Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Oct. 07, 2019 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Current Fiscal Year End Date | --12-31 | |
Document Transition Report | false | |
Entity Registrant Name | Better Choice Co Inc. | |
Entity Address, State or Province | FL | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 45,427,659 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001471727 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 5,019,000 | $ 3,946,000 |
Restricted cash | 6,243,000 | 0 |
Accounts receivable, net | 333,000 | 276,000 |
Inventories, net | 1,707,000 | 1,557,000 |
Prepaid expenses and other current assets | 1,134,000 | 269,000 |
Total Current Assets | 14,436,000 | 6,048,000 |
Property and equipment, net | 59,000 | 71,000 |
Right of use asset, operating lease, net of accumulated amortization | 840,000 | 0 |
Intangible assets, net | 961,000 | 0 |
Other assets | 182,000 | 28,000 |
Total Assets | 16,478,000 | 6,147,000 |
Current Liabilities | ||
Line of credit | 0 | 4,600,000 |
Other liabilities | 0 | 1,899,000 |
Long-term debt, current portion | 6,200,000 | 1,600,000 |
Accounts payable | 2,413,000 | 765,000 |
Due to related parties | 134,000 | 0 |
Accrued liabilities | 2,198,000 | 244,000 |
Deferred revenue | 318,000 | 66,000 |
Operating lease liability, current portion | 262,000 | 0 |
Warrant derivative liability | 2,304,000 | 0 |
Total Current Liabilities | 13,829,000 | 9,174,000 |
Operating lease liability | 590,000 | 0 |
Deferred rent | 15,000 | 15,000 |
Total Liabilities | 14,434,000 | 9,189,000 |
Commitments and Contingencies | ||
Stockholders' Deficit | ||
Common Stock, $0.001 par value, 88,000,000 shares authorized, 43,168,161 & 11,661,485 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively. | 43,000 | 12,000 |
Additional paid-in capital | 170,017,000 | 13,642,000 |
Accumulated deficit | (181,023,000) | (16,698,000) |
Total Stockholders' Deficit | (10,963,000) | (3,042,000) |
Total Liabilities, Redeemable Preferred Stock and Stockholders' Deficit | 16,478,000 | 6,147,000 |
Series E Preferred Stock [Member] | ||
Current Liabilities | ||
Redeemable Preferred Stock | 13,007,000 | 0 |
Convertible Series A Preferred Stock [Member] | ||
Stockholders' Deficit | ||
Preferred Stock | $ 0 | $ 2,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 88,000,000 | 580,000,000 |
Common stock, shares issued (in shares) | 43,168,161 | 11,661,485 |
Common stock, shares outstanding (in shares) | 43,168,161 | 11,661,485 |
Preferred stock, shares outstanding (in shares) | 1,707,920 | |
Series E Preferred Stock [Member] | ||
Redeemable convertible preferred, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Redeemable convertible preferred, shares authorized (in shares) | 2,900,000 | 0 |
Redeemable convertible preferred, shares issued (in shares) | 1,707,919 | 0 |
Redeemable convertible preferred, shares outstanding (in shares) | 1,707,919 | 0 |
Preferred stock, shares outstanding (in shares) | 1,707,920 | |
Convertible Series A Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued (in shares) | 0 | 2,391,403 |
Preferred stock, shares outstanding (in shares) | 0 | 2,391,403 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Net Sales | $ 4,084,000 | $ 3,817,000 | $ 7,635,000 | $ 7,064,000 |
Cost of Goods Sold | 2,421,000 | 1,384,000 | 4,082,000 | 3,329,000 |
Gross Profit | 1,663,000 | 2,433,000 | 3,553,000 | 3,735,000 |
Operating Expenses: | ||||
General & Administrative Expense | 4,571,000 | 665,000 | 6,004,000 | 1,351,000 |
Share-Based Compensation Expense | 4,006,000 | 0 | 4,212,000 | 0 |
Sales & Marketing | 3,412,000 | 1,512,000 | 5,597,000 | 2,819,000 |
Other Operating Expenses | 937,000 | 958,000 | 1,721,000 | 1,899,000 |
Total Operating Expenses | 12,926,000 | 3,135,000 | 17,534,000 | 6,069,000 |
Loss from Operations | (11,263,000) | (702,000) | (13,981,000) | (2,334,000) |
Other Income (Expense) | ||||
Interest Expense | (62,000) | (43,000) | (124,000) | (66,000) |
Loss on Acquisition | (149,988,000) | 0 | (149,988,000) | 0 |
Change in Fair Value of Derivative Liability | (193,000) | 0 | (193,000) | 0 |
Total Other Expenses | (150,243,000) | (43,000) | (150,305,000) | (66,000) |
Net Loss | (161,506,000) | (745,000) | (164,286,000) | (2,400,000) |
Preferred dividends | 27,000 | 0 | 27,000 | 0 |
Net loss attributable to Common Stockholders | $ (161,533,000) | $ (745,000) | $ (164,313,000) | $ (2,400,000) |
Weighted Average Number of Shares Outstanding (in dollars per share) | 30,638,048 | 11,497,128 | 21,202,188 | 11,497,128 |
Loss per share, basic and diluted (in dollars per share) | $ (5.27) | $ (0.06) | $ (7.75) | $ (0.21) |
Unaudited Condensed Statements
Unaudited Condensed Statements of Changes in Stockholders' Deficit - USD ($) | Common Stock [Member] | Common Stock [Member]Better Choice Company [Member] | Common Stock [Member]Bona Vida, Inc. [Member] | Common Stock [Member]Series E Preferred Stock [Member] | Preferred Stock [Member]Series A Preferred Stock [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member]Better Choice Company [Member] | Additional Paid-in Capital [Member]Bona Vida, Inc. [Member] | Additional Paid-in Capital [Member]Series E Preferred Stock [Member] | Accumulated Deficit [Member] | Total | Better Choice Company [Member] | Bona Vida, Inc. [Member] | Series E Preferred Stock [Member] |
Balance at Dec. 31, 2017 | $ 11,497 | $ 8,545,446 | $ (10,672,090) | $ (2,115,147) | ||||||||||
Balance (in shares) at Dec. 31, 2017 | 11,497,128 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Net loss for the period | (1,655,302) | (1,655,302) | ||||||||||||
Balance at Mar. 31, 2018 | $ 11,497 | 8,545,446 | (12,327,392) | (3,770,449) | ||||||||||
Balance (in shares) at Mar. 31, 2018 | 11,497,128 | |||||||||||||
Balance at Dec. 31, 2017 | $ 11,497 | 8,545,446 | (10,672,090) | (2,115,147) | ||||||||||
Balance (in shares) at Dec. 31, 2017 | 11,497,128 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Net loss for the period | (2,400,000) | |||||||||||||
Balance at Jun. 30, 2018 | $ 11,497 | 8,545,446 | (13,071,950) | (4,515,007) | ||||||||||
Balance (in shares) at Jun. 30, 2018 | 11,497,128 | |||||||||||||
Balance at Mar. 31, 2018 | $ 11,497 | 8,545,446 | (12,327,392) | (3,770,449) | ||||||||||
Balance (in shares) at Mar. 31, 2018 | 11,497,128 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Net loss for the period | (744,558) | (745,000) | ||||||||||||
Balance at Jun. 30, 2018 | $ 11,497 | 8,545,446 | (13,071,950) | (4,515,007) | ||||||||||
Balance (in shares) at Jun. 30, 2018 | 11,497,128 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Shares issued pursuant to private placement | $ 2,391 | 4,665,609 | 4,668,000 | |||||||||||
Shares issued pursuant to private placement (in shares) | 2,391,403 | |||||||||||||
Stock compensation pursuant to services provided | $ 164 | 430,647 | 430,811 | |||||||||||
Stock compensation pursuant to services provided (in shares) | 164,357 | |||||||||||||
Net loss for the period | (3,626,157) | (3,626,157) | ||||||||||||
Balance at Dec. 31, 2018 | $ 11,661 | $ 2,391 | 13,641,701 | (16,698,107) | (3,042,000) | |||||||||
Balance (in shares) at Dec. 31, 2018 | 11,661,485 | 2,391,403 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Impact on Prior Year of Adoption of ASC 842 | ASC 842 [Member] | (11,824) | (11,824) | ||||||||||||
Shares issued pursuant to private placement | $ 69 | 149,931 | 150,000 | |||||||||||
Shares issued pursuant to private placement (in shares) | 69,115 | |||||||||||||
Stock compensation pursuant to services provided | $ 19 | 206,147 | 206,166 | |||||||||||
Stock compensation pursuant to services provided (in shares) | 18,964 | |||||||||||||
Net loss for the period | (2,780,082) | (2,780,082) | ||||||||||||
Balance at Mar. 31, 2019 | $ 11,680 | $ 2,461 | 13,997,779 | (19,490,013) | (5,478,093) | |||||||||
Balance (in shares) at Mar. 31, 2019 | 11,680,449 | 2,460,517 | ||||||||||||
Balance at Dec. 31, 2018 | $ 11,661 | $ 2,391 | 13,641,701 | (16,698,107) | (3,042,000) | |||||||||
Balance (in shares) at Dec. 31, 2018 | 11,661,485 | 2,391,403 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Retired TruPet Units | $ (2,200,000) | |||||||||||||
Retired TruPet Units (in shares) | (1,011,748) | |||||||||||||
Net loss for the period | $ (164,286,000) | |||||||||||||
Balance at Jun. 30, 2019 | $ 43,168 | 170,017,177 | (181,023,195) | (10,963,000) | ||||||||||
Balance (in shares) at Jun. 30, 2019 | 43,168,161 | |||||||||||||
Balance at Mar. 31, 2019 | $ 11,680 | $ 2,461 | 13,997,779 | (19,490,013) | (5,478,093) | |||||||||
Balance (in shares) at Mar. 31, 2019 | 11,680,449 | 2,460,517 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Stock compensation pursuant to services provided | $ 1,100 | 2,225,907 | 2,227,006 | |||||||||||
Stock compensation pursuant to services provided (in shares) | 1,099,822 | |||||||||||||
Stock based commissions to third parties | $ 798 | 4,790,156 | 4,790,955 | |||||||||||
Stock based commissions to third parties (in shares) | 798,492 | |||||||||||||
Conversion of Series Preferred Stock | $ 2,461 | $ (2,461) | 0 | |||||||||||
Conversion of Series Preferred Stock (in shares) | 2,460,517 | (2,460,517) | ||||||||||||
Retired TruPet Units | $ (1,012) | (2,198,988) | (2,200,000) | |||||||||||
Retired TruPet Units (in shares) | (1,011,748) | |||||||||||||
Balance at May. 05, 2019 | $ 15,028 | $ 0 | 18,814,854 | (19,490,013) | (660,132) | |||||||||
Balance (in shares) at May. 05, 2019 | 15,027,533 | 0 | ||||||||||||
Balance at Mar. 31, 2019 | $ 11,680 | $ 2,461 | 13,997,779 | (19,490,013) | (5,478,093) | |||||||||
Balance (in shares) at Mar. 31, 2019 | 11,680,449 | 2,460,517 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Net loss for the period | (161,506,000) | |||||||||||||
Balance at Jun. 30, 2019 | $ 43,168 | 170,017,177 | (181,023,195) | (10,963,000) | ||||||||||
Balance (in shares) at Jun. 30, 2019 | 43,168,161 | |||||||||||||
Balance at May. 05, 2019 | $ 15,028 | $ 0 | 18,814,854 | (19,490,013) | (660,132) | |||||||||
Balance (in shares) at May. 05, 2019 | 15,027,533 | 0 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Shares issued pursuant to private placement | $ 5,745 | 15,670,045 | 15,675,790 | |||||||||||
Shares issued pursuant to private placement (in shares) | 5,744,991 | |||||||||||||
Acquisition | $ 3,117 | $ 18,003 | $ 18,701,067 | $ 108,001,637 | $ 18,704,184 | $ 108,019,640 | ||||||||
Acquisition (in shares) | 3,117,364 | 18,003,273 | 18,003,273 | |||||||||||
Balance at May. 06, 2019 | $ 41,893 | 161,187,602 | (19,490,013) | 141,739,482 | ||||||||||
Balance (in shares) at May. 06, 2019 | 41,893,161 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Stock compensation pursuant to services provided | $ 100 | 599,900 | 600,000 | |||||||||||
Stock compensation pursuant to services provided (in shares) | 100,000 | |||||||||||||
Conversion of Series Preferred Stock | $ 1,175 | $ 7,050,678 | $ 7,051,853 | |||||||||||
Conversion of Series Preferred Stock (in shares) | 1,175,000 | |||||||||||||
Vesting of stock options for services provided | 1,178,997 | 1,178,997 | ||||||||||||
Net loss for the period | (161,533,182) | (161,533,182) | ||||||||||||
Balance at Jun. 30, 2019 | $ 43,168 | $ 170,017,177 | $ (181,023,195) | $ (10,963,000) | ||||||||||
Balance (in shares) at Jun. 30, 2019 | 43,168,161 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) | May 06, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Cash Flow from Operating Activities | ||||
Net loss | $ (164,286,000) | $ (2,400,000) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization | 45,000 | 7,000 | ||
Stock-based compensation expense | 4,212,000 | 0 | ||
Non-cash lease expense | 2,000 | 0 | ||
Change in fair value of derivative liability | 193,000 | 0 | ||
Loss on acquisition | 149,988,000 | 0 | ||
Other | (4,000) | 0 | ||
(Increase) decrease in operating assets | ||||
Accounts receivable | (27,000) | (50,000) | ||
Inventories | 42,000 | (296,000) | ||
Prepaid expenses and other assets | (466,000) | 48,000 | ||
Change in operating lease right of use asset | (457,000) | 0 | ||
(Decrease) increase in current liabilities | ||||
Accounts payable | (32,000) | 530,000 | ||
Accrued liabilities | 1,600,000 | 76,000 | ||
Deferred revenue | 252,000 | 68,000 | ||
Deferred rent | 0 | (9,000) | ||
Change in lease liability | 457,000 | 0 | ||
Cash Used in Operating Activities | (8,481,000) | (2,026,000) | ||
Cash Provided by (Used in) Investing Activities | ||||
Cash spent for Acquisition of fixed assets (Office Furniture) | (4,000) | (31,000) | ||
Cash acquired in merger | 1,955,000 | 0 | ||
Security deposits paid | (81,000) | 0 | ||
Cash Provided by (Used in) Investing Activities | 1,870,000 | (31,000) | ||
Cash Provided by Financing Activities | ||||
Repayment of advance | (1,899,000) | 0 | ||
Proceeds from private placement of Series A Preferred Units | 150,000 | 0 | ||
Proceeds from private issuance of public equity | 15,676,000 | 0 | ||
Payment of old debt | (6,200,000) | 0 | ||
Proceeds from the issuance of debt | 6,200,000 | 2,013,000 | ||
Cash Provided by Financing Activities | 13,927,000 | 2,013,000 | ||
Net Changes in Cash, Cash Equivalents and Restricted Cash | 7,316,000 | (44,000) | ||
Total Cash, Cash Equivalents and Restricted Cash, Beginning of Period | 3,946,000 | 157,000 | $ 157,000 | |
Total Cash, Cash Equivalents and Restricted Cash, End of Period | 11,262,000 | 113,000 | 3,946,000 | |
Current Assets | ||||
Accounts receivable, net | $ 30,000 | |||
Inventories, net | 193,000 | |||
Prepaid expenses and other current assets | 399,000 | |||
Total Current Assets | 622,000 | |||
Intangible Assets | 986,000 | |||
Other assets | 74,000 | |||
Total Assets | 1,682,000 | |||
Current Liabilities | ||||
Accounts payable | (1,814,000) | |||
Accrued liabilities | (325,000) | |||
Total Current Liabilities | (2,139,000) | |||
Warrant derivative liability | (2,111,000) | |||
Total Liabilities | (4,250,000) | |||
Redeemable Series E Preferred Stock | $ 20,059,000 | |||
Right of Use asset recorded upon adoption of ASC 842 | 477,000 | |||
Lease liability recorded upon adoption of ASC 842 | $ (489,000) | |||
Income taxes paid | 0 | 0 | ||
Cash interest paid | $ 123,000 | $ 66,000 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Nature of Business and Summary of Significant Accounting Policies [Abstract] | |
Nature of Business and Summary of Significant Accounting Policies | Note Nature of the Business Better Choice Company, Inc. (the “Company”) is a holistic pet wellness company providing high quality, hemp-based, raw cannabidiol (“CBD”) infused and non-CBD infused food, treats and supplements, dental care products, and accessories for pets and their human parents. Our products are formulated and manufactured using only high-quality ingredients manufactured, tested and packaged to our specifications. On May 6, 2019, the Company acquired TruPet LLC and Bona Vida Inc. in a pair of all-stock transactions (the “acquisitions”). The acquisition of TruPet LLC is a reverse acquisition for accounting purposes, with TruPet as the accounting acquirer. The majority of our products are sold online directly to consumers with additional sales through online retailers and pet specialty stores. We have a limited selection of CBD infused canine products available on our Bona Vida website. The information contained in, or accessible through, these websites does not constitute a part of this Quarterly Report. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10–Q and Article 10 of Regulation S–X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and operating results have been included. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending December 31, 2019. The significant accounting policies applied by the Company are described below. We present our tables, except for the Statements of Stockholders’ Deficit, in dollars (thousands), numbers in the text in dollars (millions) and % as rounded up or down. Basis of Measurement The unaudited condensed consolidated financial statements of the Company are presented on a going concern basis, under the historical cost convention except for certain financial instruments that are measured at fair value, as explained in the accounting policies below. Historical cost is measured as the fair value of the consideration provided in exchange for goods and services. The Company’s functional and presentation currency is United States dollars (“USD”). Consolidation The consolidated financial statements and related notes include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Cash and Cash Equivalents Cash and cash equivalents include demand deposits held with banks and highly liquid investments with remaining maturities of ninety days or less at acquisition date. For purposes of reporting cash flows, the Company considers all cash accounts that are not subject to withdrawal restrictions or penalties to be cash and cash equivalents. Restricted Cash As part of the revolving credit agreement with Franklin Synergy Bank, the Company is required to maintain a cash balance of $6.2 million in its account. Any withdrawals from the account require an equal reduction to the funds available under the revolving credit agreement. Dollars in thousands June 30, 2019 December 31, 2018 Cash and cash equivalents $ 5,019 $ 3,946 Restricted cash 6,243 0 Total cash, cash equivalents and restricted cash $ 11,262 $ 3,946 Accounts Receivable Accounts receivable represents amounts due from customers less an allowance for doubtful accounts. A provision is recorded for impairment when there is objective evidence (such as significant financial difficulties of the debtor) that the Company will not be able to collect all amounts due according to the original terms of the receivable. A provision is recorded as the difference between the carrying value of the receivable and the present value of future cash flows expected from the debtor, with an offsetting amount recorded as an allowance, reducing the carrying value of the receivable. The provision is included in general and administrative expense in the statements of operations. As of the period ended June 30, 2019 and December 31, 2018, the Company considers accounts receivable to be fully collectible and, accordingly, no allowance for doubtful accounts has been recorded. Inventories Inventories are recorded at the lower of cost and net realizable value. The net realizable value represents the estimated selling price for inventories in the ordinary course of business, less all estimated costs of completion and costs necessary to make the sale. Cost is determined on a standard cost basis and includes the purchase price and other costs, such as transportation costs. Inventory average cost is determined on a first‑in, first‑out (“FIFO”) basis and trade discounts are deducted from the purchase price. Property and Equipment Property and equipment are carried at cost and includes expenditures for new additions and other additions, which substantially increase the useful lives of existing assets. Depreciation is computed at various rates by use of the straight-line method. Depreciable lives are generally as follows: Furniture and Fixtures 5 to 7 years Equipment 7 years Expenditures for normal repairs and maintenance are charged to operations as incurred. The cost of property or equipment retired or otherwise disposed of and the related accumulated depreciation are removed from the accounts in the year of disposal with the resulting gain or loss reflected in earnings. The Company assesses potential impairments of its property and equipment whenever events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. An impairment charge would be recognized when the carrying amount of property and equipment is not recoverable and exceeds its fair value. The carrying amount of property and equipment is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the property and equipment. Income Taxes No provision has been made for federal and state income taxes prior to the date of the acquisitions since the proportionate share of TruPet’s income or loss was included in the personal tax returns of its members because TruPet was a limited liability company. Subsequent to the acquisitions, the Company, as a corporation, is required to provide for income taxes. The Company utilizes Accounting Standards Codification (“ASC 740”), “Accounting for Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The effective tax rate for each of the three months and the six months ended June 30, 2019 is 0%. The effective tax rate differs from the U.S. Federal statutory rate of 21% primarily because our previously reported losses have been offset by a valuation allowance due to uncertainty as to the realization of those losses. