Cover
Cover - shares | 9 Months Ended | |
May 31, 2020 | Jul. 07, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | May 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-55418 | |
Entity Registrant Name | KUSHCO HOLDINGS, INC. | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 46-5268202 | |
Entity Address, Address Line One | 6261 Katella Avenue | |
Entity Address, Address Line Two | Suite 250 | |
Entity Address, City or Town | Cypress | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 90630 | |
City Area Code | 714 | |
Local Phone Number | 462-4603 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | KSHB | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 125,576,568 | |
Entity Central Index Key | 0001604627 | |
Current Fiscal Year End Date | --08-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | May 31, 2020 | Aug. 31, 2019 |
Current assets: | ||
Cash | $ 11,088 | $ 3,944 |
Accounts receivable, net | 11,162 | 25,972 |
Inventory, net | 24,048 | 43,768 |
Prepaid expenses and other current assets | 15,655 | 12,209 |
Total current assets | 61,953 | 85,893 |
Goodwill | 52,267 | 52,267 |
Intangible assets, net | 2,393 | 3,103 |
Property and equipment, net | 9,296 | 11,054 |
Other assets | 9,759 | 6,917 |
Total Assets | 135,668 | 159,234 |
Current liabilities: | ||
Accounts payable, net | 5,497 | 10,907 |
Customer deposits | 4,217 | 2,992 |
Accrued expenses and other current liabilities | 10,424 | 6,468 |
Line of credit | 0 | 12,261 |
Total current liabilities | 20,138 | 32,628 |
Long-term liabilities: | ||
Notes payable | 24,084 | 18,975 |
Warrant liability | 2,009 | 5,444 |
Other non-current liabilities | 4,562 | 833 |
Total long-term liabilities | 30,655 | 25,252 |
Total liabilities | 50,793 | 57,880 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, value, outstanding | 0 | 0 |
Common stock, value, outstanding | 120 | 90 |
Additional paid-in capital | 218,117 | 164,258 |
Retained Earnings (Accumulated Deficit) | (133,362) | (62,994) |
Total stockholders' equity | 84,875 | 101,354 |
Total liabilities and stockholders' equity | $ 135,668 | $ 159,234 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000 | 10,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 265,000 | 265,000 |
Common Stock, Shares, Outstanding | 119,933 | 90,041 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | May 31, 2020 | Aug. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 265,000 | 265,000 |
Common stock, shares issued | 119,933 | 90,041 |
Common stock, shares outstanding | 119,933 | 90,041 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2020 | May 31, 2019 | |
Income Statement [Abstract] | ||||
Net revenue | $ 22,264 | $ 41,486 | $ 87,369 | $ 101,982 |
Cost of goods sold | 19,892 | 34,090 | 86,634 | 86,834 |
Gross profit | 2,372 | 7,396 | 735 | 15,148 |
Operating expenses: | ||||
Selling, general and administrative | 12,719 | 20,719 | 60,977 | 52,032 |
Gain on disposition of assets | 0 | 0 | 0 | (1,254) |
Change in fair value of contingent consideration | 0 | 2,961 | 0 | (2,247) |
Restructuring costs | 952 | 0 | 8,253 | 0 |
Total operating expenses | 13,671 | 23,680 | 69,230 | 48,531 |
Loss from operations | (11,299) | (16,284) | (68,495) | (33,383) |
Other income (expense): | ||||
Change in fair value of warrant liability | (1,160) | 6,254 | 3,435 | 7,309 |
Increase (Decrease) in Equity Securities, FV-NI | (9) | (71) | (1,100) | (663) |
Interest expense | (1,487) | (474) | (4,594) | (1,452) |
Other income (expense), net | 468 | (10) | 386 | 110 |
Total other income (expense) | (2,188) | 5,699 | (1,873) | 5,304 |
Loss before income taxes | (13,487) | (10,585) | (70,368) | (28,079) |
Income tax expense | 0 | (13) | 0 | (13) |
Net loss | $ (13,487) | $ (10,598) | $ (70,368) | $ (28,092) |
Net loss per share: | ||||
Basic net loss per common share | $ (0.11) | $ (0.12) | $ (0.64) | $ (0.34) |
Diluted net loss per common share | $ (0.11) | $ (0.19) | $ (0.64) | $ (0.42) |
Weighted-average common shares outstanding | ||||
Basic weighted average number of common shares outstanding | 119,574 | 88,286 | 110,440 | 83,338 |
Diluted weighted average number of common shares outstanding | 119,574 | 88,377 | 110,440 | 83,535 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Accumulated Deficit | Additional Paid-in Capital | Common Stock |
Beginning balance at Aug. 31, 2018 | $ 81,638 | $ (23,358) | $ 104,918 | $ 78 |
Beginning balance (in shares) at Aug. 31, 2018 | 78,273 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 2,297 | 2,297 | ||
Stock-based compensation (in shares) | 5 | |||
Stock option exercises | 42 | 41 | $ 1 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 281 | |||
Net loss | (8,579) | (8,579) | ||
Ending balance at Nov. 30, 2018 | 75,398 | (31,937) | 107,256 | $ 79 |
Ending balance (in shares) at Nov. 30, 2018 | 78,559 | |||
Beginning balance at Aug. 31, 2018 | 81,638 | (23,358) | 104,918 | $ 78 |
Beginning balance (in shares) at Aug. 31, 2018 | 78,273 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock issued for acquisitions | 141 | |||
Stock issued for equity investment | 0 | |||
Net loss | (28,092) | |||
Ending balance at May. 31, 2019 | 103,537 | (51,450) | 154,898 | $ 89 |
Ending balance (in shares) at May. 31, 2019 | 88,840 | |||
Beginning balance at Nov. 30, 2018 | 75,398 | (31,937) | 107,256 | $ 79 |
Beginning balance (in shares) at Nov. 30, 2018 | 78,559 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 3,178 | 3,178 | ||
Stock-based compensation (in shares) | 125 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 89 | |||
Stock sold to investors | 41,593 | 41,584 | $ 9 | |
Stock sold to investors (in shares) | 9,077 | |||
Stock issued for acquisitions | 140 | 140 | ||
Stock issued for acquisitions (In shares) | 162 | |||
Net loss | (8,915) | (8,915) | ||
Ending balance at Feb. 28, 2019 | 111,394 | (40,852) | 152,158 | $ 88 |
Ending balance (in shares) at Feb. 28, 2019 | 88,012 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 2,741 | 2,740 | $ 1 | |
Stock-based compensation (in shares) | 328 | |||
Stock issued for acquisitions (In shares) | 500 | |||
Net loss | (10,598) | (10,598) | ||
Ending balance at May. 31, 2019 | 103,537 | (51,450) | 154,898 | $ 89 |
Ending balance (in shares) at May. 31, 2019 | 88,840 | |||
Beginning balance at Aug. 31, 2019 | 101,354 | (62,994) | 164,258 | $ 90 |
Beginning balance (in shares) at Aug. 31, 2019 | 90,041 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 3,189 | 0 | 3,189 | |
Stock-based compensation (in shares) | 99 | |||
Stock sold to investors | 27,379 | 27,362 | $ 17 | |
Stock sold to investors (in shares) | 17,198 | |||
Stock issued for acquisitions (In shares) | 23 | |||
Net loss | (12,506) | (12,506) | ||
Ending balance at Nov. 30, 2019 | 119,416 | (75,500) | 194,809 | $ 107 |
Ending balance (in shares) at Nov. 30, 2019 | 107,361 | |||
Beginning balance at Aug. 31, 2019 | 101,354 | (62,994) | 164,258 | $ 90 |
Beginning balance (in shares) at Aug. 31, 2019 | 90,041 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock issued for acquisitions | 0 | |||
Stock issued for equity investment | 2,528 | |||
Net loss | (70,368) | |||
Ending balance at May. 31, 2020 | 84,875 | (133,362) | 218,117 | $ 120 |
Ending balance (in shares) at May. 31, 2020 | 119,933 | |||
Beginning balance at Nov. 30, 2019 | 119,416 | (75,500) | 194,809 | $ 107 |
Beginning balance (in shares) at Nov. 30, 2019 | 107,361 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 3,141 | 3,141 | ||
Stock-based compensation (in shares) | 89 | |||
Issuance of restricted stocks (in shares) | 15 | |||
Stock sold to investors | 14,716 | 14,706 | $ 10 | |
Stock sold to investors (in shares) | 10,000 | |||
Stock issued for equity investment | 2,528 | 2,526 | $ 2 | |
Stock issued for equity investment (Shares) | 1,653 | |||
Net loss | (44,375) | (44,375) | 0 | $ 0 |
Ending balance at Feb. 29, 2020 | 95,426 | (119,875) | 215,182 | $ 119 |
Ending balance (in shares) at Feb. 29, 2020 | 119,118 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 2,936 | 2,936 | ||
Stock-based compensation (in shares) | 353 | |||
Issuance of restricted stocks | (1) | $ 1 | ||
Issuance of restricted stocks (in shares) | 462 | |||
Net loss | (13,487) | (13,487) | ||
Ending balance at May. 31, 2020 | $ 84,875 | $ (133,362) | $ 218,117 | $ 120 |
Ending balance (in shares) at May. 31, 2020 | 119,933 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
May 31, 2020 | May 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (70,368) | $ (28,092) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 3,259 | 1,711 |
Amortization of debt discount | 3,902 | 0 |
Provision for bad debt | 10,421 | 2,313 |
Provision for sales returns | 30 | 540 |
Inventory obsolescence | 2,218 | 0 |
Provision for inventory reserve | 14,619 | 2,133 |
Loss (gain) on disposal of assets | 26 | (1,254) |
Gain on termination of leases | (798) | 0 |
Impairment of assets | 6,895 | 0 |
Change in fair value of equity investment | 1,100 | 663 |
Stock compensation expense | 11,074 | 8,839 |
Change in fair value of warrant liability | (3,435) | (7,309) |
Change in fair value of contingent consideration | 0 | (2,247) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 6,854 | (8,756) |
Inventory | 5,101 | (43,446) |
Prepaid expenses and other current assets | (7,854) | (1,632) |
Other non-current assets | 498 | (706) |
Accounts payable | (5,813) | 13,278 |
Customer deposits | 1,225 | 2,253 |
Accrued expenses and other current liabilities | 1,600 | 4,232 |
Net cash used in operating activities | (20,198) | (57,480) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property, equipment, and intangibles | (4,317) | (5,420) |
Net cash used in investing activities | (4,317) | (5,420) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayment of finance leases | (86) | |
Repayment of capital leases | (105) | |
Proceeds from notes payable | 1,900 | 19,935 |
Proceeds from stock option exercises | 0 | 42 |
Proceeds from issuance of common stock | 42,095 | 41,593 |
Proceeds from line of credit | 76,325 | 94,808 |
Repayments on line of credit | (88,575) | (94,610) |
Net cash provided by financing activities | 31,659 | 61,663 |
Net increase (decrease) in cash | 7,144 | (1,237) |
Cash at beginning of year | 3,944 | 13,467 |
Cash at end of year | 11,088 | 12,230 |
CASH PAID FOR: | ||
Interest | 624 | 959 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Services prepaid for in common stock | 646 | 1,277 |
Accrued and unpaid amounts for purchase of property & equipment | 403 | 356 |
Stock issuance for acquisition of Hybrid | 0 | 141 |
Shares issued in exchange for equity investment in Xtraction Services | 2,528 | 0 |
Fair value of shares received from sale of assets | $ 0 | $ 1,791 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
