LEGACY EJY, INC.
The following discussion of our financial condition and results of operations
should be read together with our financial statements and related notes and
other financial information included in this Report. The following discussion
may contain forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to these
differences include those discussed below and elsewhere in this Report,
particularly in Part I, Item 1A, "Risk Factors." Our historical results are not
necessarily indicative of the results that may be expected for any period in the
future.
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Overview
Enjoy started with a simple question, "What if the best of the store could come to you?" Over the last eight years we built and optimized ourMobile Store , a new channel that pairs the convenience of online shopping with the personal touch of an in-store retail experience brought together in the comfort of Consumers' homes. Over the past twenty five years, eCommerce has disrupted the retail industry in virtually every category, shifting commerce from physical stores to the home. While eCommerce channels greatly expanded choices and increased convenience with fulfillment to customers' doorsteps, they have not addressed the importance of an interactive shopping experience that customers desire for premium products, such as technology. Enjoy provides set-up and activation, and also assists customers in purchasing hardware, accessories, and subscription services in the comfort of the home. ThisMobile Store shopping experience creates a unique and deep retail experience for Consumers that does not exist with traditional retail channels. We further believe that this represents the next disruption in the consumer shopping experience. We maintain multi-year contractual relationships with leading telecommunications and technology companies, which are our Customers. Our revenue stems from a variety of service, set-up and delivery fees that are paid to us by our Customers. During a visit from ourMobile Store , the Consumer pays for products and services directly to our Customers via secure mobile point-of-sale devices. On confirmation of the purchase, our Customers then remit our fees directly to us. Enjoy delivers a broad assortment of telecommunications and technology products and accessories, which are provided by our Customers. Our Experts provide set-up, activation and demonstration of the products we deliver. We assist Consumers in evaluating and selecting a myriad of accessories, media sources, protection, broadband, and other services. We also assist in the trade-in and upgrade of our customers' products. We strive to deliver our customers' products with same-day or next-day frequency, matching the speed of traditional eCommerce channels but with an experience. Consumers initiate their purchase on our Customers' eCommerce sites, service centers or retail locations. The Consumer selects at-home delivery and a delivery window. Consumer orders flow seamlessly from our Customers' eCommerce sites to Enjoy via deeply integrated technology platforms. This results in near-zero Consumer acquisition costs for Enjoy. Our inventory is 100% consigned to us by our Customers and maintained in secure warehouses at our market locations. These warehouse locations also serve as the base of operations for ourMobile Store fleets and as the operating center for the market in which they serve. Our warehouses also provide meeting, training and support services for our Experts. Our warehouses andMobile Store vehicle fleet are fully leased. We currently operate in over 80 locations which provide access to over 50% of the population in the markets that we serve, representing over 200 million addressable consumers. Our business is enabled by highly sophisticated, proprietary sets of technology applications, systems and data science tools. To deliver and optimize millions of retail experiences, we built our technology platform from the ground up to support customer integrations, smart logistics and a variety of solutions to empower our Experts in providing the best and most personalized experience for every Consumer. Our Experts are central to the at-home retail experience we provide for Consumers. Our Experts are 100% Enjoy employees and have the skills and training to be deeply knowledgeable about the products and services that we offer. We believe our Experts bring a world-class and deeply engaging shopping experience to Consumers. We believe Enjoy is positioned to benefit from several long-term trends that will continue to expand the demand for commerce-at-home. These trends include but may not be limited to (1) the growth in online shopping and the need for speed and convenience, (2) a more mobile workforce, which includes increased telecommuting and 46
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work-from-home arrangements, all of which have been accelerated by the COVID-19 pandemic, (3) increasingly connected homes enabled by technology and telecommunications and (4) the rapid expansion of subscription-based services delivered through online channels.
Factors Affecting Our Business
Consumer Discretionary Spending:
We rely on consumer discretionary spending and may be adversely affected by
economic downturns and other macroeconomic conditions or trends. Our business
and operating results are subject to global economic conditions and their impact
on consumer discretionary spending. Some of the factors that may negatively
influence consumer spending include high levels of unemployment, higher consumer
debt levels, reductions in net worth, and declines in asset values and related
market uncertainty, fluctuating commodity prices, inflation and general
uncertainty regarding the overall future political and economic environment.
Consumer purchases of technology may decline during periods of economic
uncertainty, when disposable income is reduced or when there is a reduction in
consumer confidence. Such economic uncertainty may slow the rate at which
individuals choose to purchase new technology, upgrade existing technology or
purchase services, subscriptions or accessories.
Online Consumer Shopping Behaviors and
commerce-at-home:
Our business is affected by online shopping behavior and growth of eCommerce.
Our revenue stems primarily from online purchases originating at our Customers'
websites or customer service centers. The global online shopping market is large
and growing as a percentage of global retail purchases. Consumers are
diversifying their purchases for delivery at home, and the
COVID-19
pandemic has accelerated this trend. With consumers wary of buying
in-store,
they have increased demand for new product categories purchased online and
delivered to their homes. Consumers are also increasing their purchases of at
home services through online channels. Although there has been an increased
demand in eCommerce business in the marketplace,
COVID-19
safety protocols materially reduced the percent of our indoor Consumer
engagements, which negatively impacted our business.
Changes in Consumer Behavior and Lifestyles:
Our business is affected by changes in consumer behavior and lifestyles at home
and work and the role that mobile technology plays in enabling these changes.
Mobile technology has grown rapidly over the past four decades and reliance on
smartphones is predicted to increase as more features become available.
Smartphone and mobile technology represent the primary product categories in our
revenues. Furthermore, work-from-home and remote-work have been growing
steadily. While the
COVID-19
pandemic has dramatically increased work-from-home arrangements over the past
year, the underlying trends towards a more flexible work environments and
telecommuting suggest that these trends will continue. Studies suggest flexible
work environments create a more productive and happier workforce. Advancements
in technology have allowed remote workers to collaborate in increasingly
effective ways. These trends are likely to accelerate
commerce-at-home.
Product Innovation Lifecycles
:
Our business is affected by upgrade cycles in smartphone and consumer
technology. Consumer trends in the length of the average replacement cycle for
technology are linked to advancements in performance and features of these
devices. Our Customers produce or sell leading brands and are quick to bring
innovations to market.