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. Accounting guidance addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements, under which a company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Accordingly, the Company would report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company elects to recognize any interest and penalties, if any, related to unrecognized tax benefits in tax expense. The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%. As of the completion of these unaudited condensed financial statements, we have made a reasonable estimate of the effects of the Tax Act. This estimate incorporates assumptions made based upon the Company’s current interpretation of the Tax Act and may change as the Company may receive additional clarification and implementation guidance and as the interpretation of the Tax Act evolves. In accordance with SEC Staff Accounting Bulletin No. 118, the Company will finalize the accounting for the effects of the Tax Act no later than the end of the fourth quarter of fiscal year 2019. Future adjustments made to the provisional effects will be reported as a component of income tax expense in the reporting period in which any such adjustments are determined. Based on the new tax law that lowers corporate tax rates, the Company revalued its deferred tax assets. Future tax benefits are expected to be lower, with the corresponding one-time charge being recorded as a component of income tax expense. Revenue The Company recognizes revenue to depict the transfer of promised goods to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. In order to recognize revenue, the Company applies the following five (5) steps: • Identify a customer along with a corresponding contract; • Identify the performance obligation(s) in the contract to transfer goods to a customer; • Determine the transaction price the Company expects to be entitled to in exchange for transferring promised goods to a customer; • Allocate the transaction price to the performance obligation(s) in the contract; and • Recognize revenue when or as the Company satisfies the performance obligation(s). A description of the Company’s revenue generating activities is listed below: Direct-to-consumer (“DTC”) – Our products are offered through our online stores where customers place orders online or through our customer service number. Revenue is recorded, net of discounts, at the time the order is received by the customer. Revenue is deferred for orders that have been placed, and paid for, but have not yet been received by the customer during the reporting period. As our customers have a 60-day guarantee on the product purchased, the Company records a liability for two months of estimated returns based on historical experience. Loyalty Program - The Company offers a loyalty program to all of its direct-to-consumer customers. There are two tiers to the program. Tier 1: the customer will earn 6 points for every $1 spent Tier 2: the customer can earn points at a much faster rate and will also have opportunities to earn bonus points for different events, such as a birthday. This tier is known as the TruDog Love Club, and the customer accumulates twelve points for every $1 spent. The redemption requirements are the same under both levels and, for every five hundred points earned, customers receive a $5 gift code which can be redeemed for goods purchased in the future. The Company records a reduction to sales revenue and deferred revenue when the customer accumulates loyalty points. Wholesale Sales – This channel includes the sale of our products to wholesale customers for resale. The Company’s policy is to recognize revenue at the time the product is shipped to the wholesale customer, net of estimated returns and allowances. Consignment – The Company partners with an Amazon channel partner to market and sell TruDog products. Revenue is recognized, net of returns, when our partner ships the product to the end customer. The commission, selling, marketing and storage fees are recognized at the time the services are rendered by the channel partner and are recorded by the Company, as follows: • Commission, selling and marketing fees as sales and marketing expenses • Storage fees as cost of goods sold. Cost of Goods Sold Cost of goods sold consists primarily of the cost of product obtained from the contract manufacturing plants, packaging materials and CBD oils directly sourced by the Company, and freight for shipping product from our contract manufacturing plants to our warehouse. We review inventory on hand periodically to identify damages, slow moving inventory, and/or aged inventory. Based on the analysis, we record inventories on the lower of cost and net realizable value, with any reduction in value expensed as cost of goods sold. Advertising The Company charges advertising costs to expense as incurred and such charges are included in sales and marketing expenses. Advertising costs, consisting primarily of Facebook advertising, search costs and email advertising, were $2.3 million and $1.2 million for the three-month periods ended June 30, 2019 and 2018, respectively. For the six-month periods ended June 30, 2019 and 2018, advertising costs were $3.5 million and $2.2 million, respectively. Research and Development Research is a planned search or a critical investigation aimed at discovering new knowledge and information with the hope that such knowledge will be useful in developing a new product or service (referred to as a “product”) or a new process or technique (referred to as a “process”) or bringing about a significant improvement to an existing product or process. Development is the translation of research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or use. It includes the conceptual formulation, design and testing of product alternatives, construction of prototypes and operation of pilot plants. No research and development costs were incurred during the three or six month period ended June 30, 2019 and June 30, 2018. Shipping and Handling / Freight Out The Company recognizes shipping and handling costs as a fulfillment cost, included in other operating expenses as they are incurred prior to the customer obtaining control of the products. Shipping and handling costs primarily consist of costs associated with moving finished products to customers through third-party carriers. Shipping and handling costs were $0.6 million and $0.7 million for the three-month periods ended June 30, 2019 and 2018, respectively. For the six-month periods ended June 30, 2019 and 2018, shipping and handling costs were $1.2 million and $1.3 million, respectively. Additionally, for direct to consumer customers, the Company may recover such costs by passing them onto the customer. In these instances, the Company includes the freight charges billed to customers in total revenue. The amount included in revenue related to such recoveries was $0.2 million and $0.3 million for the three-month periods ended June 30, 2019 and 2018, respectively. For the six-month periods ended June 30, 2019 and 2018, the amounts included in revenue related to such recoveries was $0.4 million and $0.6 million, respectively. Fair Value of Financial Instruments A financial instrument is defined as cash, evidence of an ownership interest in an entity, or a contract that both: • Imposes on one entity a contractual obligation either: o To deliver cash or another financial instrument to a second entity; or o To exchange other financial instruments on potentially unfavorable terms with the second entity. • Conveys to that second entity a contractual right either: o To receive cash or another financial instrument from the first entity; or o To exchange other financial instruments on potentially favorable terms with the first entity. The Company’s financial instruments recognized in the balance sheet consist of cash and cash equivalents, restricted cash accounts, accounts receivable, deposits, accounts payable, line of credit, due to related party, accrued and other liabilities, warrant derivative liability and long-term debt. Warrant derivative liability is measured at fair value each reporting period. The fair values of the remaining financial instruments approximate their carrying values. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has applied the framework for measuring fair value which requires a fair value hierarchy to be applied to all fair value measurements. The fair value of the warrant derivative liability is considered a Level 3 financial instrument. All financial instruments recognized at fair value in the balance sheet are classified into one of three levels in the fair value hierarchy as follows: • Level 1 – valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. Cash is measured based on Level 1 inputs. • Level 2 – valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or corroborated by observable market data by correlation or other means. • Level 3 – valuation techniques with significant unobservable market inputs. Derivative Financial Instruments Financial Accounting Standards Board (“FASB”) ASC Topic 815, “Derivatives and Hedging”, generally provides three criteria that, if met, require companies to bifurcate conversion options from its host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described. The accounting treatment of derivative financial instruments requires that the Company record the embedded conversion option and warrants at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The pricing model we use for determining fair value of our derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income (see Note 8). Basic and Diluted Loss Per Share Basic and diluted loss per share has been determined by dividing the net loss available to stockholders for the applicable period by the basic and diluted weighted average number of shares outstanding, respectively. Common Stock equivalents and incentive shares are excluded from the computation of diluted loss per share when their effect is anti-dilutive. Stock-Based Compensation The Company recognizes a compensation expense for all equity–based payments in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”. The Company accounts for share–based payments granted to non–employees in accordance with FASB ASC Topic 505–50, “Equity Based Payments to Non–Employees.” The Company follows the fair value method of accounting for stock awards granted to employees, directors, officers and consultants. Stock-based awards to employees are measured at the fair value of the related stock-based awards. Stock-based payments to others are valued based on the related services rendered or goods received or if this cannot be reliably measured, on the fair value of the instruments issued. Issuances of such awards are valued using the fair value of the awards at the time of grant. The Company recognizes stock-based payment expenses over the vesting period based on the number of awards expected to vest over that period on a straight-line basis. Forfeitures are accounted for as they occur. The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are inputs into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the analysis of other public companies within the pet wellness sector. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. The Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. Use of Estimates The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America 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 dates of the financial statements and the reported amounts of expenses during the reporting periods. The Company evaluates its estimates on an ongoing basis. The Company bases its estimates on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Segment Information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed its operations and manages its business as one segment operating in the United States of America. The Company’s chief operating decision-maker does not review operating results on a disaggregated basis; rather, the chief operating decision-maker reviews operating results on an aggregate basis. License Intangibles License intangibles are recorded at fair value at the date of acquisition and are amortized ratably over the life of the license agreement. Commitments and Contingencies We may be involved in legal proceedings, claims, and regulatory, tax, or government inquiries and investigations that arise in the ordinary course of business resulting in loss contingencies. We accrue for loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. We do not accrue for contingent losses that are considered to be reasonably possible, but not probable; however, we disclose the range of such reasonably possible losses. Loss contingencies considered remote are generally not disclosed. We have entered into debt, royalty and lease agreements for which we are committed to pay certain amounts over a period of time. See Notes 5, 6 and 7. Reclassification of Prior Period Presentation Certain reclassifications have been made to conform the prior period data to the current presentations. These reclassifications had no effect on the reported results. Recently Issued Accounting Pronouncements The Company has reviewed the Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof issued by the FASB that have effective dates during the reporting period and in future periods. New Standards and Interpretations: Adoption of FASB ASC Topic 842 “Leases” The amendments in this update establish a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease term of more than twelve months. The new standard is effective for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, including a number of optional practical expedients that entities may elect to apply. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, an update which provides another transition method, the prospective transition method, which allows entities to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted the new standard on January 1, 2019 using the prospective transition method. The Company has identified all leases to determine the impact of ASC 842 on its consolidated financial statements. The Company has elected to apply the practical expedient to certain classes of leases, whereby the separation of components of leases into lease and non-lease components is not required, and all of the practical expedients to all leases, (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any existing leases. The adoption of the new standard resulted in the recording on the consolidated balance sheet as of January 1, 2019 a right-of-use asset of $0.5 million, a lease liability of $0.5 million and a corresponding cumulative adjustment to accumulated deficit of an immaterial amount in accordance with ASC 842. Adoption of FASB ASU No. 2018-07 “Improvements to Nonemployee Share-Based Payment Accounting” On January 1, 2019, the Company adopted ASU No. 2018-07 “Improvements to Nonemployee Share-Based Payment Accounting”. The amendments in this update expanded the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. The requirements of ASC 718 are applied to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. The amendments specify that ASC 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that ASC 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606, “Revenue from Contracts with Customers.” The Company is treating the inclusion of share-based payments to non-employees as a change in accounting principle prospectively beginning in the period ending June 30, 2019. As the Company did not make any share-based payments to non-employees in prior periods, there was no impact on the results of operations in prior periods. Adoption of ASU 2018-13 “Fair Value Measurement” In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) Changes to the Disclosure Requirement for Fair Value Measurement” which amends ASC 820 to expand the disclosures required for items subject to Level 3, fair value remeasurement, including the underlying assumptions. ASU 2018-13 is effective for public companies for fiscal years beginning after December 15, 2019. The Company has early adopted the disclosures as permitted under the ASU. New and Revised Standards not Yet Adopted: In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326)”. ASU 2016-13 changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019. The Company does not anticipate any material impact from the implementation of this ASU. The Company has carefully considered other new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Company’s reported balance sheet or operations in 2019. |
Acquisition of TruPet LLC and B
Acquisition of TruPet LLC and Bona Vida, Inc. | 6 Months Ended |
Jun. 30, 2019 | |
Acquisition of TruPet LLC and Bona Vida, Inc. [Abstract] | |
Acquisition of TruPet LLC and Bona Vida, Inc. | Note 2 - Acquisition of TruPet LLC and Bona Vida, Inc. On May 6, 2019, the Company completed the acquisitions through the issuance of shares of Common Stock, par value $0.001 of the Company (the “Common Stock”). Following the completion of the acquisitions, the business conducted by the Company became primarily the businesses conducted by TruPet and Bona Vida. TruPet is a North American online seller of pet foods, pet nutritional products and related pet supplies. Bona Vida is an emerging hemp based CBD platform focused on developing a portfolio of brand and product verticals within the animal health and wellness space. The completion of the acquisitions has created a vertically integrated pet wellness company providing high-quality raw CBD infused and non-CBD infused food, treats and supplements in addition to dental care products and accessories for pets and their human parents. Based upon the guidance described in ASC 805-10-25-4 and 5, TruPet LLC has been determined to be the accounting acquirer. As such, the historical financial statements are those of TruPet, and TruPet’s equity has been re-cast to reflect shares of Common Stock received in the acquisitions. At the closing of the TruPet transaction, the Company issued 15,027,533 shares of Common Stock in exchange for the remaining 93% of the outstanding interests in TruPet. BCC had acquired the initial 7% of TruPet in December 2018. Immediately after the consummation of the acquisitions, the TruPet members, in the aggregate, owned 38% of the combined company. The Company retired 914,919 TruPet Member Units (equivalent to 1,011,748 Common Shares) owned by Better Choice Company as part of the acquisition. Bona Vida did not meet the definition of a business and therefore asset acquisition accounting was applied. At the closing of the Bona Vida transaction, the Company issued 18,003,274 shares of Common Stock in exchange for 100% of the outstanding shares of Bona Vida. Immediately after the consummation of the acquisitions, the Bona Vida stockholders, in the aggregate, owned 46% of the combined company. Better Choice Company did not meet the definition of a business and therefore assets acquisition accounting was applied. The fair value of Better Choice Company’s net liabilities and redeemable preferred stock acquired by TruPet is estimated to be $19.5 million. The estimated purchase price has been allocated based on a preliminary estimate of the fair value of Better Choice Company assets acquired and liabilities assumed and redeemable preferred stock assumed with the remainder recorded as an expense. The loss on acquisition of Better Choice Company assets was $38.2 million. The fair value of Bona Vida’s net assets acquired is estimated to be $1.0 million. The estimated purchase price has been allocated based on a preliminary estimate of the fair value of assets acquired and liabilities. The excess of the consideration paid over the net assets acquired has been recorded as an expense. The loss on acquisition of Bona Vida’s assets was $107.0 million. On May 6, 2019, the fair value of the following assets and liabilities were acquired: Dollars in thousands Better Choice Company Bona Vida Total Assets Current Assets Cash and cash equivalents $ 1,546 $ 384 $ 1,930 Restricted cash 25 25 Accounts receivable 30 30 Intercompany receivables 6,161 38 6,199 Inventories 193 193 Prepaid expenses and other current assets 52 347 399 Total Current Assets 7,759 1,017 8,776 Intangible assets, net of amortization 986 986 Other assets 74 74 Total Assets $ 8,745 $ 1,091 $ 9,836 Liabilities and Redeemable Preferred Stock Current Liabilities Warrant derivative liability $ 2,111 $ - $ 2,111 Accounts payable & accrued liabilities 2,071 69 2,140 Long term debt, current portion 6,200 6,200 Total Current Liabilities $ 10,382 $ 69 $ 10,451 Total Liabilities $ 10,382 $ 69 $ 10,451 Redeemable Series E Preferred Stock $ 20,059 $ - $ 20,059 |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2019 | |
