0001193125-22-284812 | 10-Q | XBRL Viewer

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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] $ in Thousands	2 Months Ended
	Sep. 30, 2022 USD ($)
Disclosure In Tabular Form Of Changes In The Fair Value Of Private Placement Warrant Liabilities [Line Items]
Warrant liabilities at July 19, 2022	$ 114
Change in fair value of warrant liabilities	(19)
Warrant liabilities at September 30, 2022	$ 95

Private Placement Warrants And Recurring Fair Value Measurements (Details)		2 Months Ended
	Aug. 18, 2022	Sep. 30, 2022 $ / shares shares	Dec. 31, 2021
Disclosure In Entirety Of Private Placement Warrants Recurring And Fair Value Measurements [Line Items]
Class of warrants or rights exercise price per share		$ 0.01
Private Placement Warrants [Member] \| Measurement Input, Expected Dividend Rate [Member]
Disclosure In Entirety Of Private Placement Warrants Recurring And Fair Value Measurements [Line Items]
Warrants and rights outstanding, measurement input		0	0
Private Placement Warrants [Member] \| B Riley 150 [Member]
Disclosure In Entirety Of Private Placement Warrants Recurring And Fair Value Measurements [Line Items]
Class of warrants or rights exercise price per share		$ 173,333
Class of warrants or rights issued during the period units \| shares		11.5
Class of warrants or rights date upto which transfer is restricted	Aug. 18, 2022
Private Placement Warrants [Member] \| B Riley 150 [Member] \| Measurement Input, Expected Dividend Rate [Member]
Disclosure In Entirety Of Private Placement Warrants Recurring And Fair Value Measurements [Line Items]
Warrants and rights outstanding, measurement input		0

Stock Compensation Expense (Details) - Schedule of equity incentive plan	9 Months Ended
	Sep. 30, 2022 shares
Awards Reserved for Issuance [Member]
Stock Compensation Expense and Warrants (Details) - Schedule of equity incentive plan [Line Items]
2022 Omnibus Incentive Plan	12,358,689
2022 Employee Stock Purchase Plan	75,000,000
Amended 2019 Equity Incentive Plan	23,380,173
Awards Outstanding [Member]
Stock Compensation Expense and Warrants (Details) - Schedule of equity incentive plan [Line Items]
2022 Omnibus Incentive Plan	0
2022 Employee Stock Purchase Plan	0
Amended 2019 Equity Incentive Plan	20,303,993
Awards Available for Grant [Member]
Stock Compensation Expense and Warrants (Details) - Schedule of equity incentive plan [Line Items]
2022 Omnibus Incentive Plan	12,358,689
2022 Employee Stock Purchase Plan	75,000,000
Amended 2019 Equity Incentive Plan	3,076,180

Private Placement Warrants And Recurring Fair Value Measurements (Details) - Schedule of fair value of the private placement warrants - Private Placement Warrants [Member]	Sep. 30, 2022 shares yr	Dec. 31, 2021 shares yr
Risk-free interest rate
Disclosure In Tabular Form Of Significant Unobservable Inputs In Measurement In Private Placement Warrants [Line Items]
Warrants and rights outstanding, measurement input	4.1	1.3
Expected term (years)
Disclosure In Tabular Form Of Significant Unobservable Inputs In Measurement In Private Placement Warrants [Line Items]
Warrants and rights outstanding, measurement input \| yr	4.8	5.5
Expected volatility
Disclosure In Tabular Form Of Significant Unobservable Inputs In Measurement In Private Placement Warrants [Line Items]
Warrants and rights outstanding, measurement input	5.1	18.5
Exercise price
Disclosure In Tabular Form Of Significant Unobservable Inputs In Measurement In Private Placement Warrants [Line Items]
Warrants and rights outstanding, measurement input \| shares	11.5	11.5
Dividend yield
Disclosure In Tabular Form Of Significant Unobservable Inputs In Measurement In Private Placement Warrants [Line Items]
Warrants and rights outstanding, measurement input	0	0

Debt (Details) - Schedule of debt $ in Thousands	Dec. 31, 2021 USD ($)
Debt (Details) - Schedule of debt [Line Items]
Other loans Unamortized Issuance	$ 37
Other loans Short-term	0
Other loans Long-term	37
Other loans Unamortized Issuance	0
Other loans Net Carrying Unamortized	37
Total principal amount outstanding Unamortized Issuance	74,360
Total principal amount outstanding Short-term	3,148
Total principal amount outstanding Long-term	71,212
Total principal amount outstanding Unamortized Issuance	(358)
Total principal amount outstanding Net Carrying Unamortized	74,002
2021 Cox Convertible Promissory Note [Member]
Debt (Details) - Schedule of debt [Line Items]
Convertible Promissory Note Unpaid Principal	15,000
Convertible Promissory Note Short-term	0
Convertible Promissory Note Long-term	15,000
Convertible Promissory Note Unamortized Issuance	0
Convertible Promissory Note Unamortized Issuance	15,000
2021 Convertible Promissory Notes [Member]
Debt (Details) - Schedule of debt [Line Items]
Convertible Promissory Note Unpaid Principal	675
Convertible Promissory Note Short-term	0
Convertible Promissory Note Long-term	675
Convertible Promissory Note Unamortized Issuance	0
Convertible Promissory Note Unamortized Issuance	675
2020 Secured Convertible Promissory Note [Member]
Debt (Details) - Schedule of debt [Line Items]
Convertible Promissory Note Unpaid Principal	55,000
Convertible Promissory Note Short-term	0
Convertible Promissory Note Long-term	55,000
Convertible Promissory Note Unamortized Issuance	(358)
Convertible Promissory Note Unamortized Issuance	54,642
2020 Convertible Promissory Notes [Member]
Debt (Details) - Schedule of debt [Line Items]
Convertible Promissory Note Unpaid Principal	2,525
Convertible Promissory Note Short-term	2,025
Convertible Promissory Note Long-term	500
Convertible Promissory Note Unamortized Issuance	0
Convertible Promissory Note Unamortized Issuance	2,525
2020 PPP Loan [Member]
Debt (Details) - Schedule of debt [Line Items]
Convertible Promissory Note Unpaid Principal	1,123
Convertible Promissory Note Short-term	1,123
Convertible Promissory Note Long-term	0
Convertible Promissory Note Unamortized Issuance	0
Convertible Promissory Note Unamortized Issuance	$ 1,123

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies (Tables) [Line Items]

Schedule of future minimum lease payment

Future minimum lease payments, which include

non-cancelable

operating leases at September 30, 2022, are as follows:


Years ending December 31,	(in thousands)
2022 (remainder)	$	713
2023		2,895
2024		1,977
2025		5
Thereafter		3

Total minimum lease payment	$	5,593

Intangibles Assets (Details) - Schedule of intangible assets - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021	Jun. 30, 2022
Website development [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life	3 years	3 years
Gross Carrying Value	$ 332	$ 211
Accumulated Amortization	145	75
Net Carrying Value	187	136
Talent acquisition [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	1,237	1,653
Accumulated Amortization	$ 477	1,051
Net Carrying Value		$ 602	$ 760
Talent acquisition [Member] \| Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life	2 years	2 years
Talent acquisition [Member] \| Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Life	3 years	3 years
Intangible assets, net [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value	$ 1,569	$ 1,864
Accumulated Amortization	622	1,126
Net Carrying Value	$ 947	$ 738

Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Preferred stock par value (in Dollars per share)	$ 0.0001	$ 0.00001
Preferred stock, shares authorized	1,000,000	3,545,529
Preferred stock, shares issued	0	3,237,800
Preferred stock, shares outstanding	0	3,237,800
Common stock par value (in Dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	500,000,000	71,033,146
Common stock, shares issued	70,258,004	18,841,538
Common stock, shares outstanding	70,258,004	18,841,538

Subsequent Events

9 Months Ended

Sep. 30, 2022

Subsequent Events [Line Items]

SUBSEQUENT EVENTS

15.	SUBSEQUENT EVENTS

In preparing the unaudited condensed consolidated financial statements, the Company has evaluated subsequent events through November

, 2022, which is the date the unaudited condensed consolidated financial statements were available for issuance.

Equity (Details) - $ / shares	9 Months Ended
Equity (Details) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Stockholders' Equity (Details) [Line Items]
Common stock, shares authorized	500,000,000	71,033,146
Common stock par value (in Dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares issued	70,258,004	18,841,538
Preferred stock, shares authorized	1,000,000	3,545,529
Preferred stock, par value (in Dollars per share)	$ 0.0001	$ 0.00001
Preferred stock, shares issued	0	3,237,800
Preferred stock, shares outstanding	0	3,237,800
Preferred stock terms of conversion	one-to-one
Percentage of total number of common stock issued and outstanding	6.00%
Stock price (in Dollars per share)	$ 18
Shares based compensation arrangement by shares based payment award options vested number of shares	2,156,250
Class of warrants or rights exercise price per share	$ 0.01
Number of days within which the public warrants become exercisable after business combination	30 days
Number of days prior to notice of redemption	30 days
Number of trading days within which the warrants become exercisable	20 days
Number of consecutive trading days within which the warrants become exercisable	30 days
Public Warrants [Member]
Stockholders' Equity (Details) [Line Items]
Class of warrant or right issued	5,750,000
Class of Warrant or Right, Outstanding	5,750,000
Class of warrants or rights exercise price per share	$ 11.5
Series A Preferred Stock [Member]
Stockholders' Equity (Details) [Line Items]
Preferred stock, shares authorized		3,545,529
Share price per share (in Dollars per share)		$ 0.00001
Legally Faze Preferred Stock [Member]
Stockholders' Equity (Details) [Line Items]
Preferred stock, shares issued		3,237,800
Preferred stock, shares outstanding		3,237,800
Legally Faze Common Stock [Member]
Stockholders' Equity (Details) [Line Items]
Common stock, shares authorized		31,900,878
Common stock par value (in Dollars per share)		$ 0.00001
Common stock, shares issued	70,258,004	8,461,706
Common stock, shares outstanding	70,258,004	8,461,706
First Target Earn Out Shares [Member]
Stockholders' Equity (Details) [Line Items]
Stock price (in Dollars per share)	$ 12
Number of trading days for determining the share price	20 days
Number of consecutive trading days for determining the share price	30 days
Second Target Earn Out Shares [Member]
Stockholders' Equity (Details) [Line Items]
Stock price (in Dollars per share)	$ 14
Number of trading days for determining the share price	20 days
Number of consecutive trading days for determining the share price	30 days
Third Target Earn Out Shares [Member]
Stockholders' Equity (Details) [Line Items]
Stock price (in Dollars per share)	$ 16
Number of trading days for determining the share price	20 days
Number of consecutive trading days for determining the share price	30 days
Sponsor Earn Out Shares [Member]
Stockholders' Equity (Details) [Line Items]
Stock issued during period shares based compensation forfeited	2,156,250

Summary of Significant Accounting Policies (Details) - Schedule of disaggregates the company's revenue - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Segment Reporting Information [Line Items]
Total revenue	$ 14,012	$ 12,493	$ 48,621	$ 37,756
Brand sponsorships [Member]
Segment Reporting Information [Line Items]
Total revenue	7,072	6,385	28,054	17,080
Content [Member]
Segment Reporting Information [Line Items]
Total revenue	4,098	3,413	10,641	13,826
Consumer products [Member]
Segment Reporting Information [Line Items]
Total revenue	471	1,769	2,328	4,001
Esports [Member]
Segment Reporting Information [Line Items]
Total revenue	2,322	837	7,285	2,651
Other [Member]
Segment Reporting Information [Line Items]
Total revenue	$ 49	$ 89	$ 313	$ 198

- Definition

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

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+ Details

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, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Earnings Per Share [Abstract]
Net loss attributable to FaZe Holdings Inc., basic and diluted	$ (130,598)	$ (9,955)	$ (149,462)	$ (23,291)
Weighted-average common shares outstanding, basic	54,590,538	19,949,557	32,144,653	18,757,552
Weighted-average common shares outstanding, diluted	54,590,538	19,949,557	32,144,653	18,757,552
Net loss per share, basic	$ (2.39)	$ (0.5)	$ (4.65)	$ (1.24)
Net loss per share, diluted	$ (2.39)	$ (0.5)	$ (4.65)	$ (1.24)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

Commitments And Contingencies

9 Months Ended

Sep. 30, 2022

Commitments [Line Items]

COMMITMENTS AND CONTINGENCIES

10.	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 and nine months ended September 30, 2022 was $0.6 million and $1.7 million, respectively, and the three months ended and nine months ended September 30, 2021 was $0.3 million and $0.9 million, respectively. Rent expense is included in general and administrative expense in the Condensed Consolidated Statements of Operations. Scheduled rent increases, if any, are amortized on a straight-line basis over the lease term.

Future minimum lease payments, which include

non-cancelable

operating leases at September 30, 2022, are as follows:


Years ending December 31,	(in thousands)
2022 (remainder)	$	713
2023		2,895
2024		1,977
2025		5
Thereafter		3

Total minimum lease payment	$	5,593

Description of The Business

9 Months Ended

Sep. 30, 2022

Description of The Business [Line Items]

DESCRIPTION OF THE BUSINESS

1.	DESCRIPTION OF THE BUSINESS

FaZe Holdings Inc. (“FaZe” or the “Company”), is a lifestyle and media platform rooted in gaming and youth culture. The Company’s premium brand, talent network, and large audience can be monetized across a variety of products and services.

On July 19, 2022 (the “Closing Date”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated as of October 24, 2021 (as amended in December 2021 and March 2022), by and among B. Riley 150 Merger Corp. (“B. Riley 150”), a special purpose acquisition company, and BRPM Merger Sub, Inc., a directly wholly owned subsidiary of B. Riley 150 (“Merger Sub”) and FaZe Clan, Inc. (“Legacy FaZe”), the parties consummated the merger of Merger Sub with and into Legacy FaZe, with Legacy FaZe continuing as the surviving corporation (the “Merger”), as well as the other transactions contemplated by the Merger Agreement (the Merger and such other transactions, the “Business Combination”). In connection with the closing of the Business Combination (the “Closing”), Legacy FaZe became a wholly owned subsidiary of B. Riley 150, which changed its name to “FaZe Holdings Inc.” The Merger is further described in Note 3,

Business Combination.