May 31, 2020 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the activity of KushCo Holdings, Inc. (the “Company”) and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information pursuant to Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included in the condensed consolidated financial statements for the interim periods presented herein, but are not necessarily indicative of operating results to be achieved for full fiscal years or other interim periods. The condensed consolidated balance sheet as of August 31, 2019 was derived from the audited financial statements as of that date but does not include all disclosures as required by GAAP. These condensed consolidated financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes for the fiscal year ended August 31, 2019 and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year then ended and filed with the SEC on November 12, 2019. References to amounts in these notes to condensed consolidated financial statements are in thousands, except per share amounts, unless otherwise specified. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Significant estimates relied upon in preparing these condensed consolidated financial statements include revenue recognition, accounts receivable reserves, inventory and related reserves, expected future cash flows used to evaluate the recoverability of long-lived assets, estimated fair values of long-lived assets used to record impairment charges related to intangible assets and goodwill, amortization periods, accrued expenses, stock-based compensation expenses, and recoverability of the Company’s net deferred tax assets and any related valuation allowance. Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if past experience or other assumptions do not turn out to be substantially accurate. Accounts Receivable Trade accounts receivable are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis; thus, trade receivables do not bear interest. Trade accounts receivables are periodically evaluated for collectability based on the customer's past credit history and current financial condition. The Company’s net accounts receivable balance was $11,162 and $25,972 as of May 31, 2020 and August 31, 2019, respectively. The Company’s allowance for doubtful accounts was $3,660 and $1,058 as of May 31, 2020 and August 31, 2019, respectively. The increase in allowance for doubtful accounts was driven primarily by the deteriorating credit conditions in California exhibited by the Company’s customers in this market, which have significantly impacted the Company’s ability to collect, in part or in full, amounts owed by these customers. The Company’s sales return reserve was $506 and $477 as of May 31, 2020 and August 31, 2019, respectively, and is included in “Accounts receivable, net” on the Company’s condensed consolidated balance sheet. Inventory Inventories are stated at the lower of cost or net realizable value using the average cost method. The Company’s inventory consists of finished goods of $24,048 and $43,768 as of May 31, 2020 and August 31, 2019, respectively. The Company also makes prepayments against the future delivery of inventory classified as prepaid inventory. The Company’s prepaid inventory was $8,429 and $7,134 as of May 31, 2020 and August 31, 2019, respectively. The Company regularly reviews inventory and, when appropriate, records a provision for obsolete and excess inventory. The provision is based on actual loss experience and a forecast of product demand compared to its remaining shelf life. As of May 31, 2020, the Company had $11,285 of inventory reserve. As of August 31, 2019, the Company had $2,640 of inventory reserve. Equity Investment On January 30, 2020, the Company partnered with Xtraction Services Holding Corp (“Xtraction Services”), a provider of equipment leasing solutions to owners and operators of cannabis and hemp companies in the United States in order to provide such solutions to the Company’s network of regulated cannabis and cannabidiol (“CBD”) operators. The Company’s Chief Financial Officer, Stephen Christoffersen, has served on the board of directors for Xtraction Services since May 2019. Under the terms of its agreement with Xtraction Services, upon the closing of the transaction, the Company issued 1,653 of its common shares in exchange for 10,600 proportionate voting shares (the “XS Shares”) of Xtraction Services, the equivalent of 19.9% of Xtraction Services' market capitalization on the closing date. On January 30, 2020, the value of the Company's shares issued in exchange for the equity investment in Xtraction Services was $2,528. The Company’s investment in Xtraction Services is included in “Other assets” on the Company’s condensed consolidated balance sheet. Net Loss Per Share The Company computes earnings per share under Accounting Standards Codification (“ASC”) Topic 260, Earnings per Share (“ASC 260”). Basic net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potentially dilutive securities outstanding during the period. Stock options are potentially dilutive securities; and the number of dilutive options is computed using the treasury stock method. For the three and nine months ended May 31, 2020, basic and diluted weighted average shares are the same, as the Company generated a net loss for the period. The computation for the three and nine months ended May 31, 2020 does not include 11,368 options and 21,737 warrants, as their inclusion would have an anti-dilutive effect on net loss per share. For the three and nine months ended May 31, 2019, net loss is adjusted for changes in fair value of warrants recorded as a liability (see Note 9 below) and weighted average diluted shares includes dilutive warrants. The computation of diluted net loss per share for the three and nine months ended May 31, 2019 does not include 12,662 options and 6,988 warrants, as their inclusion would have an anti-dilutive effect on net loss per share. Revenue Recognition The Company markets and sells a wide variety of ancillary products and services to customers operating in the regulated medical and recreational cannabis and CBD industries. These complementary products and services include compliant and custom packaging products; vape hardware; hydrocarbons and solvents; natural products; stainless steel tanks; custom branded anti-counterfeit and authentication labels; hemp trading services; and retail services focused on CBD mass distribution, industry education and compliance. In accordance with ASC 606, Revenue from Contracts with Customers , the Company applies the following steps to recognize revenue for the sale of products that reflects the consideration to which the Company expects to be entitled to receive in exchange for the promised goods: • Identify the contract with a customer. • Identify the performance obligations in the contract. • Determine the transaction price. • Allocate the transaction price to the performance obligations in the contract. • Recognize revenue when the Company satisfies a performance obligation. Advertising The Company conducts advertising for the promotion of its products and services. In accordance with ASC subtopic 720-35-25 (“ASC 720”), advertising costs are charged to expense when incurred. Advertising costs were $21 and $207 for the three months ended May 31, 2020 and May 31, 2019, respectively. Advertising costs were $199 and $877 for the nine months ended May 31, 2020 and May 31, 2019, respectively. Recently Issued Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Changes to Disclosure Requirements for Fair Value Measurements , which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The ASU removes, modifies, and adds certain disclosure requirements and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is evaluating the potential impact of adoption of this standard on its consolidated financial statements. In December 2019, the FASB Issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting of Income Taxes”, 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 this guidance to determine its impact it may have on its financial statements. In January 2020, the FASB issued ASU 2020-1, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2016-1made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. For public business entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is evaluating the potential impact of adoption of this standard on its consolidated financial statements. Other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the condensed consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. Update on COVID-19 On March 11, 2020, the World Health Organization ("WHO") recognized COVID-19 as a global pandemic, prompting many national, regional, and local governments, including in the markets that the Company operates in, to implement preventative or protective measures, such as travel and business restrictions, temporary store closures, and wide-sweeping quarantines and stay-at-home orders. As a result, COVID-19 has significantly curtailed global economic activity, including in the regulated cannabis and CBD industries in which the Company operates. While |
CONCENTRATIONS OF RISK
CONCENTRATIONS OF RISK | 9 Months Ended |
May 31, 2020 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS OF RISK | CONCENTRATIONS OF RISK Supplier Concentrations The Company purchases inventory from various suppliers and manufacturers. For the nine months ended May 31, 2020 and May 31, 2019, the Company had one vendor which accounted for approximately 33% and 42%, respectively, of total inventory purchases. As of May 31, 2020, there were two vendors in the aggregate that represented approximately 23% of accounts payable. As of May 31, 2019, there were two vendors that represented approximately 42% of accounts payable. Customer Concentrations During the nine months ended May 31, 2020, no customer represented over 10% of the Company’s revenue. For the nine months ended May 31, 2019, the Company had one customer that represented approximately 10% of the Company’s revenues. As of May 31, 2020, there were two customers in aggregate, that represented approximately 47% of accounts receivable. As of May 31, 2019, there was one customer that represented 24% of accounts receivable. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 9 Months Ended |
May 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | RELATED-PARTY TRANSACTIONSThe Company sells certain products and supplies to two related parties. Sales recognized during the three months ended May 31, 2020 and May 31, 2019 from the related parties totaled $113 and $40, respectively. Sales recognized during the nine months ended May 31, 2020 and May 31, 2019 from the related parties totaled $1,299 and $99, respectively. Total accounts receivable from related parties was $755 and $465 as of May 31, 2020 and August 31, 2019, respectively. Further, the Company rents certain warehouse equipment from a related party. No rental payments were made from the related party during the three months ended May 31, 2020. During the three months ended May 31, 2019, total rental payments of $112 were made from the related party. During the nine months ended May 31, 2020 and May 31, 2019, total rental payments of $231 and $210, respectively, were made to the related party. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
May 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT The major classes of fixed assets consist of the following: May 31, August 31, Machinery and equipment $ 6,116 $ 4,430 Vehicles 540 603 Office Equipment 3,395 3,232 Leasehold improvements 1,963 3,296 Construction in progress 661 1,930 12,675 13,491 Accumulated Depreciation (3,379) (2,437) $ 9,296 $ 11,054 Depreciation expense was $990 and $397 for the three months ended May 31, 2020 and May 31, 2019, respectively. Depreciation expense was $2,549 and $965 for the nine months ended May 31, 2020 and May 31, 2019, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
May 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | INTANGIBLE ASSETS Intangible assets consist of the following: As of May 31, 2020 As of August 31, 2019 Description Weighted Average Estimated Useful Life Gross Carrying Value Accumulated Amortization Net Amount Gross Carrying Value Accumulated Amortization Net Amount Trade name 6 years 2,600 (1,336) 1,264 2,600 (1,011) 1,589 Non-compete agreement 4 years 2,370 (1,241) 1,129 2,370 (856) 1,514 $ 4,970 $ (2,577) $ 2,393 $ 4,970 $ (1,867) $ 3,103 Amortization expense was $237 for the three months ended May 31, 2020 and 2019. Amortization expense was $710 and $746 for the nine months ended May 31, 2020 and May 31, 2019, respectively. The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of May 31, 2020: For the year ended August 31, 2020 (remaining three months) $ 237 2021 881 2022 747 2023 528 $ 2,393 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 Months Ended |
May 31, 2020 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: May 31, August 31, Accrued compensation 2,532 3,485 Sales tax payable 745 1,047 Lease liability 1,605 — Other accrued expenses 5,542 1,936 $ 10,424 $ 6,468 |
LEASES
LEASES | 9 Months Ended |
May 31, 2020 | |
Lessee Disclosure [Abstract] | |
