | ||
Significant Other Observable Inputs (Level 2) [Member] | Private Placement Warrants [Member] | ||
Liabilities: | ||
Private Placement Warrants | ||
Significant Other Observable Inputs (Level 3) [Member] | ||
Liabilities: | ||
Total | 2 | 24 |
Significant Other Observable Inputs (Level 3) [Member] | Private Placement Warrants [Member] | ||
Liabilities: | ||
Private Placement Warrants | $ 2 | $ 24 |
Equity (Details)
Equity (Details) - $ / shares | 1 Months Ended | 9 Months Ended | ||||||||
Oct. 24, 2021 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Mar. 23, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |
Equity [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, shares issued | ||||||||||
Preferred stock, shares outstanding | ||||||||||
Common stock share authorized | 500,000,000 | 500,000,000 | ||||||||
Common stock per share (in Dollars per share) | $ 0.0001 | $ 0.0001 | ||||||||
Common stock share issued | 75,688,236 | 71,511,887 | ||||||||
Common stock share outstanding | 75,688,236 | 71,511,887 | ||||||||
Earn out shares, percentage | 6% | |||||||||
Sponsor shares | 2,156,250 | |||||||||
Outstanding public warrants (in Dollars per share) | $ 0.01 | |||||||||
Common stock equals per share (in Dollars per share) | $ 18 | |||||||||
Public Warrants [Member] | ||||||||||
Equity [Line Items] | ||||||||||
Public warrants issued | 5,750,000 | |||||||||
Public warrants outstanding | 5,750,000 | |||||||||
Exercise price per share (in Dollars per share) | $ 11.5 | |||||||||
Public warrants remain outstanding | 5,750,000 | |||||||||
Preferred Stock [Member] | ||||||||||
Equity [Line Items] | ||||||||||
Preferred stock share authorized | 3,545,529 | |||||||||
Preferred stock per share (in Dollars per share) | $ 0.00001 | |||||||||
Preferred stock, shares issued | 3,237,800 | |||||||||
Preferred stock, shares outstanding | 3,237,800 | 3,237,800 | ||||||||
Common Stock [Member] | ||||||||||
Equity [Line Items] | ||||||||||
Common stock share authorized | 500,000,000 | 31,900,878 | ||||||||
Common stock per share (in Dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.00001 | |||||||
Common stock share issued | 76,988,356 | 71,511,887 | ||||||||
Common stock share outstanding | 76,988,356 | 75,688,236 | 74,046,058 | 71,511,887 | 70,258,004 | 18,992,623 | 18,920,390 | 18,841,538 | ||
Common Stock [Member] | First Target Earn [Member] | ||||||||||
Equity [Line Items] | ||||||||||
Common stock per share (in Dollars per share) | $ 12 | |||||||||
Common Stock [Member] | Second Target Earn [Member] | ||||||||||
Equity [Line Items] | ||||||||||
Common stock per share (in Dollars per share) | 14 | |||||||||
Common Stock [Member] | Third Target Earn [Member] | ||||||||||
Equity [Line Items] | ||||||||||
Common stock per share (in Dollars per share) | $ 16 | |||||||||
Sponsor Earn-Out Shares [Member] | ||||||||||
Equity [Line Items] | ||||||||||
Sponsor shares | 2,156,250 |
Stock Compensation Expense (Det
Stock Compensation Expense (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 24, 2021 | Jul. 31, 2021 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock Compensation Expense [Line Items] | ||||||
Common stock, reserved for issuance | 1,791,416 | 1,791,416 | ||||
Granted shares | 27,711 | |||||
Options issued and vesting (in Dollars) | $ 7 | $ 336 | $ 19 | $ 454 | ||
Total granted | 0 | 0 | 0 | 0 | ||
2022 Omnibus Incentive Plan [Member] | ||||||
Stock Compensation Expense [Line Items] | ||||||
Common stock, reserved for issuance | 12,358,689 | 12,358,689 | ||||
Shares of common stock are subject to restricted stock award | 2,570,125 | |||||
Shares of restricted stock awards | 8,482,031 | 8,482,031 | ||||
2022 Employee Stock Purchase Plan [Member] | ||||||
Stock Compensation Expense [Line Items] | ||||||
