Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Jun. 18, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Better Choice Co Inc. | |
Entity Central Index Key | 0001471727 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 48,939,708 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Address, State or Province | FL |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 1,842 | $ 2,361 |
Restricted cash | 25 | 173 |
Accounts receivable, net | 6,121 | 5,824 |
Inventories, net | 4,762 | 6,580 |
Prepaid expenses and other current assets | 3,064 | 2,641 |
Total Current Assets | 15,814 | 17,579 |
Noncurrent Assets | ||
Property and equipment, net | 349 | 417 |
Right-of-use assets, operating lease | 888 | 951 |
Intangible assets, net | 14,259 | 14,641 |
Goodwill | 18,614 | 18,614 |
Other assets | 1,027 | 1,330 |
Total Assets | 50,951 | 53,532 |
Current Liabilities | ||
Short term loan, net | 17,023 | 16,061 |
Line of credit, net | 5,366 | 4,819 |
Other liabilities | 209 | 500 |
Accounts payable | 4,226 | 4,049 |
Accrued liabilities | 4,570 | 4,721 |
Deferred revenue | 330 | 311 |
Operating lease liability, current portion | 352 | 345 |
Warrant derivative liability | 841 | 2,220 |
Total Current Liabilities | 32,917 | 33,026 |
Noncurrent Liabilities | ||
Notes payable, net | 17,559 | 16,370 |
Operating lease liability | 566 | 641 |
Total Noncurrent Liabilities | 18,125 | 17,011 |
Total Liabilities | 51,042 | 50,037 |
Stockholders' Deficit | ||
Common stock, $0.001 par value, 88,000,000 shares authorized, 48,939,708 & 47,977,390 shares issued and outstanding at March 31, 2020 and December 31, 2019 | 49 | 48 |
Additional paid-in capital | 200,051 | 194,150 |
Accumulated deficit | (210,757) | (201,269) |
Total Stockholders' Deficit | (10,657) | (7,071) |
Total Liabilities, Redeemable Preferred Stock and Stockholders' Deficit | 50,951 | 53,532 |
Series E Preferred Stock [Member] | ||
Redeemable Series E Convertible Preferred Stock | ||
Redeemable Series E preferred stock, $0.001 par value, 2,900,000 shares authorized, 1,387,378 shares issued and outstanding at March 31, 2020 and December 31, 2019 | $ 10,566 | $ 10,566 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 88,000,000 | |
Common stock, shares issued (in shares) | 48,939,708 | 47,977,390 |
Common stock, shares outstanding (in shares) | 48,939,708 | 47,977,390 |
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) | 1,387,378 | 1,387,378 |
Redeemable convertible preferred, shares outstanding (in shares) | 1,387,378 | 1,387,378 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract] | ||
Net sales | $ 12,226 | $ 3,551 |
Cost of goods sold | 8,069 | 1,661 |
Gross profit | 4,157 | 1,890 |
Operating expenses: | ||
General and administrative | 8,056 | 1,959 |
Share-based compensation | 2,484 | 206 |
Sales and marketing | 1,959 | 2,185 |
Customer service and warehousing | 190 | 254 |
Total operating expenses | 12,689 | 4,604 |
Loss from operations | (8,532) | (2,714) |
Other expense/(other income): | ||
Interest expense, net | 2,301 | 62 |
Change in fair value of warrant derivative liability | (1,379) | 0 |
Total other expense/(other income) | 922 | 62 |
Net and comprehensive loss | (9,454) | (2,776) |
Preferred dividends | 34 | 0 |
Net and comprehensive loss available to common stockholders | $ (9,488) | $ (2,776) |
Weighted average number of shares outstanding, basic and diluted (in shares) | 48,526,396 | 11,674,127 |
Loss per share, basic and diluted (in dollars per share) | $ (0.20) | $ (0.24) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands | Common Stock [Member] | Preferred Stock [Member]Series A Preferred Stock [Member] | Preferred Stock [Member]Series E Preferred Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2018 | $ 12 | $ 2 | $ 13,642 | $ (16,698) | $ (3,042) | |
Balance (in shares) at Dec. 31, 2018 | 11,661,485 | 2,391,403,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Shares issued pursuant to a private placement - net proceeds | $ 0 | $ 0 | 150 | 0 | 150 | |
Shares issued pursuant to a private placement - net proceeds (in shares) | 0 | 69,115,000 | ||||
Share-based compensation | $ 0 | $ 0 | 206 | 0 | 206 | |
Share-based compensation (in shares) | 18,964 | |||||
Net and comprehensive loss available to common stockholders | $ 0 | 0 | (2,776) | (2,776) | ||
Balance at Mar. 31, 2019 | $ 12 | $ 2 | 13,998 | (19,474) | (5,462) | |
Balance (in shares) at Mar. 31, 2019 | 11,680,449 | 2,460,518,000 | ||||
Balance at Dec. 31, 2019 | $ 48 | $ 10,566 | 194,150 | (201,269) | (7,071) | |
Balance (in shares) at Dec. 31, 2019 | 47,977,390 | 1,387,378,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Shares issued pursuant to a private placement - net proceeds | $ 0 | 500 | 0 | 500 | ||
Shares issued pursuant to a private placement - net proceeds (in shares) | 308,642 | |||||
Share-based compensation | $ 1 | 2,484 | 0 | 2,485 | ||
Share-based compensation (in shares) | 455,956 | |||||
Shares and warrants issued to third party for contract termination | $ 0 | 198 | 0 | 198 | ||
Shares and warrants issued to third party for contract termination (in shares) | 72,720 | |||||
Shares issued to third parties for services | $ 0 | 125 | 0 | 125 | ||
Stock issued to third parties for services (in shares) | 125,000 | |||||
Warrants issued to third parties for services | $ 0 | 2,594 | 0 | 2,594 | ||
Net and comprehensive loss available to common stockholders | 0 | 0 | (9,488) | (9,488) | ||
Balance at Mar. 31, 2020 | $ 49 | $ 10,566 | $ 200,051 | $ (210,757) | $ (10,657) | |
Balance (in shares) at Mar. 31, 2020 | 48,939,708 | 1,387,378,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Cash Flow from Operating Activities: | |||
Net and comprehensive loss available to common stockholders | $ (9,488) | $ (2,776) | |
Adjustments to reconcile net and comprehensive loss to net cash used in operating activities : | |||
Shares and warrants issued to third parties for services | 2,792 | 0 | |
Depreciation and amortization | 457 | 4 | |
Amortization of debt issuance costs and discounts | 1,090 | 0 | |
Share-based compensation | 2,484 | 206 | |
Lease expenses | (4) | 8 | |
Change in fair value of warrant derivative liability | (1,379) | 0 | $ (1,379) |
Payment in kind (PIK) interest expense on notes payable | 459 | 0 | |
Contract termination costs | 649 | 0 | |
Changes in operating assets and liabilities, net of effects of business acquisition: | |||
Accounts receivable, net | (297) | 63 | |
Inventories, net | 1,818 | 233 | |
Prepaid expenses and other current assets | (423) | 148 | |
Other assets | 428 | (26) | |
(Decrease) increase in current liabilities | |||
Accounts payable | 177 | 445 | |
Accrued liabilities | (151) | 233 | |
Deferred revenue | 19 | 118 | |
Other | 210 | (24) | |
Cash Used in Operating Activities | (1,159) | (1,368) | |
Cash Flow from Investing Activities | |||
Acquisition of property and equipment, net | (8) | 0 | |
Cash Used in Investing Activities | (8) | 0 | |
Cash Flow from Financing Activities | |||
Proceeds from shares issued pursuant to private placement, net | 0 | 150 | |
Proceeds from revolving line of credit | 500 | 0 | |
Payment of cash advance, net | 0 | (906) | |
Cash Provided by (Used in) Financing Activities | 500 | (756) | |
Net Decrease in Cash and cash equivalents and Restricted cash | (667) | (2,124) | |
Total Cash and cash equivalents, Beginning of Period | 2,534 | 3,946 | 3,946 |
Total Cash and cash equivalents and Restricted cash, End of Period | 1,867 | $ 1,822 | $ 2,534 |
Supplemental Cash Flow Information | |||
Right-of-use assets recorded upon adoption of ASC 842 | 421 | ||
Operating lease liability recorded upon adoption of ASC 842 | (429) | ||
Noncash acquisition of right-of-use assets for leases entered into during period | 607 | ||
Noncash acquisition of operating lease liability for leases entered into during the period | $ (594) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Supplemental Cash Flow Information | ||
Income taxes paid | $ 0 | $ 0 |
Cash interest paid | $ 0.7 | $ 0.3 |
Stock issued to third parties in connection with contract termination (in shares) | 48,939,708 | |
Common Stock [Member] | ||
Supplemental Cash Flow Information | ||
Stock issued to third parties for services (in shares) | 125,000 |
Nature of Business and Summary
Nature of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Nature of Business and Summary of Significant Accounting Policies [Abstract] | |
Nature of Business and Summary of Significant Accounting Policies | Note 1 – Nature of Business and Summary of Significant Accounting Policies Nature of the Business Better Choice Company Inc. is a rapidly growing animal health and wellness company committed to leading the industry shift toward pet products and services that help dogs and cats live heathier, happier and longer lives. We sell the majority of our dog food, cat food and treats under the Halo and TruDog brands, which are focused, respectively, on providing sustainably sourced kibble and canned food derived from real whole meat, and minimally processed raw-diet dog food and treats. On May 6, 2019, the Company completed the reverse acquisition of TruPet LLC (“TruPet”) and Bona Vida Inc. (“Bona Vida”) in a pair of all stock transactions (together referred to as the “May Acquisitions”) through the issuance of shares of common stock. Following the completion of the May Acquisitions, the business conducted by the Company became primarily the businesses conducted by TruPet and Bona Vida. As a result, the consolidated financial statements for the year ended December 31, 2019 are comprised of the results of TruPet for the period between January 1, 2019 and December 31, 2019 and the results of Bona Vida beginning May 6, 2019 through December 31, 2019. The Company completed the acquisition of Halo on December 19, 2019 (see “Note 2 – Acquisitions”). Accordingly, Halo’s operations are included in the Company’s consolidated financial statements beginning December 19, 2019 through December 31, 2019. Basis of Presentation These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”). We present our tables in U.S. dollars (thousands) and percentage as rounded up or down. In the notes, we represent U.S. dollars (millions) and percentage as rounded up or down. Consolidation The Company’s interim condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The financial statements are presented on a consolidated basis subsequent to acquisitions and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Going Concern Considerations The Company is subject to risks common in the pet wellness consumer market including, but not limited to, dependence on key personnel, competitive forces, successful marketing and sale of its products, the successful protection of its proprietary technologies, ability to grow into new markets, and compliance with government regulations. In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. Uncertainties regarding the economic impact of COVID-19, the disease caused by the novel coronavirus, are likely to result in sustained market turmoil which could also negatively impact our business, financial condition, and cash flows. The Company has continually incurred losses and has an accumulated deficit. The Company continues to rely on current investors and the public markets to finance these losses through debt and/or equity issuances. These operating losses and the outstanding debt create substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date these interim condensed consolidated financial statements are issued. The Company is implementing plans to achieve cost savings and other strategic objectives to address these conditions. The Company expects cost savings from consolidation of third-party manufacturers, optimizing shipping and warehousing as well as overhead cost reductions. The business is focused on growing the most profitable channels while reducing investments in areas that are not expected to have long-term benefits. The accompanying interim condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and payments of liabilities in the ordinary course of business. Accordingly, the interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of and classification of liabilities that may result should the Company be unable to continue as a going concern. Restricted cash The Company is required to maintain a restricted cash balance of less than $0.1 million and $0.2 million as of March 31, 2020 and December 31, 2019 associated with a business credit card and credit card clearance operations. Allowance for doubtful accounts Accounts receivable primarily consist of unpaid buyer invoices from the Company’s Retail customers and credit card payments receivable from third-party credit card processing companies. Accounts receivable is stated at the amount billed to customers, net of point of sale and cash discounts . Goodwill Goodwill of $18.6 million was recognized as of December 31, 2019 in connection with the Halo Acquisition (see “Note 2 – Acquisitions”). No impairment was recognized as of March 31, 2020 and December 31, 2019. Intangible assets The Company acquired an intangible asset related to the Houndog license with the acquisition of Bona Vida an May 6, 2019. The Company fully impaired the asset as of December 31, 2019 as the Company terminated the contract on January 13, 2020. The Company also acquired intangible assets with the acquisition of Halo on December 19, 2019. There were no indicators of impairment of intangible assets as of March 31, 2020. Leases The Company’s leases relate to our corporate offices and warehouses. Effective January 1, 2019, the Company adopted the FASB guidance on leases (“Topic 842”), which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted Topic 842 using the modified retrospective transition approach. Redeemable convertible preferred stock The Company’s Redeemable Series E Convertible Preferred Stock (the “Series E”) contains redemption provisions that require it to be presented outside of stockholders’ deficit. Changes in the redemption value of the redeemable convertible preferred stock, if any, are recorded immediately in the period occurred as an adjustment to additional paid-in capital in the condensed consolidated balance sheets Income taxes The Company was incorporated on May 6, 2019. Prior to this date, the Company operated as a flow through entity for state and United States federal tax purposes. The Company files a U.S. federal and state income tax return including its wholly owned subsidiaries. As of March 31, 2020 and December 31, 2019, the Company does not have any uncertain income tax positions. Revenue The Company recognizes revenue to depict the transfer of promised goods to the customer in an amount the reflects the consideration to which the Company expects to be entitled in exchange for those goods in accordance with the provisions of ASC 606, “Revenue from Contracts with Customers”. Fair value of financial instruments The warrant derivative liability is remeasured at fair value each reporting period and represents a Level 3 financial instrument. 