Legacy FaZe determined that it was the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805, Business Combinations. The Merger was accounted for as a reverse recapitalization, in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Under this method of accounting, B. Riley 150 was treated as the acquired company for financial reporting purposes. Accordingly, the Business Combination was treated as the equivalent of Legacy FaZe issuing stock for the net assets of B. Riley 150, accompanied by a recapitalization. The net assets of B. Riley 150 were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of Legacy FaZe.

In accordance with guidance applicable to these circumstances, the equity structure has been retroactively restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s common stock issued to Legacy FaZe’s common stockholders in connection with the Business Combination. As a result, these financial statements represent the continuation of Legacy FaZe and the historical shareholders’ deficit. Common stock, preferred stock and loss per share of Legacy FaZe prior to the Business Combination have been retrospectively adjusted for the Business Combination using an exchange ratio of 2.2267 (“Equity Value Exchange Ratio”). The accumulated deficit of Legacy FaZe has been carried forward after the Business Combination.

Stock Compensation Expense

9 Months Ended

Sep. 30, 2022

Stock Compensation Expense [Line Items]

STOCK COMPENSATION EXPENSE

9.	STOCK COMPENSATION EXPENSE

2022 Omnibus Incentive Plan

On October 24, 2021, the stockholders of the Company approved the 2022 Omnibus Incentive Plan (the “OIP”), which became effective as of the Closing Date of the Business Combination. The OIP allows grants of incentive stock options,

non-statutory

stock options, stock appreciation rights, restricted stocks, restricted stock units, stock bonuses, other stock-based awards, cash awards, and substitute awards (“the “OIP Awards”) to selected officers, employees, partners,

non-employee

directors, independent contractors, and consultants. The Company has 12,358,689 shares of common stock, $0.0001 par value per share, reserved for issuance pursuant to awards that may be granted under OIP. As of September 30, 2022, no awards have been granted under this plan.

2022 Employee Stock Purchase Plan

On October 24, 2021, the stockholders of the Company approved the 2022 Employee Stock Purchase Plan (the “ESPP”), which became effective as of the Closing Date of the Business Combination. An aggregate of 1,791,416 shares of the Company’s common stock has been reserved for issuance or transfer pursuant to rights granted under the ESPP (“Aggregate Number”). The Aggregate Number represents 2% of the aggregate number of shares of the Company’s fully diluted shares outstanding immediately after the Closing and is subject to increase each year over a

ten-year

period. The maximum aggregate number of shares of common stock available for issuance under ESPP shall not exceed 75,000,000 shares. The ESPP will be implemented through a series of offerings of purchase rights to eligible employees. Each eligible employee may authorize payroll deductions at a minimum of 1% up to a maximum of 15% on a pro rate basis for each pay period during an offering. Under the ESPP, the Company’s Board may designate the period of each offering but no offering shall exceed 27 months in duration. Unless otherwise determined, the offering shall be for a purchase period of 6 months, beginning on the offering date and ending on the exercise date. The purchase price for each share shall be 85% of the fair market value of the Company’s common stock on the offering date or the exercise date, whichever is less. As of September 30, 2022, no awards have been granted under this plan.

Amended and Restated 2019 Equity Incentive Plan

The Company maintains an equity incentive plan established in October 2019, the 2019 Equity Incentive Plan (the “Legacy FaZe Plan”). The Legacy FaZe Plan allows grants of incentive stock options,

non-statutory

stock options, stock appreciation rights, restricted stock and restricted stock units, generally to directors, employees, consultants and service providers. In July 2021, the Company’s Board amended the Legacy FaZe Plan and increased the maximum aggregate number of shares authorized to be issued to 10,500,000 shares of Legacy FaZe common stock, which is equivalent to 23,380,173 shares of the Company’s common stock calculated using the Equity Value Exchange Ratio. As of September 30, 2022, 18,055,159 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 2,248,834 shares of the Company’s common stock are subject to restricted stock awards originally granted under the Legacy FaZe Plan.

The following table contains information about the plan as of September 30, 2022:


	Awards Reserved for Issuance		Awards Outstanding		Awards Available for Grant
2022 Omnibus Incentive Plan		12,358,689		—		12,358,689
2022 Employee Stock Purchase Plan		75,000,000		—		75,000,000
Amended 2019 Equity Incentive Plan		23,380,173		20,303,993		3,076,180

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 Condensed Consolidated Statements of Operations:


	(in thousands)
	For the three months ended September 30,				For the nine months ended September 30,
	2022		2021		2022		2021
Stock options	$	336	$	653	$	454	$	653
Restricted stock awards		2,001		2		4,542		2

Total stock–based compensation expense	$	2,337	$	655	$	4,996	$	655

In addition, for stock-based compensation expense related to the services provided by Commerce Media Holdings, LLC, approximately $20,893 and $61,998 has been included in cost of revenues for the three months and nine months ended September 30, 2022, respectively, and $20,893 and $61,998 has been included in cost of revenues for the three months and nine months ended September 30, 2021, respectively. Compensation costs related to Commerce Media Holdings, LLC, Spanky’s Clothing Inc., Cordell Broadus, Boss Lady Entertainment and SMAC Entertainment of $0.3 million and $0.2 million were capitalized and are included in prepaid expenses on the Condensed Consolidated Balance Sheets as of September 30, 2022 and 2021, respectively.

The following

table sets forth the presentation of stock-based compensation in the Company’s financial statements:


	(in thousands)					(in thousands)
	For the three months ended September 30,					For the nine months ended September 30,
	2022			2021		2022			2021
Stock-based compensation expense recorded to additional paid-in capital	$	2,546		$	655	$	5,205		$	655
Stock-based compensation expense capitalized as prepaid expenses		(209	)		—		(209	)		—

Stock-based compensation expense per Condensed Consolidated Statements of Operations	$	2,337		$	655	$	4,996		$	655

Debt (Tables)

9 Months Ended

Sep. 30, 2022

Debt (Tables) [Line Items]

Schedule of debt

Debt as of December 31, 2021 consisted of the following:


As of December 31, 2021
	(in thousands)
	Unpaid						Unamortized			Net Carrying
	Principal		Short-term		Long-term		Issuance Costs			Value
2021 Cox Convertible Promissory Note	$	15,000	$	—	$	15,000	$	—		$	15,000
2021 Convertible Promissory Notes		675		—		675		—			675
2020 Secured Convertible Promissory Note		55,000		—		55,000		(358	)		54,642
2020 Convertible Promissory Notes		2,525		2,025		500		—			2,525
2020 PPP Loan		1,123		1,123		—		—			1,123
Other loans		37		—		37		—			37

Total principal amount outstanding	$	74,360	$	3,148	$	71,212	$	(358	)	$	74,002

Description of The Business (Details)	Jul. 19, 2022
B Riley 150 [Member]
Description of The Business (Details) [Line Items]
Equity value exchange ratio	2.2267

Stock Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended		9 Months Ended
	Oct. 24, 2021	Jul. 31, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Stock Compensation Expense (Details) [Line Items]
Common stock, reserved for issuance per share			$ 0.0001		$ 0.0001		$ 0.0001
Compensation costs			$ 300		$ 600
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number			18,055,159		18,055,159
Common Stock [Member]
Stock Compensation Expense (Details) [Line Items]
Share-Based compensation arrangement by share-based payment award, number of shares available for grant			2,248,834		2,248,834
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized		10,500,000
Number of share calculated using the equity value exchange ratio		23,380,173
Commerce Media Holdings, LLC, Spanky's Clothing Inc., Cordell Broadus, Boss Lady Entertainment and SMAC Entertainment [Member] \| Prepaid Expenses and Other Current Assets [Member]
Stock Compensation Expense (Details) [Line Items]
Compensation costs					$ 300	$ 200
Cost of Sales [Member] \| Commerce Media Holdings LLC [Member]
Stock Compensation Expense (Details) [Line Items]
Compensation costs			$ 20,893	$ 20,893	$ 61,998	$ 61,998
2022 Omnibus Incentive Plan [Member]
Stock Compensation Expense (Details) [Line Items]
Common stock, reserved for issuance	12,358,689
Common stock, reserved for issuance per share	$ 0.0001
Share-Based compensation arrangement by share-based payment award, number of shares available for grant			0		0
2022 Employee Stock Purchase Plan [Member]
Stock Compensation Expense (Details) [Line Items]
Common stock, reserved for issuance	1,791,416
Share-Based compensation arrangement by share-based payment award, number of shares available for grant			0		0
Percentage of total number of diluted shares outstanding	2.00%
Share-based compensation arrangement by share-based payment award percentage of granted fair market value	85.00%
2022 Employee Stock Purchase Plan [Member] \| Maximum [Member]
Stock Compensation Expense (Details) [Line Items]
Common stock, reserved for issuance	75,000,000
Percentage of employee payroll deduction	15.00%
2022 Employee Stock Purchase Plan [Member] \| Minimum [Member]
Stock Compensation Expense (Details) [Line Items]
Percentage of employee payroll deduction	1.00%

Stock Compensation Expense (Details) - Summary of stock-based compensation in the Company's financial statements - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense recorded to additional paid-in capital	$ 2,546	$ 655	$ 5,205	$ 655
Stock-based compensation expense capitalized as prepaid expenses	(209)	0	(209)	0
Stock-based compensation expense per Condensed Consolidated Statements of Operations	$ 2,337	$ 655	$ 4,996	$ 655

Commitments and Contingencies (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Commitments (Details) [Line Items]
Rent expenses	$ 0.6	$ 0.3	$ 1.7	$ 0.9

Related Party Transactions (Details) - USD ($)		3 Months Ended	9 Months Ended
Related Party Transactions (Details) - USD ($)	Feb. 17, 2022	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021
Related Party Transactions (Details) [Line Items]
Stock issued during period, value, restricted stock awards			$ 2,248,834	$ 49,426
Related party transaction, amount of transaction	$ 50,000
Stock based compensation expense		$ 300,000	600,000
Prepaid Expenses and Other Current Assets [Member]
Related Party Transactions (Details) [Line Items]
Compensation costs		$ 200,000	$ 200,000
Restricted Stock [Member]
Related Party Transactions (Details) [Line Items]
Share based compensation arrangement by share based payment award vesting rights			one-third
Snoop Dogg [Member]
Related Party Transactions (Details) [Line Items]
Stock issued during period, value, restricted stock awards	1,857,154
Cordell Broadus [Member]
Related Party Transactions (Details) [Line Items]
Stock issued during period, value, restricted stock awards	247,615
Boss Lady Entertainment [Member]
Related Party Transactions (Details) [Line Items]
Stock issued during period, value, restricted stock awards	247,615
SMAC Entertainment [Member]
Related Party Transactions (Details) [Line Items]
Stock issued during period, value, restricted stock awards	$ 247,615

Business Combination (Details) - USD ($) $ / shares in Units, $ in Thousands		2 Months Ended	3 Months Ended		9 Months Ended
	Jul. 19, 2022	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Business Acquisition [Line Items]
Stock Issued During Period, Value, New Issues			$ 100,000		$ 100,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested, Number of Shares					2,156,250
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Vested in Period				1,680,774		1,680,774
Class of warrants or rights excercised during the perion units		1,047,623
Common Stock, Conversion Basis					one-to-one basis
Debt instrument converted into equity original principal amount					$ 17,551	$ 0
Debt Instrument Accrued Interest Settled In Cash					$ 2,600
Purchase of warrants (in Shares)		22,902,063	22,902,063		22,902,063
Stock Surrendered And Exchanged During Period Shares					50,995,637
Common stock, shares outstanding		70,258,004	70,258,004		70,258,004		18,841,538
Common stock par value (in Dollars per share)		$ 0.0001	$ 0.0001		$ 0.0001		$ 0.0001
Business Combination Net Cash Consideration Received					$ 57,800
Adjustment to additional paid in capital costs incurred for business combination		$ 25,900
Details Of Common Stock Shares Outstanding After The Consummation Of Business Combination [Member]
Business Acquisition [Line Items]
Common stock, shares outstanding	70,132,639
Common stock par value (in Dollars per share)	$ 0.0001
Class of Warrant or Right, Outstanding	5,923,333
FaZe Convertible Promissory Notes [Member]
Business Acquisition [Line Items]
Debt instrument converted into equity original principal amount		$ 72,900
Accrued Interest					6,900
Debt Instrument Accrued Interest Settled In Cash					$ 2,600
Preferred Stock [Member]
Business Acquisition [Line Items]
Stock Issued During Period, Shares, Conversion of Convertible Securities		3,237,800
Preferred Stock Warrants [Member]
Business Acquisition [Line Items]
Class of warrants or rights excercised during the perion units		292,790
Common Stock Warrants [Member]
Business Acquisition [Line Items]
Class of warrants or rights excercised during the perion units		754,833
PublicWarrantsMember \| Details Of Common Stock Shares Outstanding After The Consummation Of Business Combination [Member]
Business Acquisition [Line Items]
Class of Warrant or Right, Outstanding	5,750,000
Private Placement Warrants [Member] \| Details Of Common Stock Shares Outstanding After The Consummation Of Business Combination [Member]
Business Acquisition [Line Items]
Class of Warrant or Right, Outstanding	173,333
Share-Based Payment Arrangement, Option [Member]
Business Acquisition [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested, Number of Shares					525,782
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Nonvested, Number of Shares		1,450,914	1,450,914		1,450,914
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage					75.00%
Restricted Stock [Member]
Business Acquisition [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period					90 days
Restricted Stock [Member] \| Vesting Tranche One [Member]
Business Acquisition [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Vested in Period		42,441
Share Based Compensation By Share Based Award Equity Instruments Other Than Options Vested And Expected To Vest		923,886	923,886		923,886
FAZENew Fa Ze Common Stock [Member]
Business Acquisition [Line Items]
Issuance of warrants (in Shares)		10,000,000
Share price per share (in Dollars per share)		$ 10	$ 10		$ 10
Stock Issued During Period, Value, New Issues					$ 100,000
B Riley 150 [Member]
Business Acquisition [Line Items]
Stock Redeemed or Called During Period, Shares	15,883,395