Changes in Products and Services Offered by Our Customers:
In addition to our base fee earned from our Customers for delivery and setup of
products, our revenues are affected by
add-on
digital subscription services and device protection plans purchased by
Consumers. Digital subscription services such as news, music, movies, gaming
apps and entertainment have been growing as consumers have shifted their
consumption behaviors from traditional sources of content to online and
on-demand
formats. Our business is also affected by consumer adoption of device protection
plans and other support services provided by our Customers. We believe that the
growth in subscription services driven by both consumer adoption rates and new
services will continue.
Availability of Inventory from Our Customers:
We carry consigned inventory provided by our Customers. This inventory is either
manufactured or procured by our Customers and delivered to our warehouses. We
cannot
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guarantee with certainty that we will have adequate inventory at all times to support our business. At times, our business can face disruptions stemming from inventory shortages driven by new product releases with high consumer demand, supply constraints, political, environmental or other factors. Seasonal Sales Trends: We have experienced and expect to continue to experience seasonal fluctuations in sales due to the spending patterns of Consumers. Our revenue has generally been lowest in the first and second calendar quarters due to lower consumer demand following the fourth quarter holiday season and because of the decline in sales that typically occurs in anticipation of the introduction of new or enhanced smartphone and consumer technology, which usually take place in the third calendar quarter and which tend to drive sales in that quarter and the following quarter. Further, our revenue tends to be higher in the third and fourth calendar quarter due to seasonal sales such as "Black Friday" and "Cyber Monday," as Consumers tend to make higher purchases during the holiday season. Our revenue for the second calendar quarter is generally the lowest of the year followed by the first calendar quarter.
Recent Developments
Marquee Raine Acquisition Corp. Merger -Marquee Raine Acquisition Corp. ("MRAC" and, after the Domestication as described below, "New Enjoy"), our predecessor, aCayman Islands exempted company, entered into an Agreement and Plan of Merger, dated as ofApril 28, 2021 and amended onJuly 23, 2021 andSeptember 13, 2021 (the "Merger Agreement"), by and among MRAC,MRAC Merger Sub Corp. , aDelaware corporation and a direct wholly owned subsidiary of MRAC ("Merger Sub"), andEnjoy Technology Operating Corp. (f/k/aEnjoy Technology Inc. ), aDelaware corporation (" Legacy Enjoy"). We refer to the transactions contemplated by the Merger Agreement as the "Merger" and together with the Domestication (as defined below) as the "Transactions". OnOctober 14, 2021 , as contemplated by the Merger Agreement, MRAC filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of theState of Delaware , under which MRAC was domesticated and continues as aDelaware corporation, changing its name to "Enjoy Technology, Inc. " (the "Domestication"). OnOctober 15, 2021 (the "Closing Date"), Legacy Enjoy consummated the Transactions with New Enjoy as contemplated by the Merger Agreement, and New Enjoy common stock and warrants began trading on Nasdaq under the ticker symbols "ENJY" and "ENJYW", respectively. In connection with the execution of the Merger Agreement, MRAC entered into subscription agreements (the "Subscription Agreements") with certain investors (collectively, the "PIPE Investors ") pursuant to which thePIPE Investors agreed to purchase, in the aggregate, approximately 8 million shares of New Enjoy common stock at$10.00 per share for an aggregate commitment amount of approximately$80 million (the "PIPE Shares"). Pursuant to the Subscription Agreements, New Enjoy agreed to provide thePIPE Investors with certain registration rights with respect to the PIPE Shares. The PIPE investment was consummated substantially concurrently with the closing of the Transactions. On the Closing Date, certain investors (the "Backstop Investors ") purchased, in the aggregate, 5,590,906 shares of New Enjoy common stock (the "Backstop Shares"), for a purchase price of$10.00 per share and an aggregate purchase price of approximately$55,009,060 , pursuant to the backstop agreements, datedSeptember 13, 2021 (the "Backstop Agreements"). Pursuant to the Backstop Agreements, New Enjoy agreed to provide certain registration rights to theBackstop Investors with respect to the Backstop Shares. LCH Transaction: InApril 2021 , to induce one of its stockholders,LCH Enjoir L.P. ("LCH"), to surrender to Enjoy certain of its rights in connection with the Merger, Enjoy entered into the Stockholder Contribution Agreement withRon Johnson and the Stock Issuance Agreement with LCH. Pursuant to the Stockholder 48
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Contribution Agreement, immediately prior to the Closing,
COVID-19:
Our business was materially impacted by COVID-19 in several ways. Typically, Consumer interactions occur within their home. Social distancing protocols changed the way we interact with Consumers and our in-home visits fell to zero in the early stages of the pandemic. Depending on the geography during certain periods we had no in-home visits and these visits remained significantly below pre-COVID levels throughout 2020 and 2021. In addition, the Company furloughed employees in theU.K. beginning inApril 2020 throughAugust 2020 and again startingJanuary 2021 throughAugust 2021 . These factors negatively impacted bothDaily Mobile Store counts andDaily Revenue Per Mobile Store , as defined below. To protect our employees and Consumers, we implemented a variety of protocols to provide masks, cleaning supplies and other protocols that remain in place. The Company and its Business Partners continue to experience logistic, supply chain, and manufacturing challenges that are expected to continue during 2022. As economies around the world continue to recover, shortages in raw materials and inventory have become more widespread. During the latter half of fiscal year 2021, we experienced shortages in our inventory of recently launched key smartphones. Inventory shortages, and shortages of the raw materials used in the products we sell, have caused and may continue to cause, delays in the supply chain. While we are dedicating significant resources to manage, mitigate, and resolve these issues, we currently expect supply chain challenges to continue to impact our ability to deliver products to our Consumers over the next several