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. Recently adopted: ASU 2018-13 “Fair Value Measurement” In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This new guidance removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This new guidance was effective for the Company beginning on January 1, 2020 and did not have a material impact on the Company’s condensed consolidated financial statements. ASU 2018-15 “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40)” In August 2018, the FASB issued ASU 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)” to amend ASU 2015-05 in an effort to provide additional guidance on the accounting for costs implementation activities performed in a cloud computing arrangement that is a service contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalizing implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The new standard was effective for the Company on January 1, 2020. The Company has no internal use software. Issued but not Yet Adopted: ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326)” Codification Improvements to Financial Instruments-Credit Losses (Topic 326). Subsequent updates were released in November 2018 (ASU No. 2018-19), November 2019 (ASU No. 2019-10 and 2019-11) and February 2020 (ASU No. 2020-02) that provided additional guidance on this Topic. This ASU introduces the current expected credit loss (CECL) model, which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. The standard is effective for the Company on January 1, 2023, and early adoption is permitted. The Company is currently evaluating the impact the new standard will have on its consolidated financial statements. ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019- 12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. 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 sheets or operations in 2020. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2020 | |
Acquisitions [Abstract] | |
Acquisitions | Note 2 - Acquisitions Acquisition of Halo On October 15, 2019, the Company entered into a Stock Purchase Agreement (the “Agreement”) to acquire Halo and the acquisition (the “Halo Acquisition”) was completed on December 19, 2019 (“Halo Acquisition Date”) for $38.2 million. The consideration was subject to customary adjustments for Halo’s net working capital, cash, and indebtedness, and consisted of a combination of cash consideration ($20.5 million), shares of the Company’s common stock ($3.9 million), seller notes ($15.0 million), and seller warrants ($0.3 million). The Halo Acquisition was accounted for under the purchase method of accounting, and accordingly, the purchase price was allocated to the identifiable assets and liabilities based on their estimated fair values at the Halo Acquisition Date. The determination of the preliminary purchase price allocation to specific assets acquired and liabilities assumed is incomplete for Halo. The preliminary purchase price allocation may change in future periods as the fair value estimates of assets and liabilities and the valuation of the related tax assets and liabilities are completed. The preliminary purchase price allocation is summarized as follows: Dollars in thousands Total Purchase Price $ 38,244 Property and equipment $ 260 Accounts receivable 5,540 Inventories 5,160 Intangible assets 14,690 Other assets 329 Total assets 25,979 Liabilities Accounts payable 4,628 Accrued liabilities 1,553 Long term liability 168 Total liabilities 6,349 Net assets acquired 19,630 Goodwill $ 18,614 The intangible assets acquired relate to customer relationships and trade name. Acquired customer relationships are finite-lived intangible assets and are amortized over their estimated life of 7 years using the straight-line method, which approximates the customer attrition rate, reflecting the pattern of economic benefits associated with these assets. All of Halo’s products and services are sold under the “Halo” trade name, and each major product is identified by this trade name. The trade name is a finite-lived intangible asset and is being amortized over its estimated life of 15 years using the straight-line method, which reflects the pattern of economic benefits associated with this asset. The excess of purchase price over the fair value amounts assigned to the identifiable assets acquired and liabilities assumed represents goodwill from the acquisition. The Company believes the factors that contributed to goodwill include the acquisition of a talented workforce and administrative cost synergies. The Company does not expect any portion of this goodwill to be deductible for tax purposes. See “Note 9 – Intangible assets, royalties and goodwill” for more information. Reverse Acquisitions of Better Choice and Bona Vida by TruPet On May 6, 2019, the Better Choice Company completed the reverse acquisitions of TruPet and Bona Vida whereby TruPet is considered the acquirer for accounting and financial reporting purposes. The acquisitions were accounted for as asset acquisitions. The purchase price for Better Choice Company was $37.9 million and has been allocated based on an estimate of the fair value of Better Choice Company’s assets acquired and liabilities assumed with the remainder recorded as an expense. The loss on acquisition of Better Choice Company’s net liabilities is $39.6 million. The purchase price for Bona Vida was $108.6 million and the estimated purchase price has been allocated based on an estimate of the fair value of assets acquired and liabilities assumed. The excess of the purchase price over the net assets acquired has been recorded as an expense. The loss on acquisition of Bona Vida’s net assets is $107.8 million. On May 6, 2019, the fair value of assets and liabilities acquired was: Dollars in thousands Better Choice Company Bona Vida Total Total Purchase Price $ 37,949 $ 108,620 $ 146,569 Net Assets (Liabilities) Acquired: Assets Cash and cash equivalents 7 384 391 Restricted cash - 25 25 Accounts receivable - 69 69 Inventories - 95 95 Prepaid expenses and other current assets 32 348 380 Intangible assets 986 - 986 Other assets - 74 74 Total Assets 1,025 995 2,020 Liabilities Warrant derivative liability (2,130 ) - (2,130 ) Accounts payable & accrued liabilities (544 ) (153 ) (697 ) Total Liabilities (2,674 ) (153 ) (2,827 ) Net Assets (Liabilities) Acquired (1,649 ) 842 (807 ) Loss on Acquisitions $ (39,598 ) $ (107,778 ) $ (147,376 ) |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Revenue [Abstract] | |
Revenue | Note 3 - Revenue The Company has two categories of revenue channels: retail-partner based (“Retail”), which includes the sale of product to e-commerce retailers, pet specialty chains, grocery, mass and distributors, and direct to consumer, (“DTC”), which is focused on driving consumers to directly purchase product through our online web platform. Shipping costs associated with moving finished products to customers through third party carriers were less than $0.1 million for the three months ended March 31, 2020 and 2019. Such shipping costs are recorded as part of general and administrative expenses. Direct to consumer channel The Company’s DTC products are offered through online stores where customers place orders directly for delivery across the United States. The DTC channel represents 25% and 91% of consolidated revenue of the Company for the three months ended March 31, 2020 and 2019, respectively. The Company excludes sales taxes collected from revenues. Revenue is deferred for orders that have been paid for, but not shipped. Based on historical experience, the Company records an estimated liability for returns. Product returns were less than $0.2 million and less than $0.1 million for the three months ended March 31, 2020 and 2019, respectively The Company’s DTC loyalty program enables customers to accumulate points based on spending. A portion of revenue is deferred at the time of the sale when points are earned and recognized when the loyalty points are redeemed. As of March 31, 2020 and December 31, 2019, customers held unredeemed loyalty program awards of $0.2 million. The Company recognized revenue of less than $0.2 million and $0.1 million from the loyalty program for the three months ended March 31, 2020 and 2019, respectively. The amount included in net sales related to recoveries of shipping costs from customers for direct to consumer sales was $0.1 million and $0.2 million for the three months ended March 31, 2020 and 2019, respectively. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventories [Abstract] | |
Inventories | Note 4 - Inventories Inventories are summarized as follows: Dollars in thousands March 31, 2020 December 31, 2019 Food, treats and supplements $ 4,654 $ 6,425 Inventory packaging and supplies 589 504 Other products and accessories 29 73 5,272 7,002 Inventory reserve (510 ) (422 ) $ 4,762 $ 6,580 |
Prepaid expenses and other curr
Prepaid expenses and other current assets | 3 Months Ended |
Mar. 31, 2020 | |
Prepaid expenses and other current assets [Abstract] | |
Prepaid expenses and other current assets | Note 5 – Prepaid expenses and other current assets On August 28, 2019, the Company entered into a radio advertising agreement with iHeart and issued 1,000,000 shares of common stock valued at $3.4 million for future advertising to be provided to the Company from August 2019 to August 2021. The Company issued an additional 125,000 shares valued at $0.1 million on March 5, 2020, pursuant to the agreement. The agreement requires the Company to spend a minimum amount for talent and other direct iHeart costs. The Company committed to using $1.7 million of the media inventory by August 28, 2020, with the remainder of the advertising available through August 28, 2021. Prepaid advertising was $3.0 million as of March 31, 2020 and $2.8 million as of December 31, 2019, respectively, with no expense incurred during the three months ended March 31, 2020. Of this amount, $2.2 million and $1.7 million is recorded in prepaid expenses and other current assets and $0.8 million and $1.1 million in other noncurrent assets as of March 31, 2020 and December 31, 2019, respectively. |
Property and equipment
Property and equipment | 3 Months Ended |
Mar. 31, 2020 | |
Property and equipment [Abstract] | |
Property and equipment | Note 6 - Property and equipment Property and equipment consist of the following: Dollars in thousands March 31, 2020 December 31, 2019 Equipment $ 226 $ 222 Furniture and fixtures 163 138 Computer software 115 115 Computer equipment 5 4 Total property and equipment 509 479 Accumulated depreciation (160 ) (62 ) Net property and equipment $ 349 $ 417 Depreciation expense was less than $0.1 million for the three months ended March 31, 2020 and 2019, respectively. Depreciation expense is included as a component of general and administrative expenses. |
Accrued liabilities
Accrued liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Accrued liabilities [Abstract] | |
Accrued liabilities | Note 7 – Accrued liabilities Accrued liabilities consist of the following: Dollars in thousands March 31, 2020 December 31, 2019 Accrued professional fees $ 2,118 $ 2,018 Accrued sales tax 1,056 1,233 Accrued payroll and benefits 686 671 Accrued trade promotions 166 357 Accrued dividends 290 256 Accrued interest 249 109 Other 5 77 Total accrued liabilities $ 4,570 $ 4,721 Pursuant to waiver letters executed by each investor, |
Operating leases
Operating leases | 3 Months Ended |
Mar. 31, 2020 | |
Operating leases [Abstract] | |