LEASES | LEASES The Company adopted ASC 842 “Leases” (“ASC 842”) effective September 1, 2019 utilizing the modified retrospective approach for adoption for all leases that existed at or are commenced after the date of initial application with an option to use certain practical expedients. The package of practical expedients allowed the Company to not reassess: (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases, and (iii) initial direct costs for any expired or existing leases. The Company also used (i) hindsight when evaluating contractual lease options, (ii) the practical expedient that allows lessees to treat lease and non-lease components of leases as a single lease component, (iii) the portfolio approach which allows similar leased assets to be grouped and accounted for together, and (iv) the short-term lease for leases with a term of 12 months or less. The adoption of ASC 842 had a material impact on the condensed consolidated balance sheet due to the recognition of Right of Use (“ROU”) assets and lease liabilities. The adoption of this ASC did not have a material impact on the consolidated statement of operations or the consolidated statement of cash flows. The Company did not recognize a material cumulative effect adjustment to the opening balance sheet retained earnings on September 1, 2019. Because the modified retrospective approach was elected, the ASU was not applied to periods prior to adoption and did not have an impact on previously reported results. At adoption, the Company recognized operating lease ROU assets and lease liabilities that reflect the present value of the future payments. As the rate implicit in the lease could not be determined for any of the Company’s leases, an estimated incremental borrowing rate of 10.7%, which reflects the interest rate the Company would pay to borrow funds over a similar term and in a similar economic environment, was used to determine the present value of lease payments. Based on the impact of ASC 842 on the lease population, the Company recorded $7.6 million in lease liabilities and $6.8 million for ROU assets based upon the lease liabilities adjusted for deferred rent. ROU assets are included in “Other assets” and lease liabilities are included in “Accrued expenses and other current liabilities” and “Other non-current liabilities” on the Company’s condensed consolidated balance sheet. The Company determines if an arrangement is a lease at inception. The Company leases its facilities and certain office equipment under operating leases which expire on various dates through 2026. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. When readily determinable, the Company uses the implicit rate in determining the present value of lease payments. The ROU asset also includes any fixed lease payments, including in-substance fixed lease payments and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease term is determined at lease commencement and includes any non-cancellable period for which the Company has the right to use the underlying asset, together with any options to extend that the Company is reasonably certain to exercise. Lease Liabilities Lease liabilities as of May 31, 2020 consist of the following: Current portion of lease liabilities $ 1,605 Long term lease liabilities, net of current portion 4,562 Total lease liabilities $ 6,167 Aggregate lease maturities as of May 31, 2020 are as follows: Year ended August 31, 2020 (remaining three months) $ 647 2021 2,054 2022 1,968 2023 1,362 2024 764 Thereafter 579 Total minimum lease payments 7,374 Less imputed interest (1,207) Total lease liabilities $ 6,167 Rent expense was $590 and $2,279, respectively, for the three and nine months ended May 31, 2020. At May 31, 2020, the leases had a weighted average remaining lease term of 3.7 years and a weighted average discount rate of 8.5%. Rent expense for the three and nine months ended May 31, 2019 was $720 and $2,226, respectively, under ASC 840, the predecessor to ASC 842. |
DEBT
DEBT | 9 Months Ended |
May 31, 2020 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Monroe Revolving Credit Facility On August 21, 2019, the Company and its subsidiaries (collectively, the “Borrowers”) entered into a secured asset based revolving credit facility (the “Monroe Revolving Credit Facility”), with an aggregate amount not to exceed $35.0 million outstanding at any time, with Monroe Capital Management Advisors, LLC (“Monroe”), as collateral agent and administrative agent, and the various lenders party thereto. The Monroe Revolving Credit Facility also includes an accordion feature that permits the Company to increase the available revolving commitments under the Monroe Revolving Credit Facility by up to an additional $15.0 million, subject to satisfaction of certain conditions. The Monroe Revolving Credit Facility has a 5-year term which matures on August 21, 2024 and is secured by a first priority lien on substantially all of the assets of the Borrowers. The Monroe Revolving Credit Facility contains customary representations and warranties, affirmative and negative covenants, including a financial covenant requiring certain minimum availability, and events of default. As of May 31, 2020, there was no balance outstanding under the facility. As of August 31, 2019, the outstanding balance under the facility was $12.3 million. The Company incurred closing costs associated with the Monroe Revolving Credit Facility in the amount of $2,602, which were deferred and amortized over the 5-year term of the Monroe Revolving Credit Facility on a straight-line basis. As of May 31, 2020, unamortized debt issuance costs of $2,194 are included in “Other assets.” Interest expense and amortization of debt discount, associated with the Monroe Revolving Credit Facility during the three months ended May 31, 2020 amounted to $73 and $154, respectively. Interest expense and amortization of debt discount, associated with the Monroe Revolving Credit Facility during the nine months ended May 31, 2020 amounted to $528 and $461, respectively. Monroe Warrants On August 21, 2019, the Company entered into a subscription agreement with Monroe, pursuant to which the Company issued to Monroe a warrant to purchase up to 500 shares of its common stock (the “Monroe Warrant”) at an exercise price of $4.25 per share. The Monroe Warrant has a 5-year term and as such will expire on August 21, 2024. Amortization expense for the three and nine months ended May 31, 2020 was $50 and $148, respectively. Long-term Debt On April 29, 2019, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”), pursuant to which the Company issued and sold a senior note (the “Original Note”) to the Investor in a private placement offering in the aggregate principal amount of $21.3 million with an original issue discount of $1.3 million, and received net proceeds of $20.0 million. The Original Note was a senior unsecured obligation, and unless earlier redeemed, was scheduled to mature on October 30, 2020. The Original Note did not bear interest, except upon the occurrence of an event of default. On August 21, 2019, the Company entered into an exchange agreement (the “Exchange Agreement”) with the Investor in order to amend and waive certain provisions of the Purchase Agreement and the Original Note and to exchange the Original Note for (i) a new senior note (the “Amended Senior Note”) for the same aggregate principal amount as the Original Note and (ii) a warrant to purchase up to 650 shares of its common stock at an exercise price of $4.25 per share. The warrant has an expiration date of August 21, 2024 and has not been exercised as of May 31, 2020. As of August 21, 2019, the warrant was reclassified from a derivative liability to equity with a corresponding adjustment to additional paid-in capital. Similar to the terms of the Original Note, the Amended Senior Note was set to mature on October 30, 2020, at which time the Company was to pay the Investor an amount in cash representing 120% of all outstanding principal, less original issue discount, plus any accrued and unpaid interest and accrued and unpaid late charges. Similar to the terms of the Original Note, the Amended Senior Note did not bear interest except upon the occurrence of an event of default. On November 8, 2019, the Company entered into a Second Exchange Agreement (“Second Exchange Agreement”) with the Investor, pursuant to which the Company amended the Amended Senior Note (as amended, the “Second Amended Senior Note”). Pursuant to the terms of the Second Amended Senior Note, the maturity date of the Second Amended Senior Note was extended to April 29, 2021 and the aggregate principal amount of the Second Amended Senior Note was increased to approximately $24.0 million and the original issue discount was increased to $1.5 million. Upon maturity, the Company was to pay the Investor an amount in cash representing 120% of all outstanding principal, less original issue discount, plus any accrued and unpaid interest and accrued and unpaid late charges. Similar to the terms of the Original Note, the Second Amended Senior Note did not bear interest, except upon the occurrence of an event of default. See Note 14 below for a description of the Third Exchange Agreement entered into by the Company and the Investor subsequent to May 31, 2020. PPP Loan On April 30, 2020, the Company qualified for and received a loan pursuant to the Paycheck Protection Program, a program implemented by the U.S. Small Business Administration under the Coronavirus Aid, Relief, and Economic Security Act, from a qualified lender (the “PPP Lender”), for an aggregate principal amount of approximately $1.9 million (the "PPP Loan"). The PPP Loan bears interest at a fixed rate of 1.0% per annum, with the first six months of interest deferred, has a term of two years, and is unsecured and guaranteed by the U.S. Small Business Administration. The principal amount of the PPP Loan is subject to forgiveness under the Paycheck Protection Program upon the Company’s request to the extent that the PPP Loan proceeds are used to pay expenses permitted by the Paycheck Protection Program, including payroll costs, covered rent and mortgage obligations, and covered utility payments incurred by the Company. The Company intends to apply for forgiveness of the PPP Loan with respect to these covered expenses. To the extent that all or part of the PPP Loan is not forgiven, the Company will be required to pay interest on the PPP Loan at a rate of 1.0% per annum, and commencing in October 2020 principal and interest payments will be required through the maturity date in April 2022. The terms of the PPP Loan provide for customary events of default including, among other things, payment defaults, breach of representations and warranties, and insolvency events. The PPP Loan may be accelerated upon the occurrence of an event of default. |
WARRANT LIABILITY
WARRANT LIABILITY | 9 Months Ended |
May 31, 2020 | |
WARRANT LIABILITY | |
WARRANT LIABILITY | WARRANT LIABILITY In addition to the warrants described above, in June 2018, the Company issued warrants to purchase 3,750 shares of its common stock exercisable at a price per share of $5.28 (the “2018 Warrants”) to investors in a registered direct offering. The 2018 Warrants have a term of five years from the date of issuance. Pursuant to ASC Topic 815, the initial fair value of the 2018 Warrants of $15,350 was recorded as a warrant liability on the issuance date. The estimated fair values of the 2018 Warrants were computed at issuance using a Black-Scholes option pricing model. The estimated fair value of the outstanding liabilities associated with the 2018 Warrants was $2,009 and $5,444 as of May 31, 2020 and August 31, 2019, respectively. Increases or decreases in fair value of the Company's liability associated with the 2018 Warrants are included as a component of “Other expense” in the accompanying condensed consolidated statements of operations for the respective period. The changes to the liability associated with the 2018 Warrants resulted in an increase of $1,160 and decrease of $3,435 in liability and a corresponding loss and gain for the three and nine months ended May 31, 2020, respectively. The changes to the liability associated with the 2018 Warrants resulted in a decrease of $6,254 and $7,309 in liability and a corresponding gain for the three and nine months ended May 31, 2019, respectively. The estimated fair value of the 2018 Warrants was computed as of May 31, 2020 using the Black Scholes model with the following assumptions: stock price of $1.19, volatility of 119.5%, risk-free rate of 0.22%, annual dividend yield of 0% and expected life of 3.0 years. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