quarters. The Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 pandemic will have on our financial condition and operations. The full impact of the COVID-19 pandemic on management estimates and the financial performance of the Company may depend on future developments, including the duration and spread of the outbreak including new variants and related governmental advisories and restrictions and the effectiveness of the COVID-19 vaccine. In addition, the Company could see some limitations on employee resources that would otherwise be focused on operations, including but not limited to sickness of employees or their families, desire for employees to avoid contact with groups of people, and increased reliance on working from home. 2021 Convertible Loan: InApril 2021 , the Company entered into a convertible unsecured subordinated loan agreement to borrow up to$75.0 million (the "2021 Convertible Loan") from new investors, certain existing investors and executives. The 2021 Convertible Loan was senior in right of payment to the convertible unsecured subordinated loan agreement entered into by Enjoy inOctober 2020 to borrow up to$50.0 million from certain existing investors and executives (the "2020 Convertible Loan"), but expressly subordinated in right of payment to that certain first lien term loan agreement withBlue Torch Finance, LLC , as administrative agent and collateral agent, and certain affiliates ofBlue Torch Capital LP , as lenders, to borrow a first lien term loan in an aggregate principal amount of$37.0 million (the "Blue Torch Loan"). The 2021 Convertible Loan had several conversion options, including an optional conversion upon maturity and automatic conversion upon a merger with a special purpose acquisition company ("SPAC Transaction"). If a SPAC Transaction occurred on or prior to the maturity date and prior to payment in full of the principal amount, then the outstanding principal amount of the 2021 Convertible Loan and all accrued and unpaid interest will automatically convert into fully paid and nonassessable shares of our common stock immediately prior to the Closing at a price per share equal to 80% of the value assigned to each share of Legacy Enjoy common stock. The 2021 Convertible Loan incurred interest at 8% per annum and matures inApril 2022 . The 2021 Convertible Loan was converted to shares of common stock upon Closing. 49
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Restricted Stock Unit Grants: InJune 2021 , the Company granted restricted stock units ("June 2021 RSUs") underlying approximately 2 million shares of the Company's common stock under the 2014 Equity Incentive Plan. TheJune 2021 RSUs vest upon satisfaction of both service and performance-based vesting requirements. The service-based vesting requirements are satisfied as to 25% of theJune 2021 RSUs on the first anniversary of the vesting commencement date, and the remaining 75% vesting in substantially equal quarterly installments for three years thereafter, subject to continued service through each vesting date. The performance-based vesting conditions were satisfied upon Closing. InJuly 2021 , the Company granted restricted stock units ("July 2021 RSUs") underlying approximately 900,000 shares of the Company's common stock under the 2014 Equity Incentive Plan. TheJuly 2021 RSUs vest upon the satisfaction of service-based vesting conditions with 25% vesting on the first anniversary of the vesting commencement date, and the remaining 75% vesting in substantially equal quarterly installments for three years thereafter, subject to continued service through each vesting date. InDecember 2021 , the Company granted restricted stock units ("December 2021 RSUs") underlying approximately 4.4 million shares of the Company's common stock under the 2021 Equity Incentive Plan. TheDecember 2021 RSUs vest upon the satisfaction of service-based vesting conditions either: a) 25% vesting on the first anniversary of the vesting commencement date, and the remaining 75% vesting in substantially equal quarterly installments for three years thereafter; b) one-third vesting on each of the first three anniversaries of the vesting commencement date; or c) awards vest in substantially equal quarterly installments for four years following the vesting start date, all subject to continued service through each vesting date. Key Performance Metrics
Management regularly review several metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. The reasons we believe these key performance metrics are useful to investors are provided below.
Daily Mobile Stores: Daily Mobile Stores represent the number of Mobile Stores we operate on a given day. This is calculated by dividing the total number of visit-serving Expert shifts in a given reporting period by the number of calendar days in that period. A visit-serving Expert shift is defined as an Expert that is scheduled to serve Consumers on a given day. We believe this is the primary measure of scale and growth of our retail footprint.Daily Revenue Per Mobile Store :Daily Revenue Per Mobile Store is defined as the average daily revenue generated perDaily Mobile Store . This metric is calculated by dividing the revenue generated in a given reporting period by the product of Daily Mobile Stores and the number of days in that given reporting period. We believe growth inDaily Revenue Per Mobile Store is a key driver for increasing the Company's profitability. Mobile Store Profit (Loss) and Mobile Store Margin: Mobile Store Profit (Loss) is a measure prepared in accordance with GAAP and is defined as revenue less cost of revenue. Mobile Store Margin isMobile Store Profit (Loss) as a percentage of revenue. We view this metric as an important measure of business performance as it capturesMobile Store profitability and provides comparability across reporting periods. Segment Income (Loss): Segment Income (Loss) is defined as revenue less cost of revenue, operational expenses directly related to each segment and excludes certain corporate expenses. We view this metric as an important measure of business performance as it capturesMobile Store and segment profitability and provides comparability across reporting periods. Adjusted EBITDA: Adjusted EBITDA is defined as net loss adjusted for interest, taxes, depreciation and amortization, stock-based compensation expense and certain expenses not considered a core part of our operations. Adjusted EBITDA provides a basis for comparison of our business operations between current, past 50
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and future periods by excluding items that we do not believe are indicative of our core operating performance. Adjusted EBITDA is a non-GAAP measure. Refer to the " Non-GAAP Measures" section below for further discussion.