Operating leases | Note 8 – Operating leases The table below presents certain information related to the lease costs for operating leases for the three months ended March 31, 2020 and 2019: Dollars in thousands March 31, 2020 March 31, 2019 Operating lease costs $ 109 44 Variable lease costs 8 8 Total operating lease costs $ 117 52 As of March 31, 2020, the weighted-average remaining operating lease term was 2.3 years and the incremental borrowing rate was 12.5% for operating leases recognized on our condensed consolidated balance sheets. Short term lease costs, excluding expenses relating to leases with a lease term of one month or less, were less than $0.1 million for the Undiscounted cash flows The table below reconciles the undiscounted cash flows for each of the first four years and total of the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheets. Operating Leases Remainder of 2020 $ 344 2021 459 2022 240 2023 5 Total minimum lease payments $ 1,048 Less: amount of lease payments representing interest 130 Present value of future minimum lease payments $ 918 Less: current obligations under leases 352 Long-term lease obligations $ 566 |
Intangible assets, royalties an
Intangible assets, royalties and goodwill | 3 Months Ended |
Mar. 31, 2020 | |
Intangible assets, royalties and goodwill [Abstract] | |
Intangible assets, royalties and goodwill | Note 9 – Intangible assets, royalties and goodwill Intangible assets and royalties The Company’s intangible assets as of March 31, 2020 and December 31, 2019 consist of customer relationships and trade name acquired in the Halo Acquisition. The customer relationships and trade name are amortized over their estimated useful lives of 7 and 15 years respectively, using the straight-line method. In May 2019, the Company acquired a licensing agreement with Authentic Brands and Elvis Presley Enterprises (“ABG”) whereby Better Choice was to sell newly developed hemp-derived CBD products that will be marketed under the Elvis Presley Houndog name. The license agreement required an upfront equity payment of $1.0 million worth of common stock and the license was recorded at its amortized cost which approximated fair value. The Company does not plan to use the license in the future and therefore terminated the agreement on January 13, 2020. The Company recognized an impairment charge for the net book value of the licensing agreement as of and for the year ended December 31, 2019. As part of the termination, the Company: (1) paid ABG $0.1 million in cash upon the signing of the termination agreement on January 13, 2020, (2) issued ABG 72,720 shares of the Company’s common stock on January 13, 2020, (3) agreed to pay ABG $0.1 million in cash in four equal installments each month from July 31, 2020 through October 31, 2020, (4) issued ABG $0.6 million aggregate principal amount of Subordinated Promissory Notes (the “ABG Notes”) effective January 20, 2020, and (5) issued ABG a common stock purchase warrant (the “ABG Warrants”) equal to a fair value of $150,000 on January 20, 2020. The terms of the ABG Notes match those of the Seller Notes, including convertible features exercisable any time after the date of issuance, a 10% interest rate and maturity date of June 30, 2023. The ABG Warrants are exercisable for 24 months from the date of the consummation of an IPO (as defined in the ABG Warrants) at an exercise price equal to the greater of (i) $5.00 per share or (ii) the price at which the common stock was sold in the IPO. The fair values of the ABG Notes and ABG Warrants on their issuance dates were $0.6 million and less than $0.1 million, respectively. The total cost of the contract termination noted above is measured at fair value of $1.1 million and is included in general and administrative expense. The Company’s intangible assets are as follows: Dollars in thousands March 31, 2020 Weighted-Average Remaining Useful Lives (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships 7 $ 7,500 $ (306 ) $ 7,194 Trade name 15 7,190 (125 ) 7,065 Total intangible assets $ 14,690 $ (431 ) $ 14,259 December 31, 2019 Weighted-Average Remaining Useful Lives (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships 7 $ 7,500 $ (35 ) $ 7,465 Trade name 15 7,190 (14 ) 7,176 Total intangible assets $ 14,690 $ (49 ) $ 14,641 The Company did not have intangible assets or amortization expense during the three months ended March 31, 2019. The estimated future amortization of intangible assets over the weighted average remaining useful life of 10 years is as follows: Dollars in thousands Years ended December 31, Remainder of 2020 $ 1,169 2021 1,551 2022 1,551 2023 1,551 2024 1,551 Thereafter 6,886 $ 14,259 |
Line of credit, short term loan
Line of credit, short term loan and notes payable | 3 Months Ended |
Mar. 31, 2020 | |
Line of credit, short term loan and notes payable [Abstract] | |
Line of credit, short term loan and notes payable | Note 10 - Line of credit, short term loan and notes payable The components of the Company’s debt consist of the following: March 31, 2020 December 31, 2019 Amount Rate Maturity Date Amount Rate Maturity Date Short term loan, net $ 17,023 (1 ) 12/19/2020 $ 16,061 (1 ) 12/19/2020 Line of credit, net 5,366 (1 ) 12/19/2020 4,819 (1 ) 12/19/2020 November 2019 notes payable, net (November 2019 Notes) 2,839 10 % 11/4/2021 2,769 10 % 11/4/2021 December 2019 senior notes payable, net (Seller Notes) 9,494 10 % 6/30/2023 9,191 10 % 6/30/2023 December 2019 junior notes payable, net (Seller Notes) 4,565 10 % 6/30/2023 4,410 10 % 6/30/2023 ABG Notes 661 10 % 6/30/2023 - - - Total debt $ 39,948 $ 37,250 (1) Short term loan and line of credit On the Halo Acquisition Date, the Company entered into a Loan Facilities Agreement (the “Facilities Agreement”) by and among the Company, as the borrower, the several lenders from time to time parties thereto (collectively, the “Lenders”) and a private debt lender, as agent (the “Agent”). The Facilities Agreement provides for (i) a term loan facility of $20.5 million and (ii) a revolving demand loan facility not to exceed $7.5 million. As of March 31, 2020 and December 31, 2019, the term loan outstanding was $20.5 million net of debt issuance costs and discounts of $3.5 million and $4.4 million, respectively, and the line of credit outstanding was $5.5 million and $5.0 million, respectively, net of debt issuance costs of $0.1 million and $0.2 million, respectively. The debt issuance costs and discounts are amortized using the effective interest method. Certain directors and shareholders of the Company (“Shareholder Guarantors”) agreed to enter into a Continuing Guaranty (the “Shareholder Guaranties”) in the amount of $20.0 million and guarantee the Company’s obligations under the agreement. As consideration for the Shareholder Guaranties, the Company agreed to issue common stock purchase warrants to the Shareholder Guarantors in an amount equal to 0.325 warrants for each dollar of debt under the agreement guaranteed by such Shareholder Guarantors (the “Guarantor Warrants”). The Guarantor Warrants are exercisable any time from the date of issuance for up to 24 months from the date of the consummation of an IPO (as defined therein) at an exercise price $1.82 per share. The Guarantor Warrants have a fair value of $4.2 million on the date of issuance. As of March 31, 2020 and December 31, 2019, the Company was in compliance with its debt covenants. Notes payable On November 4, 2019, the Company issued $2.8 million of subordinated convertible notes (the “November 2019 Notes”) which carry a 10% interest and mature on November 4, 2021. The interest is payable in arrears on March 31, June 30, September 30 and December 31 of each year. The November 2019 Notes were amended on January 6, 2020. The amendment incorporates only the preferable terms of the Seller Notes as noted below, and all other terms and provisions of the November 2019 Note remains in full force and effect. Pursuant to the amended November 2019 Notes, PIK interest shall be payable by increasing the aggregate principal amount of the November 2019 Notes. As amended, for so long as any event of default (as defined in the November 2019 Note) exists, interest shall accrue on the November 2019 Note principal at the default interest rate of 12.0% per annum, and such accrued interest shall be immediately due and payable. As of March 31, 2020 and December 31, 2019, the aggregate amount of November 2019 Notes outstanding was $2.8 million, respectively, net of discounts of less than $0.1 million, respectively. The discounts are amortized over the life of the November 2019 Notes using the effective interest method. On December 19, 2019, the Company issued $10.0 million and $5.0 million in senior subordinated convertible notes (the “Senior Seller Notes”) and junior subordinated convertible notes (the “Junior Seller Notes”), jointly the “Seller Notes” to the sellers of Halo. On January 13, 2020, the Company issued $0.6 million in senior subordinated convertible notes to ABG. The ABG Notes are exercisable any time from the date of issuance and carry a 10% interest rate and mature on June 30, 2023. The interest is payable in arrears on March 31, June 30, September 30 and December 31 of each year. PIK interest is payable by increasing the aggregate principal amount of the ABG Notes. The ABG Notes carry a conversion price of the lower of (a) $4.00 per share or (b) the IPO Price. As of March 31, 2020, the ABG Notes outstanding was $0.7 million, including a debt premium of less than $0.1 million. The debt premium is being amortized over the life of the ABG Notes using the effective interest method. The fair values of the November 2019, Senior Seller Notes and Junior Seller Notes and ABG Notes are based on observable inputs, including quoted market prices (Level 2). The fair values of the November 2019, Senior Seller Notes and Junior Seller Notes and ABG Notes were approximately $2.8 million, $9.5 million $4.6 million and $0.7 million, respectively, as of March 31, 2020. The remaining borrowings outstanding have a carrying value that approximates fair value due to their short term nature. As of March 31, 2020 and December 31, 2019, the Company was in compliance with all covenant requirements and there were no events of default. All notes payable are subordinated to the short term loan and line of credit. |
Warrant derivative liability
Warrant derivative liability | 3 Months Ended |
Mar. 31, 2020 | |
Warrant derivative liability [Abstract] | |
Warrant derivative liability | Note 11 – 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. The December Offering generated $2.6 million of net proceeds that were received by the Company during the year ended December 31, 2018 for the sale of 1,400,000 Units, and $0.1 million of the net proceeds were received on January 8, 2019 for the sale of 25,641 Units. The warrants are exercisable anytime from the date of issuance over a two-year period at the initial exercise price of $3.90 per share. The warrants include an option to settle in cash in the event of a change of control of the Company and a reset feature if the Company issues shares of common stock with a strike price below $3.90 per share, which requires the Company to record the warrants as a derivative liability. The Company calculates the fair value of the derivative liability through a Monte Carlo Model that values the warrants based upon a probability weighted discounted cash flow model. During January 2020, the Company issued shares below the exercise price of warrants acquired on May 6, 2019. Pursuant to the warrant agreement, the Company issued an additional 1,003,232 warrants on March 17, 2020 to certain of its warrant holders at an exercise price of $1.62 and modified the exercise price of the existing warrants to $1.62. The warrants are valued based on future assumptions and, as the reset trigger was a known event on December 31, 2019, the Company included the trigger in the valuation performed during the period ended December 31, 2019. The following schedule shows the change in fair value of the warrant derivative liability as of March 31, 2020 and December 31, 2019: Dollars in thousands Warrant derivative liability Balance as of December 31, 2019 $ 2,220 Change in fair value of derivative liability (1,379 ) Balance as of March 31, 2020 $ 841 May 6, 2019 December 31, 2019 March 31, 2020 Warrant derivative liability Stock price $ 6.00 $ 2.70 $ 1.15 Exercise price $ 3.90 $ 1.62 $ 1.62 Expected remaining term (in years) 1.60 - 1.68 0.95 - 1.02 0.722 Volatility 64 % 69 % 95 % Risk-free interest rate 2.39 % 1.60 % 0.16 % The valuation of the warrants is subject to uncertainty as a result of the unobservable inputs. If the volatility rate or risk-free interest rate were to change, the value of the warrants would be impacted. |
Other liabilities
Other liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Other liabilities [Abstract] | |
Other liabilities | Note 12 – Other liabilities As of March 31, 2020 and December 31, 2019, other liabilities consisted of $0.2 million related to a reserve for a potential customer dispute settlement and $0.5 million as a prepayment for the issuance of common stock. |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and contingencies [Abstract] | |
