Fox Factory Holding Corp 8-K/A, filed May 26, 2020

Fox Factory Holding Corp (FOXF)

8-K/A 2020-05-26 For: 2020-03-11

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Added on April 07, 2026

About this 8-K/A

Fox Factory Holding Corp filed this 8-K/A on May 26, 2020, reporting on events of March 11, 2020.

Items reported

Item 9.01: Financial statements and exhibits

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☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Exhibit Number			Description
23.1			Consent of Borland Benefield, P.C. dated May 26, 2020.
23.2			Consent of Mayer Hoffman McCann CPAs, the New York Practice of Mayer Hoffman McCann P.C. dated May 26, 2020.
99.1			Balance Sheet as of April 12, 2018 and the related Statements of Income, Changes in Equity and Cash Flows of MCM Custom Vehicles, LLC for the period from January 1, 2018 to April 12, 2018.
99.2			Consolidated Balance Sheets of SCA Performance, Inc. as of December 31, 2019 and 2018 and the related Consolidated Statements of Operations, Stockholder's Equity and Cash Flows for the year ended December 31, 2019 and the period from April 13, 2018 to December 31, 2018.
99.3			Unaudited Pro Forma Combined Condensed Statement of Income and explanatory notes for the year ended January 3, 2020.


			Page
Independent Auditor’s Report			3
Balance Sheet as of April 12, 2018			4
Statement of Income and Changes in Equity for the period January 1, 2018 through April 12, 2018			5
Statement of Cash Flows for the period January 1, 2018 through April 12, 2018			6
Notes to Financial Statements			7


	April 12, 2018
Assets
Current assets
Cash	$	2,671,459
Accounts Receivable	2,466,691
Inventories	1,247,649
Inventories - truck chassis floor plan	9,339,894
Prepaid expenses	28,134
Total current assets	15,753,827
Property and equipment, net	690,864
Note receivable	769,847
Total assets	$	17,214,538

Liabilities and equity
Current liabilities
Accounts payable	$	1,010,913
Accrued expenses	1,000,027
Warranty liability	993,654
Unearned revenue	248,205
Floor plan lines of credit	9,339,894
Current maturities of long-term debt	15,813
Total current liabilities	12,608,506
Non-current liabilities
Long-term debt	69,825
Total liabilities	12,678,331
Equity
Members’ equity	4,536,207
Total liabilities and equity	$	17,214,538


	For the period
	January 1, 2018 through April 12, 2018
Sales	$	9,688,891
Cost of sales	5,512,595
Gross profit	4,176,296
Selling, general and administrative expenses	1,890,222
Operating Income	2,286,074
Other income	148,041
Net income	2,434,115

Member’s equity, beginning of period	3,381,030
Distributions	(1,278,938)
Member’s equity, end of period	$	4,536,207


	For the period
	January 1, 2018 through April 12, 2018
Cash flows from operating activities
Net income	$	2,434,115
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	64,223
Gain on disposal of property and equipment	(1,978)
Changes in operating assets and liabilities:
Accounts receivable	(1,265,435)
Inventory	(5,345,828)
Prepaid expenses	16,528
Note receivable	36,614
Accounts payable	223,997
Accrued expenses	(326,835)
Warranty Liability	161,839
Unearned revenue	(83,437)
Net cash used in operating activities	(4,086,197)
Cash flows from investing activities
Purchases of property and equipment	(199,179)
Proceeds from sale of property and equipment	49,427
Net cash used in investing activities	(149,752)
Cash flows from financing activities
Net borrowing on lines of credit	5,108,457
Repayments on long-term debt	(297,758)
Distributions to members	(1,278,938)
Net cash provided by financing activities	3,531,761
Net decrease in cash and cash equivalents	(704,188)
Cash and cash equivalents, January 1, 2018	3,375,649
Cash and cash equivalents, April 12, 2018	$	2,671,461

Supplemental cash flow information:
Cash paid during the period for:
Interest	$	101,592