Common stock, reserved for issuance | 75,000,000 | 75,000,000 | 75,000,000 | |||
Percentage of diluted shares outstanding | 2% | |||||
Percentage of fair market value | 85% | |||||
Shares of restricted stock awards | 75,000,000 | 75,000,000 | ||||
Amended and Restated 2019 Equity Incentive Plan [Member] | ||||||
Stock Compensation Expense [Line Items] | ||||||
Common stock, reserved for issuance | 23,380,173 | 23,380,173 | ||||
Aggregate number of shares authorized | 10,500,000 | |||||
Number of share equity value exchange ratio | 21,371 | |||||
Vesting and exercise of stock options | 16,712,807 | 16,712,807 | ||||
Shares of restricted stock awards | 2,008,872 | 2,008,872 | ||||
Minimum [Member] | 2022 Employee Stock Purchase Plan [Member] | ||||||
Stock Compensation Expense [Line Items] | ||||||
Percentage of employee authorize payroll deduction | 1% | |||||
Maximum [Member] | 2022 Employee Stock Purchase Plan [Member] | ||||||
Stock Compensation Expense [Line Items] | ||||||
Percentage of employee authorize payroll deduction | 15% | |||||
Common Stock [Member] | Amended and Restated 2019 Equity Incentive Plan [Member] | ||||||
Stock Compensation Expense [Line Items] | ||||||
Shares of restricted stock awards | 149,171 | 149,171 | ||||
Warrant [Member] | ||||||
Stock Compensation Expense [Line Items] | ||||||
Total granted | 0 | 0 | 0 | 0 | ||
RSAs [Member] | ||||||
Stock Compensation Expense [Line Items] | ||||||
Total granted | 1,925,856 | 0 | 1,925,856 | 1,119,698 | ||
Recognized stock-based compensation expense (in Dollars) | $ 300 | $ 2,500 | $ 10,000 | $ 3,700 | ||
RSUs [Member] | ||||||
Stock Compensation Expense [Line Items] | ||||||
Total granted | 750,000 | 0 | 2,885,984 | 0 | ||
Recognized stock-based compensation expense (in Dollars) | $ 1,100 | $ 200 | $ 2,500 | $ 500 |
Stock Compensation Expense (D_2
Stock Compensation Expense (Details) - Schedule of Equity Compensation Plans - shares | Sep. 30, 2023 | Oct. 24, 2021 |
2022 Omnibus Incentive Plan [Member] | ||
Class of Stock [Line Items] | ||
Shares Reserved for Issuance | 12,358,689 | |
Awards Outstanding | 3,876,658 | |
Shares Available for Grant | 8,482,031 | |
2022 Employee Stock Purchase Plan [Member] | ||
Class of Stock [Line Items] | ||
Shares Reserved for Issuance | 75,000,000 | 75,000,000 |
Awards Outstanding | ||
Shares Available for Grant | 75,000,000 | |
Amended 2019 Equity Incentive Plan [Member] | ||
Class of Stock [Line Items] | ||
Shares Reserved for Issuance | 23,380,173 | |
Awards Outstanding | 21,371,301 | |
Shares Available for Grant | 2,008,872 |
Stock Compensation Expense (D_3
Stock Compensation Expense (Details) - Schedule of Stock-Based Compensation Expense - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Class of Stock [Line Items] | ||||
Total stock-based compensation expense | $ 1,348 | $ 2,337 | $ 9,985 | $ 4,996 |
Stock options [Member] | ||||
Class of Stock [Line Items] | ||||
Total stock-based compensation expense | 7 | 336 | 19 | 454 |
Restricted stock awards [Member] | ||||
Class of Stock [Line Items] | ||||
Total stock-based compensation expense | $ 1,341 | $ 2,001 | $ 9,966 | $ 4,542 |
Stock Compensation Expense (D_4
Stock Compensation Expense (Details) - Schedule of Stock Option Grant Activity - $ / shares | 9 Months Ended | |
Dec. 31, 2022 | Sep. 30, 2023 | |
Vested and Nonvested Stock Options [Member] | ||
Schedule of stock option grant activity [Abstract] | ||
Number, Outstanding Ending balance | 18,863,654 | 16,712,807 |
Weighted Average Exercise Price, Outstanding Ending balance | $ 0.38 | $ 0.38 |
Weighted Average Remaining Life, Ending balance | 4 years 1 month 17 days | 3 years 4 months 17 days |
Number, Granted | ||
Weighted Average Exercise Price, Granted | ||
Number, Exercised | (2,150,847) | |
Weighted Average Exercise Price, Exercised | $ 0.38 | |
Number, Expired or forfeited | ||
