☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware |
|
83-4284557
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Title of Each Class | Trading Symbol(s) |
Name of Each Exchange on which Registered
|
N/A | N/A | N/A |
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☒
|
Smaller reporting company ☒
|
Emerging growth company ☐
|
Item |
Page
|
|
PART I – FINANCIAL INFORMATION
|
||
1. |
Financial Statements | 4 |
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
8
|
|
|
Notes to the Condensed Consolidated Financial Statements |
10
|
2. |
30 | |
3. |
38 | |
4. |
38 | |
PART II – OTHER INFORMATION
|
||
1. |
39 | |
1A. |
Risk Factors | 39 |
2. |
39 | |
3. |
39 | |
4. |
39 | |
5.
|
39 | |
6. |
39 | |
44 |
June 30, 2020
(unaudited)
|
December 31, 2019 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents |
$
|
3,462
|
$
|
2,361
|
||||
Restricted cash |
25
|
173 | ||||||
Accounts receivable, net |
4,203 | 5,824 | ||||||
Inventories, net |
5,420 |
6,580 | ||||||
Prepaid expenses and other current assets | 3,317 | 2,641 | ||||||
Total Current Assets |
16,427 |
17,579 | ||||||
Property and equipment, net |
321 | 417 | ||||||
Right-of-use assets, operating leases
|
801 | 951 | ||||||
Intangible assets, net | 13,878 |
14,641 | ||||||
Goodwill |
18,614 |
18,614 | ||||||
Other assets |
687
|
1,330
|
||||||
Total Assets |
$ | 50,728 |
$
|
53,532
|
||||
Liabilities & Stockholders’ Deficit | ||||||||
Current Liabilities
|
||||||||
Short term loan, net |
$ | 18,157 | $ | 16,061 | ||||
Line of credit, net |
5,687 |
4,819 | ||||||
PPP loans |
333 |
- | ||||||
Other liabilities |
209 | 500 | ||||||
Accounts payable |
4,044 | 4,049 | ||||||
Accrued liabilities |
4,731 |
4,721 | ||||||
Deferred revenue | 354 | 311 | ||||||
Operating lease liability, current portion |
341 | 345 | ||||||
Warrant derivative liability
|
4,315 |
2,220 | ||||||
Total Current Liabilities |
38,171 | 33,026 | ||||||
Noncurrent Liabilities
|
||||||||
Notes payable, net |
17,594
|
16,370 | ||||||
PPP loans | 519 |
- | ||||||
Operating lease liability |
492 |
641 | ||||||
Total Noncurrent Liabilities |
18,605 | 17,011 | ||||||
Total Liabilities | 56,776 |
50,037
|
||||||
Redeemable Series E Convertible Preferred Stock
|
||||||||
Redeemable Series E preferred stock, $0.001 par value, 2,900,000 shares authorized, 1,387,378 shares issued and outstanding as of June 30,
2020 and December 31, 2019, respectively
|
10,566
|
10,566
|
||||||
Stockholders’ Deficit
|
||||||||
Common stock, $0.001 par value, 88,000,000 shares authorized, 48,939,708 and 47,977,390 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
|
49 |
48 |
||||||
Additional paid-in capital
|
212,532
|
194,150
|
||||||
Accumulated deficit
|
(229,195
|
)
|
(201,269
|
)
|
||||
Total Stockholders’ Deficit
|
(16,614
|
)
|
(7,071
|
)
|
||||
Total Liabilities, Redeemable Preferred Stock and Stockholders’ Deficit
|
$
|
50,728
|
$
|
53,532
|
Six Months Ended June 30, |
Three Months Ended June 30,
|
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Net sales | $ | 22,167 | $ | 7,635 | $ | 9,941 | $ | 4,084 | ||||||||
Cost of goods sold
|
13,886 | 4,082 | 5,817 | 2,421 | ||||||||||||
Gross profit
|
8,281
|
3,553
|
4,124
|
1,663
|
||||||||||||
Operating expenses:
|
||||||||||||||||
General and administrative
|
19,650
|
7,174
|
11,594
|
5,211
|
||||||||||||
Share-based compensation
|
5,504
|
4,212
|
3,020
|
4,006
|
||||||||||||
Sales and marketing
|
3,807
|
5,597
|
1,848
|
3,412
|
||||||||||||
Customer service and warehousing
|
352 |
551
|
162 | 297 | ||||||||||||
Total operating expenses
|
29,313 |
17,534
|
16,624 |
12,926
|
||||||||||||
Loss from operations
|
(21,032 | ) |
(13,981
|
)
|
(12,500 | ) |
(11,263
|
)
|
||||||||
Other expense:
|
||||||||||||||||
Interest expense, net
|