Private Placement Warrants And Recurring Fair Value Measurements (Details) - Schedule of assets and liabilities measured at fair value on recurring basis $ in Thousands	Sep. 30, 2022 USD ($)
Disclosure Of Assets And Liabilities Measured At Fair Value On Recurring Basis [Line Items]
Total	$ 95
Warrant [Member]
Disclosure Of Assets And Liabilities Measured At Fair Value On Recurring Basis [Line Items]
Private Placement Warrants	95
Quoted Prices In Active Markets (Level 1) [Member]
Disclosure Of Assets And Liabilities Measured At Fair Value On Recurring Basis [Line Items]
Total	0
Quoted Prices In Active Markets (Level 1) [Member] \| Warrant [Member]
Disclosure Of Assets And Liabilities Measured At Fair Value On Recurring Basis [Line Items]
Private Placement Warrants	0
Significant Other Observable Inputs (Level 2) [Member]
Disclosure Of Assets And Liabilities Measured At Fair Value On Recurring Basis [Line Items]
Total	0
Significant Other Observable Inputs (Level 2) [Member] \| Warrant [Member]
Disclosure Of Assets And Liabilities Measured At Fair Value On Recurring Basis [Line Items]
Private Placement Warrants	0
Significant Unobservable Inputs (Level 3) [Member]
Disclosure Of Assets And Liabilities Measured At Fair Value On Recurring Basis [Line Items]
Total	95
Significant Unobservable Inputs (Level 3) [Member] \| Warrant [Member]
Disclosure Of Assets And Liabilities Measured At Fair Value On Recurring Basis [Line Items]
Private Placement Warrants	$ 95

Intangibles Assets (Details) - Schedule of estimated future amortization of intangible assets $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Intangibles Assets (Details) - Schedule of estimated future amortization of intangible assets [Line Items]
2022 (remainder) $	$ 155
2023/2022	456
2024/2023	311
2025/2024	25
Total future amortization of amortizable intangible assets $	$ 947

Intangibles Assets (Tables)

9 Months Ended

Sep. 30, 2022

Intangibles Assets (Tables) [Line Items]

Schedule of intangible assets

Intangible assets as of September 30, 2022 and December 31, 2021 consisted of the following:


		(in thousands)
As of September 30, 2022	Useful Life	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Website development	3 years	$	332	$	145	$	187
Talent acquisition	2 – 3 years		1,237		477		760

Intangible assets, net		$	1,569	$	622	$	947


		(in thousands)
As of December 31, 2021	Useful Life	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Website development	3 years	$	211	$	75	$	136
Talent acquisition	2 – 3 years		1,653		1,051		602

Intangible assets, net		$	1,864	$	1,126	$	738

Schedule of estimated future amortization of intangible assets

The following table presents the estimated future amortization of intangible assets:


Years ending December 31,	(in thousands)
2022 (remainder)	$	155
2023		456
2024		311
2025		25

Total future amortization of amortizable intangible assets	$	947

Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Schedule of basic and diluted earnings per share


	(in thousands, except shares and per-share information)
	Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021
Basic and diluted loss per share:
Net loss attributable to FaZe Holdings Inc., basic and diluted	$	(130,598	)	$	(9,955	)	$	(149,462	)	$	(23,291	)
Weighted-average common shares outstanding, basic and diluted		54,590,538			19,949,557			32,144,653			18,757,552
Net loss per share, basic and diluted	$	(2.39	)	$	(0.50	)	$	(4.65	)	$	(1.24	)

Schedule of antidilutive shares in the computation of diluted shares outstanding


	As of September 30, 2022		As of September 30, 2021
Convertible preferred stock		—		7,209,555
Public Warrants		5,750,000		—
Private Placement Warrants		173,333		—
Seller Earn-out		5,312,098		—
Sponsor Earn-out Shares		2,156,250		—
Legacy FaZe preferred warrant		—		651,951
Unvested restricted stock award		2,248,834		49,426
Stock options		18,055,159		19,912,281

Total potentially dilutive common stock equivalents		33,695,674		27,823,213

Related Party Transactions

9 Months Ended

Sep. 30, 2022

RELATED PARTY TRANSACTIONS

14.	RELATED PARTY TRANSACTIONS

On February 17, 2022, Legacy FaZe entered into a collaboration agreement with Spanky’s Clothing Inc., Cordell Broadus, Boss Lady Entertainment and SMAC Entertainment for an initial term of two years, pursuant to which Snoop Dogg became a member of FaZe’s talent network and joined the board of directors on the Closing Date of the Business Combination and agreed to (i) exclusively, except for companies not in direct competition with FaZe, promote FaZe for three years, and (ii) grant FaZe license to use his name and likeness in connection with certain content and services to be produced by him for FaZe, including (w) social media posts, (x) brand campaigns with FaZe sponsors, (y) hosting of events and (z) merchandise collaborations. Snoop Dogg is the Chief Executive Officer of Spanky’s Clothing Inc. Cordell Broadus is the son of Snoop Dogg. Shante Broadus, the spouse of Snoop Dogg, is the Chief Executive Officer of Boss Lady Entertainment. Constance Schwartz-Mornio, the manager of Snoop Dogg, is the Chief Executive Officer of SMAC Entertainment. The Company granted Legacy FaZe’s restricted stock, which converted into Company restricted stock awards, equal in value to (i) $1,857,154 to Snoop Dogg, (ii) $247,615 to Cordell Broadus, (iii) $247,615 to Boss Lady Entertainment and (iv) $247,615 to SMAC Entertainment, each of which will vest as follows:

(x) one-third

on August 17, 2022, (y)

one-third

in monthly installments through February 17, 2023 and

(z) one-third

in monthly installments through February 17, 2024. In addition, FaZe agreed to consider in good faith further equity bonuses and committed $50,000 in value for community outreach, including for the Snoop Youth Football League, scholarships or other charitable causes. The Company recorded stock-based compensation expense of $0.3 million and $0.6 million for the three months ended and nine months ended September 30, 2022, respectively. As of September 30, 2022, compensation costs of $0.2 million were capitalized and were included in the prepaid expenses.

Private Placement Warrants And Recurring Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Private Placement Warrants Recurring And 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 8,

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 Condensed 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 remai

n at

zero

The key inputs into the Black-Scholes model in determining the fair value of the Private Placement Warrants were as follows at September 30, 2022 and December 31, 2021:


	September 30, 2022			December 31, 2021
Risk-free interest rate		4.1	%		1.3	%
Expected term (years)		4.8			5.5
Expected volatility		5.1	%		18.5	%
Exercise price	$	11.50		$	11.50
Dividend yield		0			0

The following table presents a summary of the changes in the fair value of the Private Placement Warrants liability since the Closing Date:


	(in thousands)
Warrant liabilities at July 19, 2022	$	114
Change in fair value of warrant liabilities		(19	)

Warrant liabilities at September 30, 2022	$	95

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, 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. As of December 31, 2021, no assets and liabilities were measured at fair value on a recurring basis.


	(in thousands)
	September 30, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Observable Inputs (Level 3)
Liabilities:
Private Placement Warrants	$	95	$	—	$	—	$	95

Total	$	95	$	—	$	—	$	95

Summary of Significant Accounting Policies (Details) - Schedule of financial statements - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Condensed Financial Statements, Captions [Line Items]
Total Revenue	$ 14,012	$ 12,493	$ 48,621	$ 37,756
As Previously reported [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				38,808
Revision adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				(1,052)
As revised [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				37,756
Brand sponsorships [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue	7,072	6,385	28,054	17,080
Brand sponsorships [Member] \| As Previously reported [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				17,080
Brand sponsorships [Member] \| Revision adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				0
Brand sponsorships [Member] \| As revised [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				17,080
Content [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue	4,098	3,413	10,641	13,826
Content [Member] \| As Previously reported [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				13,826
Content [Member] \| Revision adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				0
Content [Member] \| As revised [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				13,826
Consumer products [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue	471	1,769	2,328	4,001
Consumer products [Member] \| As Previously reported [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				5,053
Consumer products [Member] \| Revision adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				(1,052)
Consumer products [Member] \| As revised [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				4,001
Esports [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue	2,322	837	7,285	2,651
Esports [Member] \| As Previously reported [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				2,651
Esports [Member] \| Revision adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				0
Esports [Member] \| As revised [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				2,651
Other [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue	$ 49	$ 89	$ 313	198
Other [Member] \| As Previously reported [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				198
Other [Member] \| Revision adjustments [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				0
Other [Member] \| As revised [Member]
Condensed Financial Statements, Captions [Line Items]
Total Revenue				$ 198

Property, Equipment and Leasehold Improvements (Tables)

9 Months Ended

Sep. 30, 2022

Property, Equipment and Leasehold Improvements (Tables) [Line Items]

Schedule property, equipment and leasehold improvements

Property, equipment and leasehold improvements as of September 30, 2022 and December 31, 2021 consisted of the following:


	(in thousands)
	September 30,			December 31,
	2022			2021
Furniture / Fixtures	$	743		$	159
Computer equipment		3,588			708
Vehicles		106			106
Leasehold improvements		663			731

Subtotal		5,100			1,704
Less accumulated depreciation		(1,175	)		(779	)

Property, equipment and leasehold improvements, net	$	3,925		$	925

Private Placement Warrants And Recurring Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2022

Private Placement Warrants Recurring And 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, 2022 and December 31, 2021:


	September 30, 2022			December 31, 2021
Risk-free interest rate		4.1	%		1.3	%
Expected term (years)		4.8			5.5
Expected volatility		5.1	%		18.5	%
Exercise price	$	11.50		$	11.50
Dividend yield		0			0

Schedule of changes in the fair value of the private placement warrants liability

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		(19	)

Warrant liabilities at September 30, 2022	$	95

Schedule of assets and liabilities measured at fair value on recurring basis


	(in thousands)
	September 30, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Observable Inputs (Level 3)
Liabilities:
Private Placement Warrants	$	95	$	—	$	—	$	95

Total	$	95	$	—	$	—	$	95

Loss Per Share (Details) - shares	3 Months Ended	9 Months Ended
Loss Per Share (Details) - shares	Sep. 30, 2021	Sep. 30, 2021
Earnings Per Share [Abstract]
Vested warrants outstanding	1,680,774	1,680,774

Litigation (Details) - USD ($) $ in Millions			1 Months Ended			3 Months Ended	9 Months Ended	12 Months Ended
Litigation (Details) - USD ($) $ in Millions	May 01, 2022	Dec. 07, 2020	Apr. 30, 2022	Oct. 31, 2021	May 21, 2021	Mar. 31, 2022	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2020	Sep. 14, 2020
Litigation (Details) [Line Items]
Agreement total amount							$ 3.0
Plus payment		$ 0.5
Settlement agreement							the Company has entered into a settlement agreement whereby Gordon agreed to the cancellation of 90,000 of the 790,000 outstanding stock options previously issued to him and to release any actions, claims, damages, judgments or agreements arising out of his relationship with the Company in exchange for $1.9 million in cash.
Legal accrual								$ 1.9
Initial payment						$ 0.4
Salman and Gimelshtein [Member]
Litigation (Details) [Line Items]
Alleged funding amount										$ 2.5
Bridging Finance Group [Member]
Litigation (Details) [Line Items]
Alleged funding amount										$ 30.0
Ms. Butler [Member]
Litigation (Details) [Line Items]
Legal accrual								$ 0.8
Preliminary settlement payable					$ 0.8
Treschow-Fritzoe [Member]
Litigation (Details) [Line Items]
Legal accrual				$ 0.8					$ 1.2
Subsequently paid in cash			$ 0.8
Mr. Selkoe [Member]
Litigation (Details) [Line Items]
Accrued amount									$ 3.2
Severance payments	$ 0.3						$ 2.9

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2022

Summary of Significant Accounting Policies (Tables) [Line Items]

Schedule of disaggregates the company's revenue

The following table disaggregates the Company’s revenue by major type for the three months

ended

and nine months ended September 30, 2022, and 2021:


	(in thousands)
	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Brand sponsorships	$	7,072	$	6,385	$	28,054	$	17,080
Content		4,098		3,413		10,641		13,826
Consumer products		471		1,769		2,328		4,001
Esports		2,322		837		7,285		2,651
Other		49		89		313		198

Total revenue	$	14,012	$	12,493	$	48,621	$	37,756

Schedule of consolidated statement of operations

The following tables set forth the effects of the revisions on the affected line items within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021:


	Nine months ended
	September 30, 2021
	As previously		Revision
	reported		adjustments			As revised
	(in thousands)
Revenues	$	38,808	$	(1,052	)	$	37,756
Cost of revenues		33,330		(1,052	)		32,278

Gross profit	$	5,478	$	—		$	5,478

Schedule of financial statements

The following tables set forth the effects of the revisions on the affected line items within Note 2,

Summary of Significant Accounting Policies

, section

Revenue Recognition and Contract Balances

for the financial statements for the nine months ended September 30, 2021:


	Nine months ended
	September 30, 2021
	As previously		Revision
	reported		adjustments			As revised
	(in thousands)
Brand sponsorships	$	17,080	$	—		$	17,080
Content		13,826		—			13,826
Consumer products		5,053		(1,052	)		4,001
Esports		2,651		—			2,651
Other		198		—			198

Total revenue	$	38,808	$	(1,052	)	$	37,756

Income Taxes

9 Months Ended

Sep. 30, 2022

Income Taxes [Line Items]

INCOME TAXES

13.	INCOME TAXES

The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax effects attributable to temporary differences between the condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, operating losses and tax credit carryforwards. The Company establishes a valuation allowance if the Company believes it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. The Company has considered its history of cumulative tax and book losses incurred since inception, and other positive and negative evidence, and has concluded that it is more likely than not that the Company did not realize the benefits of the net deferred tax assets as of September 30, 2022 and December 31, 2021.

For tax positions that are more likely than not of being sustained upon audit, the Company recognizes the largest amount of the benefit that is greater than 50% likely of being realized. For tax positions that are not more likely than not of being sustained upon audit, the Company does not recognize any portion of the benefit. As of September 30, 2022, the Company had no unrecognized tax benefits and does not anticipate any significant change to the unrecognized tax benefit balance. The Company would classify interest and penalties related to uncertain tax positions as income tax expense, if applicable. There was no interest expense or penalties related to unrecognized tax benefits recorded through September 30, 2022.