Commitments and contingencies | Note 13 – Commitments and contingencies In the normal course of business, the Company may be subject to various legal claims and contingencies that arise, including claims related to commercial transactions, product liability, health and safety, taxes, environmental matters, employee matters and other matters. Litigation is subject to numerous uncertainties and the outcome of individual claims and contingencies is not predictable. It is possible that some legal matters for which reserves have or have not been established could result in an unfavorable outcome for the Company and any such unfavorable outcome could be of a material nature or have a material adverse effect on our consolidated financial condition, results of operations and cash flows. Management is not aware of any claims or lawsuits that may have a material adverse effect on the consolidated financial position or results of operations of the Company. The Company had no purchase obligations as of March 31, 2020 and December 31, 2019. |
Stockholders' deficit
Stockholders' deficit | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' deficit [Abstract] | |
Stockholders' deficit | Note 14 - Stockholders’ deficit As a result of the reverse acquisition of Better Choice Company and Bona Vida by TruPet in May 2019, the historical TruPet members’ equity (units and incentive units) have been re-cast to reflect the equivalent Better Choice common stock for all periods presented after the transaction. Prior to the transaction in May 2019, TruPet was a limited liability company and as such, the concept of authorized shares was not relevant. A summary of equity transactions for the three months ended March 31, 2020 and 2019 is set forth below: On February 12, 2019, the Company issued 69,115 Series A Preferred Units in a private placement at $2.17 per unit. The proceeds were approximately $0.2 million, net of share issuance costs. On January 2, 2020, the Company issued 308,642 shares of common stock to an investor for net proceeds of $0.5 million, net of issuance costs of less than $0.1 million. On January 13, 2020, the Company issued 72,720 shares of common stock to ABG in connection with the termination of a licensing agreement discussed in “Note 9 – Intangible assets, royalties and goodwill”. On March 5, 2020, the Company issued 125,000 shares of common stock for advertising services. On March 30, 2020, the Company issued 5,956 restricted shares of common stock to an officer of the Company. The Company has reserved common stock for future issuance as follows: March 31, 2020 December 31, 2019 Conversion of Series E 1,760,903 1,760,903 Exercise of options to purchase common stock 7,891,833 7,791,833 Warrants to purchase common stock 18,046,310 16,981,854 Notes payable 4,722,795 4,437,500 Total 32,421,841 30,972,090 Warrants On May 6, 2019, in connection with the May Acquisitions, the Company acquired 712,823 warrants to purchase common stock with a weighted average exercise price of $3.90. The Company also issued 5,744,991 warrants with an exercise price of $4.25 on May 6, 2019 as part of the PIPE. Additionally, in connection with the PIPE transaction, the Company issued 220,539 warrants to brokers with an exercise price of $3.00. The warrants are exercisable on the date of issuance and expire 24 months from the date of the consummation of a future IPO. On September 17, 2019, a Company advisor was issued 2,500,000 warrants with an exercise price of $0.10 and 1,500,000 warrants with an exercise price of $10.00. The warrants are exercisable as follows: 1,250,000 of the warrants with the $0.10 exercise price are exercisable on the earlier of the twelve-month anniversary of the issuance date or immediately prior to a change in control subject to the advisor’s continued service to the Company; the remaining 1,250,000 of the warrants with the $0.10 exercise price and the 1,500,000 warrants with the $10.00 exercise price are exercisable on the earlier of the eighteen- month anniversary of the issuance date or immediately prior to a change in control subject to the advisor’s continued service to the Company. On November 4, 2019, the Company issued 11,000 warrants in connection with the November 2019 Notes. The warrants are exercisable on the date of issuance and expire 24 months from the date of the consummation of a future initial public offering (“IPO”) at an exercise price equal to the greater of (i) $5.00 per share or (ii) the price at which the common stock of the Company was sold in the IPO. On December 19, 2019, the Company issued 937,500 Seller Warrants in connection with the Seller Notes. The warrants are exercisable on the date of issuance and expire 24 months from the date of the consummation of a future initial public offering (“IPO”) at an exercise price equal to the greater of (i) $5.00 per share or (ii) the price at which the common stock of the Company was sold in the IPO. On December 19, 2019 the Company issued 6,500,000 warrants with an exercise price of $1.82 in conjunction with the short term loan (Guarantor Warrants). The warrants are exercisable on the date of issuance and expire 24 months from the date of the consummation of a future IPO. Warrants Weighted Average Exercise Price Warrants outstanding at December 31, 2019 16,981,854 $ 3.23 Issued 1,064,456 1.81 Exercised - - Warrants outstanding at March 31, 2020 18,046,310 $ 3.05 |
Share-based compensation
Share-based compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based compensation [Abstract] | |
Share-based compensation | Note 15 - Share-based compensation The Company recognizes compensation cost for stock awards with only service conditions that have a graded vesting schedule on a straight-line basis over the service period for each separate vesting portion of the award as if the award was, in-substance, multiple awards. During the three months ended March 31, 2020 and 2019, respectively, $2.5 million and $0.2 million of share-based compensation expense was recognized. The Company acquired the Better Choice Company Inc. 2019 Incentive Award Plan (the “2019 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”). On November 11, 2019, the Company received shareholder approval for the Amended and Restated 2019 Incentive Award Plan (the “Amended 2019 Plan”). Under the Amended 2019 Plan, the number of option awards available for issuance increased from 6,000,000 to 9,000,000 on December 19, 2019. |
Employee benefit plans
Employee benefit plans | 3 Months Ended |
Mar. 31, 2020 | |
Employee benefit plans [Abstract] | |
Employee benefit plans | Note 16 - Employee benefit plans The Company made contributions to its qualified defined contribution 401(k) plan and recognized expense of less than $0.1 million during the three months ended March 31, 2020 and March 31, 2019, respectively. |
Related party transactions
Related party transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related party transactions [Abstract] | |
Related party transactions | Note 17 - Related party transactions Marketing services A company controlled by a member of the board of directors provides online traffic acquisition marketing services for the Company. The Company incurred immaterial amounts for their services during the three months ended March 31, 2020 and 2019, respectively. The service contract has a 30-day termination clause. Outstanding balances were less than $0.1 million as of March 31, 2020 and December 31, 2019. The outstanding balance is included in accounts payable. Notes payable The Company issued $1.4 million of subordinated convertible notes to a member of the board of directors during December 2019. The note remains outstanding as of March 31, 2020. Interest related to the subordinated convertible notes was less than $0.1 million for the three months ended March 31, 2020. Halo transaction bonus and notes payable The Company issued $0.1 million of subordinated convertible notes to an executive in satisfaction of a transaction bonus as per his employment agreement upon the close of the Halo Acquisition in December 2019. These convertible notes are outstanding as of March 31, 2020. |
Income taxes
Income taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income taxes [Abstract] | |
Income taxes | Note 18 - Income taxes For the three months ended March 31, 2020 the Company recorded no current or deferred income tax expense. The Company’s effective tax rate of 0% differs from the United States federal statutory rate of 21% primarily because the Company’s losses have been fully offset by a valuation allowance due to uncertainty of realizing the tax benefit of net operating losses (“NOLs”) for the three months ended March 31, 2020 and year ended December 31, 2019. The Company’s deferred tax assets attributed to net operating loss carryforwards begin to expire in 2027. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company continues to examine the impact that the CARES Act may have on its business but does not expect the impact to be material. The ultimate realization of deferred taxes is dependent upon the generation of future taxable income during the periods in which those temporary differenced become deductible. On the basis of management’s assessment, a valuation allowance equal to the net deferred tax assets was recorded since it is more likely than not that the deferred tax assets will not be realized. The Company has no accrued interest and penalties related to uncertain income tax positions. We do not anticipate that the amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months. As of March 31, 2020 and December 31, 2019, the Company does not have any significant uncertain tax positions. If incurred, the Company would classify interest and penalties on uncertain tax positions as income tax expense. The Company’s income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction. For the three months ended March 31, 2019, the Company was a Limited Liability Company, taxed as a partnership. Thus, all of the Company’s income and losses flowed through to the owners. The company converted to a C-Corporation, subject to income tax on May 6, 2019, the date of the May Acquisitions. |
Major suppliers
Major suppliers | 3 Months Ended |
Mar. 31, 2020 | |
Major suppliers [Abstract] | |
Major suppliers | Note 19 - Major suppliers The Company sourced approximately 48% of its inventory purchases from two vendors for the three months ended March 31, 2020. The Company sourced approximately 69% of its inventory purchases from one vendor for the three months ended March 31, 2019. |
Concentration of credit risk an
Concentration of credit risk and off-balance sheet risk | 3 Months Ended |
Mar. 31, 2020 | |
Concentration of credit risk and off-balance sheet risk [Abstract] | |
Concentration of credit risk and off-balance sheet risk | Note 20 - Concentration of credit risk and off-balance sheet risk Cash and cash equivalents and accounts receivable potentially subject the Company to concentrations of credit risk. At March 31, 2020 and December 31, 2019 the Company’s cash and cash equivalents were deposited in accounts at several financial institutions. The Company maintains its cash and cash equivalents with high-quality, accredited financial institutions and, accordingly, such funds are subject to minimal credit risk. The Company may maintain balances with financial institutions in excess of federally insured limits. The Company has not experienced any losses historically in these accounts and believes it is not exposed to significant credit risk in its cash and cash equivalents. The Company has no significant off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts, or other hedging arrangements. Accounts receivable from two customers represented 79% of accounts receivable as of March 31, 2020. Accounts receivable from one customer represented 44% of accounts receivable at December 31, 2019. Four customers represented 70% of gross sales at March 31, 2020. None of the Company’s customers represented over 10% of gross sales for the three months ended March 31, 2019. |
Net loss per share
Net loss per share | 3 Months Ended |
Mar. 31, 2020 | |
Net loss per share [Abstract] | |
Net loss per share | Note 21 - 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 been recognized are collectively assumed to be used to repurchase shares. Basic and diluted net loss per share is calculated by dividing net and comprehensive loss attributable to common stockholders by the weighted-average shares outstanding during the period. For the three months ended March 31 2020 and 2019, the Company’s basic and diluted net and comprehensive 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 months ended March 31, 2020 and 2019: Dollars in thousands except per share amounts Three Months Ended March 31, 2020 2019 Common stockholders Numerator: Net and comprehensive loss $ (9,579 ) $ (2,776 ) Less: Preferred stock dividends 34 - Net and comprehensive loss available to common stockholders $ (9,613 ) $ (2,776 ) Denominator: Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted 48,526,396 11,674,127 Net loss per share attributable to common stockholders, basic and diluted $ (0.20 ) $ (0.24 ) |
Subsequent events
Subsequent events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent events [Abstract] | |