Inventories [Abstract] | |
Inventories | Note 3 - Inventories Inventories reflected on the accompanying balance sheets are summarized as follows: Dollars in thousands June 30, 2019 December 31, 2018 Food, treats and supplements $ 1,682 $ 1,301 Other products and accessories 87 191 Inventory packaging and supplies 168 133 1,937 1,625 Inventory reserve (230 ) (68 ) $ 1,707 $ 1,557 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2019 | |
Property and Equipment [Abstract] | |
Property and Equipment | Note 4 - Property and Equipment Property and equipment consist of the following: Dollars in thousands June 30, 2019 December 31, 2018 Warehouse equipment $ 49 $ 49 Computer equipment 14 14 Furniture and fixtures 76 46 Total property and equipment 139 109 Accumulated depreciation (80 ) (38 ) $ 59 $ 71 Depreciation expense was immaterial for the three and six-month periods ended June 30, 2019 and 2018, respectively. Depreciation expense is included as a component of general and administrative expenses. |
Operating Leases
Operating Leases | 6 Months Ended |
Jun. 30, 2019 | |
Operating Leases [Abstract] | |
Operating Leases | Note 5 – Operating Leases The Company adopted Topic 842 “Leases” effective January 1, 2019. A modified retrospective transition approach was followed by applying the new standard to all leases existing at the date of initial application. We chose to use January 1, 2019 as our date of initial application of the standard. Since we adopted the new standard on January 1, 2019 and use the effective date as our date of initial application, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. We elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. We elected all of the new standard’s available transition practical expedients. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Operating lease right-of-use assets and liabilities were recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, an incremental borrowing rate based on the information available at the commencement date was used in determining the present value. The Company will use the implicit rate when readily determinable. This standard did not have a material effect on our financial statements. The adoption of Topic 842 resulted in an immaterial cumulative effect adjustment to accumulated deficit and the Company recognized operating lease right-of-use assets of $0.5 million and operating lease liabilities of $0.5 million on January 1, 2019. The most significant future effects relate to (1) the recognition of new ROU assets and lease liabilities on our balance sheet for our real estate operating leases and (2) providing significant new disclosures about our leasing activities. The Company leases its office and warehouse facilities under operating leases which originally expired in November 2018. These agreements were modified in October 2017 for additional space leased. With this modification, the rent term was also revised and extended until October 2022, at a base prices of $13.02 per square foot for the existing lease and $15.50 per square foot for the additional space leased, with a 3.5% annual escalation clause and a one-time option to renew the leases for an additional 5-year term. In addition to base monthly rent, the agreement requires the Company to pay its proportionate share of real estate taxes, insurance, and common area maintenance expenses. In February and May 2019, the Company entered into two additional operating leases for office and warehouse facilities under three- year lease agreements at base monthly rental rates of $8,856 and $4,492, respectively. The monthly rent shall increase each year which will be based on the Consumer Price Index promulgated by the United States Bureau of Labor Statistics. The rent adjustment will not be less than two percent or exceed five percent per year. The Company determines if an arrangement contains a lease at inception based on the ability to control a physically distinct asset. Operating and finance lease right-of-use assets are recorded in the consolidated balance sheets based on the initial measurement of the lease liability as adjusted to include prepaid rent and initial direct costs less any lease incentives received. Lease liabilities are measured at the commencement date based on the present value of the lease payments over the lease term. Lease payments are generally fixed but may include provisions for future rent increases. The Company separately accounts for variable components within lease agreements including common area maintenance, insurance and real estate taxes. The Company uses its incremental borrowing rate to present value the lease liability as key inputs to determine the interest rate implicit in the lease are not shared by lessors. Operating lease expense is recorded on a straight-line basis over the lease term. Right-of-use assets and lease liabilities for short-term leases are not recognized in the consolidated balance sheets. Payments for leases with a term of one month or less are recognized in the consolidated statements of operations as incurred. We have no leases that are considered short term (one year or less). Rent expenses related to our real estate leases for which a right of use asset has been recognized totaled $0.1 million and $0.1 million for the three and six months ended June 30, 2019, respectively. Estimated expenses for variable lease costs are immaterial for the three and six months period ended June 30, 2019. Rent expense for operating leases in effect and recorded prior to the adoption of ASC 842. Leases amount to an immaterial amount and $0.1 million for the three and six-month periods ended June 30, 2018, respectively. The table below presents the operating lease-related assets and liabilities recorded on the consolidated balance sheets: Dollars in thousands Leases Balance Sheet Classification June 30, 2019 Assets Non-current assets Operating lease right-of-use assets, net of accumulated amortization $ 840 Total operating lease assets $ 840 Liabilities Current Operating Operating lease liabilities (262 ) Non-current Operating Operating lease liabilities (590 ) Total operating lease liabilities $ (852 ) The table below presents the maturity of lease liabilities as of June 30, 2019: Dollars in thousands Lease payments Operating Leases Remainder of 2019 $ 147 2020 299 2021 303 2022 169 Total undiscounted minimum future lease payments 918 Less: imputed interest 66 Present value of lease liabilities $ 852 |
License Intangibles and Royalti
License Intangibles and Royalties | 6 Months Ended |
Jun. 30, 2019 | |
License Intangibles and Royalties [Abstract] | |
License Intangibles and Royalties | Note 6 – License Intangibles and Royalties On May 6, 2019, the Company entered into a licensing agreement with Elvis Presley Enterprises, LLC which is fairly valued at $1 million and related to an April 2019 agreement between Better Choice Company, Authentic Brands and Elvis Presley Enterprises focused on the development of hemp-derived CBD products under the Elvis Presley Hound Dog name. Product development is expected to be complete in late 2019. The initial term of the licensing agreement ends on December 31, 2025. The license agreement is amortized on a straight-line basis over the life of the agreement. During the period from May 6, 2019 through June 30, 2019, an immaterial amount in amortization was expensed related to the Hound Dog license. Royalties are required to be paid quarterly at a rate of 5% of net retail sales and 10% of net wholesale sales. The contract includes Guaranteed Minimum Royalty Payments for each of the contract years as per the table below: Dollars in thousands Guaranteed Minimum Royalty 2019-2020 $ 1,500 2021 $ 1,000 2022 $ 1,125 2023 $ 1,250 2024 $ 1,500 2025 $ 1,750 As of June 30, 2019, the Company had paid $0.6 million of the 2019-2020 Guaranteed Minimum Royalty Payments which were recorded as prepaid expenses. There were no sales related to Hound Dog products during the three and six-month periods ended June 30, 2019. The Company entered into an agreement for the payment of royalties related to sales of the Orapup brand dental system in November 2015. The agreement called for a 10% royalty to be paid on the first $2.5 million of related sales for a term of three years. Thereafter, commencing on the earlier of the end of the three-year term or having reached $2.5 million in sales, a 2% royalty was to be paid thereafter. Royalty expense was minimal during 2017 and 2018. In November 2018, the parties reached a settlement whereby the Company paid $0.1 million to fulfill all of its present and future obligations related to this agreement. Due to the settlement by the parties, the Company no longer has any royalty obligation related to the Orapup brand dental system. |
Line of Credit and Debt
Line of Credit and Debt | 6 Months Ended |
Jun. 30, 2019 | |
Line of Credit and Debt [Abstract] | |
Line of Credit and Debt | Note 7 - Line of Credit and Debt In May 2017, the Company along with the majority owners serving as co-borrowers entered into a credit facility providing for up to $2 million of borrowings. Through various amendments, the maximum borrowings under the line increased to $4.6 million with a maturity of May 2019. Borrowings bear interest at LIBOR plus 3%. At June 30, 2019 and December 31, 2018, outstanding borrowings amounted to $0 and $4.6 million, respectively. The line of credit was secured by personal assets of the co-borrowers. Covenants under the line of credit required the Company to be within a certain quarterly and annual loss limitation threshold, and certain other restrictions. As of December 31, 2018, the Company was in compliance with its covenants and/or obtained waivers from the lien holders. At June 30, 2019 and December 31, 2018, outstanding borrowings amounted to $0 and $1.6 million, respectively. At December 31, 2018, our long-term debt consisted of an unsecured note payable to a director of the Company bearing 26.6% interest with principal and interest due within 30 days after change of control. No interest was paid during 2019. On May 6, 2019, Better Choice Company refinanced the $4.6 million line of credit and the $1.6 million note payable to the director with a $6.2 million revolving credit agreement with Franklin Synergy Bank. All advances relating to this revolving credit agreement bear a fixed rate of interest equal to 3.7% per annum , TruPet and Bona Vida became guarantors of the Company’s obligations under the Loan Agreement after the closing of the acquisitions. In addition, pursuant to a Security Agreement by and between the Company and Lender dated the date of the Loan Agreement (the “Security Agreement”), the Company has granted the Lender a security interest in all assets of the Company owned or later acquired. The Loan Agreement also contains certain events of default, representations, warranties and covenants of the Company and its subsidiaries. For example, the Loan Agreement contains representations and covenants that, subject to exceptions, restrict the Company’s ability to do the following, among things: incur additional indebtedness, engage in certain asset sales, or undergo a change in ownership. Interest expense of approximately $0.1 million and $0.1 million was recorded in the statements of operations related to the lines of credit and director note for the three and six months ended June 30, 2019, respectively. Interest expense of approximately an immaterial amount and approximately $0.1 million was recorded in the statements of operations related to the line of credit and the director note for the three and six months ended June 30, 2018, respectively. |
Warrant Derivative Liability
Warrant Derivative Liability | 6 Months Ended |
Jun. 30, 2019 | |
Warrant Derivative Liability [Abstract] | |
Warrant Derivative Liability | Note 8 – Warrant Derivative Liability On December 12, 2018, the Company closed a private placement offering (the “December Offering”) of 1,425,641 units (the “Units”), each unit consisting of (i) one share of the Company’s Common Stock and (ii) a warrant to purchase one half of a share of Common Stock. The Units were offered at a fixed price of $1.95 per Unit for gross proceeds of $2.8 million. Costs associated with the December Offering were $0.1 million, and net proceeds were $2.7 million. $2.6 million of the net proceeds were received by the Company during the period ended December 31, 2018 for the sale of 1,400,000 common shares, and $0.1 million of the net proceeds were received on January 8, 2019 for the sale of 25,641 common shares. The warrants are exercisable over a two-year period at the initial exercise price of $3.90 per share. The warrant holders have an option to settle in cash in the event of a change of control of the Company. The Company considers these warrants a derivative liability and calculated the fair value of this liability utilizing a Lattice Model that values the warrant based upon a probability weighted discounted cash flow model. At May 6, 2019, the derivative liability was recorded at fair value as part of the purchase price of Better Choice Company by TruPet. The following schedule shows the change in fair value of the derivative liabilities for the period from May 6, 2019 through June 30, 2019. Dollars in thousands Warrant Liability Assumption of warrants pursuant to May 6, 2019 acquisition of Better Choice Company $ 2,110 Change in fair value of derivative liability 193 Balance as of June 30, 2019 $ 2,304 May 6, 2019 June 30, 2019 Warrant Liability Stock Price $ 6.00 $ 6.35 Exercise Price $ 3.90 $ 3.90 Remaining term (in years) 1.60 – 1.68 1.45 – 1.53 Volatility 64 % 65 % Risk-free interest rate 2.39 % 1.98 % The warrants feature provisions to reset the exercise price in the event of certain fundamental transactions. Such a transaction is considered a likelihood of 50% for December 31, 2019. Additionally, the warrants feature provisions to force an early exercise in the event of the Company’s stock trading above a certain threshold for a specified period. The Company considers the likelihood of meeting these conditions to be zero. If all shares were redeemed at June 30, 2019, the Company would be required to pay $2.3 million if all warrants were settled in cash as a result of a fundamental transaction or issue 712,823 shares if all warrants were settled in shares. |
Loyalty Program Provision
Loyalty Program Provision | 6 Months Ended |
Jun. 30, 2019 | |
Loyalty Program Provision [Abstract] | |
Loyalty Program Provision | Note 9 - Loyalty Program Provision The Company offers a loyalty program to all of its direct-to-consumer customers. The loyalty program is designed to increase customer visits and spending. There are two tiers to the program as outlined below: Tier 1: the customer earns six points for every $1 spent Tier 2: the customer earns points at a much faster rate and will also have opportunities to earn bonus points for different events, such as a birthday. This tier is known as the TruDog Love Club (TLC), and the customer accumulates twelve points for every $1 spent. The redemption requirements are the same under both levels, for every five hundred points earned, customers receive a $5 gift code which can be redeemed for goods purchased in the future. The Company records a liability provision of 45% of all accrued and unredeemed points based on historical redemption rates. The redemption rate is consistent with the redemption rate used for the period ending December 31, 2018. We have included the redemption amounts as deferred revenue on the Condensed Consolidated Balance Sheets. As of June 30, 2019 and December 31, 2018, earned, but not redeemed, loyalty program awards are estimated to be $0.2 million and $0.1 million, respectively, and are recorded as a deferred revenues. |
Other Liabilities
Other Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Other Liabilities [Abstract] | |
Other Liabilities | Note 10 – Other Liabilities Other liabilities include outstanding amounts on bank issued revolving credit cards. Interest rates on the issued credit cards was 22% for purchases and 24.24% for cash advances for the three and six months ended June 30, 2019 and 2018. Under the terms of a Business Cash Advance Agreement, during 2018, the Company sold $2.0 million of future receivables for proceeds of $1.9 million. Future receivables are defined as all future payments made by cash, check, ACH, direct or pre-authorized debit, wire transfer, credit card, debit card, charge card or other form of payment related to the business of the Company. The creditor had the right to decline to purchase any future receivables and/or adjust the amount of the advance. In the event of a sale, disposition, assignment, transfer or otherwise of all or substantially all of the business assets, the creditor’s consent was required or repayment in full of the amount of future receivables remaining. The future receivables were remitted to the creditor based on a percentage of daily cash receipts. All remaining advances were repaid as of June 30, 2019. Dollars in thousands Advance #1 Advance #2 Advance #3 Total Opening balance – January 1, 2018 $ - $ - $ - $ - Advance of outstanding amounts 399 965 1,050 2,414 2018 Payments (429 ) (256 ) (102 ) (787 ) Rollover to Advance #3 (824 ) 824 Advance fixed fee 30 115 126 271 Closing Balance – December 31, 2018 - - 1,899 1,899 Payments (1,899 ) (1,899 ) Balance June 30, 2019 $ - $ - $ - $ - |
Redeemable Preferred Stock
Redeemable Preferred Stock | 6 Months Ended |
Jun. 30, 2019 | |
Redeemable Preferred Stock [Abstract] | |
Redeemable Preferred Stock | Note 11 – Redeemable Preferred Stock On October 22, 2018, the Board of Directors of Better Choice Company approved a resolution to designate a series of 2,900,000 shares of its Series E Convertible Preferred Stock pursuant to its articles of incorporation. The Series E Convertible Preferred Stock has a stated value of $0.99 per share; is convertible to Common Stock at a price of $0.78 per share and accrues dividends at the rate of 10% per annum on the stated value. The Series E Convertible Preferred Stock has voting rights equal to those of the underlying Common Stock. Under certain default conditions, the Series E Convertible Preferred Stock is subject to mandatory redemption in cash equal to 125% of the greater of $0.99 per share ($1.23 per share) or 75% of the market price of the Common Stock. As the redemption is outside the control of the Company, the Series E Convertible Preferred Stock has been recorded as mezzanine equity between liabilities and equity in the balance sheet. On May 6, 2019, the Series E Convertible Preferred Stock was recorded at its fair value based on the $6.00 per share closing price of Better Choice Company’s common shares as they remained outstanding after the reverse acquisitions discussed in Note 2 above. On May 10, 2019 and May 13, 2019, holders of the Company’s Series E Convertible Preferred Stock converted 689,394 and 236,364 preferred shares into 875,000 and 300,000 shares of the Company’s Common Stock, respectively. Pursuant to waiver letters executed by each investor, the holders agreed to waive their right to the distribution of dividends until October 22, 2019. The below table summarizes changes in the balance of Series E Convertible Preferred Stock for the periods ended June 30, 2019 and December 31, 2018 including its value prior to acquisition by the Company. Number Amount Dollars in thousands Issued on October 18, 2018 2,846,356 $ 2,023 Converted to Common Stock (212,678 ) (152 ) Balance on May 6, 2019 2,633,678 1,871 Purchase price adjustment 18,188 Outstanding at May 6, 2019 2,633,678 20,059 Converted to Common Stock (925,758 ) (7,052 ) Balance at June 30, 2019 1,707,920 $ 13,007 |