Weighted Average Exercise Price, Expired or forfeited | ||
Vested and Nonvested Stock Warrants [Member] | ||
Schedule of stock option grant activity [Abstract] | ||
Number, Outstanding Ending balance | 5,923,333 | 5,923,333 |
Weighted Average Exercise Price, Outstanding Ending balance | $ 11.5 | $ 11.5 |
Weighted Average Remaining Life, Ending balance | 4 years 6 months 18 days | 3 years 9 months 18 days |
Number, Granted | ||
Weighted Average Exercise Price, Granted | ||
Number, Exercised | ||
Weighted Average Exercise Price, Exercised | ||
Number, Expired or forfeited | ||
Weighted Average Exercise Price, Expired or forfeited |
Stock Compensation Expense (D_5
Stock Compensation Expense (Details) - Schedule of Nonvested Stock Options - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of nonvested stock options [Abstract] | ||||
Number, Granted | 0 | 0 | 0 | 0 |
Nonvested Stock Options [Member] | ||||
Schedule of nonvested stock options [Abstract] | ||||
Number, Outstanding Begining balance | 670,008 | |||
Weighted Average Exercise Price, Outstanding Begining balance | $ 0.38 | |||
Number, Granted | ||||
Weighted- Average Exercise Price, Granted | ||||
Number, Vested | (262,944) | |||
Weighted- Average Exercise Price, Vested | $ 0.38 | |||
Number, Forfeited | ||||
Weighted- Average Exercise Price, Forfeited | ||||
Number, Outstanding Ending balance | 407,064 | 407,064 | ||
Weighted Average Exercise Price, Outstanding Ending balance | $ 0.38 | $ 0.38 | ||
Nonvested RSAs [Member] | ||||
Schedule of nonvested stock options [Abstract] | ||||
Number, Outstanding Begining balance | 1,649,962 | |||
Weighted Average Exercise Price, Outstanding Begining balance | $ 6.27 | |||
Number, Granted | 1,925,856 | |||
Weighted- Average Exercise Price, Granted | $ 0.42 | |||
Number, Vested | (1,083,291) | |||
Weighted- Average Exercise Price, Vested | $ 6.49 | |||
Number, Forfeited | ||||
Weighted- Average Exercise Price, Forfeited | ||||
Number, Outstanding Ending balance | 2,492,527 | 2,492,527 | ||
Weighted Average Exercise Price, Outstanding Ending balance | $ 1.35 | $ 1.35 |
Stock Compensation Expense (D_6
Stock Compensation Expense (Details) - Schedule of Restricted Stock Units - Nonvested RSUs [Member] | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Schedule of restricted stock units [Abstract] | |
Number, Nonvested, Beginning balance | shares | 702,417 |
Weighted Average Price, Nonvested, Beginning balance | $ / shares | $ 2.79 |
Number, Granted | shares | 2,885,984 |
Weighted Average Price, Granted | $ / shares | $ 1.82 |
Number, Vested | shares | (578,535) |
Weighted Average Price, Vested | $ / shares | $ 1.59 |
Number,Forfeited | shares | (324,250) |
Weighted Average Price,Forfeited | $ / shares | $ 2.75 |
Number, Nonvested, Ending balance | shares | 2,685,616 |
Weighted Average Price, Nonvested, Ending balance | $ / shares | $ 1.31 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Commitments and Contingencies [Abstract] | ||||
Rent expense | $ 0.8 | $ 0.6 | $ 1.2 | $ 1.7 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of Lease Costs - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Components of total lease costs: | ||||
Operating lease expense | $ 791 | $ 826 | $ 1,188 | $ 1,192 |
Total lease costs | $ 791 | $ 826 | $ 1,188 | $ 1,192 |
Commitments and Contingencies_4
Commitments and Contingencies (Details) - Schedule of Lease Assets and Lease Liabilities - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Right of use asset – long term | $ 1,560 | $ 2,693 |
Total right of use asset | 1,560 | 2,693 |
Liabilities | ||
Operating lease liabilities – short term | 1,488 | 1,488 |
Operating lease liabilities – long term | 93 | 1,084 |
Total lease liability | $ 1,581 | $ 2,572 |
Commitments and Contingencies_5