Subsequent events | Note 22 - Subsequent events COVID-19 and PPP Loan The extent of COVID-19’s effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the outbreak, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. As a result, it is not currently possible to ascertain the overall impact of COVID-19 on our business. However, if the pandemic continues to evolve into a severe worldwide health crisis, the disease could have a material adverse effect on our business, results of operations, financial condition and cash flows and adversely impact the trading price of our common stock. Uncertainties regarding the economic impact of COVID-19 is likely to result in sustained market turmoil, which could also negatively impact our business, financial condition and cash flows. On April 10, 2020, TruPet, LLC, a wholly owned subsidiary of Better Choice Company Inc., was granted a loan from JPMorgan Chase Bank, N.A. in the aggregate amount of $0.4 million, pursuant to the Paycheck Protection Program (PPP) under Division A, Title I of the CARES Act. The loan, matures on April 6, 2022, and bears interest at a rate of 0.98% per annum, payable monthly commencing on November 6, 2020. On May 7, 2020, Halo, Purely for Pets, Inc., a wholly owned subsidiary of Better Choice Company Inc., was granted a loan from JPMorgan Chase Bank, N.A. in the aggregate amount of $0.4 million, pursuant to the PPP. The loan matures on May 6, 2022, and bears interest at a rate of 1.00% per annum, payable monthly commencing on November 7, 2020. The Company intends to use the entire loan amounts for qualifying expenses. Under the terms of the PPP, certain amounts of the loans may be forgiven if they are used for qualifying expenses as described in the CARES Act. Contract Termination On June 1, 2020, the Company entered into a termination agreement (the “Termination Agreement”) with an independent contractor who had previously been advising the Company in a consultant capacity. The termination agreement provided for the following, (i) the share purchase warrants dated September 17, 2019 entitling the former advisor to purchase 1,250,000 shares of common stock of the Company, at a price of $0.10 per share (the “Tranche 1 Warrants”) was amended to reduce the number of shares of common stock purchasable thereunder to 1,041,666 shares; (ii) the second share purchase warrants dated September 17, 2019 entitling the former advisor to purchase 1,250,000 shares of common stock at a price of $0.10 per share were terminated and (iii) the share purchase warrants dated September 17, 2019 entitling the former advisor to purchase 1,500,000 shares of common stock at a price of $10.00 per share were terminated. The Tranche 1 Warrants (as amended pursuant to the Termination Agreement) are fully vested as of the date of the termination of the agreement and will remain exercisable until September 17, 2029 and may be exercised pursuant to the cashless exercise provisions thereof. Furthermore, if the Company engages in any restricted business line as defined in the termination agreement, the Company will issue to the former advisor additional shares of common stock based on formulas intended to compensate the former advisor for the warrants that were reduced or terminated. Convertible notes On June 24, 2020, the Company issued $1.5 million in subordinated convertible promissory notes (the “June 2020 Notes”). The June 2020 Notes are convertible into the Company’s common stock at the election of the holders thereof at any time from the date of issuance. The June 2020 Notes are also convertible automatically upon the Company’s consummation of an initial public offering or change in control (each as defined in the June 2020 Notes). The June 2020 Notes are convertible at conversion price of $0.75 per share. The June 2020 Notes carry a 10% PIK interest rate which is payable in arrears on March 31, June 30, September 30 and December 31 of each year. PIK interest is payable by increasing the aggregate principal amount of the June 2020 Notes. The June 2020 Notes mature on June 30, 2023. The proceeds of the June 2020 Notes will be used for general working capital needs. The June 2020 Notes will rank on par with the Seller Notes and the ABG Notes. In connection with the issuance of the June 2020 Notes, the Company also issued common stock purchase warrants (the “June 2020 Warrants”) to purchase up to 2,000,000 shares of the Company’s common stock at a price equal to $1.25 per share. The June 2020 Warrants are exercisable on the date of issuance and expire on the earlier of (i) 84 months from the date of the consummation of an underwritten public offering or other uplist transaction or (ii) June 30, 2030. In addition, on June 24, 2020, in connection with the issuance of the June 2020 Notes, (i) the November 2019 Notes, the Seller Notes and the ABG Notes were amended to lower the maximum conversion price applicable to the conversion of these notes from $4.00 per share to $3.75 per share, (ii) the maturity date of the November 2019 Notes was extended from November 4, 2021 to June 30, 2023, and (iii) the common stock purchase warrants to purchase 1,009,724 shares of the Company’s common stock that were issued in connection with the November 2019 Notes, the Seller Notes and the ABG Notes were amended to lower the maximum exercise price applicable to these warrants from $5.00 per share to $4.25 per share. |
Nature of Business and Summar_2
Nature of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Nature of Business and Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”). We present our tables in U.S. dollars (thousands) and percentage as rounded up or down. In the notes, we represent U.S. dollars (millions) and percentage as rounded up or down. Consolidation The Company’s interim condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The financial statements are presented on a consolidated basis subsequent to acquisitions and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
Going Concern Considerations | Going Concern Considerations The Company is subject to risks common in the pet wellness consumer market including, but not limited to, dependence on key personnel, competitive forces, successful marketing and sale of its products, the successful protection of its proprietary technologies, ability to grow into new markets, and compliance with government regulations. In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. Uncertainties regarding the economic impact of COVID-19, the disease caused by the novel coronavirus, are likely to result in sustained market turmoil which could also negatively impact our business, financial condition, and cash flows. The Company has continually incurred losses and has an accumulated deficit. The Company continues to rely on current investors and the public markets to finance these losses through debt and/or equity issuances. These operating losses and the outstanding debt create substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date these interim condensed consolidated financial statements are issued. The Company is implementing plans to achieve cost savings and other strategic objectives to address these conditions. The Company expects cost savings from consolidation of third-party manufacturers, optimizing shipping and warehousing as well as overhead cost reductions. The business is focused on growing the most profitable channels while reducing investments in areas that are not expected to have long-term benefits. The accompanying interim condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and payments of liabilities in the ordinary course of business. Accordingly, the interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of and classification of liabilities that may result should the Company be unable to continue as a going concern. |
Restricted cash | Restricted cash The Company is required to maintain a restricted cash balance of less than $0.1 million and $0.2 million as of March 31, 2020 and December 31, 2019 associated with a business credit card and credit card clearance operations. |
Allowance for doubtful accounts | Allowance for doubtful accounts Accounts receivable primarily consist of unpaid buyer invoices from the Company’s Retail customers and credit card payments receivable from third-party credit card processing companies. Accounts receivable is stated at the amount billed to customers, net of point of sale and cash discounts . |
Goodwill | Goodwill Goodwill of $18.6 million was recognized as of December 31, 2019 in connection with the Halo Acquisition (see “Note 2 – Acquisitions”). No impairment was recognized as of March 31, 2020 and December 31, 2019. |
Intangible assets | Intangible assets The Company acquired an intangible asset related to the Houndog license with the acquisition of Bona Vida an May 6, 2019. The Company fully impaired the asset as of December 31, 2019 as the Company terminated the contract on January 13, 2020. The Company also acquired intangible assets with the acquisition of Halo on December 19, 2019. There were no indicators of impairment of intangible assets as of March 31, 2020. |
Leases | Leases The Company’s leases relate to our corporate offices and warehouses. Effective January 1, 2019, the Company adopted the FASB guidance on leases (“Topic 842”), which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted Topic 842 using the modified retrospective transition approach. |
Redeemable convertible preferred stock | Redeemable convertible preferred stock The Company’s Redeemable Series E Convertible Preferred Stock (the “Series E”) contains redemption provisions that require it to be presented outside of stockholders’ deficit. Changes in the redemption value of the redeemable convertible preferred stock, if any, are recorded immediately in the period occurred as an adjustment to additional paid-in capital in the condensed consolidated balance sheets |
Income taxes | Income taxes The Company was incorporated on May 6, 2019. Prior to this date, the Company operated as a flow through entity for state and United States federal tax purposes. The Company files a U.S. federal and state income tax return including its wholly owned subsidiaries. As of March 31, 2020 and December 31, 2019, the Company does not have any uncertain income tax positions. |
Revenue | Revenue The Company recognizes revenue to depict the transfer of promised goods to the customer in an amount the reflects the consideration to which the Company expects to be entitled in exchange for those goods in accordance with the provisions of ASC 606, “Revenue from Contracts with Customers”. |
Fair value of financial instruments | Fair value of financial instruments The warrant derivative liability is remeasured at fair value each reporting period and represents a Level 3 financial instrument. |
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. Recently adopted: ASU 2018-13 “Fair Value Measurement” In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This new guidance removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This new guidance was effective for the Company beginning on January 1, 2020 and did not have a material impact on the Company’s condensed consolidated financial statements. ASU 2018-15 “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40)” In August 2018, the FASB issued ASU 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)” to amend ASU 2015-05 in an effort to provide additional guidance on the accounting for costs implementation activities performed in a cloud computing arrangement that is a service contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalizing implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The new standard was effective for the Company on January 1, 2020. The Company has no internal use software. Issued but not Yet Adopted: ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326)” Codification Improvements to Financial Instruments-Credit Losses (Topic 326). Subsequent updates were released in November 2018 (ASU No. 2018-19), November 2019 (ASU No. 2019-10 and 2019-11) and February 2020 (ASU No. 2020-02) that provided additional guidance on this Topic. This ASU introduces the current expected credit loss (CECL) model, which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. The standard is effective for the Company on January 1, 2023, and early adoption is permitted. The Company is currently evaluating the impact the new standard will have on its consolidated financial statements. ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019- 12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. 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 sheets or operations in 2020. |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Halo Acquisition [Member] | |
Acquisitions [Abstract] | |
Assets and Liabilities Acquired | The preliminary purchase price allocation is summarized as follows: Dollars in thousands Total Purchase Price $ 38,244 Property and equipment $ 260 Accounts receivable 5,540 Inventories 5,160 Intangible assets 14,690 Other assets 329 Total assets 25,979 Liabilities Accounts payable 4,628 Accrued liabilities 1,553 Long term liability 168 Total liabilities 6,349 Net assets acquired 19,630 Goodwill $ 18,614 |
TruPet, LLC [Member] | |
Acquisitions [Abstract] | |