May 31, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value measurements are performed in accordance with the guidance provided by ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the hierarchy of levels of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – Unobservable inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability. The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, equity investments, accounts receivable, accounts payable and accrued liabilities and obligations approximate their fair values based on their short-term nature. The carrying amount of the Company’s long-term notes payable approximates its fair value based on interest rates available to the Company for similar debt instruments and similar remaining maturities. The Company accounts for its investment in Smoke Cartel, Inc. (“Smoke Cartel”) at fair value. On September 21, 2018, Smoke Cartel and the Company entered into an agreement to sell Rowl-Uh-Bowl (the “RUB”) web domain and inventory related to this product line and in exchange, received 1,410 shares of Smoke Cartel common stock. The fair value of the Company’s investment as of August 31, 2019 and May 31, 2020 was based upon the closing price of Smoke Cartel's common stock on each respective date. The investment was classified as a Level 2 financial instrument. The Company accounts for its investment in Xtraction Services at fair value. The fair value of the Company’s investment at May 31, 2020 was based upon the closing price of Xtraction Services' common stock on each respective date. The investment was classified as a Level 2 financial instrument. In connection with the Company’s registered direct offering in June 2018, the Company issued the 2018 Warrants, which are accounted for as a warrant liability (see Note 9 above.) The estimated fair value of the liability is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument. The estimated fair value of the contingent consideration related to the Company’s business combinations is recorded using significant unobservable measures and other fair value inputs and is therefore classified as a Level 3 financial instrument. The following table details the fair value measurement within the fair value hierarchy of the Company’s financial instruments, which includes the Level 2 assets and the Level 3 liabilities: Fair Value at May 31, 2020 Total Level 1 Level 2 Level 3 Assets: Equity investment $ 2,060 $ — $ 2,060 $ — Liabilities: Warrant liability $ 2,009 $ — $ — $ 2,009 Fair Value at August 31, 2019 Total Level 1 Level 2 Level 3 Assets: Equity investment $ 592 $ — $ 592 $ — Liabilities: Warrant liability $ 5,444 $ — $ — $ 5,444 The following table reflects adjustments to the estimated fair value of the Company’s warrant liability with respect to the 2018 Warrants measured using Level 3 inputs: Warrant Liability As of August 31, 2019 $ 5,444 Adjustments to estimated fair value (3,204) As of November 30, 2019 2,240 Adjustments to estimated fair value (1,391) As of As of February 29, 2020 849 Adjustments to estimated fair value 1,160 As of May 31, 2020 $ 2,009 Warrant Liability As of August 31, 2018 $ 14,430 Adjustments to estimated fair value 216 As of November 30, 2018 14,646 Adjustments to estimated fair value (1,271) As of February 28, 2019 13,375 Adjustments to estimated fair value (5,965) As of May 31, 2019 $ 7,410 The following table reflects the changes in fair value of the Company’s contingent consideration payable measured using Level 3 inputs: Contingent Consideration Payable As of August 31, 2018 $ 5,488 Change in fair value 394 As of November 30, 2018 5,882 Change in fair value (5,602) Cash payments (140) Settled in shares- Hybrid (140) As of As of February 28, 2019 — Change in fair value 2,961 As of May 31, 2019 $ 2,961 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
May 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Preferred Stock The Company’s authorized preferred stock is 10,000 shares with a par value of $0.001. As of May 31, 2020, and August 31, 2019, there were no shares of preferred stock issued or outstanding. Common Stock The Company’s authorized common stock is 265,000 shares with a par value of $0.001. As of May 31, 2020, and August 31, 2019, there were 119,933 and 90,041 shares issued and outstanding, respectively. On September 26, 2019, the Company entered into purchase agreements with certain accredited investors pursuant to which the Company issued and sold an aggregate of 17,198 units, with each unit consisting of one share of its common stock and a warrant to purchase half a share of its common stock in a registered direct offering (the “September 2019 Offering”). The purchase price for a unit was $1.75. The closing of the September 2019 Offering occurred on September 30, 2019 and resulted in aggregate gross proceeds to the Company of approximately $30.1 million. The aggregate net proceeds to the Company from the September 2019 Offering, after deducting the placement agent fees and other offering expenses, was approximately $27.4 million. Subject to certain ownership limitations, the warrants were immediately exercisable at an exercise price equal to $2.25 per share of common stock. The warrants are exercisable for five years from the date of issuance. On February 6, 2020, the Company entered into purchase agreements with certain accredited investors pursuant to which the Company issued and sold an aggregate of 10,000 units, with each unit consisting of one share of its common stock and a warrant to purchase half a share of its common stock in a registered direct offering (the “February 2020 Offering”). The purchase price for a unit was $1.60. The closing of the February 2020 Offering occurred on February 10, 2020 and resulted in aggregate gross proceeds to the Company of approximately $16.0 million. The aggregate net proceeds from the February 2020 Offering, after deducting the placement agent fees and other offering expenses, was approximately $14.6 million. Subject to certain ownership limitations, the warrants were immediately exercisable at an exercise price equal to $2.00 per share of common stock. The warrants are exercisable for five years from the date of issuance. Share-based Compensation The Company recorded total stock-based compensation expense of $2,985 and $2,667 for the three months ended May 31, 2020 and May 31, 2019, respectively, and $11,074 and $8,839 for the nine months ended May 31, 2020 and May 31, 2019, respectively, in connection with the issuance of shares of common stock and options to purchase common stock. Stock-based compensation expense is included in selling, general and administrative expense in the condensed consolidated statements of operations. On September 1, 2019, the Company adopted Accounting Standards Update 2018-7 which addresses several aspects of the accounting for non-employee share-based payment transactions and expands the scope of ASC 718, Compensation , to include share-based payment transactions for acquiring goods and services from non-employees. Under the simplified standard, non- employee options will be valued once at the date of grant. At adoption, all awards without established measurement dates were revalued one final time and did not have a material impact on the condensed consolidated financial statements. Stock Incentive Plan The Company’s 2016 Stock Incentive Plan (the “Plan”) was adopted on February 9, 2016. The Plan authorizes the issuance of up to 18,000 shares of common stock in the form of stock-based awards to the Company’s employees and directors. The Company believes that such awards better align the interests of its employees with those of its shareholders. Option awards are generally granted with an exercise price equal to the closing market price of the Company’s common stock at the date of grant and have 10 years contractual terms. The option awards generally vest over three years subject to the recipient’s continuous service. The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of its stock price over the expected option term, expected risk-free interest rate over the expected option term, and expected dividend yield rate over the expected option term. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors which are subject to ASC 718. These amounts are estimates only and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes compensation on a straight-line basis over the requisite service period for each award. The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted during the nine months ended May 31, 2020 and May 31, 2019: Nine Months Ended May 31, 2020 May 31, 2019 Expected term in years 5.3 – 5.9 1-3 Expected volatility 64% – 120% 69% – 87% Risk-free interest rate 0.3% – 1.7% 2.3% – 3.0% Expected dividend yield 0.0% 0.0% The expected term of stock options granted during the nine months ended May 31, 2020 and May 31, 2019 is based on management's judgement and reflects expected exercise patterns. The expected volatility of these stock options is based on management’s analysis of historical volatility. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected term of the related option at the time of the grant. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life of these options was increased, a higher expected volatility was used, or if the expected dividend yield increased. The following table summarizes the Company's stock option activity during the nine months ended May 31, 2020: Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value Balance Outstanding, August 31, 2019 14,761 $ 4.89 9.0 $ 3,192 Granted 3,667 2.24 Exercised (9) 2.06 $ 14 Forfeited (7,051) 4.74 Balance Outstanding, May 31, 2020 11,368 $ 4.10 8.4 $ 358 Vested and expected to vest at May 31, 2020 10,187 4.13 8.3 $ 285 Exercisable, May 31, 2020 5,998 $ 4.40 7.9 $ 26 Stock compensation expense related to stock options was $7,348 and $5,740 for the nine months ended May 31, 2020 and May 31, 2019, respectively. The weighted-average grant-date fair value of options granted during the nine months ended May 31, 2020 and May 31, 2019, was $1.39 and $2.59, respectively. As of May 31, 2020, there was $12,482 of total unrecognized compensation cost related to non-vested stock options granted under the Plan. The expense is expected to be recognized over a weighted-average period of 1.7 years. Restricted Stock and Restricted Stock Units During the nine months ended May 31, 2020, the Company awarded 533 shares of restricted stock to consultants in exchange for $662 of services rendered. During the nine months ended May 31, 2019, the Company issued 295 shares of restricted stock to consultants in exchange for $377 of services rendered and $1,277 of prepaid services, for a total of $1,654. The prepaid services are included in prepaid expenses on the condensed consolidated balance sheet as of May 31, 2019. Stock-based compensation expense related to restricted stock awards was $3,726 and $3,099, respectively, for the nine months ended May 31, 2020 and May 31, 2019. During the nine months ended May 31, 2020, the Company awarded 174 shares of restricted stock units to directors for serving on the board of directors. As of May 31, 2020, $2,329 of total unrecognized compensation cost related to restricted stock units is expected to be recognized over a weighted average period of 1.3 years. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
