2331-033 midterm EXHIBIT I EXTRACTS - LUX FITNESS FINANCIAL STATEMENTS 6 MONTHS ENDED Lux Fitness Inc. For the 8 months ended Draft Income Statement (in thousands of dollars) Note 31-Dec-17 31-Dec-16 fullauilerl'l tuna Lllli'l\" Sales 1 5 73.539 $ 47.800 Operating expenses: Cost of sales 2 415 249 Wages and salaries of gym sta 22.062 19,120 Operating lease expenses 7.354 5.230 Depreciation 1.471 1.613 Other selling and administrative expenses 24.26? 16.987 55.559 43.204 Operating income 1?.970 4.596 Exceptional Costs in relation to proposed IPO 1.002 - Interest expense 1.471 1.560 Earnings (loss) beiore taxes 15.498 3.036 Income taxes expense (recovery) 3,100! $60!! Net income (fuss) $ 12.398 $ 2.429 Lux Fitness Extracts from balance sheet - stated in 000's For 6 months ended December 3151' Note 201? 2016 (unaudited) (unaudited) Accounts receivable (net of AFDA) 1 6.437 - Inventories 2 311 125 Deferred revenue (credit balance 1 3,825 4.700 Total Liabilities 52.621 35,299 Total Equity 101,195 88,247 Note 1 Revenue. Deferred revenue & Accounts Receivable LFI offers its customers a variety of options for membership payments. These include: Standard Members Members pay a monthly fee of $120 per month and can cancel at any time without penalty. The initial payment is made on the day the member signs up with the gym and is a prepayment for the first month's service. Each subsequent monthly payment is made exactly one month later. Deferred revenue for standard members is related the number of days of service at month end that are still owed to the customer. For example if a customer joins on December 20th. on December Blst twenty days remain in deferred revenue. Diamond Members Customers pay a $2,000 initiation fee upfront and pay a nominal monthly fee of $12. The initiation fee entitles the member to a lifetime membership with reduced monthly fees equaling 10% of the standard member. If a Diamond member fails to pay the monthly fee for longer than 4 months they will revoke their entitlement to Diamond Member status and are no longer lifetime members. The $2,000 initiation fee is deferred and recognized over the estimated expected membership life which LFI has determined to be 26 months