Assets and Liabilities Acquired | On May 6, 2019, the fair value of assets and liabilities acquired was: Dollars in thousands Better Choice Company Bona Vida Total Total Purchase Price $ 37,949 $ 108,620 $ 146,569 Net Assets (Liabilities) Acquired: Assets Cash and cash equivalents 7 384 391 Restricted cash - 25 25 Accounts receivable - 69 69 Inventories - 95 95 Prepaid expenses and other current assets 32 348 380 Intangible assets 986 - 986 Other assets - 74 74 Total Assets 1,025 995 2,020 Liabilities Warrant derivative liability (2,130 ) - (2,130 ) Accounts payable & accrued liabilities (544 ) (153 ) (697 ) Total Liabilities (2,674 ) (153 ) (2,827 ) Net Assets (Liabilities) Acquired (1,649 ) 842 (807 ) Loss on Acquisitions $ (39,598 ) $ (107,778 ) $ (147,376 ) |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventories [Abstract] | |
Inventories | Inventories are summarized as follows: Dollars in thousands March 31, 2020 December 31, 2019 Food, treats and supplements $ 4,654 $ 6,425 Inventory packaging and supplies 589 504 Other products and accessories 29 73 5,272 7,002 Inventory reserve (510 ) (422 ) $ 4,762 $ 6,580 |
Property and equipment (Tables)
Property and equipment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property and equipment [Abstract] | |
Property and Equipment | Property and equipment consist of the following: Dollars in thousands March 31, 2020 December 31, 2019 Equipment $ 226 $ 222 Furniture and fixtures 163 138 Computer software 115 115 Computer equipment 5 4 Total property and equipment 509 479 Accumulated depreciation (160 ) (62 ) Net property and equipment $ 349 $ 417 |
Accrued liabilities (Tables)
Accrued liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accrued liabilities [Abstract] | |
Accrued Liabilities | Accrued liabilities consist of the following: Dollars in thousands March 31, 2020 December 31, 2019 Accrued professional fees $ 2,118 $ 2,018 Accrued sales tax 1,056 1,233 Accrued payroll and benefits 686 671 Accrued trade promotions 166 357 Accrued dividends 290 256 Accrued interest 249 109 Other 5 77 Total accrued liabilities $ 4,570 $ 4,721 |
Operating leases (Tables)
Operating leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Operating leases [Abstract] | |
Certain Information Related to Lease Costs for Operating Leases | The table below presents certain information related to the lease costs for operating leases for the three months ended March 31, 2020 and 2019: Dollars in thousands March 31, 2020 March 31, 2019 Operating lease costs $ 109 44 Variable lease costs 8 8 Total operating lease costs $ 117 52 |
Maturity of Lease Liabilities | The table below reconciles the undiscounted cash flows for each of the first four years and total of the remaining years to the operating lease liabilities recorded on the condensed consolidated balance sheets. Operating Leases Remainder of 2020 $ 344 2021 459 2022 240 2023 5 Total minimum lease payments $ 1,048 Less: amount of lease payments representing interest 130 Present value of future minimum lease payments $ 918 Less: current obligations under leases 352 Long-term lease obligations $ 566 |
Intangible assets, royalties _2
Intangible assets, royalties and goodwill (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Intangible assets, royalties and goodwill [Abstract] | |
Intangible Assets | The Company’s intangible assets are as follows: Dollars in thousands March 31, 2020 Weighted-Average Remaining Useful Lives (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships 7 $ 7,500 $ (306 ) $ 7,194 Trade name 15 7,190 (125 ) 7,065 Total intangible assets $ 14,690 $ (431 ) $ 14,259 December 31, 2019 Weighted-Average Remaining Useful Lives (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships 7 $ 7,500 $ (35 ) $ 7,465 Trade name 15 7,190 (14 ) 7,176 Total intangible assets $ 14,690 $ (49 ) $ 14,641 |
Estimated Future Amortization of Intangible Assets | The estimated future amortization of intangible assets over the weighted average remaining useful life of 10 years is as follows: Dollars in thousands Years ended December 31, Remainder of 2020 $ 1,169 2021 1,551 2022 1,551 2023 1,551 2024 1,551 Thereafter 6,886 $ 14,259 |
Line of credit, short term lo_2
Line of credit, short term loan and notes payable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Line of credit, short term loan and notes payable [Abstract] | |
Components of Debt | The components of the Company’s debt consist of the following: March 31, 2020 December 31, 2019 Amount Rate Maturity Date Amount Rate Maturity Date Short term loan, net $ 17,023 (1 ) 12/19/2020 $ 16,061 (1 ) 12/19/2020 Line of credit, net 5,366 (1 ) 12/19/2020 4,819 (1 ) 12/19/2020 November 2019 notes payable, net (November 2019 Notes) 2,839 10 % 11/4/2021 2,769 10 % 11/4/2021 December 2019 senior notes payable, net (Seller Notes) 9,494 10 % 6/30/2023 9,191 10 % 6/30/2023 December 2019 junior notes payable, net (Seller Notes) 4,565 10 % 6/30/2023 4,410 10 % 6/30/2023 ABG Notes 661 10 % 6/30/2023 - - - Total debt $ 39,948 $ 37,250 (1) |
Warrant derivative liability (T
Warrant derivative liability (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Warrant derivative liability [Abstract] | |
Change in Fair Value of Warrant Derivative Liability | The following schedule shows the change in fair value of the warrant derivative liability as of March 31, 2020 and December 31, 2019: Dollars in thousands Warrant derivative liability Balance as of December 31, 2019 $ 2,220 Change in fair value of derivative liability (1,379 ) Balance as of March 31, 2020 $ 841 |
Warrant Liability Fair Value Measurement Inputs and Valuation Techniques | May 6, 2019 December 31, 2019 March 31, 2020 Warrant derivative liability Stock price $ 6.00 $ 2.70 $ 1.15 Exercise price $ 3.90 $ 1.62 $ 1.62 Expected remaining term (in years) 1.60 - 1.68 0.95 - 1.02 0.722 Volatility 64 % 69 % 95 % Risk-free interest rate 2.39 % 1.60 % 0.16 % |
Stockholders' deficit (Tables)
Stockholders' deficit (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' deficit [Abstract] | |
Common Stock for Future Issuance | The Company has reserved common stock for future issuance as follows: March 31, 2020 December 31, 2019 Conversion of Series E 1,760,903 1,760,903 Exercise of options to purchase common stock 7,891,833 7,791,833 Warrants to purchase common stock 18,046,310 16,981,854 Notes payable 4,722,795 4,437,500 Total 32,421,841 30,972,090 |
Activity of Warrants | Warrants Weighted Average Exercise Price Warrants outstanding at December 31, 2019 16,981,854 $ 3.23 Issued 1,064,456 1.81 Exercised - - Warrants outstanding at March 31, 2020 18,046,310 $ 3.05 |
Net loss per share (Tables)
Net loss per share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 months ended March 31, 2020 and 2019: Dollars in thousands except per share amounts Three Months Ended March 31, 2020 2019 Common stockholders Numerator: Net and comprehensive loss $ (9,579 ) $ (2,776 ) Less: Preferred stock dividends 34 - Net and comprehensive loss available to common stockholders $ (9,613 ) $ (2,776 ) Denominator: Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted 48,526,396 11,674,127 Net loss per share attributable to common stockholders, basic and diluted $ (0.20 ) $ (0.24 ) |
Nature of Business and Summar_3
Nature of Business and Summary of Significant Accounting Policies, Restricted Cash (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Business Credit Card [Member] | Maximum [Member] | ||
Restricted Cash [Abstract] | ||
Restricted cash | $ 0.1 | $ 0.2 |
Nature of Business and Summar_4
Nature of Business and Summary of Significant Accounting Policies, Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Maximum [Member] | ||
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Allowance for doubtful accounts | $ 0.1 | $ 0.1 |
Nature of Business and Summar_5
Nature of Business and Summary of Significant Accounting Policies, Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 19, 2019 | |
Business Combination, Description [Abstract] | |||
Goodwill | $ 18,614 | $ 18,614 | |
Goodwill, impairment loss | $ 0 | 0 | |
Halo Acquisition [Member] | |||
Business Combination, Description [Abstract] | |||
Goodwill | $ 18,600 | $ 18,614 |
Acquisitions, Acquisition of Ha
Acquisitions, Acquisition of Halo (Details) - USD ($) $ in Thousands | Dec. 19, 2019 | May 06, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Acquisitions [Abstract] | ||||
Total Purchase Price | $ 146,569 | |||
Assets [Abstract] | ||||
Accounts receivable | 69 | |||
Inventories | 95 | |||
Intangible assets | 986 | |||
Other assets | 74 | |||
Total Assets | 2,020 | |||
Liabilities [Abstract] | ||||
Total Liabilities | 2,827 | |||
Net Assets (Liabilities) Acquired | $ (807) | |||
Goodwill | $ 18,614 | $ 18,614 | ||
Halo Acquisition [Member] | ||||
Acquisitions [Abstract] | ||||
Cash consideration | $ 20,500 | |||
Value of common stock issued | 3,900 | |||
Seller notes issued | 15,000 | |||
Value of seller warrants issued | 300 | |||
Total Purchase Price | 38,244 | |||
Assets [Abstract] | ||||
Property and equipment | 260 | |||
Accounts receivable | 5,540 | |||
Inventories | 5,160 | |||
Intangible assets | 14,690 | |||
Other assets | 329 | |||
Total Assets | 25,979 | |||
Liabilities [Abstract] | ||||
Accounts payable | 4,628 | |||
Accrued liabilities | 1,553 | |||
Long term liability | 168 | |||
Total Liabilities | 6,349 | |||
Net Assets (Liabilities) Acquired | 19,630 | |||
Goodwill | $ 18,614 | $ 18,600 | ||
Halo Acquisition [Member] | Customer Relationships [Member] | ||||
Liabilities [Abstract] | ||||
Estimated life | 7 years | 7 years | ||
Halo Acquisition [Member] | Trade Names [Member] | ||||
Liabilities [Abstract] | ||||
Estimated life | 15 years | 15 years |
Acquisitions, Reverse Acquisiti
Acquisitions, Reverse Acquisitions of Better Choice and Bona Vida by TruPet (Details) $ in Thousands | May 06, 2019USD ($) |
Acquisitions [Abstract] | |
Total Purchase Price | $ 146,569 |
Assets [Abstract] | |
Cash and cash equivalents | 391 |
Restricted cash | 25 |
Accounts receivable | 69 |
Inventories | 95 |
Prepaid expenses and other current assets | 380 |
Intangible assets | 986 |
Other assets | 74 |
Total Assets | 2,020 |
Liabilities [Abstract] | |
Warrant derivative liability | (2,130) |
Accounts payable & accrued liabilities | (697) |
Total Liabilities | (2,827) |
Net Assets (Liabilities) Acquired | (807) |
Loss on Acquisitions | (147,376) |
Better Choice Company [Member] | |
Acquisitions [Abstract] | |
Total Purchase Price | 37,949 |
Assets [Abstract] | |
Cash and cash equivalents | 7 |
Restricted cash | 0 |
Accounts receivable | 0 |
Inventories | 0 |
Prepaid expenses and other current assets | 32 |
Intangible assets | 986 |
Other assets | 0 |
Total Assets | 1,025 |
Liabilities [Abstract] | |
Warrant derivative liability | (2,130) |
Accounts payable & accrued liabilities | (544) |
Total Liabilities | (2,674) |
Net Assets (Liabilities) Acquired | (1,649) |
Loss on Acquisitions | (39,598) |
Bona Vida [Member] | |
Acquisitions [Abstract] | |
Total Purchase Price | 108,620 |
Assets [Abstract] | |
Cash and cash equivalents | 384 |
Restricted cash | 25 |
Accounts receivable | 69 |
Inventories | 95 |
Prepaid expenses and other current assets | 348 |
Intangible assets | 0 |
Other assets | 74 |
Total Assets | 995 |
Liabilities [Abstract] | |
Warrant derivative liability | 0 |
Accounts payable & accrued liabilities | (153) |
Total Liabilities | (153) |
Net Assets (Liabilities) Acquired | 842 |
Loss on Acquisitions | $ (107,778) |
Revenue (Details)
Revenue (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)Channel | Mar. 31, 2019USD ($) | |
Revenue Concentration [Abstract] | ||
Number of revenue channels | Channel | 2 | |
Revenue | $ 12,226 | $ 3,551 |
Directly to Consumer [Member] | ||
Revenue Concentration [Abstract] | ||
Dollar amount of loyalty program awards earned but not redeemed | 200 | 200 |
Directly to Consumer [Member] | Maximum [Member] | ||
Revenue Concentration [Abstract] | ||
Product returns | 200 | 100 |
Revenue | $ 200 | $ 100 |
Directly to Consumer [Member] | Revenues [Member] | ||
Revenue Concentration [Abstract] | ||
Concentration risk percentage | 25.00% | 91.00% |
Directly to Consumer [Member] | Shipping Cost [Member] | ||
Revenue Concentration [Abstract] | ||
Revenue | $ 100 | $ 200 |
Retail-Partner [Member] | Revenues [Member] | ||
Revenue Concentration [Abstract] | ||
Concentration risk percentage | 75.00% | 9.00% |
Retail-Partner [Member] | Shipping Cost [Member] | Maximum [Member] | ||
Revenue Concentration [Abstract] | ||
Cost of revenue | $ 100 | $ 100 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventories [Abstract] | ||
Food, treats and supplements | $ 4,654 | $ 6,425 |
Inventory packaging and supplies | 589 | 504 |
Other products and accessories | 29 | 73 |
Inventories, gross | 5,272 | 7,002 |
Inventory reserve | (510) | (422) |
Inventories, net | $ 4,762 | $ 6,580 |
Prepaid expenses and other cu_2
Prepaid expenses and other current assets (Details) - USD ($) $ in Thousands | Mar. 05, 2020 | Aug. 28, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Advertising Agreement [Abstract] | ||||
Stock issued to third parties for services | $ 125 | |||
IHeartMedia [Member] | ||||
Advertising Agreement [Abstract] | ||||
Committed usage amount of media inventory | 1,700 | |||
Prepaid advertising balance | 3,000 | $ 2,800 | ||
Advertising expenses incurred | 0 | |||
Prepaid Expenses and Other Current Assets [Member] | IHeartMedia [Member] | ||||