The following tables present our key performance metrics for the periods presented (in thousands except Daily Mobile Stores amounts):
Year Ended December 31, 2021
North
America Europe Consolidated
Daily Mobile Stores 496 137 633351 Mobile Store Loss$ (23,116 ) $ (8,796 ) $ (31,912 ) Mobile Store Margin (33.8 )% (70.2 )% (39.4 )% Segment Loss$ (103,334 ) $ (28,522 ) Adjusted EBITDA$ (166,510 ) Year Ended December 31, 2020 North America Europe Consolidated Daily Mobile Stores 334 130 464
356 Mobile Store Loss$ (7,444 ) $ (4,105 ) $ (11,549 ) Mobile Store Margin (16.0 )% (29.9 )% (19.1 )% Segment Loss$ (64,669 ) $ (18,167 ) Adjusted EBITDA$ (106,552 ) Year Ended December 31, 2021 First Quarter Second Quarter Third Quarter Fourth Quarter Daily Mobile Stores - Quarterly Average 580 588 592 770 North America 428 438 466 650 Europe 152 150 126 120 Daily Mobile Stores - Last Month of the Quarter Average 590 595 603 859 North America 438 453 477 732 Europe 152 142 126 127 Year Ended December 31, 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Daily Mobile Stores - Quarterly Average 409 351 458 633 North America 291 274 316 452 Europe 118 77 142 181 Daily Mobile Stores - Last Month of the Quarter Average 337 393 511 695 North America 242 287 361 498 Europe 95 106 150 197 51
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Results of Operations
Components of Results of Operations
Revenue
Revenue consists of service fees paid to us by our Customers for bringing their products and services to Consumers. These fees are comprised of fixed service fees per visit and variable fees based on the sale of accessories, solutions and subscription services. The composition of these fees and the rate of services paid vary by Customer per the terms of our contracts with them. Our fees are reduced by chargebacks and consigned inventory that is lost, damaged or stolen. Chargebacks are based upon Consumer cancellation of services and subscriptions within a pre-specified timeframe. Cost of revenue Cost of revenue primarily consists of salaries, benefits and other expenses related to the Company's Experts, fleet vehicle costs, and other expenses directly related to the performance of each Expert field visit. These expenses will increase in proportion to the growth of our Mobile Stores. We expect these expenses to decrease as a percentage of revenue for the next several years.
Operations and technology
Operations and technology expenses primarily consist of technology, facility and overhead costs directly related to the operation of our Mobile Stores. This includes lease and operating expenses for our warehouses, inventory management and storage, facility supplies, Experts recruiting fees, Experts on-boarding training costs, and depreciation expense. We also include costs for employees who directly or indirectly support our Experts, including supervisory and operations management, inventory management, fulfillment, recruiting and research and development costs. We expect operations and technology expenses to increase in future periods to support our growth, including bringing on additional warehouse facilities and continuing to invest in technology improvements to support the selling experience for Consumers, selling tools for our sales professionals and to drive efficiency in our operations. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments. We expect these expenses to decrease as a percentage of revenue over the next several years.
General and administrative
General and administrative expenses primarily consist of personnel-related expenses for our general corporate functions. This includes our leadership team, employees involved in finance, human resources, legal and workplace services, enterprise and financial information technology systems and marketing. We expect to increase general and administrative expenses as we grow our infrastructure to support operating as a public company and the overall growth in our business. While these expenses may vary from period to period as a percentage of revenue, we expect them to decrease as a percentage of revenue over the next several years.
Loss on convertible loans
Loss on convertible loans consists of the change in the fair value of our convertible loans. Our convertible loans converted into common stock in connection with the closing of the Transactions.
Interest income
Interest income consists of interest earned on our cash, cash equivalents and available for sale investments.
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Interest expense
Interest expense includes mainly the interest incurred on our outstanding indebtedness, as well as amortization of deferred financing costs, mainly debt origination and commitment fees. In 2021, a loss on extinguishment of debt was also recorded under interest expense.
Other income (expense), net
Other income (expense) during the periods presented consisted primarily of fair value gains and losses related to the issued stock warrants as well as gains and losses from foreign currency transactions. In 2021, other expense included cost related to the issuance of shares to induce a shareholder to surrender to Enjoy certain of its rights in connection with the merger with MRAC.
Income tax provision
Our provision for income taxes consists primarily of state minimum taxes inthe United States . We have a full valuation allowance for our federal and state net deferred tax assets primarily consisting of net operating loss carryforwards, accruals, and reserves. We expect to maintain this full valuation allowance for the foreseeable future.
Comparison of Results of Operations
Comparison of the Year Ended
The following table is a reference for the discussion that follows:
Years Ended December 31, Change
(dollars in thousands) 2021 2020 $ %
Revenue $ 80,998 $ 60,323 $ 20,675 34.3 %
Operating expenses:
Cost of revenue* 112,910 71,872 $ 41,038 57.1 %
Operations and technology* 92,017 65,804 $ 26,213 39.8 %
General and administrative* 57,915 34,274 $ 23,641 69.0 %
Total operating expenses 262,842 171,950 $ 90,892 52.9 %
Loss from operations (181,844 ) (111,627 ) $ (70,217 ) 62.9 %
Loss on convertible loans (27,338 ) (42,907 ) $ 15,569 (36.3 )%
Interest expense (8,522 ) (2,003 ) $ (6,519 ) 325.5 %
Interest income 6 276 $ (270 ) (97.8 )%
Other income (expense), net (2,993 ) (1,426 ) Loss before provision for income taxes (220,691 ) (157,687 )
$ (63,004 ) 40.0 % Provision for income taxes (82 ) 97$ (179 ) (184.5 )% Net loss (220,609 )$ (157,784 ) $ (62,825 ) 39.8 %
* The Company reclassified certain costs within each of its operating expense
line items in the consolidated statements of operations. Prior period amounts
have been reclassified to conform to this presentation. These changes have no
impact on the Company's previously reported consolidated net loss or cash flows
for the periods presented
.