The effective tax rate was zero percent for both the three months ended and nine months ended September 30, 2022 and 2021, respectively. The difference between the U.S. statutory rate and the Company’s effective tax rate is primarily due to the full valuation allowance on its deferred tax assets.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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+ Details

Stock Compensation Expense (Details) - Schedule of stock-based compensation expense - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Stock Compensation Expense (Details) - Schedule of stock-based compensation expense [Line Items]
Total stock–based compensation expense	$ 2,337	$ 655	$ 4,996	$ 655
Stock options [Member]
Stock Compensation Expense (Details) - Schedule of stock-based compensation expense [Line Items]
Total stock–based compensation expense	336	653	454	653
Restricted stock awards [Member]
Stock Compensation Expense (Details) - Schedule of stock-based compensation expense [Line Items]
Total stock–based compensation expense	$ 2,001	$ 2	$ 4,542	$ 2

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current Assets:
Cash	$ 43,872	$ 17,018
Accounts receivable, net	18,792	6,266
Contract assets	2,959	4,118
Inventory	0	6
Content asset, net	0	474
Prepaid expenses	8,833	944
Others assets	1,795	5,246
Total Current Assets	76,251	34,072
Restricted cash	600	600
Property, equipment and leasehold improvements, net	3,925	925
Intangible assets, net	947	738
Other long-term assets	679	733
TOTAL ASSETS	82,402	37,068
Current liabilities:
Accounts payable and accrued expenses	11,311	28,381
Short-term debt	0	3,148
Contract liabilities	10,099	7,902
Other current liabilities	0	7
Total Current Liabilities	21,410	39,438
Long-term debt, net of discounts (Note 7)	0	70,854
Warrant liabilities	95	0
Other long-term liabilities	36
Total Liabilities	21,541	110,292
COMMITMENTS AND CONTINGENCIES (Note 10)
MEZZANINE EQUITY:
Series A preferred stock, $0.00001 par value; 3,545,529 shares of Legacy FaZe preferred stock authorized at December 31, 2021; 3,237,800 shares of Legacy FaZe preferred stock issued and outstanding at December 31, 2021	0	33,705
STOCKHOLDERS' DEFICIT:
Preferred stock, $0.0001 par value; 1,000,000 shares of the Company's preferred stock authorized at September 30, 2022; zero share of the Company's preferred stock issued and outstanding at September 30, 2022	0	0
Common stock, $0.0001 par value at September 30, 2022 and December 31, 2021, respectively; 500,000,000 and 71,033,146 shares of common stock authorized at September 30, 2022 and December 31, 2021, respectively; 70,258,004 and 18,841,538 shares of common stock issued and outstanding at September 30, 2022 and December 31, 2021, respectively	7	2
Additional paid-in capital	322,724	5,477
Accumulated deficit	(261,870)	(112,408)
Total Stockholders' Deficit	60,861	(106,929)
TOTAL LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS' DEFICIT	$ 82,402	$ 37,068

Equity

9 Months Ended

Sep. 30, 2022

Stockholders' Equity [Line Items]

EQUITY

Prior to the Business Combination, Legacy FaZe had two classes of capital stock outstanding: common stock and preferred stock. Following the Business Combination, the Company has one class of capital stock outstanding: common stock. The following summarizes the terms of the Company’s capital stock.

Preferred Stock

The Company had 3,545,529 shares of Legacy FaZe preferred stock authorized for issuance with a par value of $0.00001 per share as of December 31, 2021 and prior to the Closing of the Business Combination.

Pursuant to the Company’s second amended and restated certificate of incorporation, the Company is authorized to issue up to 1,000,000 shares of preferred stock with a par value of $0.0001.

The Company had 3,237,800 shares of Legacy FaZe’s preferred stock issued and outstanding as of December 31, 2021. As a result of the Business Combination, 3,237,800 shares of Legacy FaZe’s preferred stock outstanding as of the Closing Date were converted into shares of Legacy FaZe’s common stock on a

one-to-one

basis. As of September 30, 2022, the Company had no shares of preferred stock issued and outstanding.

Common Stock

The Company had 31,900,878 shares of Legacy FaZe common stock authorized for issuance with a par value of $0.00001 per share as of December 31, 2021 and prior to the Closing of the Business Combination.

Pursuant to the Company’s second amended and restated certificate of incorporation, the Company is authorized to issue up to 500,000,000 shares of common stock with a par value of $0.0001 per share.

The Company had 70,258,004 of common stock and 8,461,706 shares of Legacy FaZe’s common stock issued and outstanding as of September 30, 2022 and December 31, 2021 respectively.

Earn-out

As a result of the Business Combination, a number of the Company’s common stock (the “Seller Earn Out”) equal to 6% of the sum of i) the total number of the Company’s common stock issued and outstanding as of immediately after the Closing and ii) the total number of shares of the Company’s common stock equal to the product of the total number of net vested company option shares calculated as of immediately prior to the Closing and the Equity Value Exchange Ratio were issued and is subject to vesting and forfeiture conditions upon reaching certain VWAP per share during the period commencing 90 days after the Closing Date and ending five years after the Closing Date

(“Earn-out

Period”). Among other things further disclosed in the Merger Agreement, if the following events (“Trigger Event”) occurs on or before the five-year anniversary of the Business Combination:

•

the VWAP per share of the Company’s common stock at any point during the trading hours of a trading day is equal to or greater than $12.00 for any 20 trading days within any period of 30 consecutive trading days,

one-third

(“First Target

Earn-Out

Shares”) shall immediately vest and no longer be subject to the forfeiture conditions;

•

the VWAP per share of the Company’s common stock at any point during the trading hours of a trading day is equal to or greater than $14.00 for any 20 trading days within any period of 30 consecutive trading days,

one-third

(“Second Target

Earn-Out

Shares”) shall immediately vest and no longer be subject to the forfeiture conditions;

•

the VWAP per share of the Company’s common stock at any point during the trading hours of a trading day is equal to or greater than $16.00 for any 20 trading days within any period of 30 consecutive trading days,

one-third

(“Third Target

Earn-Out

Shares”) shall immediately vest and no longer be subject to the forfeiture conditions;

•

in the event of a sale during the

Earn-out

Period, to the extent that the holders of the Company’s common stock receive sale price that is greater than or equal to the applicable closing price, any

Earn-out

Shares that have not previously vested shall be deemed to have vested immediately prior to the closing of such sale, and the holders of any

Earn-out

Shares deemed vested shall be eligible to participate in such sale with respect to the sponsor

Earn-out

Shares on the same terms, and subject to the same conditions, as apply to the holders of the Company’s common stock. Upon the consummation of the sale, the

Earn-out

Period shall terminate.

As a result of the Business Combination, among other things further disclosed in the Sponsor Support Agreement, the sponsors agreed that (x) an aggregate of 2,156,250 sponsor shares shall be fully vested and (y) an aggregate of 2,156,250 sponsor shares (the “Sponsor

Earn-Out

Shares”) shall be subject to vesting or forfeiture, during the

Earn-out

Period, at the event the Trigger Event mentioned above occurs.

The

Earn-out

Shares meet the accounting definition of a derivative financial instrument, are considered to be indexed to the Company’s common stock and meet other the conditions in ASC

815-40,

Derivatives and Hedging: Contracts in Entity’s Own Equity, to be classified as equity.

As of September 30, 2022, the

Earn-Out

Period had not begun.

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, 2022, all 5,750,000 Public Warrants remain outstanding.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

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+ Details

Income Taxes (Details)	9 Months Ended
Income Taxes (Details)	Sep. 30, 2022
Income Taxes (Details) [Line Items]
Realized percentage	50.00%

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies, by Policy (Policies) [Line Items]

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts and operations of the Company. All intercompany accounts and transactions have been eliminated. The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding annual financial reporting. Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative U.S. GAAP included in the ASC, and Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates and assumptions.

Unaudited Interim Condensed Consolidated Financial Information

The accompanying Condensed Consolidated Balance Sheet as of September 30, 2022, Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2022 and 2021, Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 and Condensed Consolidated Statements of Stockholders’ Deficit for the three months and nine months ended September 30, 2022 and 2021 are unaudited. The financial data and other information contained in the notes thereto as of and for the three months and nine months ended September 30, 2022, and 2021 are also unaudited. The Consolidated Balance Sheet as of December 31, 2021 was derived from the Company’s audited consolidated financial statements incorporated by reference in the Company’s Form

S-1/A,

which was filed with the SEC on September 29, 2022.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements, and in the opinion of management, reflect all normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of September 30, 2022, the results of its operations for the three months and nine months ended September 30, 2022 and 2021, and its cash flows for the nine months ended September 30, 2022 and 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the years ended December 31, 2021 and 2020, and the notes thereto.

The results for the three months and nine months ended September 30, 2022, are not necessarily indicative of results to be expected for the year ended December 31, 2022, or any other interim periods, or any future year or period.

The significant accounting policies used in preparation of these unaudited interim condensed consolidated financial statements are consistent with those described in the Company’s audited consolidated financial statements as of and for the years ended December 31, 2021 and 2020.

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to

non-emerging

growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public and private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s condensed consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

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 condensed 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 condensed 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.

Reclassification

Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications have no effect on the reported results of operations. Contract assets and accounts receivable have been consolidated into accounts receivable and contract assets on the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021. In addition, prepaid expenses has been reclassified out of prepaid expenses and other assets, with prepaid expenses and other assets presented as separate line items on the Consolidated Balance Sheet as of December 31, 2021.

COVID-19

The continuing presence of

COVID-19

around the world has affected the United States and global economies and has affected the Company’s operations and those of third parties upon which the Company relies, including disruption in staffing, order fulfillment, and demand for product. In addition, the

COVID-19

pandemic has and may continue to affect the Company’s revenues. Additionally, while the duration and potential economic impact brought by the

COVID-19

pandemic are difficult to assess or predict, the

COVID-19

pandemic may reduce the Company’s ability to access capital, which could negatively impact the Company’s short-term and long-term liquidity. The continuing impact of the

COVID-19

pandemic is highly uncertain and subject to change. The Company continues to monitor

COVID-19

and the extent to which the continued spread of the virus adversely affects the Company’s customer base and revenue. As

COVID-19

is complex and evolving, the Company’s plans as described above may change. At this point, the Company cannot reasonably estimate the duration and severity of this pandemic, which could have a material adverse impact on the business, results of operations, financial position, and cash flows.

Content Asset, net

The Company produces programming content which it plans to broadcast on online video and streaming platforms. Costs of produced content consist of development and production costs. These costs are capitalized as “Content Asset, net” on the Condensed Consolidated Balance Sheets.

Each title is predominantly monetized on its own. At the specific title level, the Company tests the content asset for impairment when events and circumstances indicate that its fair value may be less than its unamortized cost. If the carrying value of a content asset exceeds its estimated fair value, an impairment charge will be recorded in the amount of the difference.

In April 2022, the Company performed an evaluation of its content asset and determined that the underlying programming of the content asset will not be released. In addition, the Company determined that the content asset has no further utility. Accordingly, the Company recorded an impairment loss of $1.1 million to write off the entire carrying value of content asset. As such, the Company has no content asset balance as of September 30, 2022. Content asset balance as of September 30, 2021 was 0.2 million.

The Company’s policy is to amortize the content asset once the content airs. Given that the content was fully written off prior to airing, no amortization expense was recorded for the three and nine months ended September 30, 2022. The Company does not own any purchased or licensed programming content.

Exploitation costs such as marketing, advertising, publicity, promotion, and other distribution expenses directly connected with the distribution of the content asset are expensed as incurred.

Revenue Recognition and Contract Balances

In May 2014, the FASB issued new accounting guidance related to revenue recognition. On January 1, 2019, the Company adopted the new accounting standard and related amendments using the modified retrospective approach. Based on the Company’s assessment, the adoption of ASC 606, Revenue from Contracts with Customers (“ASC 606”) did not have a material impact to the Company’s condensed consolidated financial statements and there were no material differences between the Company’s adoption of ASC 606 and its historic accounting under

ASC

605, Revenue Recognition.

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 months and nine months ended September 30, 2022, and 2021, no impairment was recorded from contract assets.

The Company’s allowances for doubtful accounts are typically immaterial and, if required, are based on management’s best estimate of expected credit losses inherent in the Company’s accounts receivable balance.

Contract liabilities are recorded in the event that the Company bills for services in advance of the time the services are performed, or when cash payments are received or due in advance of satisfying the Company’s performance obligations, even if amounts are refundable. Contract liabilities recorded at September 30, 2022, and December 31, 2021, represent the Company’s accounting for the timing difference between when the customer is billed or funds are received and when the performance obligation is satisfied. During the nine months ended September 30, 2022 and 2021, the Company recognized $7.8 million and $0.8 million as revenue that was relating to the contract liability balance as of January 1, 2022 and 2021, respectively.

The following table disaggregates the Company’s revenue by major type for the three months

ended

and nine months ended September 30, 2022, and 2021:


	(in thousands)
	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Brand sponsorships	$	7,072	$	6,385	$	28,054	$	17,080
Content		4,098		3,413		10,641		13,826
Consumer products		471		1,769		2,328		4,001
Esports		2,322		837		7,285		2,651
Other		49		89		313		198

Total revenue	$	14,012	$	12,493	$	48,621	$	37,756

The section below describes the Company’s revenue recognition policies and significant judgments in further detail for each major revenue source of the Company.

Brand Sponsorships

The Company offers advertisers a full range of promotional vehicles, including but not limited to online advertising, livestream announcements, content generation, social media posts, logo placement on the Company’s official merchandise, and special appearances of members of the Company’s talent roster. The Company’s brand sponsorship agreements may include multiple services that are capable of being individually distinct, however the intended benefit is an association with the Company’s brand and the services are not distinct within the context of the contracts. Revenues from brand sponsorship agreements are recognized ratably over the contract term. Payment terms and conditions vary, but payments are generally due periodically throughout the term of the contract. In instances where the timing of revenue recognition differs from the timing of billing, management has determined the brand sponsorship agreements generally do not include a significant financing component.

Content

The Company generates and produces original content which the Company monetizes through Google’s AdSense service. Revenue is variable and is earned when the visitor views or “clicks through” on the advertisement. The amount of revenue earned is reported to the Company monthly and is recognized upon receipt of the report of viewership activity. Payment terms and conditions vary, but payments are generally due within 30 to 45 days after the end of each month.