Advertising Agreement [Abstract] | ||||
Prepaid advertising balance | 2,200 | 1,700 | ||
Other Noncurrent Assets [Member] | IHeartMedia [Member] | ||||
Advertising Agreement [Abstract] | ||||
Prepaid advertising balance | $ 800 | $ 1,100 | ||
Common Stock [Member] | ||||
Advertising Agreement [Abstract] | ||||
Stock issued to third parties for services (in shares) | 125,000 | 125,000 | ||
Stock issued to third parties for services | $ 0 | |||
Common Stock [Member] | IHeartMedia [Member] | ||||
Advertising Agreement [Abstract] | ||||
Stock issued to third parties for services (in shares) | 125,000 | 1,000,000 | ||
Stock issued to third parties for services | $ 100 | $ 3,400 |
Property and equipment (Details
Property and equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment, Net [Abstract] | |||
Property, and equipment, gross | $ 509 | $ 479 | |
Accumulated depreciation | (160) | (62) | |
Net property and equipment | 349 | 417 | |
Equipment [Member] | |||
Property, Plant and Equipment, Net [Abstract] | |||
Property, and equipment, gross | 226 | 222 | |
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment, Net [Abstract] | |||
Property, and equipment, gross | 163 | 138 | |
Computer Software [Member] | |||
Property, Plant and Equipment, Net [Abstract] | |||
Property, and equipment, gross | 115 | 115 | |
Computer Equipment [Member] | |||
Property, Plant and Equipment, Net [Abstract] | |||
Property, and equipment, gross | 5 | $ 4 | |
Maximum [Member] | |||
Property, Plant and Equipment, Net [Abstract] | |||
Depreciation expense | $ 100 | $ 100 |
Accrued liabilities (Details)
Accrued liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Accrued Liabilities Current [Abstract] | ||
Accrued professional fees | $ 2,118 | $ 2,018 |
Accrued sales tax | 1,056 | 1,233 |
Accrued payroll and benefits | 686 | 671 |
Accrued trade promotions | 166 | 357 |
Accrued dividends | 290 | 256 |
Accrued interest | 249 | 109 |
Other | 5 | 77 |
Total accrued liabilities | 4,570 | 4,721 |
Series E Preferred Stock [Member] | ||
Accrued Liabilities Current [Abstract] | ||
Accrued dividends | $ 300 | $ 300 |
Operating leases, Lease Costs (
Operating leases, Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating Lease Costs [Abstract] | ||
Operating lease costs | $ 109 | $ 44 |
Variable lease costs | 8 | 8 |
Total operating lease costs | $ 117 | 52 |
Weighted-average remaining operating lease term | 2 years 3 months 18 days | |
Incremental borrowing rate | 12.50% | |
Rent expense | $ 100 | 100 |
Maximum [Member] | ||
Operating Lease Costs [Abstract] | ||
Short term lease costs | $ 100 | $ 100 |
Operating leases, Maturity of L
Operating leases, Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Maturity of Lease Liabilities [Abstract] | ||
Remainder of 2020 | $ 344 | |
2021 | 459 | |
2022 | 240 | |
2023 | 5 | |
Total minimum lease payments | 1,048 | |
Less: amount of lease payments representing interest | 130 | |
Present value of future minimum lease payments | 918 | |
Less: current obligations under leases | 352 | $ 345 |
Long-term lease obligations | $ 566 | $ 641 |
Intangible assets, royalties _3
Intangible assets, royalties and goodwill (Details) | Oct. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Aug. 31, 2020USD ($) | Jul. 31, 2020USD ($) | Jan. 13, 2020USD ($)Installment$ / sharesshares | May 31, 2019USD ($) | Mar. 31, 2020USD ($)shares | Dec. 31, 2019USD ($)shares | Mar. 31, 2019USD ($) |
Intangible Assets and Royalties [Abstract] | |||||||||
Common stock, shares issued (in shares) | shares | 72,720 | 48,939,708 | 47,977,390 | ||||||
Amortization expense of intangible assets | $ 0 | ||||||||
Intangible Assets [Abstract] | |||||||||
Weighted Average Remaining Useful Lives | 10 years | ||||||||
Gross Carrying Amount | $ 14,690,000 | $ 14,690,000 | |||||||
Accumulated Amortization | (431,000) | (49,000) | |||||||
Net carrying amount | $ 14,259,000 | $ 14,641,000 | $ 0 | ||||||
Licensing Agreements [Member] | |||||||||
Intangible Assets and Royalties [Abstract] | |||||||||
Payment of upfront fees in equity | $ 1,000,000 | ||||||||
Termination fee paid | $ 100,000 | ||||||||
Common stock, shares issued (in shares) | shares | 72,720 | ||||||||
Termination fee payable | $ 100,000 | ||||||||
Number of equal installment payments | Installment | 4 | ||||||||
Notes issued | $ 600,000 | ||||||||
Common stock purchase warrant issued | 150,000 | ||||||||
Total cost of contract termination | $ 1,100,000 | ||||||||
Licensing Agreements [Member] | Forecast [Member] | |||||||||
Intangible Assets and Royalties [Abstract] | |||||||||
Termination fee installment payable | $ 25,000 | $ 25,000 | $ 25,000 | $ 25,000 | |||||
Licensing Agreements [Member] | ABG Warrants [Member] | |||||||||
Intangible Assets and Royalties [Abstract] | |||||||||
Warrants, exercisable period | 24 months | ||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 5 | ||||||||
Licensing Agreements [Member] | ABG Warrants [Member] | Maximum [Member] | |||||||||
Intangible Assets and Royalties [Abstract] | |||||||||
Warrants, fair value | $ 100,000 | ||||||||
Licensing Agreements [Member] | ABG Notes [Member] | |||||||||
Intangible Assets and Royalties [Abstract] | |||||||||
Long-term debt, interest rate | 10.00% | ||||||||
Maturity date | Jun. 30, 2023 | ||||||||
Debt instruments, fair value | $ 600,000 | ||||||||
Customer Relationships [Member] | |||||||||
Intangible Assets [Abstract] | |||||||||
Weighted Average Remaining Useful Lives | 7 years | 7 years | |||||||
Gross Carrying Amount | $ 7,500,000 | $ 7,500,000 | |||||||
Accumulated Amortization | (306,000) | (35,000) | |||||||
Net carrying amount | $ 7,194,000 | $ 7,465,000 | |||||||
Customer Relationships [Member] | Halo Acquisition [Member] | |||||||||
Intangible Assets and Royalties [Abstract] | |||||||||
Estimated useful lives of intangible assets | 7 years | 7 years | |||||||
Trade Names [Member] | |||||||||
Intangible Assets [Abstract] | |||||||||
Weighted Average Remaining Useful Lives | 15 years | 15 years | |||||||
Gross Carrying Amount | $ 7,190,000 | $ 7,190,000 | |||||||
Accumulated Amortization | (125,000) | (14,000) | |||||||
Net carrying amount | $ 7,065,000 | $ 7,176,000 | |||||||
Trade Names [Member] | Halo Acquisition [Member] | |||||||||
Intangible Assets and Royalties [Abstract] | |||||||||
Estimated useful lives of intangible assets | 15 years | 15 years |
Intangible assets, royalties _4
Intangible assets, royalties and goodwill, Estimated Future Amortization of Amortizable Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | |
Intangible assets, royalties and goodwill [Abstract] | |||
Weighted average remaining useful life | 10 years | ||
Estimated Future Amortization of Amortizable Intangible Assets [Abstract] | |||
Remainder of 2020 | $ 1,169 | ||
2021 | 1,551 | ||
2022 | 1,551 | ||
2023 | 1,551 | ||
2024 | 1,551 | ||
Thereafter | 6,886 | ||
Net carrying amount | $ 14,259 | $ 14,641 | $ 0 |
Line of credit, short term lo_3
Line of credit, short term loan and notes payable, Components of Debt (Details) - USD ($) $ in Thousands | Jan. 13, 2020 | Dec. 19, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | Nov. 04, 2019 | ||
Debt Instruments [Abstract] | |||||||
Total debt | $ 39,948 | $ 37,250 | |||||
November 2019 Notes Payable, Net (November 2019 Notes) [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Total debt | $ 2,839 | $ 2,769 | |||||
Rate | 10.00% | 10.00% | 10.00% | ||||
Maturity date | Nov. 4, 2021 | Nov. 4, 2021 | |||||
Seller Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Rate | 10.00% | ||||||
Maturity date | Jun. 30, 2023 | ||||||
December 2019 Senior Notes Payable, Seller Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Total debt | $ 9,494 | $ 9,191 | |||||
Rate | 10.00% | 10.00% | |||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||
December 2019 Junior Notes Payable, Seller Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Total debt | $ 4,565 | $ 4,410 | |||||
Rate | 10.00% | 10.00% | |||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||
ABG Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Total debt | $ 661 | $ 0 | |||||
Rate | 10.00% | 10.00% | [1] | ||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||
Short Term Loan, Net [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Total debt | $ 17,023 | $ 16,061 | |||||
Rate | [1] | ||||||
Maturity date | Dec. 19, 2020 | Dec. 19, 2020 | |||||
Lines of Credit, Net [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Total debt | $ 5,366 | $ 4,819 | |||||
Rate | [1] | ||||||
Maturity date | Dec. 19, 2020 | Dec. 19, 2020 | |||||
Lines of Credit, Net [Member] | Bank of Montreal Prime [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Basis spread on variable interest rate | 8.05% | ||||||
[1] | Interest at Bank of Montreal Prime plus 8.05% |
Line of credit, short term lo_4
Line of credit, short term loan and notes payable, Short Term Loan and Line of Credit (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 19, 2019 | |
Short Term Loan and Line of Credit [Member] | |||
Debt Instruments [Abstract] | |||
Maturity date | Dec. 19, 2020 | ||
Short Term Loan [Member] | |||
Debt Instruments [Abstract] | |||
Face amount | $ 20.5 | $ 20.5 | $ 20.5 |
Debt discount (premium) | $ 3.5 | $ 4.4 | |
Maturity date | Dec. 19, 2020 | Dec. 19, 2020 | |
Line of Credit [Member] | |||
Debt Instruments [Abstract] | |||
Face amount | $ 5.5 | $ 5 | |
Debt discount (premium) | $ 0.1 | $ 0.2 | |
Maturity date | Dec. 19, 2020 | Dec. 19, 2020 | |
Shareholder Guaranties [Member] | |||
Debt Instruments [Abstract] | |||
Guaranty obligations | $ 20 | ||
Warrants per share (in dollars per share) | $ 0.325 | ||
Warrants, exercise price (in dollars per share) | $ 1.82 | ||
Warrants, fair value | $ 4.2 | ||
Shareholder Guaranties [Member] | Maximum [Member] | |||
Debt Instruments [Abstract] | |||
Warrants, exercisable period | 24 months | ||
Revolving Credit Facility [Member] | |||
Debt Instruments [Abstract] | |||
Face amount | $ 7.5 |
Line of credit, short term lo_5
Line of credit, short term loan and notes payable, Notes Payable (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 13, 2020 | Dec. 19, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Nov. 04, 2019 | |
Debt Instruments [Abstract] | |||||||
Debt outstanding | $ 39,948 | $ 37,250 | |||||
Interest expense | $ 2,300 | $ 100 | |||||
November 2019 Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Face amount | $ 2,800 | ||||||
Long-term debt, interest rate | 10.00% | 10.00% | 10.00% | ||||
Maturity date | Nov. 4, 2021 | Nov. 4, 2021 | |||||
Conversion price (in dollars per share) | $ 4 | ||||||
Fair value of incremental warrants issued | $ 100 | ||||||
Debt outstanding | $ 2,839 | $ 2,769 | |||||
Default Interest Rate | 12.00% | ||||||
Fair value of debt | $ 2,800 | ||||||
November 2019 Notes [Member] | Maximum [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Debt outstanding | 2,800 | 2,800 | |||||
Debt discount (premium) | $ 100 | $ 100 | |||||
Seller Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Long-term debt, interest rate | 10.00% | ||||||
Maturity date | Jun. 30, 2023 | ||||||
Conversion price (in dollars per share) | $ 4 | ||||||
Senior Seller Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Face amount | $ 10,000 | ||||||
Long-term debt, interest rate | 10.00% | 10.00% | |||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||
Debt outstanding | $ 9,494 | $ 9,191 | |||||
Debt discount (premium) | 800 | $ 900 | |||||
Fair value of debt | $ 9,500 | ||||||
Junior Seller Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Face amount | $ 5,000 | ||||||
Long-term debt, interest rate | 10.00% | 10.00% | |||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||
Debt outstanding | $ 4,565 | $ 4,410 | |||||
Debt discount (premium) | 500 | $ 500 | |||||
Fair value of debt | $ 4,600 | ||||||
ABG Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Face amount | $ 600 | ||||||
Long-term debt, interest rate | 10.00% | 10.00% | [1] | ||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||
Conversion price (in dollars per share) | $ 4 | ||||||
Debt outstanding | $ 661 | $ 0 | |||||
Fair value of debt | 700 | ||||||
ABG Notes [Member] | Maximum [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Debt discount (premium) | $ 100 | ||||||
[1] | Interest at Bank of Montreal Prime plus 8.05% |
Warrant derivative liability, P
Warrant derivative liability, Private placement (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 08, 2019 | Dec. 12, 2018 | Dec. 31, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Mar. 17, 2020 | Jan. 20, 2020 |
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 | $ 2.8 | ||||||
Share issuance costs | 0.1 | ||||||
Net proceeds from private placement offering | $ 2.7 | ||||||
Cash payable if warrants settled in cash | $ 0.2 | ||||||
Warrant [Member] | |||||||
Private Placement Offering [Abstract] | |||||||
Number of shares issuable per unit (in shares) | 0.5 | 1,003,232 | |||||
Warrants, exercisable period | 2 years | ||||||
Warrants, exercise price (in dollars per share) | $ 3.90 | $ 1.62 | |||||
Common Stock [Member] | |||||||
Private Placement Offering [Abstract] | |||||||
Number of shares issuable per unit (in shares) | 1 | 61,224 | |||||
Net proceeds from private placement offering | $ 0.1 | $ 2.6 | |||||