Beginning balance	$	831,815
Warranty expense	314,500
Less: Writeoffs	(152,661)
Ending balance	$	993,654


Automobiles	$	267,655
Tooling	562,759
Machinery and equipment	1,350,628
Furniture and fixtures	25,830
Leasehold improvements	43,305
	2,250,177
Less: Accumulated depreciation	(1,629,234)
Construction in progress	69,921
	$	690,864


Note payable due in monthly installments of $1,634, including principal and interest at 4.84%, through April 2023, secured by a vehicle	$	85,638
Total debt	85,638
Less: Current maturities	(15,813)
Long-term debt	$	69,825


2019	$	15,813
2020	16,595
2021	17,415
2022	18,276
2023	17,539
Thereafter	—
	$	85,638


Balance Sheet
Notes receivable	$	769,847

Statement of Income and Changes in Equity
Sales	$	175,936
Cost of sales	15,811
Gross Profit	160,125
Selling, general, and administrative expenses	1,666
Operating income	158,459
Other income (expense)	13,416
Net income	$	171,875


Balance Sheet
Accounts receivable	$	8,690

Statement of Income and Changes in Equity
Sales	$	154,829
Cost of sales	43,302
Gross Profit	111,527
Selling, general, and administrative expenses	1,202
Operating income	110,325
Other income (expense)	—
Net income	$	110,325


Balance Sheet
Accounts receivable	$	8,895

Statement of Income and Changes in Equity
Sales	$	49,251
Cost of sales	19,770
Gross Profit	29,481
Selling, general, and administrative expenses	—
Operating income	29,481
Other income (expense)	—
Net income	$	29,481


Statement of Income and Changes in Equity
Sales	$	4,905
Cost of sales	134,118
Gross Profit	(129,213)
Selling, general, and administrative expenses	23,375
Operating income	(152,588)
Other income (expense)	—
Net income	$	(152,588)


			Page
Independent Auditor’s Report			3
Consolidated Balance Sheets as of December 31, 2019 and 2018			4
Consolidated Statements of Operations for the year ended December 31, 2019 and for the period from April 13, 2018 (Commencement of Operations) to December 31, 2018			5
Consolidated Statements of Stockholder’s Equity for the year ended December 31, 2019 and for the period from April 13, 2018 (Commencement of Operations) to December 31, 2018
Consolidated Statements of Cash Flows for the year ended December 31, 2019 and for the period from April 13, 2018 (Commencement of Operations) to December 31, 2018			7
Notes to Consolidated Financial Statements			8


Advertising Cost			$	61,096


Demo inventory	$	61,549
Raw materials	1,186,100
	$	1,247,649



	2019		2018
Assets (Note 10)
Current assets
Cash (Note 5)	$	5,180,107	$	2,182,055
Accounts Receivable	10,222,350		3,582,006
Inventories (Notes 6 and 11)	4,539,959		1,744,643
Inventories - truck chassis floor plan (Notes 6 and 11)	45,257,619		8,359,505
Prepaid expenses and other current assets	1,153,517		535,669
Total current assets	66,353,552		16,403,878
Property, plant and equipment, net (Notes 7 and 10)	10,015,956		4,000,642
Goodwill (Note 9)	23,413,553		12,443,638
Intangible assets (Note 8)	63,810,548		41,121,355
Deferred income taxes (Note 14)	1,964,456		1,231,797
Total assets	$	165,558,065	$	75,201,310

Liabilities and stockholder’s equity
Current liabilities
Accounts payable	$	2,313,519	$	1,615,432
Warranty liabilities (Note 3)	3,120,674		1,436,362
Income tax payable	1,812,103		21,595
Accrued expenses and other current liabilities (Note 3)	3,047,048		1,319,359
Current portion of notes payable (Note 10)	5,179,000		2,021,827
Floor plan obligations (Note 11)	45,257,619		8,359,505
Total current liabilities	60,729,963		14,774,080