May 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Other Commitments In the ordinary course of business, the Company may enter into contractual purchase obligations and other agreements that are legally binding and specify certain minimum payment terms. The Company had no such agreements as of May 31, 2020. Litigation The Company may be subject to legal proceedings and claims that arise in the ordinary course of its business. During fiscal 2019, lawsuits were filed in California federal and state court by various purported shareholders against, the Company, each of the current members of the Company’s Board of Directors, and certain of the Company’s current and former officers, alleging, among other things, certain federal securities law violations and/or related breaches of fiduciary duties in connection with the Company’s April 2019 restatement of certain prior period financial statements. In general, the lawsuits assert the same or similar allegations, including that the defendants artificially inflated the Company’s securities prices by knowingly making materially false and misleading statements and omissions to the investing public about the Company’s financial statements, business, operations, management, and internal controls. These lawsuits are described below. May v. KushCo Holdings, Inc., et al. Filed April 30, 2019. Case No. 8:19-cv-00798-JLS-KES, U.S. District Court for the Central District of California. This putative shareholder class action against the Company and certain of its current and former officers alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, and seeks unspecified compensatory damages and other relief on behalf of a class of purchasers of the Company’s securities between July 13, 2017 and April 9, 2019, inclusive. In September 2019, the Court appointed co-lead plaintiffs and co-lead counsel for the plaintiffs. The lead plaintiffs’ amended complaint was filed in November 2019. In February 2020, the Company moved to dismiss the amended complaint. The motion is pending. The Company intends to vigorously defend itself against these claims. Salsberg v. Kovacevich, et al . Filed May 24, 2019. Case No. 8:19-cv-00998-JLS-KES, U.S. District Court for the Central District of California and Neysmith v. Baum, et al . Filed May 31, 2019. Case No. 8:19-cv-01070-JLS-KES, U.S. District Court for the Central District of California. This purported shareholder derivative action against certain current and former directors and officers alleges, among other things, breach of fiduciary duty, waste of corporate assets, and unjust enrichment. The Company is named as a nominal defendant and the plaintiff seeks, among other things, corporate governance reforms, and disgorgement of profits, benefits, and compensation obtained by the defendants from the alleged conduct, to be paid to the Company. In September 2019, the Court consolidated these cases. In December 2019, the Court ordered a stay of this action pursuant to a stipulation of the parties. Savage v. Kovacevich, et al . Filed June 14, 2019. Case No. 30-2019-01077191-CU-MC-NJC, Superior Court of California, County of Orange. This purported shareholder derivative action against certain current and former directors and officers alleges, among other things, breach of fiduciary duty, waste of corporate assets, and unjust enrichment. The Company is named as a nominal defendant and the plaintiff seeks, among other things, corporate governance reforms, and unspecified damages and restitution from the defendants, to be paid to the Company. In August 2019, the Court ordered a stay of this action pursuant to a stipulation of the parties. Bruno, et al. v. Kovacevich, et al . Filed September 26, 2019. Case No. A-19-802660-C, Eighth Judicial District Court of the State of Nevada and Majchrzak v. Kovacevich, et al . Filed October 2, 2019. Case No. A-19-902945-B, First Judicial District Court of the State of Nevada. These purported shareholder derivative actions against certain current and former directors and officers allege, among other things, breach of fiduciary duty, waste of corporate assets, and unjust enrichment. The Company is named as a nominal defendant in each action and the plaintiffs seek, among other things, equitable relief and unspecified damages from the defendants, to be paid to the Company. In May 2020, the Company accepted service of the complaints, and the plaintiffs have indicated that they intend to move to stay each action. |
2020 PLAN & RESTRUCTURING CHARG
2020 PLAN & RESTRUCTURING CHARGES | 9 Months Ended |
May 31, 2020 | |
Restructuring Charges [Abstract] | |
2020 PLAN & RESTRUCTURING CHARGES | 2020 PLAN & RESTRUCTURING CHARGES During the second quarter of fiscal 2020, the Company adopted a comprehensive strategic plan (the “2020 Plan”) to more effectively execute the Company’s strategy of focusing its resources on more established, financially stable, and creditworthy customers (namely multi-state operators, licensed producers, and leading brands). In connection with the 2020 Plan, the Company began implementing a restructuring process that seeks to rationalize all aspects of its operations by, among other things, significantly reducing its overhead, implementing tighter expense controls, consolidating its warehouses, reducing its inventory, and drastically altering its sales strategy to focus more on these customers. The Company believes that this strategic shift and associated restructuring should result in a better forecast of demand, reduction of inventory and warehouse space, improved collections and cash flow, and potential revenue upside from these customers’ continued expansion and consolidation in the marketplace. The Company has completed, or is in the process of completing, the following restructuring activities in connection with the 2020 Plan: • Severance: The Company is in the process of implementing a more efficient and automated approach to serving a smaller more targeted group of customers, which will require substantially fewer dedicated sales representatives, project managers, warehouse personnel, and other related personnel. As part of this process, the Company determined that certain positions at the Company were no longer essential to the execution of the Company’s strategy going forward. As a result, the Company underwent reductions in force to right-size and better align its workforce with this new strategy. During the second quarter of fiscal 2020, the Company terminated 28 employees, and incurred $379 in severance-related restructuring costs. During the third quarter of fiscal 2020, the Company terminated 65 employees, and incurred $800 in severance-related restructuring costs. • Facility-Related Lease Termination and Exiting Costs: As a result of the Company’s decision to discontinue nearly all of its stock inventory, the Company determined that it no longer needs the vast majority of its current warehouse space, and is currently in the process of negotiating with its landlords to terminate or sublease and exit the impacted warehouses. During the third quarter of fiscal 2020, the Company terminated leases and vacated its Las Vegas, Nevada, Santa Rosa, California, Osage, Colorado facilities and subleased its Garden Grove, California facility. The Company is planning to vacate additional facilities throughout the remainder of fiscal 2020 in order to consolidate its warehouse footprint. During the third quarter of fiscal 2020, the Company incurred $0.2 million in restructuring exit cost. • Asset Impairment: With the Company’s planned facility closures, the Company has determined that the fair value of its fixed assets at these closing facilities is now below their carrying value, and that an impairment has occurred. The Company also determined that its product molds and tooling are no longer necessary assets, given its shift to focus exclusively on custom and best-selling stock inventory, creating an additional need for impairment. As a result, the Company recognized a total impairment charge related of approximately $3.9 million related to these fixed assets during the second quarter of its fiscal 2020. In addition, because of the Company’s decision to consolidate its warehouses, the Company determined that it will incur impairment charges to its ROU assets. Based on internal calculations, the Company recognized impairment charges related to these assets of $3.0 million during the second quarter of its fiscal 2020. The Company expects to incur a total of $9.5 million in restructuring charges upon the completion of the 2020 Plan, which represents the Company’s best estimate as of May 31, 2020. The 2020 Plan is expected to be completed by the end of fiscal 2020. The recognition of restructuring charges requires that the Company make certain judgments and estimates regarding the nature, timing and amount of costs associated with the planned reductions of workforce and facility, ROU and asset impairment costs. At the end of each reporting period, the Company will evaluate the remaining accrued balance to ensure that no excess accruals are retained, and the utilization of the provisions are for their intended purpose in accordance with developed plans. The following table reflects the movement of activity of the restructuring reserve for the six months ended May 31, 2020: Severance Facility, ROU Facility Exit Cost Total Balance at December 1, 2019 $ — $ — $ — $ — Provisions/Additions 1,182 6,895 176 8,253 Utilized/Paid (1,002) (6,895) (176) (8,073) Balance at May 31, 2020 $ 180 $ — $ — $ 180 Expenses incurred under the 2020 Plan during the three and nine months ended May 31, 2020 are included within “Restructuring costs” in the condensed consolidated statements of operations. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 9 Months Ended |
May 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT Third Exchange Agreement and Third Exchange Note On June 9, 2020, the Company entered into a Third Exchange Agreement (the “Third Exchange Agreement”) with the Investor in order to (x) amend and waive certain provisions of the Purchase Agreement and the Second Amended Senior Note, and (y) exchange the Second Amended Senior Note without any cash consideration for (i) a new senior note in the aggregate principal amount of $22.0 million (the “Third Amended Senior Note”) and (ii) 5,347,594 shares of the Company’s common stock (the “Exchange Shares”). Similar to the terms of the Second Amended Senior Note, the Third Amended Senior Note will mature on April 29, 2021, subject to the Investor’s right to extend such maturity date. Upon maturity, the Company must pay the Investor an amount in cash representing the aggregate outstanding principal, plus any accrued and unpaid interest and accrued and unpaid late charges. Similar to the terms of the Original Note, the Third Amended Senior Note will not bear interest except upon the occurrence (and during the continuance) of an Event of Default (as such term is defined in the Third Amended Senior Note), in which case the Third Amended Senior Note will bear interest at a rate of 18.0% per annum (the “Default Rate”). The Third Amended Senior Note is redeemable by the Company at any time after the issuance in an amount equal to the outstanding principal and any accrued interest or late charges. The Third Amended Senior Note includes customary affirmative and negative covenants, including a limitation on the Company’s ability to incur additional indebtedness, subject to certain permitted exceptions. The Third Amended Senior Note includes customary events of default including, among others, payment defaults, breach of covenant defaults, bankruptcy and insolvency defaults, cross defaults with certain indebtedness, a change of control default, judgment defaults, and inaccuracies of representations and warranties defaults. Similar to the terms of the Original Note, the Investor may require the Company to redeem, upon the occurrence of an Event of Default, all or a portion of the Third Amended Senior Note at a redemption premium of 135% of the outstanding principal and any accrued interest or late charges. Similar to the terms of the Original Note, any amount of principal or other amounts due to the Investor under the Purchase Agreement or the Third Amended Senior Note that is not paid when due (except to the extent such amount is simultaneously accruing interest at the Default Rate) will result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of 18.0% per annum from the date such amount was due until the same is paid in full. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