Shares issued in private placement offering (in shares) | 25,641 | 1,400,000 | 308,642 | 0 | |||
Number of warrants issuable if settled (in shares) | 1,716,055 |
Warrant derivative liability, F
Warrant derivative liability, Fair value of warrant derivative liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Warrant Derivative Liability [Abstract] | |||
Balance as of December 31, 2019 | $ 2,220 | ||
Change in fair value of derivative liability | (1,379) | $ 0 | $ (1,379) |
Balance as of March 31, 2020 | $ 841 | $ 2,220 |
Warrant derivative liability,_2
Warrant derivative liability, Fair value measurements and valuation techniques (Details) - Warrant [Member] | Mar. 31, 2020$ / shares | Dec. 31, 2019$ / shares | May 06, 2019$ / shares |
Stock Price [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 1.15 | 2.70 | 6 |
Exercise Price [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 1.62 | 1.62 | 3.90 |
Expected Remaining Term (in Years) [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 0.722 | ||
Expected Remaining Term (in Years) [Member] | Minimum [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 0.95 | 1.60 | |
Expected Remaining Term (in Years) [Member] | Maximum [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 1.02 | 1.68 | |
Volatility [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 0.95 | 0.69 | 0.64 |
Risk-free Interest Rate [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 0.0016 | 0.0160 | 0.0239 |
Other liabilities (Details)
Other liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Other liabilities [Abstract] | ||
Reserve for potential customer dispute settlement | $ 0.2 | $ 0.2 |
Investor prepayment | $ 0.5 | $ 0.5 |
Commitments and contingencies (
Commitments and contingencies (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Commitments and contingencies [Abstract] | ||
Purchase obligations | $ 0 | $ 0 |
Stockholders' deficit, Equity T
Stockholders' deficit, Equity Transactions (Details) $ / shares in Units, $ in Millions | Jan. 02, 2020USD ($)shares | Feb. 12, 2019USD ($)$ / sharesshares | Dec. 12, 2018USD ($)$ / sharesshares | Mar. 31, 2020shares | Mar. 30, 2020shares | Mar. 05, 2020shares | Mar. 03, 2020Directorshares | Jan. 13, 2020shares | Dec. 31, 2019shares |
Common Stock [Abstract] | |||||||||
Common stock, shares issued (in shares) | 48,939,708 | 72,720 | 47,977,390 | ||||||
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 | $ | $ 2.8 | ||||||||
Share issuance costs | $ | $ 0.1 | ||||||||
Reserved Shares of Common Stock for Future Issuance [Abstract] | |||||||||
Conversion of Series E (in shares) | 1,760,903 | 1,760,903 | |||||||
Exercise of options to purchase common stock (in shares) | 7,891,833 | 7,791,833 | |||||||
Warrants to purchase common stock (in shares) | 18,046,310 | 16,981,854 | |||||||
Notes payable (in shares) | 4,722,795 | 4,437,500 | |||||||
Total (in shares) | 32,421,841 | 30,972,090 | |||||||
Series A Preferred Units [Member] | |||||||||
Common Stock [Abstract] | |||||||||
Units issued in private placement offering (in shares) | 69,115 | ||||||||
Unit price (in dollars per share) | $ / shares | $ 2.17 | ||||||||
Gross proceeds from private placement offering | $ | $ 0.2 | ||||||||
Common Stock [Member] | Advertising Services [Member] | |||||||||
Common Stock [Abstract] | |||||||||
Common stock, shares issued (in shares) | 125,000 | ||||||||
Common Stock [Member] | Investor [Member] | |||||||||
Common Stock [Abstract] | |||||||||
Common stock, shares issued (in shares) | 308,642 | ||||||||
Gross proceeds from private placement offering | $ | $ 0.5 | ||||||||
Common Stock [Member] | Investor [Member] | Maximum [Member] | |||||||||
Common Stock [Abstract] | |||||||||
Share issuance costs | $ | $ 0.1 | ||||||||
Common Stock [Member] | ABG [Member] | |||||||||
Common Stock [Abstract] | |||||||||
Common stock, shares issued (in shares) | 72,720 | ||||||||
Restricted Stock [Member] | |||||||||
Common Stock [Abstract] | |||||||||
Common stock, shares issued (in shares) | 450,000 | ||||||||
Number of non-employee directors | Director | 3 | ||||||||
Restricted Stock [Member] | Officer [Member] | |||||||||
Common Stock [Abstract] | |||||||||
Common stock, shares issued (in shares) | 5,956 |
Stockholders' deficit, Warrants
Stockholders' deficit, Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 17, 2020 | Dec. 19, 2019 | Nov. 04, 2019 | Sep. 17, 2019 | May 06, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Number of Warrants [Abstract] | |||||||
Warrants outstanding (in shares) | 16,981,854 | ||||||
Issued (in shares) | 1,064,456 | ||||||
Exercised (in shares) | 0 | ||||||
Warrants outstanding (in shares) | 18,046,310 | ||||||
Weighted Average Exercise Price [Abstract] | |||||||
Warrants outstanding (in dollars per share) | $ 3.23 | ||||||
Issued (in dollars per share) | 1.81 | ||||||
Exercised (in dollars per share) | 0 | ||||||
Warrants outstanding (in dollars per share) | $ 3.05 | ||||||
Warrants acquired (in shares) | 712,823 | ||||||
Warrants acquired (in dollars per share) | $ 3.9 | ||||||
Warrants outstanding, intrinsic value | $ 2.6 | $ 12.2 | |||||
Exercise Price $5.00 [Member] | |||||||
Number of Warrants [Abstract] | |||||||
Issued (in shares) | 937,500 | 11,000 | |||||
Weighted Average Exercise Price [Abstract] | |||||||
Warrants, exercise price (in dollars per share) | $ 5 | $ 5 | |||||
Warrants, exercisable period | 24 months | 24 months | |||||
Exercise price $1.82 [Member] | |||||||
Number of Warrants [Abstract] | |||||||
Issued (in shares) | 6,500,000 | ||||||
Weighted Average Exercise Price [Abstract] | |||||||
Warrants, exercise price (in dollars per share) | $ 1.82 | ||||||
Warrants, exercisable period | 24 months | ||||||
PIPE Transaction [Member] | |||||||
Number of Warrants [Abstract] | |||||||
Issued (in shares) | 1,003,232 | 5,744,991 | |||||
Weighted Average Exercise Price [Abstract] | |||||||
Warrants, exercise price (in dollars per share) | $ 4.25 | ||||||
Broker [Member] | |||||||
Weighted Average Exercise Price [Abstract] | |||||||
Warrants, exercise price (in dollars per share) | $ 3 | ||||||
Warrants, exercisable period | 24 months | ||||||
Broker [Member] | PIPE Transaction [Member] | |||||||
Number of Warrants [Abstract] | |||||||
Issued (in shares) | 220,539 | ||||||
Advisor [Member] | Exercise Price $0.10 [Member] | |||||||
Number of Warrants [Abstract] | |||||||
Issued (in shares) | 2,500,000 | ||||||
Weighted Average Exercise Price [Abstract] | |||||||
Warrants, exercise price (in dollars per share) | $ 0.10 | ||||||
Advisor [Member] | Exercise Price $0.10 [Member] | Tranche One [Member] | |||||||
Weighted Average Exercise Price [Abstract] | |||||||
Warrants, exercisable period | 12 months | ||||||
Warrants exercisable (in shares) | 1,250,000 | ||||||
Advisor [Member] | Exercise Price $0.10 [Member] | Tranche Two [Member] | |||||||
Weighted Average Exercise Price [Abstract] | |||||||
Warrants, exercisable period | 18 months | ||||||
Warrants exercisable (in shares) | 1,250,000 | ||||||
Advisor [Member] | Exercise Price $10.00 [Member] | |||||||
Number of Warrants [Abstract] | |||||||
Issued (in shares) | 1,500,000 | ||||||
Weighted Average Exercise Price [Abstract] | |||||||
Warrants, exercise price (in dollars per share) | $ 10 | ||||||
Warrants, exercisable period | 18 months | ||||||
Warrants exercisable (in shares) | 1,500,000 |
Share-based compensation (Detai
Share-based compensation (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 19, 2019 | Apr. 29, 2019 | |
Stock Awards [Abstract] | ||||
Share-based compensation expense | $ 2.5 | $ 0.2 | ||
Stock Options [Member] | ||||
Stock Awards [Abstract] | ||||
Granted (in shares) | 100,000 | 0 | ||
2019 Incentive Award Plan [Member] | ||||
Stock Awards [Abstract] | ||||
Authorized issuance shares of common stock (in shares) | 6,000,000 | |||
Amended and Restated Incentive Award Plan 2019 [Member] | ||||
Stock Awards [Abstract] | ||||
Authorized issuance shares of common stock (in shares) | 9,000,000 |
Employee benefit plans (Details
Employee benefit plans (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Maximum [Member] | ||
Employee Benefit Plans [Abstract] | ||
Contributions related to plan | $ 100 | $ 100 |
Related party transactions (Det
Related party transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Related Party Transactions [Abstract] | ||
Subordinated convertible notes issued | $ 17,559 | $ 16,370 |
Subordinated Convertible Notes [Member] | Member of Board of Directors [Member] | ||
Related Party Transactions [Abstract] | ||
Subordinated convertible notes issued | 1,400 | |
Subordinated Convertible Notes [Member] | Executive Officer [Member] | Halo Acquisition [Member] | ||
Related Party Transactions [Abstract] | ||
Subordinated convertible notes issued | 100 | |
Maximum [Member] | Subordinated Convertible Notes [Member] | Member of Board of Directors [Member] | ||
Related Party Transactions [Abstract] | ||
Interest amount | 100 | |
Marketing Services [Member] | ||
Related Party Transactions [Abstract] | ||
Service contract termination clause | 30 days | |
Marketing Services [Member] | Maximum [Member] | ||
Related Party Transactions [Abstract] | ||
Outstanding balances due to related party | $ 100 | $ 100 |
Income taxes (Details)
Income taxes (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Income taxes [Abstract] | |
Current income tax expense | $ 0 |
Deferred income tax expense | $ 0 |
Effective tax rate | 0.00% |
Federal statutory rate | 21.00% |
Accrued interest and penalties related to uncertain tax positions | $ 0 |
Major suppliers (Details)
Major suppliers (Details) - Vendor | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Concentration Risk [Abstract] | ||
Number of vendors utilized to purchase inventory | 2 | 1 |
Inventory Purchases [Member] | Supplier Concentration Risk [Member] | ||
Concentration Risk [Abstract] | ||
Concentration risk percentage | 48.00% | 69.00% |
Concentration of credit risk _2
Concentration of credit risk and off-balance sheet risk (Details) - Customer Concentration Risk [Member] - Customer | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Gross Sales [Member] | ||
Concentration Risk [Line Items] | ||
Number of customers | 4 | |
Concentration risk percentage | 70.00% | |
Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Number of customers | 2 | 1 |
Concentration risk percentage | 79.00% | 44.00% |
Net loss per share (Details)
Net loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator [Abstract] | ||
Net and comprehensive loss | $ (9,454) | $ (2,776) |
Less: Preferred stock dividends | 34 | 0 |
Net and comprehensive loss available to common stockholders | $ (9,488) | $ (2,776) |
Denominator [Abstract] | ||
Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted (in shares) | 48,526,396 | 11,674,127 |
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share) | $ (0.20) | $ (0.24) |
Subsequent events (Details)
Subsequent events (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 24, 2020 | Jun. 01, 2020 | May 07, 2020 | Apr. 10, 2020 | Jun. 23, 2020 | May 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Subsequent events [Abstract] | ||||||||
Warrants outstanding (in shares) | 18,046,310 | 16,981,854 | ||||||
Subsequent Event [Member] | First Share Purchase Warrants Dated September 17, 2019 [Member] | ||||||||
Subsequent events [Abstract] | ||||||||
Warrants outstanding (in shares) | 1,041,666 | 1,250,000 | ||||||
Exercise price of warrants (in dollars per share) | $ 0.10 | |||||||
Subsequent Event [Member] | Second Share Purchase Warrants Dated September 17, 2019 [Member] | ||||||||
Subsequent events [Abstract] | ||||||||
Warrants terminated (in shares) | 1,250,000 | |||||||
Exercise price of warrants (in dollars per share) | $ 0.10 | |||||||
Subsequent Event [Member] | Third Share Purchase Warrants Dated September 17, 2019 [Member] | ||||||||
Subsequent events [Abstract] | ||||||||
Warrants terminated (in shares) | 1,500,000 | |||||||
Exercise price of warrants (in dollars per share) | $ 10 | |||||||
Subsequent Event [Member] | June 2020 Warrants [Member] | ||||||||
Subsequent events [Abstract] | ||||||||
Exercise price of warrants (in dollars per share) | $ 1.25 | |||||||
Number of warrants issuable if settled (in shares) | 2,000,000 | |||||||
Term of warrants | 84 months | |||||||
Subsequent Event [Member] | June 2020 Notes [Member] | ||||||||
Subsequent events [Abstract] | ||||||||
Face amount | $ 1.5 | |||||||
Interest rate | 10.00% | |||||||
Conversion price (in dollars per share) | $ 0.75 | |||||||
Subsequent Event [Member] | Seller Notes and ABG Notes [Member] | ||||||||
Subsequent events [Abstract] | ||||||||
Maturity date | Jun. 30, 2023 | |||||||
Exercise price of warrants (in dollars per share) | $ 4.25 | $ 5 | ||||||
Conversion price (in dollars per share) | $ 3.75 | $ 4 | ||||||
Number of warrants issuable if settled (in shares) | 1,009,724 | |||||||
Subsequent Event [Member] | TruPet, LLC [Member] | PPP Loan [Member] | ||||||||
Subsequent events [Abstract] | ||||||||
Face amount | $ 0.4 | |||||||
Interest rate | 0.98% | |||||||
Maturity date | Apr. 6, 2022 | |||||||
Subsequent Event [Member] | Halo, Purely for Pets, Inc. [Member] | PPP Loan [Member] | ||||||||
Subsequent events [Abstract] | ||||||||
Face amount | $ 0.4 | |||||||
Interest rate | 1.00% | |||||||
Maturity date | May 6, 2022 |