Notes payable, net of current portion (Note 10)	66,463,369		20,742,680
Total liabilities	127,193,332		35,516,760

Commitments and contingencies (Notes 3 and 17)

Stockholder’s equity:
Common stock; $0.01 par value, 100 shares authorized, issued and outstanding	1		1
Class A preferred stock; $0.01 par value, 100 shares authorized, 21 shares issued and outstanding in 2019	1		—
Authorized paid-in-capital	65,299,295		43,189,999
Accumulated deficit	(26,934,564)		(3,505,450)
Total stockholder’s equity	38,364,733		39,684,550
Total liabilities and stockholder’s equity	$	165,558,065	$	75,201,310


	2019		2018
Revenue (Note 4)	$	91,680,949	$	25,656,723
Cost of goods sold (Note 7)	50,770,177		15,096,314
Gross profit	40,910,772		10,560,409

Operating expenses:
Sales and marketing	11,038,387		2,937,049
General and administrative (Notes 2, 7, 13, 16)	10,105,838		4,413,562
Amortization of purchased intangibles (Note 8)	7,330,807		3,480,181
Additional earnout consideration (Note 2)	—		2,900,000
Total operating expenses	28,475,032		13,730,792

Income (loss) from operations	12,435,740		(3,170,383)

Other expense, net:
Interest expense, net of interest income of $2,140 in 2019 and $5,547 in 2018 (Notes 3, 10 and 11)	5,762,536		1,548,269
Other expense (income)	27,030		(3,000)
Net other expense	5,789,566		1,545,269

Income (loss) before income tax expense (benefit)	6,646,174		(4,715,652)

Income tax expense (benefit) (Note 14)	1,596,849		(1,210,202)

Net income (loss)	$	5,049,325	$	(3,505,450)
See accompanying notes.


	Common Stock				Class A Preferred Stock
	Number of Shares	Amount		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Total
Capital contributions	100	$	1	—	$	—	$	34,999,999	$	—	$	35,000,000
Rollover equity	—	—		—	—		8,190,000		—		8,190,000
Net loss	—	—		—	—		—		(3,505,450)		(3,505,450)

Balance at December 31, 2018	100	1		—	—		43,189,999		(3,505,450)		39,684,550

Capital contributions	—	—		21	1		13,999,999		—		14,000,000
Rollover equity	—	—		—	—		7,900,000		—		7,900,000
Stock compensation	—	—		—	—		209,297		—		209,297
Dividends to parent	—	—		—	—		—		(28,478,439)		(28,478,439)
Net income	—	—		—	—		—		5,049,325		5,049,325

Balance at December 31, 2019	100	$	1	21	$	1	$	65,299,295	$	(26,934,564)	$	38,364,733
See accompanying notes.


	2019		2018
Cash flows from operating activities:
Net income (loss)	$	5,049,325	$	(3,505,450)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	1,152,022		167,215
Deferred income taxes	(732,659)		(1,231,797)
Amortization of intangibles	7,330,806		3,478,645
Amortization of deferred financing costs	407,049		55,373
Stock compensation expense	209,297		—
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(4,838,884)		(1,290,631)
Inventories	1,335,855		(403,747)
Prepaid expenses and other current assets	(429,821)		(507,535)
Accounts payable	(4,400,093)		594,903
Warranty liabilities	600,723		442,708
Income tax payable	1,790,508		21,595
Accrued expenses and other current liabilities	999,273		165,569
Net cash provided by (used in) operating activities	8,473,401		(2,013,152)

Cash flows from investing activities:
Payments for acquisition of property and equipment	(4,733,336)		(3,125,857)
Acquisition of business, net of cash acquired in 2019 of $402,990	(34,271,398)		(45,288,070)
Cash used in investing activities	(39,004,734)		(48,413,927)

Cash flows from financing activities:
Earnout payment	—		(5,100,000)
Capital contributions from stockholder	14,000,000		35,000,000
Payment of deferred financing cost	(801,784)		(390,866)
Borrowings on note payable	50,900,000		24,000,000
Repayment of note payable	(2,090,392)		(900,000)
Dividends paid to parent	(28,478,439)		—
Net cash provided by financing activities	33,529,385		52,609,134
Net increase in cash	2,998,052		2,182,055
Cash, beginning of period	2,182,055		—
Cash, end of period	$	5,180,107	$	2,182,055

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	5,032,232	$	1,320,753
Taxes	$	539,000	$	—
Supplemental schedule of non-cash investing and financing activities:
Rollover equity issued in business acquisitions	$	7,900,000	$	8,190,000
See accompanying notes.