Commitments and Contingencies (Details) - Schedule of Lease Terms and Discount Rate | Sep. 30, 2023 |
Schedule of lease terms and discount rate [Abstract] | |
Weighted average remaining lease term (in years) – operating leases | 1 year |
Weighted average discount rate – operating leases | 4% |
Commitments and Contingencies_6
Commitments and Contingencies (Details) - Schedule of Future Minimum Lease Payment $ in Thousands | Sep. 30, 2023 USD ($) |
Schedule of future minimum lease payment [Abstract] | |
2023 (remainder) | $ 502 |
2024 | 1,071 |
2025 | 5 |
2026 | 3 |
Thereafter | |
Total minimum lease payment | $ 1,581 |
Litigation (Details)
Litigation (Details) - USD ($) $ in Thousands | Jun. 03, 2023 | May 14, 2021 | Nov. 30, 2020 |
Litigation [Line Items | |||
Alleged funding amount | $ 3,000 | ||
Disposition of the claim | $ 3,000 | ||
Awarded cost | $ 399 | ||
Amount claim | $ 3,000 | ||
Bridging Finance Group [Member] | |||
Litigation [Line Items | |||
Alleged funding amount | $ 30,000 |
Loss Per Share (Details)
Loss Per Share (Details) | 12 Months Ended |
Dec. 31, 2021 shares | |
Loss Per Share [Abstract] | |
Vested warrants | 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 | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of Basic and Diluted Earnings Per Share [Abstract] | ||||
Net loss attributable to FaZe Holdings Inc., basic | $ (7,201) | $ (130,598) | $ (35,597) | $ (149,462) |
Weighted-average common shares outstanding, basic | 68,234,009 | 54,590,538 | 66,315,727 | 32,144,653 |
Net loss per share, basic | $ (0.1) | $ (2.39) | $ (0.54) | $ (4.65) |
Loss Per Share (Details) - Sc_2
Loss Per Share (Details) - Schedule of Basic and Diluted Earnings Per Share (Parentheticals) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of Basic and Diluted Earnings Per Share [Abstract] | ||||
Net loss attributable to FaZe Holdings Inc.,diluted | $ (7,201) | $ (130,598) | $ (35,597) | $ (149,462) |
Weighted-average common shares outstanding, diluted | 68,234,009 | 54,590,538 | 66,315,727 | 32,144,653 |
Net loss per share, diluted | $ (0.10) | $ (2.39) | $ (0.54) | $ (4.65) |
Loss Per Share (Details) - Sc_3
Loss Per Share (Details) - Schedule of Antidilutive Shares - shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive common stock equivalents | 37,429,497 | 33,695,674 |
Public Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive common stock equivalents | 5,750,000 | 5,750,000 |
Private Placement Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive common stock equivalents | 173,333 | 173,333 |
Seller Earn-out [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive common stock equivalents | 5,312,098 | 5,312,098 |
Sponsor Earn-out Shares [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive common stock equivalents | 2,156,250 | 2,156,250 |
Legacy FaZe preferred warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive common stock equivalents | ||
Unvested restricted stock award [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive common stock equivalents | 2,492,527 | 2,248,834 |
Unvested restricted stock units [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive common stock equivalents | 2,685,616 | |
Convertible preferred stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive common stock equivalents | ||
Stock options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total potentially dilutive common stock equivalents | 18,859,673 | 18,055,159 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] | Oct. 19, 2023 USD ($) $ / shares |
Subsequent Events (Details) [Line Items] | |
Common stock, par value (in Dollars per share) | $ / shares | $ 0.0001 |
Convertible ratio | 0.13091 |
Sale of common stock | $ 10,000,000 |
Borrowing term | 3 years |
Maximum borrowing amount | $ 10,000,000 |
Gross sales price | $ 4,000,000 |