The Company grants exclusive licenses to customers for certain content produced by the Company’s talent. The Company grants the customer a license to the intellectual property, which is the content and its use in generating advertising revenues, for a

pre-determined

period, for an amount paid by the customer upon execution of the contract. The Company’s only performance obligation is to license the content for use in generating advertising revenues, and recognizes the full contract amount at the point at which the Company provides the customer access to the content, which is at the execution of the contract. The Company has no further performance obligations under these types of contracts and does not anticipate generating any additional revenue from these arrangements apart from the contract amount.

Principal Versus Agent Considerations

A significant amount of the Company’s brand sponsorship and content revenues are generated from the Company’s talent, who are under exclusive, multi-year contracts. The Company’s talent consists of highly trained independent contractors, whose compensation is tied to the revenue that they generate. Management has evaluated the terms of the Company’s brand sponsorship and content agreements and has concluded the Company is the principal. Brand sponsorship and content revenues are reported on a gross basis, while revenue-sharing and other fees paid to the Company’s talent are recorded as cost of revenues. The Company owns the brand and intellectual property, takes primary responsibility for delivery of services, and exercises control over content generation and monetization. The Company contracts directly with Google on its Company operated channels, and the talent contracts directly with Google on their own channels. As part of the Company’s contracts with its talent, the Company agrees to serve as the talent’s exclusive management company as it relates to any and all type of work the talent may perform, including content creation and advertising revenue generated from the content. While the talent owns the content they create while they are under contract with the Company, the talent grants the Company an exclusive perpetual license to the content, and the Company grants limited usage rights of that content back to the talent, conditional upon them complying with their contract. Furthermore, all income earned from services provided by the talent related to gaming, Esports, content creation, or the business of the Company, which includes revenue from advertising via talent content, is subject to the talent agreement and is payable to the Company. In addition, the Company’s contracts with its talent specify rules and restrictions on the content the talent can create and post. As such, through its contracts with talent, the Company is the principal because the Company is the entity exercising primary control over the content generated in the YouTube channels being monetized.

Consumer Products

The Company earns consumer products revenue from sales of the Company’s consumer products on the Company’s website or at live or virtual events. Revenues are recognized at a point in time, as control is transferred to the customer upon shipment. The Company offers customer returns and discounts through a third-party distributor and accounts for this as a reduction to revenue. The Company does not offer loyalty programs or other sales incentive programs that are material to revenue recognition. Payment is due at the time of sale. The Company has outsourced the design, manufacturing, fulfillment, distribution, and sale of the Company’s consumer products to a third party in exchange for royalties based on the amount of revenue generated. Management evaluated the terms of the agreement to determine whether the Company’s consumer products revenues should be reported gross or net of royalties paid. Key indicators that management evaluated in determining whether the Company is the principal in the sale (gross reporting) or an agent (net reporting) include, but are not limited to:

•

the Company is the party that is primarily responsible for fulfilling the promise to provide the specified good or service,

•

the Company has inventory risk before the good is transferred to the customer, and

•

the Company is the party that has discretion in establishing pricing for the specified good or service.

Based on management’s evaluation of the above indicators, the Company reports consumer products revenues on a gross basis.

Esports

League Participation

: Generally, The Company has one performance obligation—to participate in the overall Esport event—because the underlying activities do not have standalone value absent the Company’s participation in the tournament or event. Revenue from prize winnings and profit-share agreements is variable and is highly uncertain. The Company recognizes revenue at the point in time when the uncertainty is resolved.

Player Transfer Fees

: Player transfer agreements include a fixed fee and may include a variable fee component. The Company recognizes the fixed portion of revenue from transfer fees upon satisfaction of the Company’s performance obligation, which coincides with the execution of the related agreement. The variable portion of revenue is considered highly uncertain and is recognized at the point in time when the uncertainty is resolved.

Licensing of Intellectual Property

: The Company’s licenses of intellectual property generate royalties that are recognized in accordance with the royalty recognition constraint. That is, royalty revenue is recognized at the time when the sale occurs.

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, 2022, the Company applies the allowable practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less. Revenue expected to be recognized in the future related to performance obligations that have original expected durations greater than one year that are unsatisfied (or partially unsatisfied) as of September 30, 2022 were not material.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging. Warrants that meet the definition of a derivative financial instrument and the equity scope exception in ASC

815-10-15-74(a)

are classified as equity, and are not subject to remeasurement provided that the Company continues to meet the criteria for equity classification. Warrants that are accounted for as equity-classified are further discussed in Note 8,

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 Condensed 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

Stock-Based Compensation

The Company accounts for its stock-based awards in accordance with ASC 718, Compensation – Stock Compensation, which requires fair value measurement on the grant date and recognition of compensation expense for all stock-based payment awards.

Legacy FaZe has issued stock options before there was an active market for the Company’s common stock. The Board of Directors (the “Board”) was required to estimate the fair value of the Company’s common stock at the time of each award. The Board considered numerous objective and subjective factors in determining the value of the Company’s common stock at each grant date, including the following: (1) the

per-share

price of issuances of the Company’s preferred stock, which the Company sold to outside investors in

arm’s-length

transactions, and the rights, preferences, and privileges of the Company’s preferred stock and common stock; (2) valuations performed by an independent valuation specialist; (3) the Company’s stage of development and revenue growth; (4) the fact that the awards involved illiquid securities in a private company; and (5) the likelihood of achieving a liquidity event for the shares of common stock underlying the awards, such as an initial public offering or sale of the Company, given prevailing market conditions. The Company believed this to have been a reasonable methodology based on certain

arm’s-length

transactions involving the Company’s preferred stock, supported by the results produced by this valuation methodology. Since the Business Combination, the Company’s common stock is now actively traded, so the fair value of the common stock is readily available.

For stock options, the Company estimates the fair value using the Black-Scholes model. The fair value is expensed over the requisite service periods of the awards (usually one to four years), in the period of grant for awards that vest immediately and have no future service condition, or in the period the awards vest immediately after meeting a performance condition becomes probable (i.e., the occurrence of a change in control event). As there was no public market for its common stock at the time of the stock option grant, the Company determined the volatility for options granted based on an analysis of reported data for a peer group of companies. The expected volatility of options granted has been estimated based on an average of the historical volatility measures of this peer group of companies. The expected life of options has been estimated utilizing the “simplified method” due to the lack of available or sufficient historical exercise data for the Company for the applicable options terms. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. The Company has not paid, and does not anticipate paying, cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. As the Company’s stock is now publicly traded after the Business Combination, the fair value of the Company’s stock and the volatility is readily available.

The Black-Scholes model requires the input of certain assumptions that require the Company’s judgment, including the fair value of common shares before the Business Combination, expected term, and the expected price volatility of the underlying stock. The assumptions used in calculating the fair value of stock-based compensation represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change resulting in the use of different assumptions, stock-based compensation expense could be materially different in the future. The Company accounts for forfeitures of stock-based awards as they occur.

Fair Value Measurement

The fair value hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy consists of the following three levels:

Level

: Quoted prices in active markets for identical assets or liabilities

Level

: 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

: 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 Condensed 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 Condensed 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.

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 12,

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, 2022 and December 31, 2021, the Company did not have material assets located outside of the United States. For the three months and nine months ended September 30, 2022, the Company had $1.8 million and $4.0 million of revenue, respectively, earned outside of the United States. The Company earned no material revenue outside of the United States for three months and nine months ended September 30, 2021.

Revisions to Previously Issued Financial Statements

As previously disclosed in the audited consolidated financial statements as of and for the years ended December 31, 2021 and 2020, Legacy FaZe identified a misapplication of the accounting guidance related to accounting for customer returns and discounts. For the nine months ended September 30, 2021, Legacy FaZe recorded $0.8 million in customer discounts and $0.3 million in customer returns. Legacy FaZe had accounted for these as Cost of revenues, as opposed to as a reduction to Revenues.

Legacy FaZe assessed the materiality of this error on prior period financial statements in accordance with the SEC Staff Accounting Bulletin Number 99,

Materiality

, and ASC

250-10,

Accounting Changes and Error Corrections

. As this is a reclassification between Revenues and Cost of revenues, gross margin and net loss are not impacted. The error did not have any effect on Legacy FaZe’s previously reported Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows, and Condensed Consolidated Statements of Shareholders’ Deficit. The Company determined that this error was not material to the financial statements for the nine months ended September 30, 2021. The Company elected to correct this immaterial error as revision to previously issued financial statements and has revised the September 30, 2021 financial statements presented herein.

The following tables set forth the effects of the revisions on the affected line items within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021:


	Nine months ended
	September 30, 2021
	As previously		Revision
	reported		adjustments			As revised
	(in thousands)
Revenues	$	38,808	$	(1,052	)	$	37,756
Cost of revenues		33,330		(1,052	)		32,278

Gross profit	$	5,478	$	—		$	5,478

The following tables set forth the effects of the revisions on the affected line items within Note 2,

Summary of Significant Accounting Policies

, section

Revenue Recognition and Contract Balances

for the financial statements for the nine months ended September 30, 2021:


	Nine months ended
	September 30, 2021
	As previously		Revision
	reported		adjustments			As revised
	(in thousands)
Brand sponsorships	$	17,080	$	—		$	17,080
Content		13,826		—			13,826
Consumer products		5,053		(1,052	)		4,001
Esports		2,651		—			2,651
Other		198		—			198

Total revenue	$	38,808	$	(1,052	)	$	37,756

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU

2020-06,

Debt–Debt with Conversion and Other Options (Subtopic

470-20)

and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic

815-40)

. This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock as well as amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. The ASU is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted for fiscal years beginning after December 15, 2020. Adoption of the ASU can either be on a modified retrospective or full retrospective basis. The Company adopted the standard with an effective date of January 1, 2022 using the modified retrospective approach. The adoption of this ASU impacted the Company’s accounting for the conversion of convertible debt under original contractual terms at the Merger on July 19, 2022 as discussed in Note 7,

Debt

In May 2021, the FASB issued ASU

2021-04,

Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic

470-50),

Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic

815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options.

The amendments are designed to clarify an issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options that remain equity-classified after modification or exchange. The ASU provides guidance on how an issuer would measure and recognize the effects of these transactions. The standard provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense. The ASU is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU

2021-04

prospectively to modifications or exchanges occurring on or after the effective date. The Company adopted the standard with an effective date of January 1, 2022. The adoption of this ASU did not have a material impact on the condensed consolidated financial

statements.

Accounting Pronouncements Not Yet Adopted

As an emerging growth company, the JOBS Act allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an emerging growth company. The adoption dates discussed below reflect this election.

In February 2016, the FASB issued ASU

2016-02,

Leases

(Topic 842)

, which requires lessees to recognize a

right-of-use

(“ROU assets”) asset and a lease liability for all leases with terms greater than 12 months and requires disclosures by lessees and lessors about the amount, timing, and uncertainty of cash flows arising from leases. After the issuance of ASU

2016-02,

the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as “ASC 842”. The ASU is effective for annual periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In September 2016, the FASB issued ASU

2016-13,

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

. This guidance requires the measurement of all expected credit losses for financial assets held at the reporting data based on historical experience, current conditions, and reasonable and supportable forecasts. This guidance also requires enhanced disclosures regarding significant estimates and judgements used in estimating credit losses. The new guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU

2019-12,

Income Taxes

(Topic-740):

Simplifying the Accounting for Income Taxes

, which is intended to simplify various aspects related to accounting for income taxes. ASU

2019-12

removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The guidance is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Loss Per Share (Detail) - Schedule of antidilutive shares in the computation of diluted shares outstanding - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Earnings Per Share [Abstract]
Convertible preferred stock	$ 0	$ 7,209,555
Public Warrant	5,750,000	0
Private Placement Warrant	173,333	0
Seller Earn-out	5,312,098	0
Sponsor Earn-out Shares	2,156,250	0
Legacy FaZe preferred warrant	0	651,951
Unvested restricted stock award	2,248,834	49,426
Stock options	18,055,159	19,912,281
Total potentially dilutive common stock equivalents	$ 33,695,674	$ 27,823,213

Commitments and Contingencies (Details) - Schedule of future minimum lease payment - Long Term Debt Maturity [Member] $ in Thousands	Sep. 30, 2022 USD ($)
Commitments and Contingencies (Details) - Schedule of future minimum lease payment [Line Items]
2022 (remainder)	$ 713
2023	2,895
2024	1,977
2025	5
Thereafter	3
Total minimum lease payment	$ 5,593

Stock Compensation Expense (Tables)

9 Months Ended

Sep. 30, 2022

Stock Compensation Expense (Tables) [Line Items]

Schedule of equity incentive plan

The following table contains information about the plan as of September 30, 2022:


	Awards Reserved for Issuance		Awards Outstanding		Awards Available for Grant
2022 Omnibus Incentive Plan		12,358,689		—		12,358,689
2022 Employee Stock Purchase Plan		75,000,000		—		75,000,000
Amended 2019 Equity Incentive Plan		23,380,173		20,303,993		3,076,180

Schedule of stock-based compensation expense


	(in thousands)
	For the three months ended September 30,				For the nine months ended September 30,
	2022		2021		2022		2021
Stock options	$	336	$	653	$	454	$	653
Restricted stock awards		2,001		2		4,542		2

Total stock–based compensation expense	$	2,337	$	655	$	4,996	$	655

Summary of stock-based compensation in the Company's financial statements

The following

table sets forth the presentation of stock-based compensation in the Company’s financial statements:


	(in thousands)					(in thousands)
	For the three months ended September 30,					For the nine months ended September 30,
	2022			2021		2022			2021
Stock-based compensation expense recorded to additional paid-in capital	$	2,546		$	655	$	5,205		$	655
Stock-based compensation expense capitalized as prepaid expenses		(209	)		—		(209	)		—

Stock-based compensation expense per Condensed Consolidated Statements of Operations	$	2,337		$	655	$	4,996		$	655

Property, Equipment and Leasehold Improvements (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Property, Equipment and Leasehold Improvements (Details) [Line Items]
Depreciation expense	$ 0.3	$ 0.2	$ 0.8	$ 0.3