May 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the activity of KushCo Holdings, Inc. (the “Company”) and its wholly-owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information pursuant to Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included in the condensed consolidated financial statements for the interim periods presented herein, but are not necessarily indicative of operating results to be achieved for full fiscal years or other interim periods. The condensed consolidated balance sheet as of August 31, 2019 was derived from the audited financial statements as of that date but does not include all disclosures as required by GAAP. These condensed consolidated financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes for the fiscal year ended August 31, 2019 and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year then ended and filed with the SEC on November 12, 2019. References to amounts in these notes to condensed consolidated financial statements are in thousands, except per share amounts, unless otherwise specified. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Significant estimates relied upon in preparing these condensed consolidated financial statements include revenue recognition, accounts receivable reserves, inventory and related reserves, expected future cash flows used to evaluate the recoverability of long-lived assets, estimated fair values of long-lived assets used to record impairment charges related to intangible assets and goodwill, amortization periods, accrued expenses, stock-based compensation expenses, and recoverability of the Company’s net deferred tax assets and any related valuation allowance. Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if past experience or other assumptions do not turn out to be substantially accurate. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are carried at their estimated collectible amounts. Trade credit is generally extended on a short-term basis; thus, trade receivables do not bear interest. Trade accounts receivables are periodically evaluated for collectability based on the customer's past credit history and current financial condition. The Company’s net accounts receivable balance was $11,162 and $25,972 as of May 31, 2020 and August 31, 2019, respectively. The Company’s allowance for doubtful accounts was $3,660 and $1,058 as of May 31, 2020 and August 31, 2019, respectively. The increase in allowance for doubtful accounts was driven primarily by the deteriorating credit conditions in California exhibited by the Company’s customers in this market, which have significantly impacted the Company’s ability to collect, in part or in full, amounts owed by these customers. The Company’s sales return reserve was $506 and $477 as of May 31, 2020 and August 31, 2019, respectively, and is included in “Accounts receivable, net” on the Company’s condensed consolidated balance sheet. |
Inventory | Inventory Inventories are stated at the lower of cost or net realizable value using the average cost method. The Company’s inventory consists of finished goods of $24,048 and $43,768 as of May 31, 2020 and August 31, 2019, respectively. The Company also makes prepayments against the future delivery of inventory classified as prepaid inventory. The Company’s prepaid inventory |
Equity Investment in Xtraction Services | Equity Investment On January 30, 2020, the Company partnered with Xtraction Services Holding Corp (“Xtraction Services”), a provider of equipment leasing solutions to owners and operators of cannabis and hemp companies in the United States in order to provide such solutions to the Company’s network of regulated cannabis and cannabidiol (“CBD”) operators. The Company’s Chief Financial Officer, Stephen Christoffersen, has served on the board of directors for Xtraction Services since May 2019. Under the terms of its agreement with Xtraction Services, upon the closing of the transaction, the Company issued 1,653 of its common shares in exchange for 10,600 proportionate voting shares (the “XS Shares”) of Xtraction Services, the equivalent of 19.9% of Xtraction Services' market capitalization on the closing date. On January 30, 2020, the value of the Company's shares issued in exchange for the equity investment in Xtraction Services was $2,528. The Company’s investment in Xtraction Services is included in “Other assets” on the Company’s condensed consolidated balance sheet. |
Net Loss Per Share | Net Loss Per Share The Company computes earnings per share under Accounting Standards Codification (“ASC”) Topic 260, Earnings per Share (“ASC 260”). Basic net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the potentially dilutive securities outstanding during the period. Stock options are potentially dilutive securities; and the number of dilutive options is computed using the treasury stock method. For the three and nine months ended May 31, 2020, basic and diluted weighted average shares are the same, as the Company generated a net loss for the period. The computation for the three and nine months ended May 31, 2020 does not include 11,368 options and 21,737 warrants, as their inclusion would have an anti-dilutive effect on net loss per share. For the three and nine months ended May 31, 2019, net loss is adjusted for changes in fair value of warrants recorded as a liability (see Note 9 below) and weighted average diluted shares includes dilutive warrants. The computation of diluted net loss per share for the three and nine months ended May 31, 2019 does not include 12,662 options and 6,988 warrants, as their inclusion would have an anti-dilutive effect on net loss per share. |
Revenue Recognition | Revenue Recognition The Company markets and sells a wide variety of ancillary products and services to customers operating in the regulated medical and recreational cannabis and CBD industries. These complementary products and services include compliant and custom packaging products; vape hardware; hydrocarbons and solvents; natural products; stainless steel tanks; custom branded anti-counterfeit and authentication labels; hemp trading services; and retail services focused on CBD mass distribution, industry education and compliance. In accordance with ASC 606, Revenue from Contracts with Customers , the Company applies the following steps to recognize revenue for the sale of products that reflects the consideration to which the Company expects to be entitled to receive in exchange for the promised goods: • Identify the contract with a customer. • Identify the performance obligations in the contract. • Determine the transaction price. • Allocate the transaction price to the performance obligations in the contract. • Recognize revenue when the Company satisfies a performance obligation. |
Advertising | Advertising The Company conducts advertising for the promotion of its products and services. In accordance with ASC subtopic 720-35-25 (“ASC 720”), advertising costs are charged to expense when incurred. Advertising costs were $21 and $207 for the three |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Changes to Disclosure Requirements for Fair Value Measurements , which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The ASU removes, modifies, and adds certain disclosure requirements and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is evaluating the potential impact of adoption of this standard on its consolidated financial statements. In December 2019, the FASB Issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting of Income Taxes”, 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 this guidance to determine its impact it may have on its financial statements. In January 2020, the FASB issued ASU 2020-1, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2016-1made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. For public business entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company is evaluating the potential impact of adoption of this standard on its consolidated financial statements. Other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the condensed consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
Fair Value Measurement, Policy | ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the hierarchy of levels of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – Unobservable inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
May 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | The major classes of fixed assets consist of the following: May 31, August 31, Machinery and equipment $ 6,116 $ 4,430 Vehicles 540 603 Office Equipment 3,395 3,232 Leasehold improvements 1,963 3,296 Construction in progress 661 1,930 12,675 13,491 Accumulated Depreciation (3,379) (2,437) $ 9,296 $ 11,054 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
May 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible assets | Intangible assets consist of the following: As of May 31, 2020 As of August 31, 2019 Description Weighted Average Estimated Useful Life Gross Carrying Value Accumulated Amortization Net Amount Gross Carrying Value Accumulated Amortization Net Amount Trade name 6 years 2,600 (1,336) 1,264 2,600 (1,011) 1,589 Non-compete agreement 4 years 2,370 (1,241) 1,129 2,370 (856) 1,514 $ 4,970 $ (2,577) $ 2,393 $ 4,970 $ (1,867) $ 3,103 |
Schedule of remaining estimated amortization of definite-lived intangible assets | The following table summarizes the remaining estimated amortization of definite-lived intangible assets as of May 31, 2020: For the year ended August 31, 2020 (remaining three months) $ 237 2021 881 2022 747 2023 528 $ 2,393 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
May 31, 2020 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of the following: May 31, August 31, Accrued compensation 2,532 3,485 Sales tax payable 745 1,047 Lease liability 1,605 — Other accrued expenses 5,542 1,936 $ 10,424 $ 6,468 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
May 31, 2020 | |
Lessee Disclosure [Abstract] | |
Summary of lease liabilities | Lease liabilities as of May 31, 2020 consist of the following: Current portion of lease liabilities $ 1,605 Long term lease liabilities, net of current portion 4,562 Total lease liabilities $ 6,167 |
Summary of aggregate lease maturities | Aggregate lease maturities as of May 31, 2020 are as follows: Year ended August 31, 2020 (remaining three months) $ 647 2021 2,054 2022 1,968 2023 1,362 2024 764 Thereafter 579 Total minimum lease payments 7,374 Less imputed interest (1,207) Total lease liabilities $ 6,167 |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
May 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of financial instruments | The following table details the fair value measurement within the fair value hierarchy of the Company’s financial instruments, which includes the Level 2 assets and the Level 3 liabilities: Fair Value at May 31, 2020 Total Level 1 Level 2 Level 3 Assets: Equity investment $ 2,060 $ — $ 2,060 $ — Liabilities: Warrant liability $ 2,009 $ — $ — $ 2,009 Fair Value at August 31, 2019 Total Level 1 Level 2 Level 3 Assets: Equity investment $ 592 $ — $ 592 $ — Liabilities: Warrant liability $ 5,444 $ — $ — $ 5,444 |