Stockholders' Deficit
Stockholders' Deficit | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' Deficit [Abstract] | |
Stockholders' Deficit | Note 12 - Stockholders’ Deficit On May 6, 2019, Better Choice Company completed the acquisition of TruPet pursuant to a Stock Exchange Agreement dated February 2, 2019 and amended May 6, 2019. At the closing of the transaction, Better Choice Company issued 15,027,533 shares of its Common Stock in exchange for 93% of the outstanding ownership units of TruPet. Additionally, on May 6, 2019, Better Choice Company also completed the acquisition of Bona Vida pursuant to an Agreement and Plan of Merger dated February 28, 2019 and amended May 3, 2019. At the closing of the transaction, Better Choice Company issued 18,003,273 shares of its Common Stock in exchange for all outstanding shares of Bona Vida. The operations of Better Choice Company subsequent to the acquisitions are those of TruPet and Bona Vida. For accounting purposes, the transaction is considered a reverse merger whereby TruPet is considered the accounting acquirer of Better Choice Company. As a result of the transaction the historical TruPet members’ equity (units and incentive units) has been recast to reflect the equivalent Better Choice Common Stock for all periods presented after the transaction. Prior to the transaction, TruPet was a Limited Liability Company and as such, the concept of authorized shares was not relevant. Series A Preferred Units In December 2018, the Company completed a private placement and issued 2,162,536 Series A Preferred Units (no par value) to unrelated parties for $2.40 per unit. The proceeds were approximately $4.7 million, net of $0.5 million of share issuance costs. Additionally, on February 12, 2019, an additional private placement of 62,500 Series A Preferred Units at $2.40 per unit was completed. The proceeds were approximately $0.2 million, net of share issuance costs. On May 6, 2019, all Series A Preferred Units were converted to 2,460,517 shares of Common Stock. Series E Preferred Stock On May 6, 2019, the Company acquired 2,633,678 shares of Series E Preferred Stock issued by Better Choice Company in the transaction. Series E Preferred Stock is treated as mezzanine equity as it has redemption features that can be exercised by the holder under certain instances outside the control of the Company. 925,758 shares of Series E Preferred Stock were converted to Common Stock in the three- and six-month period ended June 30, 2019. As of June 30, 2019, 1,707,920 shares of Series E Preferred Stock remain outstanding. Full conversion of the remaining Series E Preferred Stock would result in the issuance of 2,167,745 shares of Common Stock. Common Stock The Company was authorized to issue 580,000,000 shares of Common Stock as of December 31, 2018. On April 22, 2019, the Company filed a certificate of amendment of certificate of incorporation with the State of Delaware which reduced the number of authorized shares of Common Stock to 88,000,000. The Company has 43,168,161 and 11,661,485 shares of Common Stock issued and outstanding as of June 30, 2019 and December 31, 2018, respectively. On March 14, 2019, the Company filed a certificate of amendment of Certificate of Incorporation with the Delaware Secretary of State to effect a one-for-26 reverse split of Common Stock effective March 15, 2019. All of the Common Stock amounts and per share amounts in these financial statements and footnotes have been retroactively adjusted to reflect the effect of this reverse split. On December 12, 2018, Better Choice Company closed a private placement offering (the “December Offering”) of 1,425,641 units (the “Units”), each unit consisting of (i) one share of the Company’s Common Stock and (ii) a warrant to purchase one half of a share of Common Stock. The Units were offered at a fixed price of $1.95 per Unit for gross proceeds of $2.8 million. Costs associated with the December Offering were $0.1 million, and net proceeds were $2.7 million. Net proceeds of $2.6 million were received by the Company during the period ended December 31, 2018 for the sale of 1,400,000 common shares, and $0.1 million of the net proceeds were received on January 8, 2019 for the sale of 25,641 common shares. The Warrants are exercisable over a two-year period at the initial exercise price of $3.90 per share. (See In connection with the December Offering, Better Choice Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with each investor in the Offering. Pursuant to the Registration Rights Agreement, the Company agreed to use commercially reasonable efforts to file with the Securities and Exchange Commission a registration statement on Form S-1 (or other applicable form) within 60 days following the closing date to register the resale of the shares of Common Stock sold in the Offering and shares of Common Stock issuable upon exercise of the Warrants. On November 18, 2018 the Company entered into a consulting agreement for management services. The consultant was awarded the equivalent of 303,427 shares of Common Stock, half which vested on November 18, 2018 and the remainder on a monthly schedule over 2 years. During the period from January 1, 2019 through May 5, 2019, equity awards for the equivalent of 979,716 shares were issued to employees and consultants and were valued at a weighted average value per share of $2.26, the fair value at the date of award. The awards vested over three years. However, on May 6, 2019, all equity incentive awards issued prior to May 6, 2019 immediately vested. As a result of the immediate vesting of these awards, share-based compensation expense equal to $2.2 million and $2.4 million has been recorded during the three and six-months ended June 30, 2019. There were no equity awards issued or outstanding during the three and six months ended June 30, 2018. The Company retired 914,919 member units (equivalent to 1,011,748 Common Shares) in TruPet representing the 7% Better Choice Company ownership of TruPet valued at $2.2 million which was recorded as part of loss on acquisition. The Company also issued 5,744,991 million units for gross proceeds of $3.00 per unit, also closing on May 6, 2019 (the “PIPE Transaction”). Each unit included one common share of Better Choice Company stock, and a warrant to purchase an additional share. The funds raised from the PIPE Transaction will be used to fund the operations of the combined company. Net proceeds of $15.7 million were received in the private placement, allocable between shares of Common Stock and warrants. Pursuant to Damian Dalla-Longa’s (“Mr. Dalla-Longa”) employment agreement with Bona Vida dated October 29, 2018, he was entitled to a $500,000 Change of Control payment. It was later agreed to and included in Mr. Dalla-Longa’s Better Choice Company employment agreement dated May 6, 2019, that he would receive 100,000 common shares in the Company in consideration for the $500,000 Change of Control payment. The 100,000 common shares were valued at $6.00 per share, which was the market value as of the date of Mr. Dalla-Longa’s employment agreement. Stock Options On May 6, 2019, the Company acquired the Better Choice Company, Inc. 2019 Incentive Award Plan (“2019 Incentive Award Plan”) which became effective as of April 29, 2019. The 2019 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, other stock or cash-based awards or a dividend equivalent award (each an “Award”). Non-employee directors of the Company and employees and consultants of the Company or any of its subsidiaries are eligible to receive awards under the 2019 Plan. The 2019 Plan authorizes the issuance of (i) 6,000,000 shares of common stock plus (ii) an annual increase on the first day of each calendar year beginning on January 1, 2020 and ending on and including January 1, 2029, equal to the lesser of (A) 10% of the shares of common stock outstanding (on an as-converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares of common stock as determined by the Board. At the time of acquisition, the following grants had been issued under the 2019 Incentive Award Plan: On May 6, 2019, as part of the merger, the Company acquired options to purchase an aggregate of 3,750,000 shares of the Company’s Common Stock at an exercise price of $5.00 per share. These options had been granted to management of Better Choice Company on May 2, 2019. Subject to the holder’s continued service to the Company, each such option vests with respect to 1/24th of the underlying shares on each monthly anniversary of the grant date such that the option is fully vested on the second anniversary of the grant date. On May 6, 2019, as part of the merger, the Company acquired options to purchase an aggregate of 1,500,000 shares of the Company’s Common Stock at an exercise price of $5.00 per share. These options had been granted to non-employee directors of Better Choice Company on May 2, 2019. Subject to the holder’s continued service to the Company, each such option vests with respect to 1/24th of the underlying shares on each monthly anniversary of the grant date such that the option is fully vested on the second anniversary of the grant date. After the acquisition, the following stock option awards were granted under the 2019 Incentive Award Plan, subject to stockholder approval of the 2019 Incentive Award Plan: On May 21, 2019, the Company granted to third-party consultants options to purchase an aggregate of 60,000 shares of the Company’s Common Stock at an exercise price of $7.50 per share. Subject to the holder’s continued service to the Company, each such option vests with respect to 1/36th of the underlying shares on each monthly anniversary of the grant date, such that the option is fully vested on the third anniversary of the grant date. On May 21, 2019, the Company granted to employees options to purchase an aggregate of 30,000 shares of the Company’s Common Stock at an exercise price of $7.50 per share. Subject to the holder’s continued service to the Company, each such option vests with respect to 25% of the underlying shares on the first anniversary of the grant date and the remainder vests in 24 equal installments on each monthly anniversary of the grant date following the first anniversary of the grant date, such that the option is fully vested on the third anniversary of the grant date. On June 29, 2019, the Company granted to employees options to purchase an aggregate of 3,000 shares of the Company’s Common Stock options at an exercise price of $7.50 per share. Subject to the holder’s continued service to the Company, each such option vests with respect to 25% of the underlying shares on the first anniversary of the grant date and the remainder vests in 24 equal installments on each monthly anniversary of the grant date following the first anniversary of the grant date, such that the option is fully vested on the third anniversary of the grant date. Following the stockholder approval of the 2019 Incentive Award Plan, all vested options described herein will become exercisable and may be exercised through the ten-year anniversary of the grant date (or such earlier date described in the applicable award agreement following a holder’s termination of service). Dollars in thousands except per share amounts Date of grant(s) Vesting period (years) Number Exercise price ($) Share-based payment expense ($) Risk-free rate Volatility Dividend yield Expiry (yrs) Remaining Life (yrs) Option grant 5/21/2019 2 60,000 $ 7.50 9 2.28 % 55.00 % Nil 10 9.9 Option grant 5/21/2019 3 30,000 $ 7.50 5 2.28 % 55.00 % Nil 10 9.9 Option grant 6/29/2019 3 3,000 $ 7.50 0 1.84 % 56.00 % Nil 10 10.0 93,000 $ 14 Pursuant to ASC 718-10-35-8, the Company recognizes compensation cost for stock and option awards with only service conditions that have a graded vesting schedule on a straight-line basis over the service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. The following table summarizes the significant terms of options outstanding at June 30, 2019: Range of exercise prices Number of options outstanding Weighted average remaining contractual life (years) Weighted average exercise price of outstanding options number of options exercisable Weighted average exercise price of exercisable options $ 5.00 – 7.50 5,381,462 9.8 $ 5.06 260,545 5.04 Transactions involving options are summarized below: Number of Options Weighted Average Exercise Price Acquired on May 6, 2019 5,288,462 $ 5.00 Granted 93,000 $ 7.50 Options outstanding at June 30, 2019 5,381,462 $ 5.04 The intrinsic value of outstanding options is $34.2 million as of June 30, 2019. Warrants On May 6, 2019, the Company acquired 913,310 warrants with a weighted average exercise price of $3.70 with the acquisition of Better Choice Company. The Company also issued 5,744,991 warrants with an exercise price of $4.50 on May 6, 2019 as part of the PIPE. No warrants were exercised in the six months ending June 30, 2019. Number of Warrants Weighted Average Exercise Price Warrants Acquired on May 6, 2019 913,310 $ 3.70 Issued 5,744,991 $ 4.50 Exercised - - Canceled / expired - - Warrants outstanding at June 30, 2019 6,658,301 $ 4.39 The intrinsic value of outstanding warrants is $13.0 million as of June 30, 2019. |
Related Party Transactions and
Related Party Transactions and Material Service Agreements | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions and Material Service Agreements [Abstract] | |
Related Party Transactions and Material Service Agreements | Note 13 - Related Party Transactions and Material Service Agreements Related Party Transactions Management Services A related party provided management services during 2018. Payments related to this arrangement were immaterial for the three and six-month period ended June 30, 2018. No payments were made to the related party during 2019. Outstanding balances were immaterial amounts for the periods ending June 30, 2019 and December 31, 2018, respectively. Marketing Services A related party provides online traffic acquisition marketing services for the Company. The Company paid immaterial amounts for their services during the three and six months ended June 30, 2019, respectively. The Company did not use this related party’s services in 2018. The service contract has a 30-day termination clause. Outstanding balances were $0.1 million and an immaterial amount for the periods ending June 30, 2019 and December 31, 2018, respectively. Financial and Accounting Personnel The Company entered into an agreement in December 2018 for assistance and support regarding its financial operation and capital raise efforts and can be terminated at any time by either party with a 60-day notice with an affiliate of the managing member. The agreement requires payments amounting to $21,160 every four weeks through December 2020. Payments related to this agreement amounted to $0.1 million and $0.2 million for the three and six-month period ended June 30, 2019, respectively. The Company entered into an employment agreement in February 2019 with a previous executive for a term of six months. Payments related to this agreement amounted to $0.1 million and $0.2 million for the three and six-month period ended June 30, 2019. Finder’s Fee and Other Services The Company paid a finders’ fee of $0.3 million during the year ended December 31, 2018 to an entity owned by one of its members. Additionally, the Company paid approximately $0.4 million to this entity for other professional services rendered. No amounts have been paid in 2019. Material Service Agreements Consummated with Third Parties: Financial and Accounting Personnel The Company entered into a new agreement in December 2018 for accounting management services for a fee of $8,370 to be paid every two weeks. Prior to this entering into this agreement, the same company was performing similar services in 2018 for $2,600 every two weeks. Payments related to this agreement amounted to $0.1 million and an immaterial amount for the three-month period ended June 30, 2019 and 2018, respectively. Payments related to this agreement amounted to $0.2 million and an immaterial amount for the six-month period ended June 30, 2019 and 2018, respectively. Marketing Services The Company entered into multiple agreements with marketing services with independent contractors during 2018 and 2019. Payments related to the marketing agreements amounted to $0.2 million and an immaterial amount for the three-month period ended June 30, 2019 and 2018, respectively. Payments related to the marketing agreements amounted to $0.4 million and $0.2 million for the six-month period ended June 30, 2019 and 2018, respectively. Placement and Selling Agent In December 2018, the Company executed an agreement with a third party to assist the Company in identifying and negotiating with potential investors, assisting in due diligence, and other capital market functions for a term of six months. The agreement calls for a $0 base fee and a 5% commission on cash proceeds obtained in exchange for shares or equity interest in the Company. The commissions can be paid in cash or equity in the Company. This agreement has an initial six-month term and, thereafter, the Company at its option may elect to extend this agreement for one successive twelve-month term upon a sixty-day notice prior to the end of the initial term. Payments related to this agreement amounted to $0.1 million for the year ended December 31, 2018 and was capitalized to related private placement as costs of issuance. On May 6, 2019, the Company expensed the issuance costs of $0.1 million. No other amounts were paid under this agreement in 2019. On May 6, 2019, the Company issued the equivalent of 798,492 shares of its Common Stock to the Placement and Selling Agent. As a cost associated with the merger, this amount is presented as a loss on acquisition of $4.8 million. |
Major Suppliers
Major Suppliers | 6 Months Ended |
Jun. 30, 2019 | |
Major Suppliers [Abstract] | |
Major Suppliers | Note 14 - Major Suppliers The Company purchased approximately 83% and 72% of its inventories from one vendor for the six months ended June 30, 2019 and 2018, respectively. Additionally, the Company primarily utilized one vendor for outsourced manufacturing of meals for the six-month periods ended June 30, 2019 and the year ended June 30, 2018. |
Concentration of Credit Risk
Concentration of Credit Risk | 6 Months Ended |
Jun. 30, 2019 | |
Concentration of Credit Risk [Abstract] | |
Concentration of Credit Risk | Note 15 - Concentration of Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivables. The Company places its cash and cash equivalents with primarily one financial institution. At times, such amounts may be in excess of the FDIC insured limit. The Company has never experienced any losses related to these balances. As of June 30, 2019 and December 31, 2018 the Company had deposits in excess of the FDIC insured limits of $10.3 million and $3.4 million, respectively. The Company routinely assesses the financial strength of its customers and, consequently, believes that its accounts receivable credit risk exposure is limited. |
Net Loss per Share
Net Loss per Share | 6 Months Ended |
Jun. 30, 2019 | |
Net Loss per Share [Abstract] | |