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2022	Nov. 14, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2022
Amendment Flag	false
Entity Central Index Key	0001839360
Entity Registrant Name	FAZE HOLDINGS INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	85-2081659
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Entity Current Reporting Status	Yes
Entity Address, Address Line One	720 N. Cahuenga Blvd.
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90038
City Area Code	818
Local Phone Number	688-6373
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	FAZE
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		72,506,849
Entity File Number	001-40083
Warrant [Member]
Document Information [Line Items]
Title of 12(b) Security	Warrants, each whole warrant exercisable for one share of common stock
Trading Symbol	FAZEW
Security Exchange Name	NASDAQ

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues	$ 14,012	$ 12,493	$ 48,621	$ 37,756
Cost of revenues	10,470	11,403	34,647	32,278
Gross profit	3,542	1,090	13,974	5,478
Operating expenses:
General and administrative	16,928	8,408	39,025	22,720
Sales and marketing	1,479	1,109	3,557	2,470
Impairment of content assets	0	0	1,073	0
Loss from operations	(14,865)	(8,427)	(29,681)	(19,712)
Other (income)/expense:
Interest expense, net	459	1,517	4,491	3,635
Change in fair value of warrant liabilities	(19)	0	(19)	0
Loss on debt extinguishment	115,292	0	115,292	0
Other, net	1	11	17	(56)
Total other (income)/expense:	115,733	1,528	119,781	3,579
Net loss	$ (130,598)	$ (9,955)	$ (149,462)	$ (23,291)
Basic and diluted net loss per share (in Dollars per share)	$ (2.39)	$ (0.5)	$ (4.65)	$ (1.24)
Basic and diluted weighted average shares outstanding (in Shares)	54,590,538	19,949,557	32,144,653	18,757,552

Property, Equipment and Leasehold Improvements (Details) - Schedule property, equipment and leasehold improvements - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Subtotal	$ 5,100	$ 1,704
Less accumulated depreciation	(1,175)	(779)
Property, equipment and leasehold improvements, net	3,925	925
Furniture / Fixtures [Member]
Property, Plant and Equipment [Line Items]
Subtotal	743	159
Computer equipment [Member]
Property, Plant and Equipment [Line Items]
Subtotal	3,588	708
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Subtotal	106	106
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Subtotal	$ 663	$ 731

Business Combination

9 Months Ended

Sep. 30, 2022

Business Acquisition [Line Items]

Business Combination

3.	BUSINESS COMBINATION

As discussed in Note 1,

Description of the Business

, on July 19, 2022, the Business Combination was consummated. The following transactions occurred in connection with the Business Combination:

•

Redemption of 15,883,395 shares of B. Riley 150 public shares that occurred subsequent to B. Riley 150 stockholders exercising their right to redeem public shares for their pro rata share of the trust account;

•

10,000,000 shares of the Company’s common stock at a purchase price of $10.00 per share were sold and issued for an aggregate purchase price of $100.0 million pursuant to the subscription agreements entered in connection with the PIPE investment, including purchases made by the Company PIPE investor, sponsor related PIPE investors, and third-party investors, and inclusive of shares issued to the sponsor pursuant to the backstop commitment under the sponsor support agreement, representing the portion of the PIPE investment not purchased by third-party investors;

•

525,782 shares of Legacy FaZe’s options to its executives, 1,450,914 shares of Legacy FaZe options, representing 75% of the unvested Legacy FaZe’s options outstanding under its existing incentive plans that remain unvested as of the effective time were vested;

•

42,441 shares of the Company’s restricted stock awards were vested at the Closing, pursuant to existing contractual terms. In addition, 923,886 shares of the Company’s restricted stock awards will vest 90 days after the Closing, pursuant to amendments to certain restricted stock awards entered prior to the Closing;

•

1,047,623 shares of Legacy FaZe’s warrants (including 292,790 shares of preferred stock warrants and 754,833 shares of common stock warrants) were exercised into Legacy FaZe’s common stock and preferred stock, respectively;

•

3,237,800 shares of Legacy FaZe’s preferred stock were converted into Legacy FaZe common stock on a

one-to-one

basis;

•

$72.9 million of Legacy FaZe’s convertible debt (including 2021 Cox Convertible Promissory Notes, 2021 Convertible Promissory Notes, 2020 Secured Convertible Note Purchase Agreements and Secured Convertible Promissory Notes, and 2020 Convertible Promissory Notes) were converted into Legacy FaZe common stock, with $6.9 million accrued interest converted into the common stock, and $2.6 million accrued interest settled in cash;

•

All 22,902,063 shares of issued and outstanding Legacy FaZe’s common stock (including shares of its common stock issued pursuant to the exercise of common stock and preferred stock purchase warrants and the conversion of its convertible debts and the preferred stocks) were surrendered and exchanged into 50,995,637 shares of the Company’s common stock calculated using the Equity Value Exchange Ratio;

•

The Company entered into

earn-out

agreements to remove restrictions of legally outstanding shares if certain share price milestones are achieved. Refer to Note 8,

Equity

; and

•

The Company assumed public and private placement warrants from B. Riley 150. Refer to Note 8,

Equity

, for the public warrants (the “Public Warrants”) and Note 6,

Private Placement Warrants and Recurring Fair Value Measurements

, for the Private Placement Warrants.

As of the Closing Date and following the completion of the Business Combination, the Company had the following outstanding securities:

•

70,132,639 shares of common stock, with a par value of $0.0001 per share.

•

5,923,333 warrants, consisting of 5,750,000 Public Warrants and 173,333 Private Placement Warrants.

As a result of the Business Combination, Legacy FaZe received net cash consideration of $57.8 million. Legacy FaZe and B. Riley 150 incurred costs that were considered direct and incremental costs associated with the transaction. These costs amounted to $25.9 million and were treated as a reduction of additional

paid-in

capital.

Cash flows provided to or paid by Legacy FaZe or the Company in connection with the Business Combination are included in the Company’s Condensed Consolidated Statements of Cash Flows as financing activities.

Property, Equipment and Leasehold Improvements

9 Months Ended

Sep. 30, 2022

Property, Equipment and Leasehold Improvements [Line Items]

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

4.	PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements as of September 30, 2022 and December 31, 2021 consisted of the following:


	(in thousands)
	September 30,			December 31,
	2022			2021
Furniture / Fixtures	$	743		$	159
Computer equipment		3,588			708
Vehicles		106			106
Leasehold improvements		663			731

Subtotal		5,100			1,704
Less accumulated depreciation		(1,175	)		(779	)

Property, equipment and leasehold improvements, net	$	3,925		$	925

Depreciation expense totaled $0.3 million and $0.8 million for the three months and nine months ended September 30, 2022, respectively, and $0.2 million and $0.3 million for the three and nine months ended September 30, 2021, respectively. During the three months and nine months ended September 30, 2022, the Company disposed of certain leasehold improvements that were fully depreciated at the time of disposal, and there was no gain or loss on disposal.

Debt (Details)	1 Months Ended			3 Months Ended		9 Months Ended
Debt (Details)	Oct. 31, 2021 USD ($)	Aug. 31, 2021 USD ($)	May 31, 2020 USD ($)	Sep. 30, 2022 USD ($) shares	Aug. 31, 2021 USD ($)	Sep. 30, 2022 USD ($) shares	May 31, 2022	Mar. 31, 2022 USD ($)	Feb. 01, 2022 shares	Dec. 31, 2021 USD ($)	Sep. 30, 2021 USD ($)
Debt (Details) [Line Items]
Conversion price, percentage					90.00%
Combined common stock shares (in Shares) \| shares				22,902,063		22,902,063
Interest expense				$ 500,000		$ 4,500,000
Contractual interest expense				500,000		4,400,000
Amortization of debt issuance costs				9,519		100,000
Debt Instrument Accrued Interest Settled In Cash						2,600,000
Long-term debt, net of discounts (Note 7)				$ 0		0				$ 70,854,000
Minimum [Member]
Debt (Details) [Line Items]
Total shares of capital stock						250,000,000
Maximum [Member]
Debt (Details) [Line Items]
Total shares of capital stock						200,000,000
2022 B. Riley Term Loan [Member]
Debt (Details) [Line Items]
Convertible promissory notes								$ 10,000,000
Gross proceeds								$ 10,000,000
Interest accrued, percentage								7.00%
Debt Instrument Accrued Interest Settled In Cash						400,000
Repayments of Convertible Debt						$ 20,000,000
2021 Cox Convertible Promissory Notes [Member]
Debt (Details) [Line Items]
Purchase of additional units		$ 15,000,000
Interest accrued, percentage				10.00%		10.00%
Promissory notes		$ 10,000,000		$ 15,000,000	$ 10,000,000	$ 15,000,000
Conversion price, percentage		50.00%
Aggregate principal amount	$ 5,000,000
Outstanding debt						250,000,000
Number of shares outstanding						25,000,000
Enterprise value					250,000,000
Debt Instrument, Increase, Accrued Interest						1,300,000
Long-term debt, net of discounts (Note 7)				$ 0		$ 0
2021 Cox Convertible Promissory Notes [Member] \| Common Stock [Member]
Debt (Details) [Line Items]
Debt Instrument, Convertible, Number of Equity Instruments \| shares						3,096,908
Convertible Promissory Note [Member]
Debt (Details) [Line Items]
Promissory notes		$ 700,000			$ 700,000
Bear interest percentage				4.00%		4.00%
Debt Instrument, Increase, Accrued Interest						$ 26,770,000
Debt Instrument, Convertible, Number of Equity Instruments \| shares						133,276
Convertible Promissory Note [Member] \| Common Stock [Member]
Debt (Details) [Line Items]
Promissory notes				$ 700,000		$ 700,000
2020 Secured Convertible Note Purchase Agreement and Secured Convertible Promissory Note [Member]
Debt (Details) [Line Items]
Purchase of additional units	$ 36,700,000
Secured convertible promissory notes				91,700,000		91,700,000
Investors total				$ 55,000,000		$ 55,000,000
Purchase agreement description						an initial public offering, (ii) a transaction or series of related transactions pursuant to which more than 50% of Legacy FaZe’s equity securities come to be owned by an unrelated third party or (iii) the sale of all or substantially all of the assets of Legacy FaZe (a “Liquidity Event”). The CPH Notes are convertible, at the investor’s election, into shares of common stock or shares of the series or class of capital stock (“Conversion Shares”)
Enterprise value as a condition for converting debt into equity											$ 250,000,000
Bear interest rate				10.00%		10.00%
Convertible Debt, Current				$ 54,700,000		$ 54,700,000
Debt Instrument, Increase, Accrued Interest						$ 5,300,000
2020 Secured Convertible Note Purchase Agreement and Secured Convertible Promissory Note [Member] \| Common Stock [Member]
Debt (Details) [Line Items]
Debt Instrument, Convertible, Number of Equity Instruments \| shares						15,769,002
2020 Secured Convertible Note Purchase Agreement and Secured Convertible Promissory Note [Member] \| Qualified Financing [Member]
Debt (Details) [Line Items]
Minimum proceeds from public financing						$ 15,000,000
Estimated gain loss on debt conversion				112,900,000		112,900,000
2020 Secured Convertible Note Purchase Agreement and Secured Convertible Promissory Note [Member] \| Minimum [Member]
Debt (Details) [Line Items]
Combined common stock shares (in Shares) \| shares									523,763
2020 Secured Convertible Note Purchase Agreement and Secured Convertible Promissory Note [Member] \| Maximum [Member]
Debt (Details) [Line Items]
Combined common stock shares (in Shares) \| shares									4,800,000
2020 Convertible Promissory Notes [Member]
Debt (Details) [Line Items]
Convertible promissory notes				2,500,000		2,500,000
2020 Convertible Promissory Notes [Member] \| Qualified Financing [Member]
Debt (Details) [Line Items]
Estimated gain loss on debt conversion				2,400,000		2,400,000
Paycheck Protection Program Loan ("PPP Loan") [Member]
Debt (Details) [Line Items]
Bear interest percentage							1.00%
Business administration principal amount			$ 1,100,000
Debt Instrument Accrued Interest Settled In Cash						24,760,000
Repayments of Convertible Debt						1,100,000
2021 Cox Convertible Promissory Notes [Member]
Debt (Details) [Line Items]
Interest accrued, percentage		4.00%			4.00%
2020 Convertible Promissory Notes [Member]
Debt (Details) [Line Items]
Convertible Debt, Current				$ 2,500,000		2,500,000
Debt Instrument, Increase, Accrued Interest						$ 200,000
2020 Convertible Promissory Notes [Member] \| Common Stock [Member]
Debt (Details) [Line Items]
Debt Instrument, Convertible, Number of Equity Instruments \| shares						546,220

Loss Per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Loss Per Share

12.	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, 2022 and 2021. 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, 2022 and 2021:


	(in thousands, except shares and per-share information)
	Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021
Basic and diluted loss per share:
Net loss attributable to FaZe Holdings Inc., basic and diluted	$	(130,598	)	$	(9,955	)	$	(149,462	)	$	(23,291	)
Weighted-average common shares outstanding, basic and diluted		54,590,538			19,949,557			32,144,653			18,757,552
Net loss per share, basic and diluted	$	(2.39	)	$	(0.50	)	$	(4.65	)	$	(1.24	)

Intangibles Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Intangibles Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Intangibles Assets (Details) [Line Items]
Amortization expense	$ 200	$ 100	$ 400	$ 400
Fully amortized from intangible assets			947
Intangible Assets [Member]
Intangibles Assets (Details) [Line Items]
Fully amortized from intangible assets			$ 900

Debt

9 Months Ended

Sep. 30, 2022

Debt [Line Items]

DEBT

As of September 30, 2022, there is no debt outstanding as all outstanding debts have been paid off or converted into Legacy FaZe common stock and eventually to Company common stock as a result of the Business Combination. Debt as of December 31, 2021 consisted of the following:

2021 Convertible Promissory Notes


As of December 31, 2021
	(in thousands)
	Unpaid						Unamortized			Net Carrying
	Principal		Short-term		Long-term		Issuance Costs			Value
2021 Cox Convertible Promissory Note	$	15,000	$	—	$	15,000	$	—		$	15,000
2021 Convertible Promissory Notes		675		—		675		—			675
2020 Secured Convertible Promissory Note		55,000		—		55,000		(358	)		54,642
2020 Convertible Promissory Notes		2,525		2,025		500		—			2,525
2020 PPP Loan		1,123		1,123		—		—			1,123
Other loans		37		—		37		—			37

Total principal amount outstanding	$	74,360	$	3,148	$	71,212	$	(358	)	$	74,002

2021 Cox Convertible Promissory Notes

In August 2021, Legacy FaZe entered into an agreement with Cox Investment Holdings, Inc. (“Cox”) to which the Legacy FaZe sold convertible promissory notes totaling $10.0 million. The maturity date is the earliest of (a) December 15, 2023, (b) the consummation of an initial public offering, (c) the merger of Legacy FaZe with another entity, (d) a transaction pursuant to which more than 50% of Legacy FaZe’s equity securities come to be owned by an unrelated third party, (e) a sale of all or substantially all of the assets of Legacy FaZe, or (f) the consummation of a private round of equity financing resulting in aggregate gross proceeds to Legacy FaZe of at least $15.0 million (“Cox Qualified Financing”). In addition, Cox exercised its right to purchase an additional $5.0 million in Cox Convertible Promissory Notes in October 2021.

