K-Swiss owned Form Athletics bankrupt

source: ingrainedmedia
 

Form Athletics launched late in 2009. It was co-founded by former WEC featherweight champion Urijah Faber and Mark Miller, a former DC Shoes Senior Vice President and founder of the M3 snowboard line.

In July 2010, only seven months after its official launch, the brand was acquired by American footwear giant K-Swiss. 18 months, and nearly $4,000,000 later, the brand is bankrupt, as detailed by Jason Genet.

K-Swiss the parent company of Form is exiting the Mixed Martial Arts landscape. Form was one of the few companies that had a true endorsement model and activated around the athletes and sport.  According to the companies Edgar filings they bought Form in 2010 for $1.6 million and lost about $3.7 million before tapping out.

From their public filing:

13. Form Athletics
On July 23, 2010, the Company entered into a Membership Interest Purchase Agreement (“Purchase Agreement”) with Form Athletics, LLC (“Form Athletics”) and its Members to purchase Form Athletics for $1,600,000 in cash. Form Athletics was established in January 2010 to design, develop and distribute apparel for mixed martial arts under the Form Athletics brand worldwide. The purchase of Form Athletics was part of an overall strategy to enter the action sports market, however, during the third quarter of 2011, the Company decided to no longer pursue operating in this line of business, as discussed below. Operations of Form Athletics have been accounted for and presented as a discontinued operation in the accompanying Consolidated Financial Statements.

Pursuant to the Purchase Agreement, the Company was obligated to pay additional cash consideration to certain Members of Form Athletics in an amount equal to Form Athletics’ EBITDA for the twelve months ended December 31, 2012 (“Form CPP”). The purchase price of $1,600,000 and the net present value of the initial estimate of the Form CPP was capitalized. The fair value of the Form CPP was determined each quarter based on the net present value of the current quarter’s projection of Form Athletics’ EBITDA for the twelve months ended December 31, 2012. Any subsequent changes to the Form CPP was recognized as interest income or interest expense during the applicable quarter.

The acquisition of Form Athletics was recorded as a 100% purchase and the Form CPP liability was recognized and accordingly, the results of operations of the acquired business were included in the Company’s Consolidated Financial Statements from the date of acquisition. A trademark asset totaling $3,150,000 and goodwill of $539,000, were recognized for the amount of the excess purchase price paid over fair market value of the net assets acquired. The amount of goodwill that was deductible for tax purposes was $507,000 and will be amortized over 15 years.

14
During the second quarter of 2011, after a review of sales, backlog, cash flows and marketing strategy, the Company determined that its investment in the Form Athletics goodwill and trademark was impaired and recognized impairment losses of $3,689,000 (see Note 5) and reversed the Form CPP liability of $2,110,000, which was recognized as interest income.

Read entire article...

Comments by MMA retailers on the UG details some of the company's shortcomings.

From: MMA Outlet
MMA Outlet
Member Since: 1/27/11
Posts: 2

I talked to someone from K-Swiss last night who had actually been laid off about a month ago. She said they were forced to sell FORM recently.

K-Swiss' stock is doing very poorly. Not a surprise. They rarely had the FORM merchandise you saw on the fighters for sale. In addition, their sales guys were some of the most incompetent we've ever dealt with at MMAOutlet.com

Maybe a new owner will revive it, but honestly I hope they didn't pay too much. I thought the designs were new & different, but FORM never really built a grassroots following.

--

From: Dan Diaz
Metal Mulisha, MMA Brand Manager
Member Since: 12/1/10

by and large the major consumers of product in mma want tuff guy gear.

people who dont will buy nike and underarmour and related merch before buying an unknown and untested new brand.

also every ad comercial and related pop was all shirtless guys oiled up. cmon even nike and ua have got some girls on and in their comercials. they might not be overdoing it but they are still doing it.

--

From: MMA Outlet
MMA Outlet
Member Since: 1/27/11
Posts: 3

To say that FORM didn't resonate with the general MMA audience is probably true to a certain extent, but saying that's why they failed is kind of over simplifing things a little.

They rarely ever had product to sell.

They sat on purchase orders for weeks when they did.Sales guys were the worst in history and would rarely return calls or emails.

There's a good reason why K-Swiss is probably going to go out of business, from my (very little) experience with them they are a poorly run company from top to bottom.

--

Form is taking issue with the figures provided.

http://www.mmasucka.com/behind-the-shirt/shirt-marc-wilson-special-update-form-athletics/

I just wanted to update everyone on what was posted about FORM Athletics loosing K-Swiss the money they claimed…

Although some numbers are correct, K-Swiss blaming FORM for their losses is no fault of anyone at FORM Athletics (Past, present or future).

If you take a look at what K-Swiss has done in the past 6 years you will see that the company alone has gone from a $500 million dollar company to a $200 million dollar company. FORM Athletics was purchased in July of 2010 and K-Swiss took over operations and development shortly afterwards. In the time that FORM was brought on they actually had increased their sales with a combination of FORM, K-Swiss Tubes, Kenny Powers and a recent “Young” marketing plan. However, their poor decisions, lack of direction, refusal to change and poor business management led to a loss across the board. Not to mention over investment in avenues that did not result in a good return on investment.

So where do the numbers come from?