Net Loss per Share | Note 16 - Net Loss per Share Basic and diluted net loss per share attributable to Common Stockholders is presented using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that has not yet recognized are collectively assumed to be used to repurchase shares. Basic and diluted net loss per share is calculated by dividing net loss attributable to Common Stockholders by the weighted-average shares outstanding during the period. For the six months ended June 30, 2019 and 2018, the Company’s basic and diluted net loss per share attributable to Common Stockholders are the same, because the Company has generated a net loss to Common Stockholders and Common Stock equivalents are excluded from diluted net loss per share as they have an antidilutive impact. The following table sets forth basic and diluted net loss per share attributable to Common Stockholders for the three and six months ended June 30, 2019 and 2018: Dollars in thousands except per share amounts Six Months Ended June 30 Three Months Ended June 30 2019 2018 2019 2018 Common Stockholders Numerator: Net loss $ (164,286 ) $ (2,400 ) $ (161,506 ) $ (745 ) Less: Preferred Stock Dividends (27 ) - (27 ) - Net loss attributable to Common Stockholders $ (164,313 ) $ (2,400 ) $ (161,533 ) $ (745 ) Denominator: Weighted average shares used in computing net loss per share attributable to Common Stockholders, basic and diluted 21,202,188 11,497,128 30,638,048 11,497,128 Net loss per share attributable to Common Stockholders, basic and diluted $ (7.75 ) $ (0.21 ) $ (5.27 ) $ (0.06 ) |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2019 | |
Going Concern [Abstract] | |
Going Concern | Note 17 - Going Concern The Company has incurred significant losses over the last three years and has a significant accumulated deficit. These operating losses create an uncertainty about the Company’s ability to continue as a going concern for a period of twelve months from the date these unaudited condensed consolidated financial statements are issued. Management has evaluated whether the unaudited condensed consolidated financial statements should be presented as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The unaudited condensed consolidated financial statements have been prepared on a going concern basis. In making this assessment, management conducted a comprehensive review of the Company’s affairs including, but not limited to: • The Company’s financial position at June 30, 2019 which includes $0.6 million of working capital; • Significant events and transactions the Company has entered into, including and through the date the unaudited condensed consolidated financial statements were available to be issued; • The loss from operations includes $4.2 million related to non-cash stock compensation; • Sales and profitability forecasts for the Company for the next financial year; • The continued support of the Company’s members and lenders. • The repayment of the line of credit with proceeds from a new $6.2 million loan. To address the future additional funding requirements members have undertaken the following initiatives: o To continue to monitor the Company’s ongoing working capital requirements and minimum expenditure commitments; o Continue their focus on maintaining an appropriate level of corporate overhead in line with the Company’s available cash resources. Management is confident that it will be able to meet its minimum expenditure commitments and support its planned level of overhead expenditures. There can be no assurance however that the Company will be able to raise additional capital when needed, or at terms deemed acceptable, if at all. The accompanying unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 18 - Subsequent Events Management has evaluated subsequent events through the date on which the unaudited condensed consolidated financial statements were issued. On June 28, 2019, the Company granted 500,000 options to Andreas Schulmeyer, the Company’s Chief Financial Officer, subject to commencement of employment on July 29, 2019. The options have an exercise price of $6.35 and vest over a two-year period beginning with commencement of employment. On July 23, 2019, the Audit Committee of the Board of Directors of the Company appointed Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal periods on or after January 1, 2019. On July 29, 2019, Mr. Schulmeyer received a grant of 6,042 common shares as a consulting fee pursuant to his employment agreement dated June 28, 2019. On August 14, 2019, the Company granted 30,000 options to an employee of the Company. The options have an exercise price of $4.00 and vest over a three-year period. On August 28, 2019, the Company entered into a radio advertising agreement with iHeartMedia + Entertainment, Inc. The Company issued 1,000,000 common shares which shall be entirely paid for by iHeartMedia in the form of a commitment from iHeartMedia to provide to Company advertising media inventory having an aggregate value of $5,000,000. Company has committed to using $2,500,000 of the media inventory by August 28, 2020 with the remainder of the inventory available through August 28, 2021 On August 30, 2019, the Company granted 100,000 stock options to Mr. Schulmeyer. These options have an exercise price of $3.90 and vest over a two-year period. On September 6, 2019, the Audit Committee notified RBSM LLP of the Audit Committee’s approval to dismiss RBSM as the Company’s independent registered public accounting firm upon filing of this Quarterly Report. On September 9, 2019, the Company granted 30,000 options to an employee of the Company. The options have an exercise price of $3.70 and vest over a three-year period. On September 13, 2019, Lori R. Taylor notified the Company of her decision to resign as Co-Chief Executive Officer of the Company effective as of September 13, 2019. The Company also entered into a separation agreement with Ms. Taylor, in connection with her resignation as an officer of the Company, effective as of the date thereof. Pursuant to the separation agreement all outstanding stock option awards will become fully vested on November 12, 2019, subject to Ms. Taylor’s continued cooperation with the Company through such date and subject to the effectiveness and irrevocability of the release of claims. Ms. Taylor will continue to serve as a member of the board of directors of the Company. On September 17, 2019, the Company entered into a 5-year consulting agreement with Bruce Linton. As compensation for the services rendered, the Company has issued 2,500,000 share purchase warrants to acquire one share each of Company Common Stock with an exercise price of $0.10. An additional 1,500,000 share purchase warrants to acquire one share each of Company Common Stock with an exercise price of $10.00. The Warrants will vest as follows: (i) 50% (or 1,250,000) of the Warrants (the “Tranche 1 Warrants”), will vest and be exercisable upon the earlier of (Y) September 17, 2020 or (Z) immediately prior to a Change in Control (as such term is defined under the Company’s 2019 Incentive Award Plan) (a “Change in Control”) and (ii) the remaining 50% (or 1,250,000) of the Warrants (the “Tranche 2 Warrants”) will vest and be exercisable upon the earlier of (Y) March 17, 2021 or (Z) immediately prior to a Change in Control, in each case, subject to Mr. Linton’s continued service to the Company through the applicable vesting date or Change in Control. The Warrants have a term expiring on September 17, 2029 (the “Expiry Date”) and will be subject to such other terms and conditions as may be determined by the Board. The Additional Warrants will be exercisable on the earlier of (Y) March 17, 2021 or (Z) immediately prior to a Change in Control, in each case, subject to Mr. Linton’s continued service to the Company through the applicable date. The Additional Warrants have a term expiring on the Expiry Date and will be subject to such other terms and conditions as may be determined by the Board. If Mr. Linton should cease to be engaged by the Company for any reason, other than as a result of a termination by reason of Just Cause (as such term is defined in the Independent Contractor Agreement) or as a result of Mr. Linton’s resignation as an independent contractor of the Company, the Incentive Warrants which have not then vested will immediately prior to the date Mr. Linton ceases to be engaged with the Company be deemed to become vested and such Incentive Warrants will remain exercisable until the Expiry Date. During the month of September 2019 several warrant holders converted 1,144,999 warrants to 1,259,498 Common Stock shares. The Company received $4.0 million in return for the common shares issued. |
Nature of Business and Summar_2
Nature of Business and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Nature of Business and Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10–Q and Article 10 of Regulation S–X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and operating results have been included. Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending December 31, 2019. The significant accounting policies applied by the Company are described below. We present our tables, except for the Statements of Stockholders’ Deficit, in dollars (thousands), numbers in the text in dollars (millions) and % as rounded up or down. |
Basis of Measurement | Basis of Measurement The unaudited condensed consolidated financial statements of the Company are presented on a going concern basis, under the historical cost convention except for certain financial instruments that are measured at fair value, as explained in the accounting policies below. Historical cost is measured as the fair value of the consideration provided in exchange for goods and services. The Company’s functional and presentation currency is United States dollars (“USD”). |
Consolidation | Consolidation The consolidated financial statements and related notes include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include demand deposits held with banks and highly liquid investments with remaining maturities of ninety days or less at acquisition date. For purposes of reporting cash flows, the Company considers all cash accounts that are not subject to withdrawal restrictions or penalties to be cash and cash equivalents. |
Restricted Cash | Restricted Cash As part of the revolving credit agreement with Franklin Synergy Bank, the Company is required to maintain a cash balance of $6.2 million in its account. Any withdrawals from the account require an equal reduction to the funds available under the revolving credit agreement. Dollars in thousands June 30, 2019 December 31, 2018 Cash and cash equivalents $ 5,019 $ 3,946 Restricted cash 6,243 0 Total cash, cash equivalents and restricted cash $ 11,262 $ 3,946 |
Accounts Receivable | Accounts Receivable Accounts receivable represents amounts due from customers less an allowance for doubtful accounts. A provision is recorded for impairment when there is objective evidence (such as significant financial difficulties of the debtor) that the Company will not be able to collect all amounts due according to the original terms of the receivable. A provision is recorded as the difference between the carrying value of the receivable and the present value of future cash flows expected from the debtor, with an offsetting amount recorded as an allowance, reducing the carrying value of the receivable. The provision is included in general and administrative expense in the statements of operations. As of the period ended June 30, 2019 and December 31, 2018, the Company considers accounts receivable to be fully collectible and, accordingly, no allowance for doubtful accounts has been recorded. |
Inventories | Inventories Inventories are recorded at the lower of cost and net realizable value. The net realizable value represents the estimated selling price for inventories in the ordinary course of business, less all estimated costs of completion and costs necessary to make the sale. Cost is determined on a standard cost basis and includes the purchase price and other costs, such as transportation costs. Inventory average cost is determined on a first‑in, first‑out (“FIFO”) basis and trade discounts are deducted from the purchase price. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost and includes expenditures for new additions and other additions, which substantially increase the useful lives of existing assets. Depreciation is computed at various rates by use of the straight-line method. Depreciable lives are generally as follows: Furniture and Fixtures 5 to 7 years Equipment 7 years Expenditures for normal repairs and maintenance are charged to operations as incurred. The cost of property or equipment retired or otherwise disposed of and the related accumulated depreciation are removed from the accounts in the year of disposal with the resulting gain or loss reflected in earnings. The Company assesses potential impairments of its property and equipment whenever events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. An impairment charge would be recognized when the carrying amount of property and equipment is not recoverable and exceeds its fair value. The carrying amount of property and equipment is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the property and equipment. |
Income Taxes | Income Taxes No provision has been made for federal and state income taxes prior to the date of the acquisitions since the proportionate share of TruPet’s income or loss was included in the personal tax returns of its members because TruPet was a limited liability company. Subsequent to the acquisitions, the Company, as a corporation, is required to provide for income taxes. The Company utilizes Accounting Standards Codification (“ASC 740”), “Accounting for Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The effective tax rate for each of the three months and the six months ended June 30, 2019 is 0%. The effective tax rate differs from the U.S. Federal statutory rate of 21% primarily because our previously reported losses have been offset by a valuation allowance due to uncertainty as to the realization of those losses. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. Accounting guidance addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements, under which a company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Accordingly, the Company would report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company elects to recognize any interest and penalties, if any, related to unrecognized tax benefits in tax expense. The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%. As of the completion of these unaudited condensed financial statements, we have made a reasonable estimate of the effects of the Tax Act. This estimate incorporates assumptions made based upon the Company’s current interpretation of the Tax Act and may change as the Company may receive additional clarification and implementation guidance and as the interpretation of the Tax Act evolves. In accordance with SEC Staff Accounting Bulletin No. 118, the Company will finalize the accounting for the effects of the Tax Act no later than the end of the fourth quarter of fiscal year 2019. Future adjustments made to the provisional effects will be reported as a component of income tax expense in the reporting period in which any such adjustments are determined. Based on the new tax law that lowers corporate tax rates, the Company revalued its deferred tax assets. Future tax benefits are expected to be lower, with the corresponding one-time charge being recorded as a component of income tax expense. |
Revenue | Revenue The Company recognizes revenue to depict the transfer of promised goods to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. In order to recognize revenue, the Company applies the following five (5) steps: • Identify a customer along with a corresponding contract; • Identify the performance obligation(s) in the contract to transfer goods to a customer; • Determine the transaction price the Company expects to be entitled to in exchange for transferring promised goods to a customer; • Allocate the transaction price to the performance obligation(s) in the contract; and • Recognize revenue when or as the Company satisfies the performance obligation(s). A description of the Company’s revenue generating activities is listed below: Direct-to-consumer (“DTC”) – Our products are offered through our online stores where customers place orders online or through our customer service number. Revenue is recorded, net of discounts, at the time the order is received by the customer. Revenue is deferred for orders that have been placed, and paid for, but have not yet been received by the customer during the reporting period. As our customers have a 60-day guarantee on the product purchased, the Company records a liability for two months of estimated returns based on historical experience. Loyalty Program - The Company offers a loyalty program to all of its direct-to-consumer customers. There are two tiers to the program. Tier 1: the customer will earn 6 points for every $1 spent Tier 2: the customer can earn points at a much faster rate and will also have opportunities to earn bonus points for different events, such as a birthday. This tier is known as the TruDog Love Club, and the customer accumulates twelve points for every $1 spent. The redemption requirements are the same under both levels and, for every five hundred points earned, customers receive a $5 gift code which can be redeemed for goods purchased in the future. The Company records a reduction to sales revenue and deferred revenue when the customer accumulates loyalty points. Wholesale Sales – This channel includes the sale of our products to wholesale customers for resale. The Company’s policy is to recognize revenue at the time the product is shipped to the wholesale customer, net of estimated returns and allowances. Consignment – The Company partners with an Amazon channel partner to market and sell TruDog products. Revenue is recognized, net of returns, when our partner ships the product to the end customer. The commission, selling, marketing and storage fees are recognized at the time the services are rendered by the channel partner and are recorded by the Company, as follows: • Commission, selling and marketing fees as sales and marketing expenses • Storage fees as cost of goods sold. |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold consists primarily of the cost of product obtained from the contract manufacturing plants, packaging materials and CBD oils directly sourced by the Company, and freight for shipping product from our contract manufacturing plants to our warehouse. We review inventory on hand periodically to identify damages, slow moving inventory, and/or aged inventory. Based on the analysis, we record inventories on the lower of cost and net realizable value, with any reduction in value expensed as cost of goods sold. |
Advertising | Advertising The Company charges advertising costs to expense as incurred and such charges are included in sales and marketing expenses. Advertising costs, consisting primarily of Facebook advertising, search costs and email advertising, were $2.3 million and $1.2 million for the three-month periods ended June 30, 2019 and 2018, respectively. For the six-month periods ended June 30, 2019 and 2018, advertising costs were $3.5 million and $2.2 million, respectively. |
Research and Development | Research and Development Research is a planned search or a critical investigation aimed at discovering new knowledge and information with the hope that such knowledge will be useful in developing a new product or service (referred to as a “product”) or a new process or technique (referred to as a “process”) or bringing about a significant improvement to an existing product or process. Development is the translation of research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or use. It includes the conceptual formulation, design and testing of product alternatives, construction of prototypes and operation of pilot plants. No research and development costs were incurred during the three or six month period ended June 30, 2019 and June 30, 2018. |