The convertible promissory notes are convertible, at the investor’s election, into shares of common stock or shares of the series or class of capital stock most recently sold in a Cox Qualified Financing consummated prior to such time. The conversion price is equal to the lesser of (a) the imputed

pre-money

enterprise value of Legacy FaZe with respect to the Cox Qualified Financing most recently consummated prior to the time of determination, and (b) $250.0 million minus the then outstanding debt of Legacy FaZe in excess of $25.0 million, divided by the total number of shares of capital stock of Legacy FaZe then currently issued and outstanding, calculated on an

as-exercised,

as-converted,

fully diluted basis, but excluding (a) shares of capital stock of Legacy FaZe issuable upon the conversion of the note, and (b) shares of capital stock issuable upon conversion of other convertible notes or indebtedness then outstanding.

The 2021 Cox Convertible Promissory Notes, which cannot be prepaid without consent of the holder, bear interest at a rate of 10.00% per annum and are secured against substantially all assets of Legacy FaZe.

Legacy FaZe evaluated the embedded conversion feature in accordance with ASC 815 and determined that embedded conversion feature did not meet the definition of a derivative and therefore did not account for it as a separate derivative liability.

As a result of the Business Combination, on the Closing Date, $15.0 million of Legacy FaZe’s 2021 Cox Convertible Promissory Notes with $1.3 million accrued interest were converted into 3,096,908 shares of the Company’s common stock pursuant to original contractual terms and derecognized at the carrying amount of the debt.

In June and August 2021, Legacy FaZe entered into Convertible Promissory Note agreements with accredited investors pursuant to which Legacy FaZe sold Promissory Notes totaling $0.7 million. For each note issued, the maturity date is the second anniversary of the date of the Purchase Agreement. The conversion price is equal to 90% of the price per share sold in a preferred stock financing, provided the price is subject to adjustment in the event Legacy FaZe’s enterprise value is greater than $250.0 million on that date.

The 2021 Convertible Promissory Notes, which cannot be prepaid without consent of the holder, bear interest at a rate of 4.00% per annum and are subordinate and junior in right of payment to any senior indebtedness of Legacy FaZe.

As a result of the Business Combination, on the Closing Date, $0.7 million of Legacy FaZe’s 2021 Convertible Promissory Notes with $26,770 accrued interest were converted into 133,276 shares of the Company’s common stock pursuant to original contractual terms and derecognized at the carrying amount of the debt.

2020 Secured Convertible Note Purchase Agreements and Secured Convertible Promissory Notes

In December 2020, Legacy FaZe entered into a Secured Convertible Note Purchase Agreement as amended on February 22, 2021, April 23, 2021, and August 16, 2021 (together, the “Purchase Agreement”) with CPH Phase II SPV L.P. and CPH Phase III SVP L.P., accredited investors, (collectively referred to as “CPH Noteholders”) pursuant to which Legacy FaZe agreed to sell Secured Convertible Promissory Notes (the “CPH Notes”), for a total of up to $91.7 million, to the investors. Legacy FaZe issued Secured Convertible Promissory Notes to the investors for a total of $55.0 million.

In October 2021, Legacy FaZe entered into an agreement with the CPH Noteholders, for the settlement of the accrued interest on the CPH Notes and the settlement of the purchaser’s right, but not obligation, to purchase additional CPH Notes from Legacy FaZe for up to $36.7 million expiring in June 2022 (“CPH Right”). The CPH Right has an anti-dilution feature and survives beyond a

change-in-control

event, including a merger transaction with a special purpose acquisition company. Legacy FaZe settled the accrued interest through February 1, 2022 and the CPH Right for 523,763 and 4,800,000 shares of the Company’s common stock, respectively, issuable upon the close of the Merger. The accrued interest after February 1, 2022 was paid in cash. The common stock and cash for accrued interest and the common stock for the CPH Right was settled upon close of the Merger on July 19, 2022.

For each note issued under the Purchase Agreement, the maturity date is the earlier of December 15, 2023 of either (i) an initial public offering, (ii) a transaction or series of related transactions pursuant to which more than 50% of Legacy FaZe’s equity securities come to be owned by an unrelated third party or (iii) the sale of all or substantially all of the assets of Legacy FaZe (a “Liquidity Event”). The CPH Notes are convertible, at the investor’s election, into shares of common stock or shares of the series or class of capital stock (“Conversion Shares”) sold in a private round of equity financing consummated after January 1, 2021 that result in gross proceeds of at least $15.0 million (a “CPH Qualified Financing”). The conversion price is equal to the imputed

pre-money

enterprise value of Legacy FaZe with respect to the CPH Qualified Financing divided by the total number of shares of capital stock then currently issued and outstanding, calculated on an

as-exercised,

as-converted,

fully diluted basis, but excluding shares of capital stock of Legacy FaZe issuable to the investor upon conversion of the CPH Notes. The conversion price is subject to adjustment in the event Legacy FaZe’s enterprise value is greater than $250.0 million at the time of conversion.

Legacy FaZe may prepay the CPH Notes in whole or in part at any time without penalty, provided the investor has the right to utilize the proceeds to purchase the Conversion Shares at the conversion price prior to the maturity date. The CPH Notes bear interest at 10.00% per annum and are secured against substantially all assets of Legacy FaZe.

As a result of the Business Combination, on the Closing Date, $54.7 million of Legacy FaZe’s 2020 Secured Convertible Note Purchase Agreements and Secured Convertible Promissory Notes, with $5.3 million accrued interest, were converted into 15,769,002 shares of the Company’s common stock. In addition, $2.6 million of accrued interest was settled by cash. Upon the conversion of such debts under the Merger Agreement terms, approximately $112.9 million of loss on debt extinguishment was recognized in the three months and nine months period ended September 30, 2022.

2020 Convertible Promissory Notes

In March — June 2020, Legacy FaZe entered into Convertible Promissory Note agreements with accredited investors pursuant to which Legacy FaZe sold Convertible Promissory Notes totaling $2.5 million. Subsequent to the execution of the Merger Agreement, in November and December 2021, Legacy FaZe entered into consent letters with each of the 2020 Convertible Promissory Note Holders wherein each note was converted into a number of shares of Legacy FaZe’s common stock immediately prior to the Merger. The conversion price was equal to $250.0 million or $200.0 million divided by the total number of shares of capital stock of Legacy FaZe issued and outstanding, calculated on an

as-exercised,

as-converted,

fully diluted basis, but excluding shares of capital stock of Legacy FaZe issued or issuable upon conversion of the note and other convertible notes of Legacy FaZe.

The 2020 Convertible Promissory Notes, which cannot be prepaid without consent of the holder, bear interest at a rate of 4.00% per annum and are subordinate and junior in right of payment to any senior indebtedness of Legacy FaZe.

As a result of the Business Combination, on the Closing Date, $2.5 million of Legacy FaZe’s 2020 Convertible Promissory Notes, with $0.2 million accrued interest, were converted into 546,220 shares of the Company’s common stock. Upon the conversion of such debts under the Merger Agreement terms, approximately $2.4 million of loss on debt extinguishment was recognized in the three months and nine months period ended September 30, 2022.

2022 B.

Riley Term Loan

In March 2022, Legacy FaZe entered into a Bridge Loan Agreement with B. Riley Commercial Capital, LLC (“B. Riley Lender”), an affiliate of B. Riley 150, pursuant to which Legacy FaZe received a term loan in the amount of $10.0 million in a single advance (“Initial Term Loan”). Upon receipt of a borrowing notice from Legacy FaZe to B. Riley Lender in April 2022, B. Riley Lender issued Legacy FaZe a second advance of $10.0 million (“Final Term Loan”). The maturity date is the Closing Date of the Merger Agreement.

The 2022 B. Riley

Term Loan accrues interest at a rate of 7.00% per annum, compounded quarterly, with such interest accrued on the last business day of each calendar quarter, and shall be paid in cash on the maturity date and is secured against substantially all assets of Legacy FaZe.

As a result of the Business Combination, on the Closing Date, the Company paid the $20.0 million 2022 B. Riley Term Loan and $0.4 million of accrued interest with the proceeds of the Merger.

2020 Paycheck Protection Program Loan

In May 2020, Legacy FaZe entered into a Promissory Note dated May 4, 2020 (the “PPP Loan”) with Harvest Small Business Finance, LLC (“Harvest”), pursuant to which Harvest agreed to make a loan to Legacy FaZe under the Paycheck Protection Program offered by the U.S. Small Business Administration in a principal amount of $1.1 million pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The PPP Loan proceeds are available to be used to pay for payroll costs, including salaries, commissions and similar compensation, group health care benefits and paid leaves, rent, utilities, and interest on certain other outstanding debt.

Legacy FaZe is required to make principal and interest payments in monthly installments, beginning ten months after the last day of the covered period, on the balance that is not forgiven. The loan matures in May 2022 and bears interest at a rate of 1.00% per annum.

As a result of the Business Combination, on the Closing Date, the Company paid the $1.1 million of outstanding PPP Loan and $24,760 of accrued interest with the proceeds of the Merger.

Interest Expense

Interest expense for the three months September 30, 2022 was $0.5 million, comprised of $0.5 million of contractual interest expense and $9,519 of amortization of debt issuance costs. Interest expense for the nine months ended September 30, 2022 was $4.5 million, comprised of $4.4 million of contractual interest expense and $0.1 million of amortization of debt issuance costs.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI https://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Summary of Significant Accounting Policies [Line Items]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Unaudited Interim Condensed Consolidated Financial Information

S-1/A,

which was filed with the SEC on September 29, 2022.

Emerging Growth Company

non-emerging

Use of Estimates

The preparation

of the Company’s condensed consolidated financial statements in

conformity

COVID-19

Reclassification

COVID-19

The continuing presence of

COVID-19

pandemic has and may continue to affect the Company’s revenues. Additionally, while the duration and potential economic impact brought by the

COVID-19

pandemic are difficult to assess or predict, the

COVID-19

pandemic may reduce the Company’s ability to access capital, which could negatively impact the Company’s short-term and long-term liquidity. The continuing impact of the

COVID-19

pandemic is highly uncertain and subject to change. The Company continues to monitor

COVID-19

and the extent to which the continued spread of the virus adversely affects the Company’s customer base and revenue. As

COVID-19

Content Asset, net

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.

Revenue Recognition and Contract Balances

ASC

605, Revenue Recognition.

The following table disaggregates the Company’s revenue by major type for the three months

ended

and nine months ended September 30, 2022, and 2021:


	(in thousands)
	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Brand sponsorships	$	7,072	$	6,385	$	28,054	$	17,080
Content		4,098		3,413		10,641		13,826
Consumer products		471		1,769		2,328		4,001
Esports		2,322		837		7,285		2,651
Other		49		89		313		198

Total revenue	$	14,012	$	12,493	$	48,621	$	37,756

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

Content

pre-determined

Principal Versus Agent Considerations

Consumer Products

•

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

Warrants

815-10-15-74(a)

Equity

re-assessed

Private Placement Warrants and Recurring Fair Value Measurements

Stock-Based Compensation

per-share

price of issuances of the Company’s preferred stock, which the Company sold to outside investors in

arm’s-length

Fair Value Measurement

Level

: Quoted prices in active markets for identical assets or liabilities

Level

: 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

: 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

See Note 6,

Private Placement Warrants and Recurring Fair Value Measurements,

for additional information on the Company’s liabilities measured at fair value.

Loss Per Share

Loss Per Share,

for additional information on dilutive securities.

Segment Reporting

Revisions to Previously Issued Financial Statements

Legacy FaZe assessed the materiality of this error on prior period financial statements in accordance with the SEC Staff Accounting Bulletin Number 99,

Materiality

, and ASC

250-10,

Accounting Changes and Error Corrections

The following tables set forth the effects of the revisions on the affected line items within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2021:


	Nine months ended
	September 30, 2021
	As previously		Revision
	reported		adjustments			As revised
	(in thousands)
Revenues	$	38,808	$	(1,052	)	$	37,756
Cost of revenues		33,330		(1,052	)		32,278

Gross profit	$	5,478	$	—		$	5,478

The following tables set forth the effects of the revisions on the affected line items within Note 2,

Summary of Significant Accounting Policies

, section

Revenue Recognition and Contract Balances

for the financial statements for the nine months ended September 30, 2021:


	Nine months ended
	September 30, 2021
	As previously		Revision
	reported		adjustments			As revised
	(in thousands)
Brand sponsorships	$	17,080	$	—		$	17,080
Content		13,826		—			13,826
Consumer products		5,053		(1,052	)		4,001
Esports		2,651		—			2,651
Other		198		—			198

Total revenue	$	38,808	$	(1,052	)	$	37,756

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU

2020-06,

Debt–Debt with Conversion and Other Options (Subtopic

470-20)

and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic

815-40)

Debt

In May 2021, the FASB issued ASU

2021-04,

Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic

470-50),

Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic

815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options.

2021-04

statements.

Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU

2016-02,

Leases

(Topic 842)

, which requires lessees to recognize a

right-of-use

2016-02,

In September 2016, the FASB issued ASU

2016-13,

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

In December 2019, the FASB issued ASU

2019-12,

Income Taxes

(Topic-740):

Simplifying the Accounting for Income Taxes

, which is intended to simplify various aspects related to accounting for income taxes. ASU

2019-12

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (149,462)	$ (23,291)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense (recovery)	378	(26)
Additions to content asset	(599)	0
Depreciation & amortization expense	1,230	675
Content asset impairment	1,073	0
Stock-based compensation expense	4,996	655
Fair Value Adjustment of Warrants	(19)
Non-cash interest expense	4,491	3,635
Loss on debt extinguishment	115,292
Other	(37)	(73)
Changes in operation assets and liabilities:
Accounts receivable and contract assets	(11,742)	(3,784)
Inventory	6	48
Prepaid expenses and other assets	(6,127)	(260)
Accounts payable and accrued expenses	(9,728)	(1,789)
Contract liabilities	2,197	3,053
Other current liabilities	(7)	(50)
Increase Decrease In Short Term Debt	(420)
Other long-term liabilities	36	0
NET CASH USED IN OPERATING ACTIVITIES	(48,442)	(21,207)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment	(3,804)	(305)
Purchase of intangible assets	(607)	(314)
Issuance of note receivable	0	(123)
NET CASH USED IN INVESTING ACTIVITIES	(4,411)	(742)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of loan principal	(21,123)	(385)
Proceeds from issuance of term loan	20,000	0
Proceeds from issuance of convertible debt	0	35,675
Issuance of common stock in connection with exercise of stock options	220	0
Payments of transaction fees by Legacy FaZe	(25,146)	0
Proceeds from recapitalization of B. Riley 150, net of B. Riley 150 redemptions and transaction costs	5,655	0
Proceeds from PIPE offering	100,000	0
Proceeds from conversion of preferred and common warrants	101	0
Payment of debt issuance costs	0	(254)
NET CASH PROVIDED BY FINANCING ACTIVITIES	79,707	35,036
NET CHANGE IN CASH AND RESTRICTED CASH	26,854	13,087
Cash and restricted cash at beginning of period	17,618	4,431
CASH AND RESTRICTED CASH AT END OF PERIOD	44,472	17,518
RECONCILIATION TO CONSOLIDATED BALANCE SHEETS
Cash	43,872	16,918
Restricted cash	600	600
Cash and restricted cash	44,472	17,518
SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITIES:
Cash paid for interest	3,027	0
SUPPLEMENTAL DISCLOSURE FOR NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capitalization of deferred transaction costs included in accounts payable	0	1,764
Issuance of common stock in connection with litigation settlement	294	720
Purchase of property, plant and equipment in accrued expenses	28	0
Issuance of common stock in connection with exercise of stock options prior to receipt of cash	0	33
Conversion of convertible notes and accrued interest into common stock under original contractual terms	17,551	0
Conversion of redeemable convertible preferred stock to common stock pursuant to Business Combination	$ 33,705	$ 0

Intangibles Assets

9 Months Ended

Sep. 30, 2022

Intangibles Assets [Line Items]

INTANGIBLES ASSETS

5.	INTANGIBLE ASSETS

Intangible assets as of September 30, 2022 and December 31, 2021 consisted of the following:


		(in thousands)
As of September 30, 2022	Useful Life	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Website development	3 years	$	332	$	145	$	187
Talent acquisition	2 – 3 years		1,237		477		760

Intangible assets, net		$	1,569	$	622	$	947


		(in thousands)
As of December 31, 2021	Useful Life	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Website development	3 years	$	211	$	75	$	136
Talent acquisition	2 – 3 years		1,653		1,051		602

Intangible assets, net		$	1,864	$	1,126	$	738

Amortization expense totaled $0.2 million and $0.4 million for the three months and nine months ended September 30, 2022, respectively, and $0.1 million and $0.4 million for the three months and nine months ended September 30, 2021, respectively.

The following table presents the estimated future amortization of intangible assets:


Years ending December 31,	(in thousands)
2022 (remainder)	$	155
2023		456
2024		311
2025		25

Total future amortization of amortizable intangible assets	$	947

During the nine months ended September 30, 2022, the Company removed $0.9 million of intangible assets, that were fully amortized from intangible assets and accumulated amortization, and there was no gain or loss on the removal. The Company did not have any fully amortized intangible assets as of September 30, 2022.

Litigation

9 Months Ended

Sep. 30, 2022

Litigation [Line Items]

LITIGATION

11.	LITIGATION

From time to time, in the normal course of operations, the Company is subject to litigation matters and claims, including claims relating to employee relations and business practices. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity, or results of operations.

On August 12, 2020, Greg Selkoe, President of the Company until May 2020, filed suit against the Company for severance and sums related to his termination from the Company, which was initiated in January 2020. The Company and Mr. Selkoe reached a settlement, including a severance payment to Mr. Selkoe and forfeiture by Mr. Selkoe of the entirety of his stock options. The Company accrued $3.2 million for the year ended December 31, 2020. The Company paid $2.9 million of the severance payments to Mr. Selkoe in 2021.

In May 2022, the Company made a payment of $0.3 million for the remainder of the balance.

On September 14, 2020, Adam Salman of Adult Use Holdings, Inc. and Igor Gimelshtein of Zola Ventures Ltd., claimed that the Company owes approximately $2.5 million to Salman and Gimelshtein in connection with alleged funding to the Company of $30.0 million by Bridging Finance Group. The Company has denied any liability in connection with this claim and has agreed to arbitrate the dispute, which is ongoing. The Company does not believe a material loss is probable at this time. As result, the Company has not recorded a reserve with respect to this litigation.

On December 7, 2020, the Company filed an arbitration demand against its former Chief Legal Officer, Phillip Gordon (“Gordon”), alleging claims for fraud, breach of fiduciary duty, breach of duty of loyalty, and breach of employment agreement. The Company terminated Gordon effective as of December 5, 2020 based on the results of an internal investigation. Gordon has denied that the Company had cause to terminate him and filed counterclaims seeking payment of severance under his employment agreement in the total amount of $3.0 million, plus payment of $0.5 million in bonus compensation. Subsequent to December 31, 2021, as a result of arbitration proceedings, the Company has entered into a settlement agreement whereby Gordon agreed to the cancellation of 90,000 of the 790,000 outstanding stock options previously issued to him and to release any actions, claims, damages, judgments or agreements arising out of his relationship with the Company in exchange for $1.9 million in cash. The Company recorded a legal accrual for $1.9 million as of December 31, 2021. The initial payment of $0.4 million was made in the first quarter of 2022. The outstanding balance has been settled as of the third quarter of 2022.

On May 21, 2021, Alissa Violet Marie Butler filed suit in the Superior Court of the State of California for the County of Los Angeles against FaZe Clan Inc., Dentons US LLP, and Wilson Sonsini Goodrich & Rosati, P.C. Ms. Butler alleges that she is entitled to shares of the Company’s stock. Subsequent to December 31, 2021, the Company has reached a preliminary settlement with Ms. Butler for a total of $0.8 million payable in a combination of cash and common stock to settle Ms. Butler’s claim. The Company recorded a legal accrual for $0.8 million as of December 31, 2021. The outstanding balance has been settled as of the third quarter of 2022.

In 2021, the Company was made aware of a claim from Treschow-Fritzoe AS that the Company repaid the wrong party for certain funds received by the Company in 2017 and recorded a legal accrual of $1.2 million as of December 31, 2020. In October 2021, the Company entered into a settlement agreement with Treschow-Fritzoe AS and adjusted its legal accrual to $0.8 million as of December 31, 2021. The Company paid $0.8 million in April 2022.

Summary of Significant Accounting Policies (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)
Summary of Significant Accounting Policies (Details) [Line Items]
Contract liability			$ 7,800	$ 800
Segment			1
Customer discounts		$ 800		800
Customer returns		300		300
Impairment of Intangible Assets, Finite-Lived			$ 1,100
Amortization of Intangible Assets			947
Revenues	$ 14,012	12,493	48,621	37,756
Non-US [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Revenues	1,800	0	4,000	0
Media Content [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Finite-Lived Intangible Assets, Net	0	$ 200	0	$ 200
Amortization of Intangible Assets	$ 0		$ 0

Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) $ in Thousands	Total	Conversion of preferred stock to FaZe common stock [Member]	Previously Reported [Member]	Common Stock	Common Stock Conversion of preferred stock to FaZe common stock [Member]	Common Stock Conversion of B Riley Class B stock to FaZe common stock [Member]	Common Stock Previously Reported [Member]	Common Stock Revision of Prior Period, Adjustment [Member]	Additional Paid-in Capital	Additional Paid-in Capital Conversion of preferred stock to FaZe common stock [Member]	Additional Paid-in Capital Previously Reported [Member]	Additional Paid-in Capital Revision of Prior Period, Adjustment [Member]	Accumulated Deficit	Accumulated Deficit Previously Reported [Member]
Balance at Dec. 31, 2020	$ (72,456)		$ (72,456)	$ 2				$ 2	$ 3,084		$ 3,086	$ (2)	$ (75,542)	$ (75,542)
Balance (in Shares) at Dec. 31, 2020				16,470,897			7,397,055	9,073,842
Exercise of stock option	33								33
Exercise of stock option (in Shares)				85,819
Issuance of common stock	720								720
Issuance of common stock (in Shares)				2,226,683
Issuance of restricted stock awards	2								2
Issuance of common stock options and stock option reprice ( Share )				0
Issuance of common stock options and stock option reprice ( Value )	653								653
Net loss	(23,291)												(23,291)
Balance at Sep. 30, 2021	(94,339)			$ 2					4,492				(98,833)
Balance (in Shares) at Sep. 30, 2021				18,783,399
Balance at Jun. 30, 2021	(85,792)		(85,792)	$ 2				$ 2	3,084		3,086	(2)	(88,878)	(88,878)
Balance (in Shares) at Jun. 30, 2021				16,470,897			7,397,055	9,073,842
Exercise of stock option	33								33
Exercise of stock option (in Shares)				85,819
Issuance of common stock	720								720
Issuance of common stock (in Shares)				2,226,683
Issuance of restricted stock awards	2								2
Issuance of common stock options and stock option reprice ( Share )				0
Issuance of common stock options and stock option reprice ( Value )	653								653
Net loss	(9,955)												(9,955)
Balance at Sep. 30, 2021	(94,339)			$ 2					4,492				(98,833)
Balance (in Shares) at Sep. 30, 2021				18,783,399
Balance at Dec. 31, 2021	(106,929)		(106,929)	$ 2				$ 2	5,477		5,479	(2)	(112,408)	(112,408)
Balance (in Shares) at Dec. 31, 2021				18,841,538			8,461,706	10,379,832
Issuance of common stock upon vesting of restricted stock awards
Issuance of common stock upon vesting of restricted stock awards (in Shares)				212,767
Exercise of stock option	220								220
Exercise of stock option (in Shares)				576,425
Adjustment To Additional Paid In Capital Share Based Compensation Requisite Service Period Recognition Value	5,205								5,205
Stock Issued During Period Shares Issued In Connection With Litigation Settlement				28,994
Stock Issued During Period Value Issued In Connection With Litigation Settlement	294								294
Exercise of common and preferred warrants (in Shares)				2,332,117
Exercise of common and preferred warrants	101								101
Conversion of Stock, Amount Issued		$ 33,705			$ 1					$ 33,704
Conversion of Stock, Shares Issued					7,209,555	4,832,500
Conversion of convertible debt to FaZe common stock	195,117			$ 2					195,115
Conversion of convertible debt to FaZe common stock (Shares)				19,545,406
Issuance of earn-out shares	0			$ 1					(1)
Issuance of earn-out shares (Shares)				5,312,098
Recapitalization transaction, net of equity issuance costs (in Shares)				1,366,604
Recapitalization transaction, net of equity issuance costs	(17,390)			$ 0					(17,390)
Proceeds from PIPE offerings	100,000			$ 1					99,999
Proceeds from PIPE offerings (in Shares)				10,000,000
Net loss	(149,462)												(149,462)
Balance at Sep. 30, 2022	60,861			$ 7					322,724				(261,870)
Balance (in Shares) at Sep. 30, 2022				70,258,004
Balance at Jun. 30, 2022	(122,740)		$ (122,740)	$ 2				$ 2	8,530		$ 8,532	$ (2)	(131,272)	$ (131,272)
Balance (in Shares) at Jun. 30, 2022				19,177,956			8,612,791	10,565,165
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
Exercise of common and preferred warrants (in Shares)				2,332,117
Exercise of common and preferred warrants	101								101
Issuance of common stock options and stock option reprice ( Value )	2,546								2,546
Conversion of Stock, Amount Issued		$ 33,705			$ 1					$ 33,704
Conversion of Stock, Shares Issued					7,209,555	4,832,500
Conversion of convertible debt to FaZe common stock	195,117			$ 2					195,115
Conversion of convertible debt to FaZe common stock (Shares)				19,545,406
Issuance of earn-out shares	0			$ 1					(1)
Issuance of earn-out shares (Shares)				5,312,098
Recapitalization transaction, net of equity issuance costs (in Shares)				1,366,604
Recapitalization transaction, net of equity issuance costs	(17,390)			$ 0					(17,390)
Proceeds from PIPE offerings	100,000			$ 1					99,999
Proceeds from PIPE offerings (in Shares)				10,000,000
Net loss	(130,598)												(130,598)
Balance at Sep. 30, 2022	$ 60,861			$ 7					$ 322,724				$ (261,870)
Balance (in Shares) at Sep. 30, 2022				70,258,004

Summary of Significant Accounting Policies (Details) - Schedule of consolidated statement of operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Condensed Income Statements, Captions [Line Items]
Revenues	$ 14,012	$ 12,493	$ 48,621	$ 37,756
Gross profit	$ 3,542	$ 1,090	$ 13,974	5,478
As Previously reported [Member]
Condensed Income Statements, Captions [Line Items]
Revenues				38,808
Cost of revenues				33,330
Gross profit				5,478
Revision adjustments [Member]
Condensed Income Statements, Captions [Line Items]
Revenues				(1,052)
Cost of revenues				(1,052)
Gross profit				0
As revised [Member]
Condensed Income Statements, Captions [Line Items]
Revenues				37,756
Cost of revenues				32,278
Gross profit				$ 5,478

- Definition

Aggregate revenue less cost of goods and services sold or operating expenses directly attributable to the revenue generation activity.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03.1,2)
-URI https://asc.fasb.org/extlink&oid=126953954&loc=SL114868664-224227

Reference 19: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599