Consideration
Cash	$	45,288,070
Rollover equity	8,190,000
Estimated fair value of earnout consideration	5,100,000
Total consideration	$	58,578,070

Identifiable assets assumed
Accounts receivable	$	2,291,375
Inventories	1,340,896
Prepaid expenses and other current assets	28,134
Property and equipment	1,042,000
Goodwill	12,443,638
Other intangible assets	44,600,000
Total identifiable assets acquired	61,746,043

Identifiable liabilities assumed
Accounts payable	(1,020,529)
Warranty liabilities	(993,654)
Accrued expenses and other current liabilities	(1,153,790)
Total identifiable liabilities assumed	(3,167,973)
Net assets acquired	$	58,578,070


	Vanworks⁽¹⁾		RRMT ⁽²⁾
Consideration
Cash	$	3,000,000	$	31,674,388
Rollover equity	900,000		7,000,000
Total consideration	$	3,900,000	$	38,674,388

Identifiable assets assumed
Cash	$	—	$	402,990
Accounts receivable	—		1,801,460
Inventories	—		4,131,171
Prepaid expenses and other current assets	—		188,027
Property and equipment	—		2,434,000
Goodwill	680,000		10,289,915
Intangible assets	3,220,000		26,800,000
Total identifiable assets assumed	3,900,000		46,047,563

Identifiable liabilities assumed
Accounts payable	—		(5,098,180)
Warranty liabilities	—		(1,083,590)
Notes payable	—		(462,989)
Accrued expenses and other current liabilities	—		(728,416)
	—		(7,373,175)
Net assets acquired	$	3,900,000	$	38,674,388


	SCA		RMT		RRT		Total
Independent dealer	$	48,914,713	$	5,691,537	$	24,499,485	$	79,105,735
Other	7,634,484		857,385		4,083,345		12,575,214
Total revenue	$	56,549,197	$	6,548,922	$	28,582,830	$	91,680,949

Revenue by timing of revenue recognition was as follows:

	SCA		RMT		RRT		Total
Point in time	$	56,549,197	$	6,548,922	$	28,582,830	$	91,680,949


	2019		2018
Land	$	965,778	$	832,167
Buildings	2,157,586		0
Leasehold improvements	2,918,546		1,359,545
Machinery and equipment	4,035,779		1,735,454
Furniture and office equipment	763,676		9,551
Vehicles	239,571		191,225
	11,080,936		4,127,942
Less: Accumulated depreciation and amortization	1,319,237		167,215
	9,761,699		3,960,727
Construction-in-progress	254,257		39,915
Property and equipment, net	$	10,015,956	$	4,000,642


	Useful Lives	2019		2018
Customer relationships	8 years	$	6,000,000	$	3,800,000
Non-compete agreement	5 years	1,000,000		1,000,000
Developed designs	3 years	800,000		800,000
Trade names	10 years	10,870,000		4,800,000
Supplier relationships	10 years	55,950,000		34,200,000
		74,620,000		44,600,000
Less: Accumulated amortization		10,809,452		3,478,645
Intangible assets, net		$	63,810,548	$	41,121,355


Year Ending December 31,
2020	$	7,899,000
2021	$	7,707,000
2022	$	7,632,000
2023	$	7,488,000
2024	$	7,432,000