Schedule of fair value warrant liability | The following table reflects adjustments to the estimated fair value of the Company’s warrant liability with respect to the 2018 Warrants measured using Level 3 inputs: Warrant Liability As of August 31, 2019 $ 5,444 Adjustments to estimated fair value (3,204) As of November 30, 2019 2,240 Adjustments to estimated fair value (1,391) As of As of February 29, 2020 849 Adjustments to estimated fair value 1,160 As of May 31, 2020 $ 2,009 Warrant Liability As of August 31, 2018 $ 14,430 Adjustments to estimated fair value 216 As of November 30, 2018 14,646 Adjustments to estimated fair value (1,271) As of February 28, 2019 13,375 Adjustments to estimated fair value (5,965) As of May 31, 2019 $ 7,410 |
Schedule of fair value contingent acquisition liabilities | The following table reflects the changes in fair value of the Company’s contingent consideration payable measured using Level 3 inputs: Contingent Consideration Payable As of August 31, 2018 $ 5,488 Change in fair value 394 As of November 30, 2018 5,882 Change in fair value (5,602) Cash payments (140) Settled in shares- Hybrid (140) As of As of February 28, 2019 — Change in fair value 2,961 As of May 31, 2019 $ 2,961 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
May 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of assumptions used | The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted during the nine months ended May 31, 2020 and May 31, 2019: Nine Months Ended May 31, 2020 May 31, 2019 Expected term in years 5.3 – 5.9 1-3 Expected volatility 64% – 120% 69% – 87% Risk-free interest rate 0.3% – 1.7% 2.3% – 3.0% Expected dividend yield 0.0% 0.0% |
Schedule of stock option activity | The following table summarizes the Company's stock option activity during the nine months ended May 31, 2020: Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value Balance Outstanding, August 31, 2019 14,761 $ 4.89 9.0 $ 3,192 Granted 3,667 2.24 Exercised (9) 2.06 $ 14 Forfeited (7,051) 4.74 Balance Outstanding, May 31, 2020 11,368 $ 4.10 8.4 $ 358 Vested and expected to vest at May 31, 2020 10,187 4.13 8.3 $ 285 Exercisable, May 31, 2020 5,998 $ 4.40 7.9 $ 26 |
2020 PLAN & RESTRUCTURING CHA_2
2020 PLAN & RESTRUCTURING CHARGES (Tables) | 9 Months Ended |
May 31, 2020 | |
Restructuring Charges [Abstract] | |
Schedule of movement of activity of the restructuring reserve | Severance Facility, ROU Facility Exit Cost Total Balance at December 1, 2019 $ — $ — $ — $ — Provisions/Additions 1,182 6,895 176 8,253 Utilized/Paid (1,002) (6,895) (176) (8,073) Balance at May 31, 2020 $ 180 $ — $ — $ 180 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Jan. 30, 2020 | May 31, 2020 | Feb. 29, 2020 | May 31, 2019 | May 31, 2020 | May 31, 2019 | Aug. 31, 2019 |
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | |||||||
Allowance for doubtful accounts | $ 3,660 | $ 3,660 | $ 1,058 | ||||
Sales return reserve | 506 | 506 | 477 | ||||
Inventory finished goods | 24,048 | 24,048 | 43,768 | ||||
Prepaid inventory | 8,429 | 8,429 | 7,134 | ||||
Inventory reserve | 11,285 | 11,285 | $ 2,640 | ||||
Shares issued in exchange for equity investment in Xtraction Services | $ 2,528 | 2,528 | $ 0 | ||||
Advertising costs | $ 21 | $ 207 | $ 199 | $ 877 | |||
Options | |||||||
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | |||||||
Exclusion of shares that have an anti-dilutive effect on net loss per share | 11,368 | 12,662 | 11,368 | 12,662 | |||
Warrant | |||||||
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | |||||||
Exclusion of shares that have an anti-dilutive effect on net loss per share | 21,737 | 6,988 | 21,737 | 6,988 | |||
Common Stock | |||||||
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | |||||||
Shares issued for exchange | 1,653 | 1,653 | |||||
Shares issued in exchange for equity investment in Xtraction Services | $ 2 | ||||||
Xtraction Services | |||||||
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | |||||||
Percentage of equity interests received | 19.90% | ||||||
Shares exchanged for common stock | 10,600 | ||||||
Shares issued in exchange for equity investment in Xtraction Services | $ 2,528 |
CONCENTRATIONS OF RISK (Details
CONCENTRATIONS OF RISK (Details) | 9 Months Ended | |
May 31, 2020vendorcustomer | May 31, 2019vendorcustomer | |
Purchase | Supplier Concentration Risk | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Benchmark Description | one vendor which accounted for approximately 33% and 37%, respectively, of total inventory purchases | one vendor which accounted for approximately 33% and 37%, respectively, of total inventory purchases |
Number of vendors | vendor | 1 | 1 |
Concentration risk, percentage | 33.00% | 42.00% |
Accounts Payable | Supplier Concentration Risk | ||
Concentration Risk [Line Items] | ||
Number of vendors | vendor | 2 | 2 |
Concentration risk, percentage | 23.00% | 42.00% |
Revenue | Customer Concentration Risk | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 10.00% | 10.00% |
Number of customer | customer | 0 | 1 |
Accounts Receivable | Customer Concentration Risk | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 47.00% | 24.00% |
Number of customer | customer | 2 | 1 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
May 31, 2020USD ($)relatedParty | May 31, 2019USD ($)relatedParty | May 31, 2020USD ($) | May 31, 2019USD ($) | Aug. 31, 2019USD ($) | |
Related Party Transactions [Abstract] | |||||
Number of related parties | relatedParty | 2 | 2 | |||
Sales recognized from related parties | $ 113 | $ 40 | $ 1,299 | $ 99 | |
Total accounts receivable from related parties | 755 | 755 | $ 465 | ||
Total payments made to related party | $ 0 | $ 112 | $ 231 | $ 210 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
May 31, 2020 | May 31, 2019 | May 31, 2020 | May 31, 2019 | Aug. 31, 2019 | |
PROPERTY AND EQUIPMENT | |||||
Property and equipment, gross | $ 12,675 | $ 12,675 | $ 13,491 | ||
Accumulated Depreciation | (3,379) | (3,379) | (2,437) | ||
Property and equipment, net | 9,296 | 9,296 | 11,054 | ||
Depreciation expense | 990 | $ 397 | 2,549 | $ 965 | |
Machinery and equipment | |||||
PROPERTY AND EQUIPMENT | |||||
Property and equipment, gross | 6,116 | 6,116 | 4,430 | ||
Vehicles | |||||
PROPERTY AND EQUIPMENT | |||||
Property and equipment, gross | 540 | 540 | 603 | ||
Office Equipment | |||||
PROPERTY AND EQUIPMENT | |||||
Property and equipment, gross | 3,395 | 3,395 | 3,232 | ||
Leasehold improvements | |||||
PROPERTY AND EQUIPMENT | |||||
Property and equipment, gross | 1,963 | 1,963 | 3,296 | ||
Construction in progress | |||||
PROPERTY AND EQUIPMENT | |||||
Property and equipment, gross | $ 661 | $ 661 | $ 1,930 |
PROPERTY AND EQUIPMENT - Additi
PROPERTY AND EQUIPMENT - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2020 | May 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 990 | $ 397 | $ 2,549 | $ 965 |
INTANGIBLE ASSETS - Intangible
INTANGIBLE ASSETS - Intangible assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
May 31, 2020 | Aug. 31, 2019 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | $ 4,970 | $ 4,970 |
Accumulated amortization | (2,577) | (1,867) |
Net Amount | $ 2,393 | 3,103 |
Trade name | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average estimated useful life | 6 years | |
Gross carrying value | $ 2,600 | 2,600 |
Accumulated amortization | (1,336) | (1,011) |
Net Amount | $ 1,264 | 1,589 |
Non-compete agreement | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Weighted average estimated useful life | 4 years | |
Gross carrying value | $ 2,370 | 2,370 |
Accumulated amortization | (1,241) | (856) |
Net Amount | $ 1,129 | $ 1,514 |
INTANGIBLE ASSETS - Additional
INTANGIBLE ASSETS - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2020 | May 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 237 | $ 237 | $ 710 | $ 746 |
INTANGIBLE ASSETS - Amortizatio
INTANGIBLE ASSETS - Amortization expense (Details) - USD ($) $ in Thousands | May 31, 2020 | Aug. 31, 2019 |
Year ended August 31, | ||
2020 (remaining three months) | $ 237 | |
2021 | 881 | |
2022 | 747 | |
2023 | 528 | |
Net Amount | $ 2,393 | $ 3,103 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | May 31, 2020 | Aug. 31, 2019 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Accrued compensation | $ 2,532 | $ 3,485 |
Sales tax payable | 745 | 1,047 |
Lease liability | 1,605 | 0 |
Other accrued expenses | 5,542 | 1,936 |
Accrued expenses and other current liabilities | $ 10,424 | $ 6,468 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | May 31, 2020 | May 31, 2019 |
Lessee, Lease, Description [Line Items] | ||
Weighted average discount rate | 8.50% | |
Lease liabilities | $ 6,167 | |
ASU 2016-02 | Restatement | ||
Lessee, Lease, Description [Line Items] | ||
Weighted average discount rate | 10.70% | |
Lease liabilities | $ 7,600 | |
ROU assets | $ 6,800 |
LEASES - Lease liabilities (Det
LEASES - Lease liabilities (Details) $ in Thousands | May 31, 2020USD ($) |
Lease Liabilities | |
Current portion of lease liabilities | $ 1,605 |
Long term lease liabilities, net of current portion | 4,562 |
Total lease liabilities | $ 6,167 |
LEASES - Aggregate lease maturi
LEASES - Aggregate lease maturities (Details) $ in Thousands | May 31, 2020USD ($) |
Aggregate lease maturities | |
2020 (remaining three months) | $ 647 |
2021 | 2,054 |
2022 | 1,968 |
2023 | 1,362 |
2024 | 764 |
Thereafter | 579 |
Total minimum lease payments | 7,374 |
Less imputed interest | (1,207) |
Total lease liabilities | $ 6,167 |
LEASES - Additional Information
LEASES - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2020 | May 31, 2019 | May 31, 2020 | May 31, 2019 | |
Lessee Disclosure [Abstract] | ||||
Rent expense | $ 590 | $ 2,279 | ||
Weighted average remaining lease term | 3 years 8 months 12 days | 3 years 8 months 12 days | ||
Weighted average discount rate | 8.50% | 8.50% | ||
Rent expense under ASC 840 | $ 720 | $ 2,226 |
DEBT - Monroe Revolving Credit
DEBT - Monroe Revolving Credit Facility (Details) - USD ($) | Aug. 21, 2019 | May 31, 2020 | May 31, 2020 | May 31, 2019 | Aug. 31, 2019 |
Line of Credit Facility [Line Items] | |||||
Amortization of debt discount | $ 3,902,000 | $ 0 | |||
Monroe Revolving Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 35,000,000 | ||||
Additional borrowing capacity | $ 15,000,000 | ||||
Debt instrument, term | 5 years | 5 years | |||
Outstanding amount | $ 0 | $ 0 | $ 12,300,000 | ||
Closing costs incurred | 2,602,000 | ||||
Unamortized debt issuance costs | 2,194,000 | 2,194,000 | |||
Interest expense | 73,000 | 528,000 | |||
Amortization of debt discount | $ 154,000 | $ 461,000 |
DEBT - Monroe Warrants (Details
DEBT - Monroe Warrants (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 31, 2020USD ($)$ / shares | May 31, 2020USD ($)$ / shares | Aug. 31, 2019$ / shares | Aug. 21, 2019$ / sharesshares | |
Line of Credit Facility [Line Items] | ||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |
Monroe Subscription Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Warrants issued | shares | 500 | |||
Warrants exercise price | $ 4.25 | |||
Percentage of outstanding principal for repayment | 1.20 | |||
Term of warrants | 5 years | |||
Amortization expense | $ | $ 50 | $ 148 | ||
Exchange Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Warrants issued | shares | 650 | |||
Warrants exercise price | $ 4.25 |
DEBT - Long-term Debt (Details)
DEBT - Long-term Debt (Details) | Apr. 29, 2019USD ($) | May 31, 2020$ / shares | Nov. 08, 2019USD ($) | Aug. 31, 2019$ / shares | Aug. 21, 2019$ / sharesshares |
Line of Credit Facility [Line Items] | |||||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | |||
Exchange Agreement | |||||
Line of Credit Facility [Line Items] | |||||
Warrants issued | shares | 650 | ||||
Warrants exercise price | $ / shares | $ 4.25 | ||||
Second Exchange Agreement | |||||
Line of Credit Facility [Line Items] | |||||
Aggregate principal amount | $ 24,000,000 | ||||
Issue discount | $ 1,500,000 | ||||
Percentage of outstanding principal for repayment | 1.20 | ||||
Private placement offering (the "Private Placement") | Securities Purchase Agreement (the "Purchase Agreement") | |||||
Line of Credit Facility [Line Items] | |||||
Aggregate principal amount | $ 21,300,000 | ||||
Issue discount | 1,300,000 | ||||