See Note 1 in Notes to the Consolidated Financial Statements included under
"Part II, Item 8. Financial Statements and Supplementary Information" for
further discussion. Revenue
Revenue increased by
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ourDaily Mobile Store count by 169 to 633 in 2021, up from 464 in 2020. Our revenue growth was offset by product availability delays due to supply chain issues in the second half of the year.North America revenue increased$21.9 million , or 46.9%, primarily due to an increase in ourDaily Mobile Store count of 162 stores to 496 from 334, partially offset by a small decrease in ourDaily Revenue Per Mobile Store of$4 to$378 in 2021, down from$382 in 2020. The decrease inDaily Revenue Per Mobile Store was partially due to differences in the fee structure with a North American Customer, which was not in place in the current year and product availability delays due to supply chain issues in the second half of the year.Europe revenue decreased$1.2 million , or (8.7)%, primarily due to a decrease in ourDaily Revenue Per Mobile Store of$38 to$251 in 2021, down from$289 in 2020 as a result of product availability delays due to supply chain issues and a switch to a variable fee model in the second half of 2021 as compared to a fixed fee model for all of 2020. The variable fee model results in less revenue per visit, but the Company expects that this fee model has more potential to increase revenue per visit above a fixed fee model in the future.Europe revenue growth was offset by product availability delays due to supply chain issues in the second half of the year. Cost of revenue Cost of revenue increased$41.0 million or 57.1%, primarily due to an increase in ourDaily Mobile Store count by 169 to 633 in 2021, up from 464 in 2020. Increased Daily Mobile Stores were driven by a higher number of Experts, resulting in higher total salary and benefit costs, along with expenses associated with vehicle leases, fuel, vehicle insurance and other direct expenses required to operate our Mobile Stores. Furthermore, we built up our field teams in anticipation of increased demand normally incurred in the second half of the year. However, due to product availability delays due to supply chain issues, our gross margins were worse compared to the first half of the year. As a result, cost of revenue, as a percentage of revenue, increased to 139.4% in 2021, compared to 119.1% in 2020.North America cost of revenue increased$37.5 million , or 69.5%, primarily due to an increase in ourDaily Mobile Store count by 162 to 496 in 2021, up from 334 in 2020. During 2021 we expanded our geographic market coverage withinthe United States andCanada and initiated services for a new Customer inthe United States . Increased Mobile Stores were supported by a higher number of Experts, driving higher total salary and benefit costs. A greater number of Daily Mobile Stores also increased expenses associated with vehicle leases, fuel, vehicle insurance and other direct expenses. Furthermore, we built up our field teams in anticipation of increased demand normally incurred in the second half of the year. However, due to product availability delays due to supply chain issues, our gross margins were worse compared to the first half of the year. As a result, cost of revenue, as a percentage of revenue, increased to 133.8% in 2021, compared to 116.0% in 2020.Europe cost of revenue increased$3.5 million , or 19.6%, primarily due to an increase in ourDaily Mobile Store count by 7 to 137 in 2021, up from 130 in 2020. Increased Daily Mobile Stores were driven by an expansion of our market coverage within theUnited Kingdom . Increased Daily Mobile Stores were supported by a higher number of Experts, driving higher total salary and benefit costs. A greater number of Mobile Stores also increased expenses associated with vehicle leases, fuel, vehicle insurance and other direct expenses. Furthermore, we built up our field teams in anticipation of increased demand normally incurred in the second half of the year. However, due to product availability delays due to supply chain issues, our gross margins were worse compared to the first half of the year. As a result, cost of revenue, as a percentage of revenue, increased to 170.2% in 2021, compared to 129.9% in 2020.
Operations and technology
Operations and technology expenses increased$26.2 million , or 39.8%, primarily due to investments in our warehouse network to support our market expansions and our increasedMobile Store count. The total number of our warehouses increased by 6, or 7.1%, to 91 in 2021, from 85 in 2020. The increase in the number of warehouses we operated during 2021 versus 2020 increased our warehouse lease expenses, salaries and benefits 54
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associated with market-level Expert supervisory, training and development
activities and facility investments. Expenses associated with developing the
technologies that support our
North America operations and technology expenses increased$19.7 million , or 46.0%, primarily due to investments to expand our warehouse network to support our market expansions and our increasedMobile Store count. The total number of our warehouses increased by 6, or 9.7%, to 68 in 2021, from 62 in 2020. The increase in the number of warehouses we operated increased our warehouse lease expenses, salaries and benefits associated with market-level Expert supervisory staff, training and development activities and facility investments, partially offset by productivity improvements in fulfillment operations. Operations and technology expense inNorth America as a percentage of revenue remained relatively flat at 91.3% in 2021 compared to 91.8% in 2020.Europe operations and technology expenses increased$5.6 million , or 55.0%, primarily due to investments to expand our warehouse network to support our market expansions and our increasedMobile Store count. The total number of our warehouses stayed the same at 23 in 2021 and 2020. However, in 2020 we had expenses related to the 23 rd warehouse for only part of the year since we did not reach the 23 warehouse count until approximately the middle of the year, while in 2021 we had 23 warehouses for the full year. The increase in operations and technology expenses is due to an increase in salaries and benefits associated with market-level Expert supervisory and fulfillment staff, and facility investments. Operations and technology expense inEurope as a percentage of revenue increased to 125.4% compared to 73.8% in 2020.
Corporate operations and technology expenses increased
General and administrative
General and administrative expense increased$23.6 million , or 69.0%, primarily due to increased stock-based compensation expense of$8.0 million related to increased headcount, and increased professional and legal fees of$6.3 million associated with public company readiness and preparation of regulatory filing documents. The following increases were due to scaling the business and market expansion:$3.5 million of payroll and other related expenses,$1.9 million in recruiting expenses,$1.7 million for computer supplies and dues and$1.7 million for insurance. General and administrative expense as a percentage of revenue increased to 71.5% in 2021, from 56.8% in 2020.North America general and administrative expenses increased$3.3 million , or 22.8%. The following increases were due to scaling the business and market expansion:$1.5 million in recruiting costs,$1.3 million in consulting and outside services,$0.9 million in computer supplies, and$1.0 million in stock-based compensation expense. These increases were partially offset by a$1.5 million decrease in payroll and other related expenses based on reclassification of such costs to operations and technology, along with other immaterial decreases. General and administrative expense as a percentage of revenue decreased to 25.9% in 2021, from 31.0% in 2020.
Corporate general and administrative expenses increased$20.3 million , or 127.5%, primarily due to increased stock-based compensation, payroll and other related costs, and dues and insurance related to scaling the business and market expansion, as well as professional fees and legal fees associated with public company readiness and preparation of regulatory filing documents. 55
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Loss on convertible loans
Loss on convertible loans for the years endedDecember 31, 2021 and 2020 was$27.3 million and$42.9 million respectively, due to the mark-to-market adjustment based on the fair value of the long-term convertible loans, which were entered into during both 2021 and 2020.