Shipping and Handling / Freight Out | Shipping and Handling / Freight Out The Company recognizes shipping and handling costs as a fulfillment cost, included in other operating expenses as they are incurred prior to the customer obtaining control of the products. Shipping and handling costs primarily consist of costs associated with moving finished products to customers through third-party carriers. Shipping and handling costs were $0.6 million and $0.7 million for the three-month periods ended June 30, 2019 and 2018, respectively. For the six-month periods ended June 30, 2019 and 2018, shipping and handling costs were $1.2 million and $1.3 million, respectively. Additionally, for direct to consumer customers, the Company may recover such costs by passing them onto the customer. In these instances, the Company includes the freight charges billed to customers in total revenue. The amount included in revenue related to such recoveries was $0.2 million and $0.3 million for the three-month periods ended June 30, 2019 and 2018, respectively. For the six-month periods ended June 30, 2019 and 2018, the amounts included in revenue related to such recoveries was $0.4 million and $0.6 million, respectively. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments A financial instrument is defined as cash, evidence of an ownership interest in an entity, or a contract that both: • Imposes on one entity a contractual obligation either: o To deliver cash or another financial instrument to a second entity; or o To exchange other financial instruments on potentially unfavorable terms with the second entity. • Conveys to that second entity a contractual right either: o To receive cash or another financial instrument from the first entity; or o To exchange other financial instruments on potentially favorable terms with the first entity. The Company’s financial instruments recognized in the balance sheet consist of cash and cash equivalents, restricted cash accounts, accounts receivable, deposits, accounts payable, line of credit, due to related party, accrued and other liabilities, warrant derivative liability and long-term debt. Warrant derivative liability is measured at fair value each reporting period. The fair values of the remaining financial instruments approximate their carrying values. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has applied the framework for measuring fair value which requires a fair value hierarchy to be applied to all fair value measurements. The fair value of the warrant derivative liability is considered a Level 3 financial instrument. All financial instruments recognized at fair value in the balance sheet are classified into one of three levels in the fair value hierarchy as follows: • Level 1 – valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. Cash is measured based on Level 1 inputs. • Level 2 – valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or corroborated by observable market data by correlation or other means. • Level 3 – valuation techniques with significant unobservable market inputs. |
Derivative Financial Instruments | Derivative Financial Instruments Financial Accounting Standards Board (“FASB”) ASC Topic 815, “Derivatives and Hedging”, generally provides three criteria that, if met, require companies to bifurcate conversion options from its host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional, as described. The accounting treatment of derivative financial instruments requires that the Company record the embedded conversion option and warrants at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The pricing model we use for determining fair value of our derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income (see Note 8). |
Basic and Diluted Loss Per Share | Basic and Diluted Loss Per Share Basic and diluted loss per share has been determined by dividing the net loss available to stockholders for the applicable period by the basic and diluted weighted average number of shares outstanding, respectively. Common Stock equivalents and incentive shares are excluded from the computation of diluted loss per share when their effect is anti-dilutive. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes a compensation expense for all equity–based payments in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”. The Company accounts for share–based payments granted to non–employees in accordance with FASB ASC Topic 505–50, “Equity Based Payments to Non–Employees.” The Company follows the fair value method of accounting for stock awards granted to employees, directors, officers and consultants. Stock-based awards to employees are measured at the fair value of the related stock-based awards. Stock-based payments to others are valued based on the related services rendered or goods received or if this cannot be reliably measured, on the fair value of the instruments issued. Issuances of such awards are valued using the fair value of the awards at the time of grant. The Company recognizes stock-based payment expenses over the vesting period based on the number of awards expected to vest over that period on a straight-line basis. Forfeitures are accounted for as they occur. The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are inputs into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the analysis of other public companies within the pet wellness sector. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. The Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. |
Use of Estimates | Use of Estimates The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America 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 dates of the financial statements and the reported amounts of expenses during the reporting periods. The Company evaluates its estimates on an ongoing basis. The Company bases its estimates on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. |
Segment Information | Segment Information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed its operations and manages its business as one segment operating in the United States of America. The Company’s chief operating decision-maker does not review operating results on a disaggregated basis; rather, the chief operating decision-maker reviews operating results on an aggregate basis. |
License Intangibles | License Intangibles License intangibles are recorded at fair value at the date of acquisition and are amortized ratably over the life of the license agreement. |
Commitments and Contingencies | Commitments and Contingencies We may be involved in legal proceedings, claims, and regulatory, tax, or government inquiries and investigations that arise in the ordinary course of business resulting in loss contingencies. We accrue for loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. We do not accrue for contingent losses that are considered to be reasonably possible, but not probable; however, we disclose the range of such reasonably possible losses. Loss contingencies considered remote are generally not disclosed. We have entered into debt, royalty and lease agreements for which we are committed to pay certain amounts over a period of time. See Notes 5, 6 and 7. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Company has reviewed the Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof issued by the FASB that have effective dates during the reporting period and in future periods. New Standards and Interpretations: Adoption of FASB ASC Topic 842 “Leases” The amendments in this update establish a comprehensive new lease accounting model. The new standard: (a) clarifies the definition of a lease; (b) requires a dual approach to lease classification similar to current lease classifications; and (c) causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease term of more than twelve months. The new standard is effective for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, including a number of optional practical expedients that entities may elect to apply. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements”, an update which provides another transition method, the prospective transition method, which allows entities to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted the new standard on January 1, 2019 using the prospective transition method. The Company has identified all leases to determine the impact of ASC 842 on its consolidated financial statements. The Company has elected to apply the practical expedient to certain classes of leases, whereby the separation of components of leases into lease and non-lease components is not required, and all of the practical expedients to all leases, (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any existing leases. The adoption of the new standard resulted in the recording on the consolidated balance sheet as of January 1, 2019 a right-of-use asset of $0.5 million, a lease liability of $0.5 million and a corresponding cumulative adjustment to accumulated deficit of an immaterial amount in accordance with ASC 842. Adoption of FASB ASU No. 2018-07 “Improvements to Nonemployee Share-Based Payment Accounting” On January 1, 2019, the Company adopted ASU No. 2018-07 “Improvements to Nonemployee Share-Based Payment Accounting”. The amendments in this update expanded the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. The requirements of ASC 718 are applied to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. The amendments specify that ASC 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that ASC 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606, “Revenue from Contracts with Customers.” The Company is treating the inclusion of share-based payments to non-employees as a change in accounting principle prospectively beginning in the period ending June 30, 2019. As the Company did not make any share-based payments to non-employees in prior periods, there was no impact on the results of operations in prior periods. Adoption of ASU 2018-13 “Fair Value Measurement” In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820) Changes to the Disclosure Requirement for Fair Value Measurement” which amends ASC 820 to expand the disclosures required for items subject to Level 3, fair value remeasurement, including the underlying assumptions. ASU 2018-13 is effective for public companies for fiscal years beginning after December 15, 2019. The Company has early adopted the disclosures as permitted under the ASU. New and Revised Standards not Yet Adopted: In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326)”. ASU 2016-13 changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019. The Company does not anticipate any material impact from the implementation of this ASU. The Company has carefully considered other new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Company’s reported balance sheet or operations in 2019. |
Nature of Business and Summar_3
Nature of Business and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Nature of Business and Summary of Significant Accounting Policies [Abstract] | |
Cash and Cash Equivalents and Restricted Cash | Dollars in thousands June 30, 2019 December 31, 2018 Cash and cash equivalents $ 5,019 $ 3,946 Restricted cash 6,243 0 Total cash, cash equivalents and restricted cash $ 11,262 $ 3,946 |
Depreciable Lives | Depreciable lives are generally as follows: Furniture and Fixtures 5 to 7 years Equipment 7 years |
Acquisition of TruPet LLC and_2
Acquisition of TruPet LLC and Bona Vida, Inc. (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Acquisition of TruPet LLC and Bona Vida, Inc. [Abstract] | |
Assets and Liabilities Acquired | On May 6, 2019, the fair value of the following assets and liabilities were acquired: Dollars in thousands Better Choice Company Bona Vida Total Assets Current Assets Cash and cash equivalents $ 1,546 $ 384 $ 1,930 Restricted cash 25 25 Accounts receivable 30 30 Intercompany receivables 6,161 38 6,199 Inventories 193 193 Prepaid expenses and other current assets 52 347 399 Total Current Assets 7,759 1,017 8,776 Intangible assets, net of amortization 986 986 Other assets 74 74 Total Assets $ 8,745 $ 1,091 $ 9,836 Liabilities and Redeemable Preferred Stock Current Liabilities Warrant derivative liability $ 2,111 $ - $ 2,111 Accounts payable & accrued liabilities 2,071 69 2,140 Long term debt, current portion 6,200 6,200 Total Current Liabilities $ 10,382 $ 69 $ 10,451 Total Liabilities $ 10,382 $ 69 $ 10,451 Redeemable Series E Preferred Stock $ 20,059 $ - $ 20,059 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Inventories [Abstract] | |
Inventories | Inventories reflected on the accompanying balance sheets are summarized as follows: Dollars in thousands June 30, 2019 December 31, 2018 Food, treats and supplements $ 1,682 $ 1,301 Other products and accessories 87 191 Inventory packaging and supplies 168 133 1,937 1,625 Inventory reserve (230 ) (68 ) $ 1,707 $ 1,557 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property and Equipment [Abstract] | |
Property and Equipment | Property and equipment consist of the following: Dollars in thousands June 30, 2019 December 31, 2018 Warehouse equipment $ 49 $ 49 Computer equipment 14 14 Furniture and fixtures 76 46 Total property and equipment 139 109 Accumulated depreciation (80 ) (38 ) $ 59 $ 71 |
Operating Leases (Tables)
Operating Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Operating Leases [Abstract] | |
Operating Lease-related Assets and Liabilities | The table below presents the operating lease-related assets and liabilities recorded on the consolidated balance sheets: Dollars in thousands Leases Balance Sheet Classification June 30, 2019 Assets Non-current assets Operating lease right-of-use assets, net of accumulated amortization $ 840 Total operating lease assets $ 840 Liabilities Current Operating Operating lease liabilities (262 ) Non-current Operating Operating lease liabilities (590 ) Total operating lease liabilities $ (852 ) |
Maturity of Lease Liabilities | The table below presents the maturity of lease liabilities as of June 30, 2019: Dollars in thousands Lease payments Operating Leases Remainder of 2019 $ 147 2020 299 2021 303 2022 169 Total undiscounted minimum future lease payments 918 Less: imputed interest 66 Present value of lease liabilities $ 852 |
License Intangibles and Royal_2
License Intangibles and Royalties (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
License Intangibles and Royalties [Abstract] | |
Guaranteed Minimum Royalty Payments | The contract includes Guaranteed Minimum Royalty Payments for each of the contract years as per the table below: Dollars in thousands Guaranteed Minimum Royalty 2019-2020 $ 1,500 2021 $ 1,000 2022 $ 1,125 2023 $ 1,250 2024 $ 1,500 2025 $ 1,750 |
Warrant Derivative Liability (T
Warrant Derivative Liability (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Warrant Derivative Liability [Abstract] | |
Change in Fair Value of Derivative Liabilities | The following schedule shows the change in fair value of the derivative liabilities for the period from May 6, 2019 through June 30, 2019. Dollars in thousands Warrant Liability Assumption of warrants pursuant to May 6, 2019 acquisition of Better Choice Company $ 2,110 Change in fair value of derivative liability 193 Balance as of June 30, 2019 $ 2,304 |
Warrant Liability Fair Value Measurement Inputs and Valuation Techniques | May 6, 2019 June 30, 2019 Warrant Liability Stock Price $ 6.00 $ 6.35 Exercise Price $ 3.90 $ 3.90 Remaining term (in years) 1.60 – 1.68 1.45 – 1.53 Volatility 64 % 65 % Risk-free interest rate 2.39 % 1.98 % |
Other Liabilities (Tables)
Other Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Other Liabilities [Abstract] | |
Other Liabilities | Dollars in thousands Advance #1 Advance #2 Advance #3 Total Opening balance – January 1, 2018 $ - $ - $ - $ - Advance of outstanding amounts 399 965 1,050 2,414 2018 Payments (429 ) (256 ) (102 ) (787 ) Rollover to Advance #3 (824 ) 824 Advance fixed fee 30 115 126 271 Closing Balance – December 31, 2018 - - 1,899 1,899 Payments (1,899 ) (1,899 ) Balance June 30, 2019 $ - $ - $ - $ - |
Redeemable Preferred Stock (Tab
Redeemable Preferred Stock (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Redeemable Preferred Stock [Abstract] | |
Redeemable Preferred Stock | The below table summarizes changes in the balance of Series E Convertible Preferred Stock for the periods ended June 30, 2019 and December 31, 2018 including its value prior to acquisition by the Company. Number Amount Dollars in thousands Issued on October 18, 2018 2,846,356 $ 2,023 Converted to Common Stock (212,678 ) (152 ) Balance on May 6, 2019 2,633,678 1,871 Purchase price adjustment 18,188 Outstanding at May 6, 2019 2,633,678 20,059 Converted to Common Stock (925,758 ) (7,052 ) Balance at June 30, 2019 1,707,920 $ 13,007 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stockholders' Deficit [Abstract] | |
Option Grants | Following the stockholder approval of the 2019 Incentive Award Plan, all vested options described herein will become exercisable and may be exercised through the ten-year anniversary of the grant date (or such earlier date described in the applicable award agreement following a holder’s termination of service). Dollars in thousands except per share amounts Date of grant(s) Vesting period (years) Number Exercise price ($) Share-based payment expense ($) Risk-free rate Volatility Dividend yield Expiry (yrs) Remaining Life (yrs) Option grant 5/21/2019 2 60,000 $ 7.50 9 2.28 % 55.00 % Nil 10 9.9 Option grant 5/21/2019 3 30,000 $ 7.50 5 2.28 % 55.00 % Nil 10 9.9 Option grant 6/29/2019 3 3,000 $ 7.50 0 1.84 % 56.00 % Nil 10 10.0 93,000 $ 14 |
Significant Terms of Options Outstanding | The following table summarizes the significant terms of options outstanding at June 30, 2019: Range of exercise prices Number of options outstanding Weighted average remaining contractual life (years) Weighted average exercise price of outstanding options number of options exercisable Weighted average exercise price of exercisable options $ 5.00 – 7.50 5,381,462 9.8 $ 5.06 260,545 5.04 |
Transactions Involving Options | Transactions involving options are summarized below: Number of Options Weighted Average Exercise Price Acquired on May 6, 2019 5,288,462 $ 5.00 Granted 93,000 $ 7.50 Options outstanding at June 30, 2019 5,381,462 $ 5.04 |
Activity of Warrants | Number of Warrants Weighted Average Exercise Price Warrants Acquired on May 6, 2019 913,310 $ 3.70 Issued 5,744,991 $ 4.50 Exercised - - Canceled / expired - - Warrants outstanding at June 30, 2019 6,658,301 $ 4.39 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Net Loss per Share [Abstract] | |
Basic and Diluted Net Loss Per Share Attributable to Common Stockholders | The following table sets forth basic and diluted net loss per share attributable to Common Stockholders for the three and six months ended June 30, 2019 and 2018: Dollars in thousands except per share amounts Six Months Ended June 30 Three Months Ended June 30 2019 2018 2019 2018 Common Stockholders Numerator: Net loss $ (164,286 ) $ (2,400 ) $ (161,506 ) $ (745 ) Less: Preferred Stock Dividends (27 ) - (27 ) - Net loss attributable to Common Stockholders $ (164,313 ) $ (2,400 ) $ (161,533 ) $ (745 ) Denominator: Weighted average shares used in computing net loss per share attributable to Common Stockholders, basic and diluted 21,202,188 11,497,128 30,638,048 11,497,128 Net loss per share attributable to Common Stockholders, basic and diluted $ (7.75 ) $ (0.21 ) $ (5.27 ) $ (0.06 ) |
Nature of Business and Summar_4
Nature of Business and Summary of Significant Accounting Policies, Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Cash and Cash Equivalents and Restricted Cash [Abstract] | ||||
Cash and cash equivalents | $ 5,019 | $ 3,946 | ||
Restricted cash | 6,243 | 0 | ||
Total cash and cash equivalents and restricted cash | $ 11,262 | $ 3,946 | $ 113 | $ 157 |
Nature of Business and Summar_5
Nature of Business and Summary of Significant Accounting Policies, Property and Equipment (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 7 years |
Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 7 years |
Nature of Business and Summar_6