Proceeds from private placement | $ 20,000,000 |
DEBT - PPP Loan (Details)
DEBT - PPP Loan (Details) $ in Millions | Apr. 30, 2020USD ($) |
Paycheck Protection Program | |
Short-term Debt [Line Items] | |
Proceeds from Issuance of Debt | $ 1.9 |
WARRANT LIABILITY (Details)
WARRANT LIABILITY (Details) - Derivative Warrant Liability | 3 Months Ended | 9 Months Ended | ||||
May 31, 2020USD ($) | May 31, 2019USD ($) | May 31, 2020USD ($) | May 31, 2019USD ($) | Aug. 31, 2019USD ($) | Jun. 30, 2018USD ($)$ / sharesshares | |
Credit Derivatives [Line Items] | ||||||
Warrants issued | shares | 3,750 | |||||
Warrants exercise price | $ / shares | $ 5.28 | |||||
Term of warrants | 5 years | |||||
Estimated fair value of outstanding warrant liabilities | $ 2,009,000 | $ 2,009,000 | $ 5,444,000 | $ 15,350,000 | ||
Changes in derivative liability | $ 1,160,000 | $ (6,254,000) | $ (3,435,000) | $ (7,309,000) | ||
Stock price | ||||||
Credit Derivatives [Line Items] | ||||||
Measurement input | 1.19 | 1.19 | ||||
Volatility | ||||||
Credit Derivatives [Line Items] | ||||||
Measurement input | 1.195 | 1.195 | ||||
Risk-free rate | ||||||
Credit Derivatives [Line Items] | ||||||
Measurement input | 0.22 | 0.22 | ||||
Annual dividend yield | ||||||
Credit Derivatives [Line Items] | ||||||
Measurement input | 0 | 0 | ||||
Expected life | ||||||
Credit Derivatives [Line Items] | ||||||
Term of warrants | 3 years | 3 years |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - Recurring - USD ($) $ in Thousands | May 31, 2020 | Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | May 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | Aug. 31, 2018 |
Assets: | ||||||||
Equity investment | $ 2,060 | $ 592 | ||||||
Liabilities | ||||||||
Warrant liability | 2,009 | 5,444 | ||||||
Level 1 | ||||||||
Assets: | ||||||||
Equity investment | 0 | 0 | ||||||
Liabilities | ||||||||
Warrant liability | 0 | 0 | ||||||
Level 2 | ||||||||
Assets: | ||||||||
Equity investment | 2,060 | 592 | ||||||
Liabilities | ||||||||
Warrant liability | 0 | 0 | ||||||
Level 3 | ||||||||
Assets: | ||||||||
Equity investment | 0 | 0 | ||||||
Liabilities | ||||||||
Warrant liability | 2,009 | 5,444 | ||||||
Level 3 | Derivative Warrant Liability | ||||||||
Liabilities | ||||||||
Warrant liability | $ 2,009 | $ 849 | $ 2,240 | $ 5,444 | $ 7,410 | $ 13,375 | $ 14,646 | $ 14,430 |
FAIR VALUE OF FINANCIAL INSTR_4
FAIR VALUE OF FINANCIAL INSTRUMENTS - Activity for Warrant derivative Liability (Details) - Recurring - USD ($) $ in Thousands | 3 Months Ended | |||||
May 31, 2020 | Feb. 29, 2020 | Nov. 30, 2019 | May 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||
Beginning Balance | $ 5,444 | |||||
Ending Balance | $ 2,009 | |||||
Level 3 | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||
Beginning Balance | 5,444 | |||||
Ending Balance | 2,009 | |||||
Level 3 | Derivative Warrant Liability | ||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||
Beginning Balance | 849 | $ 2,240 | 5,444 | $ 13,375 | $ 14,646 | $ 14,430 |
Adjustments to estimated fair value | 1,160 | (1,391) | (3,204) | (5,965) | (1,271) | 216 |
Ending Balance | $ 2,009 | $ 849 | $ 2,240 | $ 7,410 | $ 13,375 | $ 14,646 |
FAIR VALUE OF FINANCIAL INSTR_5
FAIR VALUE OF FINANCIAL INSTRUMENTS - Contingent acquisition liabilities (Details) - Contingent consideration - USD ($) $ in Thousands | 3 Months Ended | ||
May 31, 2019 | Feb. 28, 2019 | Nov. 30, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | $ 0 | $ 5,882 | $ 5,488 |
Change in Fair Value | 2,961 | (5,602) | 394 |
Cash payment | (140) | ||
Settled in shares | (140) | ||
Ending balance | $ 2,961 | $ 0 | $ 5,882 |
FAIR VALUE OF FINANCIAL INSTR_6
FAIR VALUE OF FINANCIAL INSTRUMENTS - Additional Information (Details) | Sep. 21, 2018shares |
Smoke Cartel, Inc. | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Common stock issued for consideration to sell a web domain and inventory related to the Company's Roll-uh-Bowl ("RUB") product line | 1,410 |
STOCKHOLDERS' EQUITY - Addition
STOCKHOLDERS' EQUITY - Additional Information 1 (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 06, 2020 | Sep. 30, 2019 | Sep. 26, 2019 | Feb. 29, 2020 | Sep. 30, 2019 | May 31, 2020 | May 31, 2019 | May 31, 2020 | May 31, 2019 | Aug. 31, 2019 |
Stockholders Equity [Line Items] | ||||||||||
Preferred stock, shares authorized | 10,000 | 10,000 | 10,000 | |||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Preferred stock, shares issued | 0 | 0 | 0 | |||||||
Preferred stock, shares outstanding | 0 | 0 | 0 | |||||||
Common stock, shares authorized | 265,000 | 265,000 | 265,000 | |||||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | |||||||
Common stock, shares issued | 119,933 | 119,933 | 90,041 | |||||||
Common stock, shares outstanding | 119,933 | 119,933 | 90,041 | |||||||
Share-based Payment Arrangement, Noncash Expense | $ 11,074 | $ 8,839 | ||||||||
Common Stock | ||||||||||
Stockholders Equity [Line Items] | ||||||||||
Share-based Payment Arrangement, Noncash Expense | $ 2,985 | $ 2,667 | $ 11,074 | $ 8,839 | ||||||
Securities Purchase Agreement (the "Purchase Agreement") | ||||||||||
Stockholders Equity [Line Items] | ||||||||||
Issuance of common stock and warrants for cash, net of offering costs (in shares) | 10,000 | 17,198 | ||||||||
Warrants exercise price | $ 1.60 | $ 2.25 | $ 1.75 | $ 2 | $ 2.25 | |||||
Gross proceeds from the Offering | $ 16,000 | $ 30,100 | ||||||||
Term Of Warrants Exercisable | 5 years | 5 years | ||||||||
Net Proceeds After Deducting Placement Agent Fees And Estimated Offering Expense | $ 14,600 | $ 27,400 |
STOCKHOLDERS' EQUITY - Schedule
STOCKHOLDERS' EQUITY - Schedule of assumptions used (Details) | 9 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected dividend yield | 0.00% | 0.00% |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term in years | 5 years 3 months 18 days | 1 year |
Expected volatility | 64.00% | 69.00% |
Risk-free interest rate | 0.30% | 2.30% |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term in years | 5 years 10 months 24 days | 3 years |
Expected volatility | 120.00% | 87.00% |
Risk-free interest rate | 1.70% | 3.00% |
STOCKHOLDERS' EQUITY - Stock op
STOCKHOLDERS' EQUITY - Stock option activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |
Nov. 30, 2019 | May 31, 2020 | Feb. 29, 2020 | |
Stock Options | |||
Beginning, balance outstanding | 14,761 | 14,761 | |
Granted | 3,667 | ||
Exercised | (9) | ||
Forfeited | (7,051) | ||
Ending, balance outstanding | 11,368 | ||
Vested and expected to vest | 10,187 | ||
Exercisable | 5,998 | ||
Weighted Average Exercise Price | |||
Beginning, balance outstanding | $ 4.89 | $ 4.89 | |
Granted | 2.24 | ||
Exercised | 2.06 | ||
Forfeited | 4.74 | ||
Ending, balance outstanding | 4.10 | ||
Vested and expected to vest | $ 4.13 | ||
Exercisable | $ 4.40 | ||
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 | 9 years | 8 years 4 months 24 days | |
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 | 9 years | 8 years 4 months 24 days | |
Vested and expected to vest | 8 years 3 months 18 days | ||
Weighted Average Remaining Contractual Term Exercisable | 7 years 10 months 24 days | ||
Aggregate intrinsic value, beginning balance outstanding | $ 3,192 | $ 3,192 | |
Aggregate Intrinsic Value Granted | |||
Aggregate Intrinsic Value, Exercised | 14 | ||
Aggregate Intrinsic Value, Forfeited | |||
Aggregate intrinsic value, ending balance outstanding | 358 | ||
Aggregate Intrinsic Value, Vested and expected to vest | 285 | ||
Aggregate Intrinsic Value Exercisable | $ 26 |
STOCKHOLDERS' EQUITY - Additi_2
STOCKHOLDERS' EQUITY - Additional Information 3 (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2019 | Nov. 30, 2018 | May 31, 2020 | May 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation cost related to non-vested share | $ 12,482 | |||
Weighted-average period, cost expected to be recognized | 1 year 8 months 12 days | |||
Weighted average remaining contractual term | 9 years | 8 years 4 months 24 days | ||
Value of common shares issued on exercise of option | $ 42 | |||
Stock option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock compensation expense | $ 7,348 | $ 5,740 | ||
Weighted-average grant-date fair value of options granted | $ 1.39 | $ 2.59 | ||
2016 Stock Incentive Plan (the Plan) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares issued | 18,000 | |||
Weighted average remaining contractual term | 10 years | |||
2016 Stock Incentive Plan (the Plan) | Stock option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award vesting period | 3 years |
STOCKHOLDERS' EQUITY - Additi_3
STOCKHOLDERS' EQUITY - Additional Information 4 (Details) - USD ($) $ in Thousands | 9 Months Ended | |
May 31, 2020 | May 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of stock issued to investor in exchange for services | 533 | 295 |
Value of stock issued to investor in exchange for services | $ 662 | $ 377 |
Stock issued during period value for current and prepaid services | 1,654 | |
Weighted-average period, cost expected to be recognized | 1 year 8 months 12 days | |
Prepaid expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Value of stock issued to investor in exchange for services | 1,277 | |
Restricted Stock Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock compensation expense | $ 3,726 | $ 3,099 |
Unrecognized compensation cost related to non-vested share | $ 2,329 | |
Weighted-average period, cost expected to be recognized | 1 year 3 months 18 days | |
Restricted Stock Awards | Directors | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of stock issued to investor in exchange for services | 174 |
2020 PLAN & RESTRUCTURING CHA_3
2020 PLAN & RESTRUCTURING CHARGES (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
May 31, 2020USD ($)employee | Feb. 29, 2020USD ($)employee | May 31, 2019USD ($) | May 31, 2020USD ($) | May 31, 2020USD ($) | May 31, 2019USD ($) | |
RESTRUCTURING CHARGES | ||||||
Number of employees terminated | employee | 65 | 28 | ||||
Severance-related restructuring costs | $ 800 | $ 379 | ||||
Impairment of fixed assets | 3,900 | |||||
Impairment charges to its right-of-use | 3,000 | |||||
Restructuring charges | 9,500 | |||||
Restructuring reserve | ||||||
Restructuring reserve, beginning balance | 0 | $ 0 | ||||
Provisions/Additions | 952 | $ 0 | 8,253 | $ 8,253 | $ 0 | |
Utilized/Paid | (8,073) | |||||
Restructuring reserve, ending balance | 180 | 180 | 180 | |||
Severance related costs | ||||||
Restructuring reserve | ||||||
Restructuring reserve, beginning balance | 0 | 0 | ||||
Provisions/Additions | 1,182 | |||||
Utilized/Paid | (1,002) | |||||
Restructuring reserve, ending balance | 180 | 180 | 180 | |||
Facility, ROU and asset impairment | ||||||
Restructuring reserve | ||||||
Restructuring reserve, beginning balance | 0 | 0 | ||||
Provisions/Additions | 6,895 | |||||
Utilized/Paid | (6,895) | |||||
Restructuring reserve, ending balance | 0 | 0 | 0 | |||
Facility exit cost | ||||||
Restructuring reserve | ||||||
Restructuring reserve, beginning balance | $ 0 | 0 | ||||
Provisions/Additions | 176 | |||||
Utilized/Paid | (176) | |||||
Restructuring reserve, ending balance | $ 0 | $ 0 | $ 0 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - USD ($) | Jun. 09, 2020 | May 31, 2020 | Aug. 31, 2019 |
Subsequent Event [Line Items] | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Subsequent Event | The Third Exchange Agreement | Senior Notes | |||
Subsequent Event [Line Items] | |||
Aggregate principal amount | $ 22,000,000 | ||
Stock Issued in Transaction, Shares | 5,347,594 | ||
Debt Instrument, Interest Rate, Stated Percentage | 18.00% | ||
Debt Instrument, Redemption Price, Percentage | 135.00% |
Uncategorized Items - kshb-2020
Label | Element | Value |
Increase (Decrease) in Other Noncurrent Liabilities | us-gaap_IncreaseDecreaseInOtherNoncurrentLiabilities | $ 0 |
Increase (Decrease) in Other Noncurrent Liabilities | us-gaap_IncreaseDecreaseInOtherNoncurrentLiabilities | $ 752,000 |