Interest expense
Interest expense increased
Interest expense is also higher in 2021 compared to 2020 due to the issuance of the 2020 Convertible Loan inOctober 2020 , issuance of the Blue Torch Loan inNovember 2020 , and issuance of the 2021 Convertible Loan inApril 2021 , which were all repaid or converted into common stock as applicable, on the Closing Date. Interest income
Interest income decreased
Other expense, net
Other expense increased$1.6 million primarily due to$20.0 million cost related to the issuance of shares to induce a shareholder to surrender to Enjoy certain of its rights in connection with the merger with MRAC, offset by the gain on change in fair value of the stock warrants of$17.3 million . There were no significant losses on the disposal of assets and changes in foreign currency in 2021 and 2020. Provision for income taxes The provision for income taxes remained relatively flat during 2021 and 2020. Provision for income taxes as a percentage of revenue was (0.1)% in 2021 and 0.2% in 2020. Non-GAAP Measures In addition to net loss, which is a measure presented in accordance with GAAP, management believes that Adjusted EBITDA provides relevant and useful information to management and investors to assess our performance. Adjusted EBITDA is a supplemental measure of Enjoy's performance that is neither required by nor presented in accordance with GAAP. This measure is limited in its usefulness and should not be considered a substitute for GAAP metrics such as loss from operations, net loss, or any other performance measures derived in accordance with GAAP and may not be comparable to similar measures used by other companies.
Adjusted EBITDA represents net loss adjusted for interest, taxes, depreciation and amortization, stock-based compensation expense and certain expenses and income not considered a core part of our operations.
We believe that Adjusted EBITDA provides a meaningful understanding of certain aspects of earnings (loss) before the impact of investing and financing charges and income taxes. Adjusted EBITDA is useful to an investor in evaluating our performance because this measure:
• Is widely used by analysts, investors and competitors to measure a
company's operating performance;
• Is a financial measurement that is used by rating agencies, lenders, and
other parties to evaluate our credit worthiness; and
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• Is used by our management for various purposes, including as a measure of
performance and as a basis for strategic planning and forecasting.
The reconciliations of net loss to Adjusted EBITDA for the years ended
Years Ended
December 31,
(in thousands) 2021 2020
Net loss $ (220,609 ) $ (157,784 )
Add back:
Interest expense 8,522 2,003
Other income (expense), net 2,993 1,426
Provision/(benefit) for income taxes (82 ) 97
Depreciation and amortization 4,028 3,138
Stock-based compensation 10,558 1,749
Loss on convertible loans 27,338 42,907
Transaction-related costs
(1) 748 188
Deduct:
Interest income (6 ) (276 )
Adjusted EBITDA $ (166,510 ) $ (106,552 ) (1) Consists of accounting and consulting fees related to public company
readiness that did not qualify for capitalization under GAAP.
Liquidity and Capital Resources
To date, the Company has financed its operations through the issuance and sale of redeemable convertible preferred stock, issuance of debt, and issuance of common stock associated with the Transactions. The Company's ongoing operations are dependent on its ability to obtain additional financing and generate sufficient cash flow to meet its obligations on a timely basis. The Company will need to obtain debt or equity financing, to provide additional equity capital and liquidity. If the Company is unable to generate positive operating cash flows, additional debt and equity financings may be necessary to sustain future operations.
The following table presents the Company's cash and cash equivalents, restricted cash, and accounts receivable, net, for the periods presented:
December 31, December 31,
(in thousands) 2021 2020
Cash and cash equivalents $ 85,836 $ 58,452
Restricted cash 1,710 5,494
Accounts receivable, net 9,977 4,544
The accompanying consolidated financial statements included in this Report have
been prepared by management assuming that we will continue as a going concern
and do not include any adjustments to reflect the possible future effects of the
recoverability and classification of assets, or the amounts and classification
of liabilities that may result from the outcome of this uncertainty.
Since inception, we have incurred net losses and cash outflows from operations.
Management expects that operating losses and negative cash flows from operating
activities will continue in the foreseeable future as we continue invest in the
expansion of our operations.
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Management believes there is substantial doubt about our ability to continue as a going concern as our present cashflows from operations will not enable us to meet our obligations over the next 12 months. Maintaining our ongoing operations is dependent on our ability to obtain additional financing and generate sufficient cash flow to meet our obligations on a timely basis. If we are unable to generate positive operating cash flows, additional debt and equity financings may be necessary to sustain future operations, including to meet any longer-term expected future cash requirements and obligations beyond the next 12 months. Such additional debt or equity financing may not be available to us on favorable terms, if at all. As the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs. The COVID-19 pandemic has negatively impacted the global economy and created significant volatility and disruption of financial markets. An extended period of economic disruption could materially affect our business, results of operations, ability to meet debt covenants, access to sources of liquidity and financial condition.
Cash Flows
The following table presents cash provided by (used in) operating, investing, and financing activities during the periods presented:
Years Ended
December 31,
(in thousands) 2021 2020
Net cash used in operating activities $ (174,618 ) $ (95,342 )
Net cash (used in) provided by investing activities (6,403 ) 14,498
Net cash provided by financing activities 204,648
78,427
Effect of exchange rate on cash, cash equivalents and restricted cash
(27 ) 349
Net increase (decrease) in cash, cash equivalents and restricted cash$ 23,600 $ (2,068 ) Operating Activities During the year endedDecember 31, 2021 , operating activities used$174.6 million of cash, resulting from our net loss of$220.6 million , partially offset by net non-cash charges of$49.0 million and net cash used by changes in our operating assets and liabilities of$3.1 million . Net cash provided by changes in our operating assets and liabilities for the year endedDecember 31, 2021 , consisted primarily of a$5.4 million increase in accounts receivable, a$1.4 million increase in prepaid expenses and other current assets, a$1.5 million increase in other assets, offset by increase of$3.2 million accounts payable and$2.0 million accrued expenses and other current liabilities. The increase in accounts receivable is primarily due to timing of collection of invoices during the fourth quarter of 2021. The increase in accrued expenses and other current liabilities is due to salaries and wages as a result of increased headcount, accrued taxes and timing of vendor payments. The increase in other assets is primarily associated with deposit payments for leased warehouse facilities and insurance. During the year endedDecember 31, 2020 , operating activities used$95.3 million of cash, resulting from our net loss of$157.8 million , partially offset by net cash provided by changes in our operating assets and liabilities of$12.9 million , and net non-cash charges of$49.6 million . Net cash provided by changes in our operating assets and liabilities for the year endedDecember 31, 2020 , consisted primarily of a$8.4 million decrease in accounts receivable, net an increase in accrued expenses and other current liabilities of$7.6 million , offset by a$2.9 million increase in other assets. The decrease in accounts receivable is primarily due to timing of collection of invoices during the fourth quarter of 2020. The increase in accrued expenses and other current liabilities is due to salaries and wages as a result of increased headcount, accrued taxes and timing of vendor payments. The increase in other assets is primarily associated with deposit payments for leased warehouse facilities and insurance. 58
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Investing Activities
During the year ended
During the year ended
Financing Activities
During the year ended
During the year ended
Financing Arrangements
Historically, the Company completed the following transactions, each of which has provided liquidity and cash resources.