Nature of Business and Summary of Significant Accounting Policies, Income Taxes (Details) | 3 Months Ended | 4 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Dec. 22, 2017 | Jun. 30, 2019 | |
Income Taxes [Abstract] | |||
Effective tax rate | 0.00% | 0.00% | |
Federal statutory rate | 21.00% | 35.00% |
Nature of Business and Summar_7
Nature of Business and Summary of Significant Accounting Policies, Revenue (Details) | 6 Months Ended |
Jun. 30, 2019USD ($)Points | |
Direct-to-Consumer [Abstract] | |
Product warranty period | 60 days |
Returns period used for estimating liability | 2 months |
Loyalty Program [Abstract] | |
Points earned for every $1 spent - Tier 1 | 6 |
Points earned for every $1 spent - Tier 2 | 12 |
Number of points redeemable for customers to receive gift code | 500 |
Value of gift code receivable by customers on redemption of five hundred points earned | $ | $ 5 |
Nature of Business and Summar_8
Nature of Business and Summary of Significant Accounting Policies, Advertising, Research and Development (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Advertising [Abstract] | ||||
Advertising costs | $ 2.3 | $ 1.2 | $ 3.5 | $ 2.2 |
Research and Development [Abstract] | ||||
Research and development | $ 0 | $ 0 |
Nature of Business and Summar_9
Nature of Business and Summary of Significant Accounting Policies, Shipping and Handling/Freight Out (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Shipping and Handling [Abstract] | ||||
Shipping and handling costs | $ 6,000 | $ 7,000 | $ 1,200 | $ 1,300 |
Net sales | 4,084 | 3,817 | 7,635 | 7,064 |
Shipping and Handling [Member] | ||||
Shipping and Handling [Abstract] | ||||
Net sales | $ 200 | $ 300 | $ 400 | $ 600 |
Nature of Business and Summa_10
Nature of Business and Summary of Significant Accounting Policies, Segment Information (Details) | 6 Months Ended |
Jun. 30, 2019Segment | |
Segment Information [Abstract] | |
Number of segment | 1 |
Nature of Business and Summa_11
Nature of Business and Summary of Significant Accounting Policies, Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Adoption of FASB ASC Topic 842 "Leases" [Abstract] | ||
Right-of-use asset | $ 840 | $ 0 |
Lease liability | $ 852 | |
ASU 842 [Member] | ||
Adoption of FASB ASC Topic 842 "Leases" [Abstract] | ||
Right-of-use asset | 500 | |
Lease liability | $ 500 |
Acquisition of TruPet LLC and_3
Acquisition of TruPet LLC and Bona Vida, Inc. (Details) - USD ($) | May 06, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Acquisition [Abstract] | ||||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |||
Number of member units retired (in shares) | (914,919) | |||||
Number of shares retired (in shares) | (1,011,748) | |||||
Loss on acquisition | $ 149,988,000 | $ 0 | $ 149,988,000 | $ 0 | ||
Current Assets | ||||||
Cash and cash equivalents | $ 1,930,000 | |||||
Restricted cash | 25,000 | |||||
Accounts receivable | 30,000 | |||||
Intercompany receivables | 6,199,000 | |||||
Inventories | 193,000 | |||||
Prepaid expenses and other current assets | 399,000 | |||||
Total Current Assets | 8,776,000 | |||||
Intangible assets, net of amortization | 986,000 | |||||
Other assets | 74,000 | |||||
Total Assets | 9,836,000 | |||||
Current Liabilities | ||||||
Warrant derivative liability | 2,111,000 | |||||
Accounts payable & accrued liabilities | 2,140,000 | |||||
Long term debt, current portion | 6,200,000 | |||||
Total Current Liabilities | 10,451,000 | |||||
Total Liabilities | 10,451,000 | |||||
Redeemable Series E Preferred Stock | 20,059,000 | |||||
TruPet, LLC [Member] | ||||||
Acquisition [Abstract] | ||||||
Number of shares issued (in shares) | $ 15,027,533 | |||||
Outstanding interests acquired | 93.00% | 7.00% | 7.00% | 7.00% | ||
Number of member units retired (in shares) | (914,919) | |||||
Number of shares retired (in shares) | (1,011,748) | |||||
Fair value of net assets acquired | $ 19,500,000 | |||||
Loss on acquisition | $ 38,200,000 | |||||
TruPet, LLC [Member] | Better Choice Company [Member] | ||||||
Acquisition [Abstract] | ||||||
Percentage ownership after acquisition | 38.00% | |||||
Better Choice Company [Member] | ||||||
Current Assets | ||||||
Cash and cash equivalents | $ 1,546,000 | |||||
Intercompany receivables | 6,161,000 | |||||
Prepaid expenses and other current assets | 52,000 | |||||
Total Current Assets | 7,759,000 | |||||
Intangible assets, net of amortization | 986,000 | |||||
Total Assets | 8,745,000 | |||||
Current Liabilities | ||||||
Warrant derivative liability | 2,111,000 | |||||
Accounts payable & accrued liabilities | 2,071,000 | |||||
Long term debt, current portion | 6,200,000 | |||||
Total Current Liabilities | 10,382,000 | |||||
Total Liabilities | 10,382,000 | |||||
Redeemable Series E Preferred Stock | 20,059,000 | |||||
Bona Vida, Inc. [Member] | ||||||
Acquisition [Abstract] | ||||||
Number of shares issued (in shares) | $ 18,003,274 | |||||
Outstanding interests acquired | 100.00% | |||||
Fair value of net assets acquired | $ 1,000,000 | |||||
Loss on acquisition | 107,000,000 | |||||
Current Assets | ||||||
Cash and cash equivalents | 384,000 | |||||
Restricted cash | 25,000 | |||||
Accounts receivable | 30,000 | |||||
Intercompany receivables | 38,000 | |||||
Inventories | 193,000 | |||||
Prepaid expenses and other current assets | 347,000 | |||||
Total Current Assets | 1,017,000 | |||||
Other assets | 74,000 | |||||
Total Assets | 1,091,000 | |||||
Current Liabilities | ||||||
Warrant derivative liability | 0 | |||||
Accounts payable & accrued liabilities | 69,000 | |||||
Total Current Liabilities | 69,000 | |||||
Total Liabilities | 69,000 | |||||
Redeemable Series E Preferred Stock | $ 0 | |||||
Bona Vida, Inc. [Member] | Better Choice Company [Member] | ||||||
Acquisition [Abstract] | ||||||
Percentage ownership after acquisition | 46.00% |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Inventories [Abstract] | ||
Food, treats and supplements | $ 1,682 | $ 1,301 |
Other products and accessories | 87 | 191 |
Inventory packaging and supplies | 168 | 133 |
Inventories, gross | 1,937 | 1,625 |
Inventory reserve | (230) | (68) |
Inventories, net | $ 1,707 | $ 1,557 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property, and equipment, gross | $ 138 | $ 109 |
Accumulated depreciation | (80) | (38) |
Property, and equipment, net | 59 | 71 |
Warehouse Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, and equipment, gross | 49 | 49 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, and equipment, gross | 14 | 14 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, and equipment, gross | $ 75 | $ 46 |
Operating Leases (Details)
Operating Leases (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)$ / ft² | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Adoption of FASB ASC Topic 842 "Leases" [Abstract] | |||||
Right-of-use asset | $ 840 | $ 840 | $ 0 | ||
Lease liability | 852 | 852 | |||
Rent expense for operating leases | 100 | $ 100 | 100 | $ 100 | |
Assets [Abstract] | |||||
Non-current assets | 840 | 840 | |||
Total operating lease assets | 840 | 840 | 0 | ||
Current [Abstract] | |||||
Operating lease liability, Current | (262) | (262) | 0 | ||
Non-current [Abstract] | |||||
Operating lease liability, Non-current | (590) | (590) | 0 | ||
Total operating lease liabilities | (852) | (852) | |||
Maturity of Lease Liabilities [Abstract] | |||||
Remainder of 2019 | 147 | 147 | |||
2020 | 299 | 299 | |||
2021 | 303 | 303 | |||
2022 | 169 | 169 | |||
Total undiscounted minimum future lease payments | 918 | 918 | |||
Less: imputed interest | 66 | 66 | |||
Present value of lease liabilities | $ 852 | $ 852 | |||
Office and Warehouse Facilities [Member] | |||||
Adoption of FASB ASC Topic 842 "Leases" [Abstract] | |||||
Annual escalation clause | 3.50% | ||||
Lease renewal term | 5 years | 5 years | |||
Original Office and Warehouse Facilities [Member] | |||||
Adoption of FASB ASC Topic 842 "Leases" [Abstract] | |||||
Base rent (per square foot) | $ / ft² | 13.02 | ||||
Additional Office and Warehouse Facilities in 2017 [Member] | |||||
Adoption of FASB ASC Topic 842 "Leases" [Abstract] | |||||
Base rent (per square foot) | $ / ft² | 15.50 | ||||
Additional Office and Warehouse Facilities in 2019 [Member] | Minimum [Member] | |||||
Adoption of FASB ASC Topic 842 "Leases" [Abstract] | |||||
Annual escalation clause | 2.00% | ||||
Additional Office and Warehouse Facilities in 2019 [Member] | Maximum [Member] | |||||
Adoption of FASB ASC Topic 842 "Leases" [Abstract] | |||||
Annual escalation clause | 5.00% | ||||
Additional Office Facilities [Member] | |||||
Adoption of FASB ASC Topic 842 "Leases" [Abstract] | |||||
Lease term | 3 years | 3 years | |||
Base monthly rental rates | $ 8,856 | ||||
Additional Warehouse Facilities [Member] | |||||
Adoption of FASB ASC Topic 842 "Leases" [Abstract] | |||||
Lease term | 3 years | 3 years | |||
Base monthly rental rates | $ 4,492 | ||||
ASU 842 [Member] | |||||
Adoption of FASB ASC Topic 842 "Leases" [Abstract] | |||||
Right-of-use asset | 500 | ||||
Lease liability | 500 | ||||
Assets [Abstract] | |||||
Total operating lease assets | 500 | ||||
Non-current [Abstract] | |||||
Total operating lease liabilities | (500) | ||||
Maturity of Lease Liabilities [Abstract] | |||||
Present value of lease liabilities | $ 500 |
License Intangibles and Royal_3
License Intangibles and Royalties , Elvis Presley Enterprises, LLC (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | May 06, 2019 | |
License Agreement [Abstract] | |||||
Sales related to products | $ 4,084 | $ 3,817 | $ 7,635 | $ 7,064 | |
Guaranteed Minimum Royalty Payments [Abstract] | |||||
2019-2020 | 1,500 | 1,500 | |||
2021 | 1,000 | 1,000 | |||
2022 | 1,125 | 1,125 | |||
2023 | 1,250 | 1,250 | |||
2024 | 1,500 | 1,500 | |||
2025 | 1,750 | $ 1,750 | |||
Elvis Presley Enterprises, LLC [Member] | |||||
License Agreement [Abstract] | |||||
License agreement, fair value | $ 1,000 | ||||
License expiration date | Dec. 31, 2025 | ||||
Royalty quarterly rate, net retail sales | 5.00% | ||||
Royalty quarterly rate, net wholesale sales | 10.00% | ||||
Prepaid expenses | 600 | $ 600 | |||
Elvis Presley Enterprises, LLC [Member] | Elvis Presley Hound Dog [Member] | |||||
License Agreement [Abstract] | |||||
Sales related to products | $ 0 | $ 0 |
License Intangibles and Royal_4
License Intangibles and Royalties Orapup (Details) - Orapup [Member] - USD ($) $ in Millions | Nov. 30, 2018 | Jun. 30, 2019 | Nov. 30, 2015 |
License Agreement [Abstract] | |||
Royalty rate | 10.00% | ||
Royalty, amount of sales threshold | $ 2.5 | ||
Term of royalty agreement | 3 years | ||
Royalty rate after sales threshold amount reached | 2.00% | ||
Royalty obligation settlement | $ 0.1 | ||
Royalty obligation | $ 0 |
Line of Credit and Debt (Detail
Line of Credit and Debt (Details) - USD ($) $ in Thousands | May 06, 2019 | May 31, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Line of Credit and Debt [Abstract] | |||||||
Long-term debt, current portion | $ 6,200 | $ 6,200 | $ 1,600 | ||||
Interest expenses | 100 | $ 100 | 100 | $ 100 | |||
Line of Credit [Member] | |||||||
Line of Credit and Debt [Abstract] | |||||||
Maximum borrowing capacity | $ 2,000 | 4,600 | |||||
Line of credit | 0 | 0 | $ 4,600 | ||||
Line of Credit [Member] | LIBOR [Member] | |||||||
Line of Credit and Debt [Abstract] | |||||||
Variable interest rate | 3.00% | ||||||
Note Payable [Member] | |||||||
Line of Credit and Debt [Abstract] | |||||||
Long-term debt, interest rate | 26.60% | ||||||
Term principal and interest due | 30 days | ||||||
Interest paid | 0 | ||||||
Long-term debt, current portion | $ 0 | $ 0 | $ 1,600 | ||||
Revolving Credit Agreement [Member] | |||||||
Line of Credit and Debt [Abstract] | |||||||
Maximum borrowing capacity | $ 6,200 | ||||||
Fee paid upon closing | $ 10 | ||||||
Late charge percentage | 5.00% | ||||||
Late charge period | 10 days | ||||||
Required amount of deposit at bank | $ 6,200 | ||||||
Revolving Credit Agreement [Member] | LIBOR [Member] | |||||||
Line of Credit and Debt [Abstract] | |||||||
Variable interest rate | 3.70% |
Warrant Derivative Liability, P
Warrant Derivative Liability, Private Placement (Details) - USD ($) $ / shares in Units, $ in Thousands | May 06, 2019 | Jan. 08, 2019 | Dec. 12, 2018 | Dec. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Nov. 30, 2018 |
Private Placement Offering [Abstract] | |||||||
Units issued in private placement offering (in shares) | 1,425,641 | ||||||
Unit price (in dollars per share) | $ 1.95 | ||||||
Gross proceeds from private placement offering | $ 2,800 | $ 150 | $ 0 | ||||
Share issuance costs | 100 | ||||||
Net proceeds from private placement offering | $ 2,700 | ||||||
Common Stock [Member] | |||||||
Private Placement Offering [Abstract] | |||||||
Number of shares in contained in one unit (in shares) | 1 | 1 | |||||
Net proceeds from private placement offering | $ 100 | $ 2,600 | |||||
Shares issued in private placement offering (in shares) | 5,744,991 | 25,641 | 1,400,000 | ||||
Warrants settleable in shares, number of shares (in shares) | 712,823 | ||||||
Warrant [Member] | |||||||
Private Placement Offering [Abstract] | |||||||
Number of shares in contained in one unit (in shares) | 0.5 | 0.5 | |||||
Warrants, exercisable period | 2 years | ||||||
Warrants, exercise price (in dollars per share) | $ 3.90 |
Warrant Derivative Liability, F
Warrant Derivative Liability, Fair Value of Derivative Liabilities (Details) - USD ($) $ in Thousands | 2 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | |
Warrant Liability [Abstract] | |||
Assumption of warrants pursuant to May 6, 2019 acquisition of Better Choice Company | $ 2,110 | $ 0 | |
Change in fair value of derivative liability | 193 | 193 | $ 0 |
Balance as of June 30, 2019 | $ 2,304 | $ 2,304 |
Warrant Derivative Liability,_2
Warrant Derivative Liability, Fair Value Measurements and Valuation Techniques (Details) - Warrant [Member] | Jun. 30, 2019$ / shares | May 06, 2019$ / shares |
Stock Price [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Derivative liability | 6.35 | 6 |
Exercise Price [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Derivative liability | 3.90 | 3.90 |
Remaining Term (in Years) [Member] | Minimum [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Derivative liability | 1.45 | 1.60 |
Remaining Term (in Years) [Member] | Maximum [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Derivative liability | 1.53 | 1.68 |
Volatility [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Derivative liability | 0.65 | 0.64 |
Risk-free Interest Rate [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | ||
Derivative liability | 0.0198 | 0.0239 |
Loyalty Program Provision (Deta
Loyalty Program Provision (Details) | 6 Months Ended | |
Jun. 30, 2019USD ($)Points | Dec. 31, 2018USD ($) | |
Loyalty Program Provision [Abstract] | ||
Points earned for every $1 spent - Tier 1 | 6 | |
Points earned for every $1 spent - Tier 2 | 12 | |
Number of points redeemable for customers to receive gift code | 500 | |
Value of gift code receivable by customers on redemption of five hundred points earned | $ | $ 5 | |
Percentage of liability provision for accrued and unredeemed points | 45.00% | |
Estimated loyalty program awards, earned but not redeemed | $ | $ 200,000 | $ 100,000 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Other Liabilities [Abstract] | |||||
Interest rate on issued credit cards, for purchases | 22.00% | 22.00% | 22.00% | 22.00% | |
Interest rate on issued credit cards, for cash advances | 24.24% | 24.24% | 24.24% | 24.24% | |
Future receivables sold | $ 2,000 | ||||
Proceeds from sale of future receivables | 1,900 | ||||
Other Liabilities [Abstract] | |||||
Opening balance | $ 1,899 | $ 0 | 0 | ||
Advance of outstanding amounts | 2,414 | ||||
Payments | (1,899) | (787) | |||
Advance fixed fee | 271 | ||||
Closing balance | $ 0 | 0 | 1,899 | ||
Advance #1 [Member] | |||||
Other Liabilities [Abstract] | |||||
Opening balance | 0 | 0 | 0 | ||
Advance of outstanding amounts | 399 | ||||
Payments | (429) | ||||
Advance fixed fee | 30 | ||||
Closing balance | 0 | 0 | 0 | ||
Advance #2 [Member] | |||||
Other Liabilities [Abstract] | |||||
Opening balance | 0 | 0 | 0 | ||
Advance of outstanding amounts | 965 | ||||
Payments | (256) | ||||
Rollover to Advance #3 | (824) | ||||
Advance fixed fee | 115 | ||||
Closing balance | 0 | 0 | 0 | ||
Advance #3 [Member] | |||||
Other Liabilities [Abstract] | |||||
Opening balance | 1,899 | $ 0 | 0 | ||
Advance of outstanding amounts | 1,050 | ||||
Payments | (1,899) | (102) | |||
Rollover to Advance #3 | 824 | ||||
Advance fixed fee | 126 | ||||
Closing balance | $ 0 | $ 0 | $ 1,899 |
Redeemable Preferred Stock (Det
Redeemable Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | May 13, 2019 | May 10, 2019 | May 06, 2019 | Oct. 22, 2018 | Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2019 | May 06, 2019 |
Number [Abstract] | ||||||||
Issued (in shares) | 2,633,678 | 2,846,356 | ||||||
Converted to common stock (in shares) | (925,758) | (212,678) | ||||||
Balance (in shares) | 2,633,678 | 2,633,678 | ||||||
Balance (in shares) | 2,633,678 | 1,707,920 | 1,707,920 | 1,707,920 | 2,633,678 | |||
Amount [Abstract] | ||||||||
Issued | $ 1,871 | $ 2,023 | ||||||
Converted to Common Stock | (7,052) | (152) | ||||||
Balance | $ 1,871 | 1,871 | ||||||
Purchase price adjustment | 18,188 | |||||||
Balance | $ 20,059 | $ 13,007 | $ 13,007 | $ 13,007 | $ 20,059 | |||
Series E Convertible Preferred Stock [Member] | ||||||||
Redeemable Preferred Stock [Abstract] | ||||||||
Preferred stock, shares designated (in shares) | 2,900,000 | |||||||
Preferred stock, stated value (in dollars per share) | $ 0.99 | |||||||
Preferred stock, conversion price (in dollars per share) | $ 0.78 | |||||||
Preferred stock, dividend rate | 10.00% | |||||||
Preferred stock, mandatory redemption price in percentage of stated value | 125.00% | |||||||
Preferred stock, mandatory redemption price (in dollars per share) | $ 1.23 | |||||||
Preferred stock, fair value (in dollar per share) | $ 6 | $ 6 | ||||||
Preferred stock, shares converted (in shares) | 236,364 | 689,394 | 925,758 | 925,758 | ||||
Number of common stock, shares issued upon conversion of preferred stock (in shares) | 300,000 | 875,000 | ||||||
Number [Abstract] | ||||||||
Balance (in shares) | 1,707,920 | 1,707,920 | 1,707,920 | |||||
Series E Convertible Preferred Stock [Member] | Common Stock [Member] | ||||||||
Redeemable Preferred Stock [Abstract] | ||||||||
Preferred stock, mandatory redemption price in percentage of market price | 75.00% |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) - shares | May 06, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
TruPet, LLC [Member] | |||
Business Acquisition [Line Items] | |||
Number of shares issued (in shares) | 15,027,533 | ||
Outstanding interests acquired | 93.00% | 7.00% | 7.00% |
Bona Vida, Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Number of shares issued (in shares) | 18,003,273 | ||
Outstanding interests acquired | 100.00% |
Stockholders' Deficit, Preferre
Stockholders' Deficit, Preferred Units/Stock (Details) - USD ($) $ / shares in Units, $ in Millions | May 13, 2019 | May 10, 2019 | May 06, 2019 | Feb. 12, 2019 | Dec. 12, 2018 | Dec. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2019 | Oct. 22, 2018 |
Class of Stock [Line Items] | |||||||||
Unit price (in dollars per share) | $ 1.95 | ||||||||
Net proceeds from issuance of stock | $ 2.7 | ||||||||
Share issuance costs | $ 0.1 | ||||||||
Shares outstanding (in shares) | 2,633,678 | 1,707,920 | 1,707,920 | ||||||
Series A Preferred Units [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Shares issued in private placement (in shares) | 62,500 | 2,162,536 | |||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Unit price (in dollars per share) | $ 2.40 | $ 2.40 | |||||||
Net proceeds from issuance of stock | $ 0.2 | $ 4.7 | |||||||
Share issuance costs | $ 0.5 | ||||||||
Shares issued in stock conversion (in shares) | 2,460,517 | ||||||||
Shares outstanding (in shares) | 2,391,403 | 0 | 0 | ||||||
Series E Preferred Stock [Member] | |||||||||
Class of Stock [Line Items] | |||||||||
Preferred stock, par value (in dollars per share) | $ 0.99 | ||||||||