FORM was a “Division” of K-Swiss linked to other Action Sports lines at different levels of development  and K-Swiss has bundled all of these projects into one. Since FORM was the only operating portion of that Division they were blamed for the loss at the end of the Quarter. However, others lines were in a stage that had not hit the market yet which means money was spent, but they have not begun sales (NO PROFIT!).

Regardless, the whole company alone lost many more millions than their Action Sports division. In fact this division was one of their better divisions aside from what they are known for… Tennis.

FORM was blamed for losses that realistically had nothing to do with the brand, they only followed the trend of the parent company. In my opinion, K-Swiss is trying to slander the name of the business before the eventual buy-back from the original owners because they know that without K-Swiss in the picture, FORM will be the success that it WOULD have been without them.

Please feel free to contact me if you have any more detailed questions.


 

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tags: K-Swiss   Form Athletics   



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Recent Comments »

goeb site profile image  

1/27/12 5:13 PM by goeb

Yikes...I feel like a jinx, now 3 companies I have bought t-shirts from now don't even sell apparel anymore and I only own 4 MMA-related shirts.But that's what I get for buying shirts without skulls and crossbones and crosses.

Authority Figure site profile image  

1/27/12 4:26 PM by Authority Figure

Sounds like Form is going to be bought back by the founders from K-SWISS. Great news. Loved the designs, just need to see the product for sale in my area. In my opinion, one of the few companies that designs MMA clothing I actually like!

mikepok site profile image  

1/27/12 12:44 PM by mikepok

It is unfortunate to see this happen with FORM. They definitely brought a refreshing look to the MMA scene and had a lot of great plans going forward. I interviewed them a couple of times way back in the beginning when the brand first launched, and then last year again. It was good to get input from both co-founders Urijah Faber and Mark Miller.If you want to read up on the brand's beginnings and what they had planned for the future, check out these links:http://fighterxfashion.com/fxf-interview-form-athletics-and-urijah-faber/http://fighterxfashion.com/tough-talk-qa-form-athletics/

robbie380 site profile image  

1/27/12 12:35 PM by robbie380

And by 6 years you mean 6 months :p   And their mkt cap stands at around $117 million and they are VERY HEAVILY shorted.  AKA a lot people think they are going much lower or bankrupt.

Quik site profile image  

1/27/12 12:22 PM by Quik

Ttt for later

mmasucka site profile image  

1/27/12 11:58 AM by mmasucka

 Just wanted to give an update... One of our Guest writers was around with the fellas at FORM when they first started the company. He gave an insiders update on whats going down.... http://www.mmasucka.com/behind-the-shirt/shirt-marc-wilson-special-update-form-athletics/ I just wanted to update everyone on what was posted about FORM Athletics loosing K-Swiss the money they claimed… Although some numbers are correct, K-Swiss blaming FORM for their losses is no fault of anyone at FORM Athletics (Past, present or future). If you take a look at what K-Swiss has done in the past 6 years you will see that the company alone has gone from a $500 million dollar company to a $200 million dollar company. FORM Athletics was purchased in July of 2010 and K-Swiss took over operations and development shortly afterwards. In the time that FORM was brought on they actually had increased their sales with a combination of FORM, K-Swiss Tubes, Kenny Powers and a recent “Young” marketing plan. However, their poor decisions, lack of direction, refusal to change and poor business management led to a loss across the board. Not to mention over investment in avenues that did not result in a good return on investment. So where do the numbers come from? FORM was a “Division” of K-Swiss linked to other Action Sports lines at different levels of development  and K-Swiss has bundled all of these projects into one. Since FORM was the only operating portion of that Division they were blamed for the loss at the end of the Quarter. However, others lines were in a stage that had not hit the market yet which means money was spent, but they have not begun sales (NO PROFIT!). Regardless, the whole company alone lost many more millions than their Action Sports division. In fact this division was one of their better divisions aside from what they are known for… Tennis. FORM was blamed for losses that realistically had nothing to do with the brand, they only followed the trend of the parent company. In my opinion, K-Swiss is trying to slander the name of the business before the eventual buy-back from the original owners because they know that without K-Swiss in the picture, FORM will be the success that it WOULD have been without them. Please feel free to contact me if you have any more detailed questions.

BJJZONE site profile image  

1/16/12 10:04 PM by BJJZONE

Sub'd

VXRSI_dano site profile image  

1/16/12 9:18 PM by VXRSI_dano

>dan diaz: def. snow seasons have been really more miss than hit the last few years here in Seattle...Def heard the same things about Agenda as well. Havent been in a few years, but its growth has been pretty obvious...and feels like its choice show amongst the others...Feel you on the 80-90s rewave of DIY...hints of early skate/surf/snow/street brands...whom are usually the ones who stick it thru and tend to make an impact even when things get crazy...ie industry blowups/blowbacksAs far as us, appreciate you liking what we do...we're still grindin, doin our thing...but i love it...most the time! haha

G-Hands site profile image  

1/16/12 2:04 PM by G-Hands

I hear Urijah got paid a pretty penny when KSwiss acquired Form.Glad he was able to get his bread (if what I heard was true).

aaronlynton site profile image  

1/16/12 1:14 PM by aaronlynton

I have a signed JBJ FA shirt pre champ