Long Term Debt
Blue Torch Loan
InNovember 2020 , Legacy Enjoy, as borrower, and its subsidiaries, as guarantors, entered into the Blue Torch Loan to borrow a first lien term loan in an aggregate principal amount of$37.0 million , net of$1.2 million in lender fees, collateralized by substantially all of the property and assets (tangible and intangible) of Legacy Enjoy and its subsidiaries and maturing inNovember 2023 . The Blue Torch Loan incurred interest at one of two rates, (the "Reference Rate" or the "LIBOR Rate"), determined at the option of Legacy Enjoy, plus an applicable margin. The Reference Rate is calculated as the greatest of (i) 2.0% per annum, (ii) fluctuating interest rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of theFederal Reserve System , as published on the next succeeding business day by theFederal Reserve Bank of New York , plus 0.50% per annum, (iii) the LIBOR Rate plus 1.0% per annum, or (iv) the interest rate last quoted by theWall Street Journal as the "prime rate" or, if unavailable, the highest per annum interest rate published by theFederal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the "bank prime loan" rate. The LIBOR Rate is calculated as the greater of (i) LIBOR rate divided by 100% minus a reserve percentage or (ii) 1.0% per annum. The applicable margin was 9.0% per annum if Legacy Enjoy chose the Reference Rate and was 10% per annum if Legacy Enjoy chose the LIBOR Rate. The Blue Torch Loan had an effective interest rate of 14.9% for the year endedDecember 31, 2021 . The Blue Torch Loan was prepayable in an amount equal to the outstanding principal and accrued interest plus an applicable premium of (i) if prepaid during the first year after the effective date, a make-whole amount equal to (x) the amount of interest that would otherwise have been payable to the lenders from the payoff date until the twelve month anniversary of the effective date, calculated using the Reference Rate or LIBOR Rate in effect on the payoff date, less (y) the amount of interest the lenders would have received from the payoff date until the twelve month anniversary of the effective date if the lenders had reinvested the prepaid principal amount at theU.S. treasury rate in effect on the payoff date, plus (z) 3.0% of the outstanding principal, (ii) if prepaid during the second year after the effective date, 2.0% of the outstanding principal, (iii) if prepaid during the third year after 59
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the effective date, 1.0% of the outstanding principal, and (iv) thereafter, 0%. In connection with Closing, we repaid the Blue Torch Loan in full and paid a premium of$1.7 million , which consisted of a$717,440 make-whole amount and a$1.0 million exit fee.
Paycheck Protection Program Loan
InApril 2020 , Legacy Enjoy was granted a loan under the Paycheck Protection Program offered by theSmall Business Administration under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), section 7(a)(36) of the Small Business Act ("PPP Loan") for$10.0 million . The loan was provided byNewtek Small Business Finance, LLC and was evidenced by a promissory note and bore interest at 1% with no payments for the first six months and principal and interest payments thereafter. The loan was scheduled to mature inJuly 2023 and was subject to partial or full forgiveness if Legacy Enjoy used all proceeds for eligible purposes, maintained certain employment levels, and maintained certain compensation levels in accordance with and subject to the CARES Act and the rules, regulations, and guidance. Legacy Enjoy used all proceeds from the PPP Loan to maintain payroll and make payments for lease obligations and utilities. As ofDecember 31, 2021 , management accounted for the loan as a debt with accrued interest. Interest expense was$75 thousand and$46 thousand , respectively, for the year endedDecember 31, 2021 and 2020. In connection with the Closing, the PPP Loan was repaid in full. Convertible Loans InOctober 2020 , Legacy Enjoy entered into the 2020 Convertible Loan with certain existing investors and executives as lenders. This agreement was amended inDecember 2020 to increase the borrowing limit to$70 million . The 2020 Convertible Loan had several conversion options, including automatic conversion upon a qualified financing of at least$75.0 million , an optional conversion upon a non-qualified financing, initial public offering and an optional conversion upon maturity. The 2020 Convertible Loan also carried a mandatory repayment feature upon a change of control. The 2020 Convertible Loan accrued interest at 14% and matured inMay 2024 . Legacy Enjoy elected to measure the 2020 Convertible Loan under the fair value option. Under the fair value option, convertible loans are measured at fair value in each reporting period until it was settled, with changes in the fair values being recognized in Legacy Enjoy's consolidated statements of operations as income or expense. Debt issuance costs incurred in connection with convertible loans are expensed as incurred. As the 2020 Convertible Loan was carried at fair value in its entirety, further consideration of the embedded features in the 2020 Convertible Loan was not required. InFebruary 2021 , Legacy Enjoy and its lenders agreed to an amendment to the 2020 Convertible Loan to specify the treatment of the 2020 Convertible Loan should Legacy Enjoy merge with a SPAC and subsequently become a publicly traded entity. As the substance of the transaction is a capital contribution from related parties, the resulting gain of$36.8 million was recorded to additional paid-in capital during the year endedDecember 31, 2021 . The 2020 Convertible Loan was converted to shares of New Enjoy common stock upon Closing. InApril 2021 , Legacy Enjoy entered into the 2021 Convertible Loan with new investors, certain existing investors and executives. The 2021 Convertible Loan was senior in right of payment to the Convertible Loan, but expressly subordinated in right of payment to the Blue Torch Loan. The 2021 Convertible Loan had several conversion options, including an optional conversion upon maturity and automatic conversion upon a SPAC Transaction. If a SPAC Transaction occurred on or prior to the maturity date and prior to payment in full of the principal amount, then the outstanding principal amount of the 2021 Convertible Loan and all accrued and unpaid interest was to automatically convert into fully paid and nonassessable shares of Enjoy's common stock immediately prior to the closing of a SPAC Transaction at a price per share equal to 80% of the value assigned to each share of Legacy Enjoy's common stock. The 2021 Convertible Loan incurred interest at 8% per annum and would have matured inApril 2022 . Legacy Enjoy borrowed a total of$75.0 million under the 2021 Convertible Loan agreement. The 2021 Convertible Loan was converted to shares of New Enjoy common stock upon Closing. 60
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Material Cash Requirements
Our material cash requirements, include amounts due under our contractual and other obligations, including under operating leases for monthly base rent under our lease agreement for office space for our headquarters inPalo Alto, California which began inSeptember 2019 for a term of 90 months, and for office space throughoutthe United States , as well as inCanada and theUnited Kingdom . On an ongoing basis, we also enter into vehicle lease agreements under Fleet Lease Agreements inthe United States and theUnited Kingdom , with each vehicle lease having a typical term of 36 months. Please refer to Note 17- Commitments and Contingencies of the notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" for more information on these operating leases and the amounts due thereunder.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements. The preparation of these financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the revenue and expenses during the reporting periods. These estimates, assumptions, and judgments are necessary because future events and their effects on our consolidated financial statements cannot be determined with certainty and are made based on our historical experience and on other assumptions that we believe to be reasonable under the circumstances. These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time. Because the use of estimates is inherent in the financial reporting process, actual results could materially differ from those estimates. While our significant accounting policies are more fully described in Note 2- Summary of Significant Accounting Policies. We believe that the accounting estimates discussed below relate to the more significant areas involving management's judgments and estimates: • Revenue Recognition; • Stock-based Compensation; and • Fair value of Convertible Loans.