Shares issued in stock conversion (in shares) | 300,000 | 875,000 | |||||||
Shares acquired (in shares) | 2,633,678 | ||||||||
Shares converted (in shares) | 236,364 | 689,394 | 925,758 | 925,758 | |||||
Shares outstanding (in shares) | 1,707,920 | 1,707,920 | |||||||
Preferred stock, shares issuable upon conversion (in shares) | 2,167,745 | 2,167,745 |
Stockholders' Deficit, Common S
Stockholders' Deficit, Common Stock (Details) | May 06, 2019USD ($)$ / sharesshares | May 05, 2019$ / sharesshares | Mar. 15, 2019 | Jan. 08, 2019USD ($)shares | Dec. 12, 2018USD ($)$ / sharesshares | Nov. 18, 2018shares | May 05, 2019USD ($)shares | Dec. 31, 2018USD ($)shares | Jun. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2018shares | Jun. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2018USD ($)shares | Apr. 22, 2019shares | Nov. 30, 2018shares | Oct. 29, 2018USD ($) |
Common Stock [Abstract] | |||||||||||||||
Common stock, shares authorized (in shares) | 580,000,000 | 88,000,000 | 88,000,000 | 88,000,000 | |||||||||||
Common stock, shares issued (in shares) | 11,661,485 | 43,168,161 | 43,168,161 | ||||||||||||
Common stock, shares outstanding (in shares) | 11,661,485 | 43,168,161 | 43,168,161 | ||||||||||||
Reverse stock split ratio | 0.0385 | ||||||||||||||
Units issued in private placement offering (in shares) | 1,425,641 | ||||||||||||||
Unit price (in dollars per share) | $ / shares | $ 1.95 | ||||||||||||||
Gross proceeds from private placement offering | $ | $ 2,800,000 | $ 150,000 | $ 0 | ||||||||||||
Share issuance costs | $ | 100,000 | ||||||||||||||
Net proceeds from private placement offering | $ | $ 2,700,000 | ||||||||||||||
Filing period of registration statement following closing date | 60 days | ||||||||||||||
Equity awards issued (in shares) | 979,716 | 0 | 0 | ||||||||||||
Equity awards issued, weighted average value per share (in dollars per share) | $ / shares | $ 2.26 | ||||||||||||||
Equity awards vesting period | 3 years | ||||||||||||||
Share-based compensation expense as a result of immediate vesting | $ | $ 2,200,000 | $ 2,400,000 | |||||||||||||
Equity awards outstanding (in shares) | 0 | 0 | |||||||||||||
Number of member units retired (in shares) | (914,919) | ||||||||||||||
Number of shares retired (in shares) | (1,011,748) | ||||||||||||||
Value of shares retired | $ | $ 2,200,000 | $ 2,200,000 | |||||||||||||
Stock price (in dollars per share) | $ / shares | $ 1.95 | ||||||||||||||
TruPet, LLC [Member] | |||||||||||||||
Common Stock [Abstract] | |||||||||||||||
Initial ownership interest acquired | 93.00% | 7.00% | 7.00% | 7.00% | |||||||||||
Number of member units retired (in shares) | (914,919) | ||||||||||||||
Number of shares retired (in shares) | (1,011,748) | ||||||||||||||
Bona Vida, Inc. [Member] | |||||||||||||||
Common Stock [Abstract] | |||||||||||||||
Unit price (in dollars per share) | $ / shares | $ 6 | ||||||||||||||
Initial ownership interest acquired | 100.00% | ||||||||||||||
Amount of Change of Control payment | $ | $ 500,000 | ||||||||||||||
Number of shares of common stock to be issued in consideration for Change of Control payment (in shares) | 100,000 | ||||||||||||||
Stock price (in dollars per share) | $ / shares | $ 6 | ||||||||||||||
PIPE Transaction [Member] | |||||||||||||||
Common Stock [Abstract] | |||||||||||||||
Units issued in private placement offering (in shares) | 5,744,991 | ||||||||||||||
Unit price (in dollars per share) | $ / shares | $ 3 | ||||||||||||||
Net proceeds from private placement offering | $ | $ 15,700,000 | ||||||||||||||
Stock price (in dollars per share) | $ / shares | $ 3 | ||||||||||||||
Common Stock [Member] | |||||||||||||||
Common Stock [Abstract] | |||||||||||||||
Number of shares contained in one unit (in shares) | 1 | 1 | |||||||||||||
Net proceeds from private placement offering | $ | $ 100,000 | $ 2,600,000 | |||||||||||||
Shares issued in private placement offering (in shares) | 5,744,991 | 25,641 | 1,400,000 | ||||||||||||
Number of shares retired (in shares) | (1,011,748) | ||||||||||||||
Value of shares retired | $ | $ 1,012 | ||||||||||||||
Common Stock [Member] | Consultant [Member] | |||||||||||||||
Common Stock [Abstract] | |||||||||||||||
Equity awards issued (in shares) | 303,427 | ||||||||||||||
Common Stock [Member] | Consultant [Member] | First Half [Member] | |||||||||||||||
Common Stock [Abstract] | |||||||||||||||
Percentage of equity awards vested on grant date | 50.00% | ||||||||||||||
Common Stock [Member] | Consultant [Member] | Second Half [Member] | |||||||||||||||
Common Stock [Abstract] | |||||||||||||||
Equity awards vesting period | 2 years | ||||||||||||||
Common Stock [Member] | PIPE Transaction [Member] | |||||||||||||||
Common Stock [Abstract] | |||||||||||||||
Number of shares contained in one unit (in shares) | 1 | ||||||||||||||
Warrant [Member] | |||||||||||||||
Common Stock [Abstract] | |||||||||||||||
Number of shares contained in one unit (in shares) | 0.5 | 0.5 | |||||||||||||
Warrants, exercisable period | 2 years | 2 years | |||||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 3.90 | $ 3.90 |
Stockholders' Deficit, Stock Op
Stockholders' Deficit, Stock Options (Details) $ / shares in Units, $ in Millions | Jun. 29, 2019Installment$ / sharesshares | May 21, 2019Installment$ / sharesshares | May 06, 2019$ / sharesshares | Jun. 30, 2019$ / sharesshares | Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($)shares |
Stock Options [Abstract] | ||||||
Shares acquired (in shares) | 5,288,462 | |||||
Shares acquired, exercise price (in dollars per share) | $ / shares | $ 5 | |||||
Shares granted (in shares) | 93,000 | |||||
Shares granted, exercise price (in dollars per share) | $ / shares | $ 7.50 | |||||
Share-based compensation expense as a result of immediate vesting | $ | $ 2.2 | $ 2.4 | ||||
2019 Incentive Award Plan [Member] | ||||||
Stock Options [Abstract] | ||||||
Shares granted (in shares) | 93,000 | |||||
2019 Incentive Award Plan [Member] | Stock Options [Member] | ||||||
Stock Options [Abstract] | ||||||
Award exercise period | 10 years | |||||
2019 Incentive Award Plan [Member] | Stock Options [Member] | Management [Member] | ||||||
Stock Options [Abstract] | ||||||
Shares acquired (in shares) | 3,750,000 | |||||
Shares acquired, exercise price (in dollars per share) | $ / shares | $ 5 | |||||
Award monthly vesting percentage | 4.167% | |||||
2019 Incentive Award Plan [Member] | Stock Options [Member] | Employee [Member] | ||||||
Stock Options [Abstract] | ||||||
Shares granted (in shares) | 3,000 | 30,000 | ||||
Shares granted, exercise price (in dollars per share) | $ / shares | $ 7.50 | $ 7.50 | ||||
Award monthly vesting percentage | 2.778% | 2.778% | ||||
Award vesting percentage on first anniversary of grant date | 25.00% | 25.00% | ||||
Number of equal installments of vesting after first anniversary of grant date | Installment | 24 | 24 | ||||
2019 Incentive Award Plan [Member] | Stock Options [Member] | Non-Employee Director [Member] | ||||||
Stock Options [Abstract] | ||||||
Shares acquired (in shares) | 1,500,000 | |||||
Shares acquired, exercise price (in dollars per share) | $ / shares | $ 5 | |||||
Award monthly vesting percentage | 4.167% | |||||
2019 Incentive Award Plan [Member] | Stock Options [Member] | Third-party Consultant [Member] | ||||||
Stock Options [Abstract] | ||||||
Shares granted (in shares) | 60,000 | |||||
Shares granted, exercise price (in dollars per share) | $ / shares | $ 7.50 | |||||
Award monthly vesting percentage | 2.778% |
Stockholders' Deficit, Option G
Stockholders' Deficit, Option Grants (Details) - USD ($) $ / shares in Units, $ in Thousands | May 06, 2019 | Jun. 30, 2019 | Jun. 30, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Number (in shares) | 93,000 | ||
Exercise price (in dollars per share) | $ 7.50 | ||
2019 Incentive Award Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number (in shares) | 93,000 | ||
Share-based payment expense | $ 14 | ||
Authorized issuance shares of common stock (in shares) | 6,000,000 | ||
Percent of common stock outstanding | 10.00% | ||
2019 Incentive Award Plan [Member] | 5/21/2019 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Date of grant(s) | May 21, 2019 | ||
Vesting period | 2 years | ||
Number (in shares) | 60,000 | ||
Exercise price (in dollars per share) | $ 7.50 | ||
Share-based payment expense | $ 9 | ||
Risk-free rate | 2.28% | ||
Volatility | 55.00% | ||
Dividend yield | 0.00% | ||
Expiry | 10 years | ||
Remaining life | 9 years 10 months 24 days | ||
2019 Incentive Award Plan [Member] | 5/21/2019 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Date of grant(s) | May 21, 2019 | ||
Vesting period | 3 years | ||
Number (in shares) | 30,000 | ||
Exercise price (in dollars per share) | $ 7.50 | ||
Share-based payment expense | $ 5 | ||
Risk-free rate | 2.28% | ||
Volatility | 55.00% | ||
Dividend yield | 0.00% | ||
Expiry | 10 years | ||
Remaining life | 9 years 10 months 24 days | ||
2019 Incentive Award Plan [Member] | 6/29/2019 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Date of grant(s) | Jun. 29, 2019 | ||
Vesting period | 3 years | ||
Number (in shares) | 3,000 | ||
Exercise price (in dollars per share) | $ 7.50 | ||
Share-based payment expense | $ 0 | ||
Risk-free rate | 1.84% | ||
Volatility | 56.00% | ||
Dividend yield | 0.00% | ||
Expiry | 10 years | ||
Remaining life | 10 years |
Stockholders' Deficit, Signific
Stockholders' Deficit, Significant Terms of Options Outstanding (Details) - $5.00 - 7.50 [Member] | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Range of exercise prices, lower range limit (in dollars per share) | $ 5 |
Range of exercise prices, upper range limit (in dollars per share) | $ 7.50 |
Number of options outstanding (in shares) | shares | 5,381,462 |
Weighted average remaining contractual life | 9 years 9 months 18 days |
Weighted average exercise price of outstanding options (in dollars per share) | $ 5.06 |
Number of options, exercisable (in shares) | shares | 260,545 |
Weighted average exercise price of exercisable options (in dollars per share) | $ 5.04 |
Stockholders' Deficit, Transact
Stockholders' Deficit, Transactions Involving Options (Details) $ / shares in Units, $ in Millions | May 06, 2019$ / sharesshares | Jun. 30, 2019USD ($)$ / sharesshares |
Number of Options [Abstract] | ||
Acquired (in shares) | shares | 5,288,462 | |
Granted (in shares) | shares | 93,000 | |
Option outstanding (in shares) | shares | 5,381,462 | |
Weighted Average Exercise Price [Abstract] | ||
Acquired (in dollars per share) | $ / shares | $ 5 | |
Granted (in dollars per share) | $ / shares | $ 7.50 | |
Options outstanding (in dollars per share) | $ / shares | $ 5.04 | |
Options outstanding, intrinsic value | $ | $ 34.2 |
Stockholders' Deficit, Warrants
Stockholders' Deficit, Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | 2 Months Ended | |
Jun. 30, 2019 | May 06, 2019 | |
Number of Warrants [Abstract] | ||
Warrants Acquired (in shares) | 913,310 | |
Issued (in shares) | 5,744,991 | |
Exercised (in shares) | 0 | |
Canceled/ expired (in shares) | 0 | |
Warrants outstanding (in shares) | 6,658,301 | |
Weighted Average Exercise Price [Abstract] | ||
Warrants Acquired (in dollars per share) | $ 3.70 | |
Issued (in dollars per share) | $ 4.50 | |
Exercised (in dollars per share) | 0 | |
Canceled/ expired (in dollars per share) | 0 | |
Warrants outstanding (in dollars per share) | $ 4.39 | |
Warrants outstanding, intrinsic value | $ 13 |
Related Party Transactions an_2
Related Party Transactions and Material Service Agreements, Related Party Transactions (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($)Member | |
Related Party Transactions [Abstract] | |||
Payment of finder's fee | $ 300,000 | ||
Number of members who own entity | Member | 1 | ||
Management Services [Member] | |||
Related Party Transactions [Abstract] | |||
Payments to related parties | $ 0 | $ 0 | |
Marketing Services [Member] | |||
Related Party Transactions [Abstract] | |||
Outstanding balances due to related party | 100,000 | $ 100,000 | |
Service contract termination clause | 30 days | ||
Financial Services [Member] | |||
Related Party Transactions [Abstract] | |||
Payments to related parties | 100,000 | $ 200,000 | |
Notice period to terminate agreement | 60 days | ||
Payments for agreement regarding financial operation | $ 21,160 | ||
Period of payment | 1 month | ||
Employment Agreement [Member] | |||
Related Party Transactions [Abstract] | |||
Payments to related parties | $ 100,000 | $ 200,000 | |
Term of agreement | 6 months | ||
Other Professional Services [Member] | |||
Related Party Transactions [Abstract] | |||
Payments to related parties | $ 0 | $ 400,000 |
Related Party Transactions an_3
Related Party Transactions and Material Service Agreements, Material Service Agreements (Details) | May 06, 2019USD ($)shares | May 05, 2019shares | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($)shares | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($)shares | Dec. 31, 2018USD ($)Extension |
Other Commitments [Abstract] | |||||||
Common stock issued (in shares) | shares | 979,716 | 0 | 0 | ||||
Loss on acquisition | $ 149,988,000 | $ 0 | $ 149,988,000 | $ 0 | |||
Accounting Management Services [Member] | |||||||
Other Commitments [Abstract] | |||||||
Payments for accounting management services agreement | $ 8,370 | $ 2,600 | |||||
Period of payment | 14 days | 14 days | |||||
Payments related to agreement | 100,000 | $ 200,000 | |||||
Marketing Services [Member] | |||||||
Other Commitments [Abstract] | |||||||
Payments related to agreement | $ 200,000 | 400,000 | $ 200,000 | ||||
Placement and Selling Agent [Member] | |||||||
Other Commitments [Abstract] | |||||||
Payments related to agreement | $ 0 | $ 100,000 | |||||
Term of agreement | 6 months | ||||||
Agreement base fee | $ 0 | ||||||
Percentage of commission on cash proceeds | 5.00% | ||||||
Number of term extensions | Extension | 1 | ||||||
Term of extended agreement | 12 months | ||||||
Notice period to extend term before initial term expires | 60 days | ||||||
Stock issuance costs expensed | $ 100,000 | ||||||
Loss on acquisition | $ 4,800,000 | ||||||
Placement and Selling Agent [Member] | Common Stock [Member] | |||||||
Other Commitments [Abstract] | |||||||
Common stock issued (in shares) | shares | 798,492 |
Major Suppliers (Details)
Major Suppliers (Details) - Vendor | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Concentration Risk [Abstract] | ||
Number of vendors utilized to purchase inventory | 1 | 1 |
Number of vendors utilized for outsourced manufactured meals | 1 | 1 |
Cost of Goods [Member] | Supplier Concentration Risk [Member] | ||
Concentration Risk [Abstract] | ||
Percentage of purchased inventories | 83.00% | 72.00% |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) $ in Millions | Jun. 30, 2019USD ($)Institution | Dec. 31, 2018USD ($) |
Concentration of Credit Risk [Abstract] | ||
Number of financial institutions | Institution | 1 | |
Deposits in excess of FDIC insured limits | $ | $ 10.3 | $ 3.4 |
Net Loss per Share (Details)
Net Loss per Share (Details) - USD ($) | 2 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | |
Numerator: [Abstract] | ||||||||
Net loss | $ (161,533,182) | $ (161,506,000) | $ (2,780,082) | $ (745,000) | $ (1,655,302) | $ (164,286,000) | $ (3,626,157) | $ (2,400,000) |
Less: Preferred Stock Dividends | (27,000) | 0 | (27,000) | 0 | ||||
Net loss attributable to Common Stockholders | $ (161,533,000) | $ (745,000) | $ (164,313,000) | $ (2,400,000) | ||||
Denominator: [Abstract] | ||||||||
Weighted average shares used in computing net loss per share attributable to Common Stockholders, basic and diluted (in shares) | 30,638,048 | 11,497,128 | 21,202,188 | 11,497,128 | ||||
Net loss per share attributable to Common Stockholders, basic and diluted (in dollars per share) | $ (5.27) | $ (0.06) | $ (7.75) | $ (0.21) |
Going Concern (Details)
Going Concern (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Going Concern [Abstract] | ||||
Working capital | $ 600 | $ 600 | ||
Non-cash stock compensation | $ 4,006 | $ 0 | 4,212 | $ 0 |
Proceeds from new loan | $ 6,200 | $ 2,013 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Sep. 17, 2019 | Sep. 09, 2019 | Aug. 30, 2019 | Aug. 28, 2019 | Aug. 14, 2019 | Jul. 29, 2019 | Jun. 28, 2019 | Sep. 30, 2019 | May 05, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 |
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Shares granted (in shares) | 93,000 | |||||||||||||
Exercise price (in dollars per share) | $ 7.50 | |||||||||||||
Number of common shares issued for services | $ 2,227,006 | $ 600,000 | $ 206,166 | $ 430,811 | ||||||||||
Vesting period | 3 years | |||||||||||||
Proceeds from private issuance of public equity | $ 15,676,000 | $ 0 | ||||||||||||
Warrant [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Warrants, exercise price (in dollars per share) | $ 3.90 | $ 3.90 | ||||||||||||
Common Stock [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Number of common shares issued for services (in shares) | 1,099,822 | 100,000 | 18,964 | 164,357 | ||||||||||
Number of common shares issued for services | $ 1,100 | $ 100 | $ 19 | $ 164 | ||||||||||
Chief Financial Officer [Member] | Stock Options [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Shares granted (in shares) | 500,000 | |||||||||||||
Exercise price (in dollars per share) | $ 6.35 | |||||||||||||
Vesting period | 2 years | |||||||||||||
Subsequent Event [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Proceeds from private issuance of public equity | $ 4,000,000 | |||||||||||||
Subsequent Event [Member] | Tranche One [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Vesting percentage of warrants | 50.00% | |||||||||||||
Number of warrants vested (in shares) | 1,250,000 | |||||||||||||
Subsequent Event [Member] | Tranche Two [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Vesting percentage of warrants | 50.00% | |||||||||||||
Number of warrants vested (in shares) | 1,250,000 | |||||||||||||
Subsequent Event [Member] | Warrant [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Conversion of stock, shares converted (in shares) | 1,144,999 | |||||||||||||
Subsequent Event [Member] | Common Stock [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Conversion of Stock, Shares Issued (in shares) | 1,259,498 | |||||||||||||
Subsequent Event [Member] | iHeartMedia [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Number of common shares issued for services (in shares) | 1,000,000 | |||||||||||||
Number of common shares issued for services | $ 5,000,000 | |||||||||||||
Advertising media inventory committed for use in 2020 | $ 2,500,000 | |||||||||||||
Subsequent Event [Member] | Chief Financial Officer [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Number of common shares issued for services (in shares) | 6,042 | |||||||||||||
Subsequent Event [Member] | Chief Financial Officer [Member] | Stock Options [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Shares granted (in shares) | 100,000 | |||||||||||||
Exercise price (in dollars per share) | $ 3.90 | |||||||||||||
Vesting period | 2 years | |||||||||||||
Subsequent Event [Member] | Employee [Member] | Stock Options [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Shares granted (in shares) | 30,000 | 30,000 | ||||||||||||
Exercise price (in dollars per share) | $ 3.70 | $ 4 | ||||||||||||
Vesting period | 3 years | 3 years | ||||||||||||
Subsequent Event [Member] | Special Adviser [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Consulting agreement period | 5 years | |||||||||||||
Subsequent Event [Member] | Special Adviser [Member] | Tranche One [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Number of warrants issued (in shares) | 2,500,000 | |||||||||||||
Warrants, exercise price (in dollars per share) | $ 0.10 | |||||||||||||
Subsequent Event [Member] | Special Adviser [Member] | Tranche Two [Member] | ||||||||||||||
Subsequent Events (Additional Information) [Abstract] | ||||||||||||||
Number of warrants issued (in shares) | 1,500,000 | |||||||||||||
Warrants, exercise price (in dollars per share) | $ 10 |