Balance as of April 13, 2018	$	—
Acquisition (Note 2)	12,443,638
Balance as of December 31, 2018	12,443,638
Acquisitions (Note 2)	10,969,915
Balance as of December 31, 2019	$	23,413,553


Year Ending December 31,	Term Note		Equipment Note
2020	$	5,087,500	$	91,500
2021	6,937,500		98,000
2022	10,175,000		101,700
2023	11,100,000		99,175
2024	38,682,222		—
	71,982,222		390,375
Less: Deferred financing cost	730,228		—
	71,251,994		390,375
Current portion	5,087,500		91,500
Notes payable - noncurrent	$	66,164,494	$	298,875


	Number of Incentive Units	Grant Date Fair Value
Outstanding, beginning of year	—	$	—
Granted	967,368	2.16
Forfeited	—	—
Outstanding, end of year	967,368	$	2.16
Vested	—	$	—


Loss from operations of closed facilities	$	290,667
Reduction in workforce	468,258
Lease termination costs	172,172
Buyout of consulting agreement	1,066,275
System integration costs	359,009
Total restructuring costs	$	2,356,381


	2019		2018
Current taxes
Federal	$	1,775,389	$	—
State	554,119		21,595
Total current taxes	$	2,329,508	$	21,595

Deferred taxes
Federal	$	(582,290)	$	(926,566)
State	(150,369)		(305,231)
Total deferred taxes	$	(732,659)	$	(1,231,797)
Total	$	1,596,849	$	(1,210,202)


	2019		2018
Book over tax amortization and basis differences	$	872,595	$	674,059
Transaction costs	604,886		358,219
Warranty liabilities	286,944		121,745
Net operating loss	—		128,791
Other reserves	200,031		(51,017)
Total deferred tax assets (liability)	$	1,964,456	$	1,231,797


Year Ending December 31,
2020	$	918,000
2021	936,000
2022	814,000
2023	578,000
Total future minimum lease payments	$	3,246,000


	Historical							Pro Forma Adjustments			Combined Pro Forma
	Fox Factory Holding Corp.		SCA Performance, Inc.		Note 2
Sales	$	751,020	$	91,681	$	—			$	842,701
Cost of sales	508,285		50,770		—				559,055
Gross profit	242,735		40,911		—				283,646
Operating expenses:
Sales and marketing	42,794		11,038		—				53,832
Research and development	31,789		—		—				31,789
General and administrative	48,999		10,106		5,294		a.		62,898
					(1,501)		b.
Amortization of purchased intangibles	6,344		7,331		7,859		c.		21,534
Total operating expenses	129,926		28,475		11,652				170,053
Income from operations	112,809		12,436		(11,652)				113,593
Other expense, net:
Interest expense	3,173		5,763		(3,567)		d.		13,894
					8,525		e.
Other expense	1,067		27		—				1,094
Other expense, net	4,240		5,790		4,958				14,988
Income before income taxes	108,569		6,646		(16,610)				98,605
Provision for income taxes	14,099		1,597		(3,488)		f.		12,208
Net income	94,470		5,049		(13,122)				86,397
Less: net income attributable to non-controlling interest	1,437		—		—				1,437
Net income attributable to FOX stockholders	$	93,033	$	5,049	$	(13,122)			$	84,960

Earnings per share:
Basic	$	2.43							$	2.21
Diluted	$	2.38							$	2.17
Weighted average shares used to compute earnings per share:
Basic	38,333				30		g.		38,363
Diluted	39,155				30		g.		39,185


Acquisition consideration
Cash consideration	$	329,209
Non-cash consideration	322
Total consideration at closing	$	329,531

Fair market values
Other current assets	$	15,556
Property, plant and equipment	9,953
Lease right-of-use assets	4,027
Customer relationships	129,000
Trademarks and brand	11,500
Goodwill	192,215
Total assets acquired	$	362,251

Accounts payable and accrued expenses	$	9,454
Lease liabilities	4,027
Deferred taxes	19,239
Total liabilities assumed	32,720
Purchase price allocation	$	329,531