Revenue Recognition
The Company generates revenue through visit fees whereby its Experts provide delivery, set-up, and technological expertise services at the request of its Customers. Its Customers are primarily large telecommunication and technology companies that sell technology products and services and require aMobile Store experience for their customers, who are referred to herein as "Consumers." Revenue is recognized upon transfer of control of promised services to Customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those promised services. Each Customer contract contains only one performance obligation, which is a stand-ready obligation for the Company's Experts to provide visits to Consumers throughout the Company's contractual term. The stand-ready obligation consists of a series of distinct services that are substantially the same and have the same pattern of transfer, represented as visits provided to Consumers satisfied over time. The transaction prices of the Company's contracts are entirely variable, as the number of visits and the specific services provided at each visit are unknown at contract inception. Each contract includes pricing whereby the 61
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Company and the Customer agree to payments for various elements of a visit, which generally include the base fee for conducting the visit and delivering product, as well as incremental amounts for add-ons provided to Consumers. Due to the nature of the obligation, the variability of payment based on the number of visits performed, and the specific services and products provided at each visit which are resolved as each visit is completed, the Company recognizes visit fees in revenue as such visits are provided. In addition, the Company is required to issue a credit to its Customer for the stipulated value of any consigned inventory that is under the Company's control that is lost, damaged, or stolen. The Company recognizes the credit as a reduction in revenue when it identifies that the items were lost, damaged, or stolen. From time to time, the Company's Experts sell a Consumer incremental services on behalf of the Customer during a visit. Certain of the Company's contracts contain provisions that allow for a chargeback by the Customer of the Company's fee for selling the incremental service, if the Consumer cancels such services within a specified period from the visit. Chargebacks are recognized as a reduction of revenue, in the period such visit occurs, using an estimate derived from historical information regarding Consumer cancelations of specific services as well as real-time information provided by the Customer. The estimation of chargebacks for each performance obligation requires us to make subjective judgments and is subject to uncertainty. As ofDecember 31, 2021 and 2020, the Company has recorded$8.6 million and$5.4 million , respectively, in chargebacks.
Stock-Based Compensation
We account for stock-based compensation expense related to our stock option awards based on the estimated grant date fair value, which is calculated using the Black-Scholes option pricing model. Our use of the Black-Scholes option-pricing model requires the input of subjective assumptions which are subject to uncertainty. If factors change and different assumptions are used, our stock-based compensation expense could be materially different for the current period and in the future. These assumptions and estimates used in the Black-Scholes option-pricing model are as follows:
• Risk-Free Interest Rate. The risk-free interest rate is determined by
reference to the
the award for time periods approximately equal to the expected term of the
award.
• Expected Term. The expected term of the Company's stock options has been
determined utilizing the "simplified" method for awards that qualify as
"plain-vanilla" options.
• Expected Volatility. Expected volatility was determined based on similar
companies' stock volatility.
• Expected Dividend Yield. Expected dividend yield is based on the fact that
the Company has never paid cash dividends on common shares and does not
expect to pay any cash dividends in the foreseeable future.
Fair Value of Convertible Loans
We elected the fair value option for our convertible loans, which means we mark these investments to fair market value on a recurring basis. We believe the estimate of fair value of the convertible loans requires significant judgment. As ofDecember 31, 2021 and 2020, the amount of convertible loans recorded using the fair value option was approximately$0 and$86.4 million , respectively. The Company used the probability-weighted, expected return method ("PWERM") to fair value the convertible loans. Key assumptions used in PWERM subject to the Company's judgement were discount rates and discount for lack of marketability. Because of the inherent uncertainty of valuation, and the use of different assumptions to calculate fair value, the estimated fair value of our convertible loans may differ significantly from the values that would have been used had a ready market for the convertible loans existed, and the differences could be material to our consolidated financial statements.
Recently Issued and Adopted Accounting Pronouncements
See Note 2 to our consolidated financial statements included elsewhere in this
Report for a discussion of accounting pronouncements recently adopted and
recently issued accounting pronouncements not yet adopted and their potential
impact to our consolidated financial statements.
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Emerging Growth Company
We are an emerging growth company, as defined in the JOBS Act. The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards applicable to public companies, allowing them to delay the adoption of those standards until those standards would otherwise apply to private companies. Enjoy has elected to take advantage of some of the reduced regulatory and reporting requirements of emerging growth companies pursuant to the JOBS Act so long as it qualifies as an emerging growth company, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.
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