4,731
|
124 | 2,430 |
62
|
||||||||||||
Loss on acquisitions
|
-
|
149,988 | - |
149,988
|
||||||||||||
Change in fair value of warrant derivative liability
|
2,095 |
193
|
3,474 |
193
|
||||||||||||
Total other expense, net
|
6,826 |
150,305
|
5,904 |
150,243
|
||||||||||||
Net and comprehensive loss
|
(27,858 | ) |
(164,286
|
)
|
(18,404 | ) |
(161,506
|
)
|
||||||||
Preferred dividends
|
68 | 27 | 34 |
27 |
||||||||||||
Net and comprehensive loss available to common stockholders
|
(27,926 | ) |
(164,313
|
)
|
(18,438 | ) | (161,533 | ) | ||||||||
Weighted average number of shares outstanding, basic and diluted
|
48,733,052
|
21,202,188
|
48,939,708 |
30,638,048
|
||||||||||||
Loss per share, basic and diluted
|
$ | (0.57 | ) |
$
|
(7.75
|
)
|
$ |
(0.38 | ) |
$
|
(5.27
|
)
|
Common Stock |
Redeemable Series E
Convertible Preferred Stock
|
|||||||||||||||||||||||||||
Shares | Amount |
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Deficit
|
Shares
|
Amount
|
||||||||||||||||||||||
Balance as of December 31, 2019
|
47,977,390
|
$ | 48 |
$
|
194,150
|
$
|
(201,269
|
)
|
$
|
(7,071
|
)
|
1,387,378
|
$
|
10,566
|
||||||||||||||
Shares issued pursuant to a private placement
|
308,642
|
- |
500
|
-
|
500
|
-
|
-
|
|||||||||||||||||||||
Share-based compensation
|
455,956
|
1 |
2,484
|
-
|
2,485
|
-
|
-
|
|||||||||||||||||||||
Shares and warrants issued to third party for contract termination
|
72,720
|
- |
198
|
-
|
198
|
-
|
-
|
|||||||||||||||||||||
Shares issued to third parties for services
|
125,000
|
- |
125
|
-
|
125
|
-
|
-
|
|||||||||||||||||||||
Warrants issued to third parties for services
|
-
|
- |
2,594
|
-
|
2,594
|
-
|
-
|
|||||||||||||||||||||
Net and comprehensive loss available to common stockholders
|
-
|
- |
-
|
(9,488
|
)
|
(9,488
|
)
|
-
|
-
|
|||||||||||||||||||
Balance as of March 31, 2020
|
48,939,708
|
$ | 49 |
$
|
200,051
|
$
|
(210,757
|
)
|
$
|
(10,657
|
)
|
1,387,378
|
$
|
10,566
|
||||||||||||||
Warrants issued to third parties for services
|
-
|
- |
7,390
|
-
|
7,390
|
-
|
-
|
|||||||||||||||||||||
Share-based compensation
|
-
|
- |
3,020
|
-
|
3,020
|
-
|
-
|
|||||||||||||||||||||
Warrants issued in connection with June 2020 Notes
|
-
|
- |
337
|
-
|
337
|
-
|
-
|
|||||||||||||||||||||
Beneficial conversion feature of June 2020 Notes
|
-
|
- |
1,163
|
-
|
1,163
|
-
|
-
|
|||||||||||||||||||||
Modification of conversion feature for November 2019 Notes, Seller Notes, and ABG Notes
|
-
|
- |
528
|
-
|
528
|
-
|
-
|
|||||||||||||||||||||
Modification of warrants
|
-
|
- |
43
|
-
|
43
|
-
|
-
|
|||||||||||||||||||||
Net and comprehensive loss available to common stockholders
|
-
|
- |
-
|
(18,438
|
)
|
(18,438
|
)
|
-
|
-
|
|||||||||||||||||||
Balance as of June 30, 2020
|
48,939,708
|
$ | 49 |
$
|
212,532
|
$
|
(229,195
|
)
|
$
|
(16,614
|
)
|
1,387,378
|
$
|
10,566
|
Common Stock
|
Series A
Preferred Units
|
Redeemable Series E
Convertible Preferred
Stock
|
||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares |
Amount
|
Additional
paid-in
capital
|
Accumulated
deficit
|
Total
Stockholders’
Deficit
|
Shares |
Amount
|
||||||||||||||||||||||||||||
Balance as of December 31, 2018
|
11,661,485
|
$
|
12
|
2,391,403
|
$
|
2
|
$
|
13,642
|
$
|
(16,698
|
)
|
$
|
(3,042
|
)
|
-
|
$
|
-
|
|||||||||||||||||||
Shares issued pursuant to a private placement – net proceeds
|
-
|
-
|
69,115
|
-
|
150
|
-
|
150
|
|||||||||||||||||||||||||||||
Share-based compensation
|
18,964
|
-
|
-
|
-
|
206
|
-
|
206
|
-
|
-
|
|||||||||||||||||||||||||||
Net and comprehensive loss available to common stockholders
|
-
|
-
|
-
|
-
|
-
|
(2,776
|
)
|
(2,776
|
)
|
-
|
-
|
|||||||||||||||||||||||||
Balance as of March 31,2019
|
11,680,449
|
$
|
12
|
2,460,518
|
$
|
2
|
$
|
13,998
|
$
|
(19,474
|
)
|
$
|
(5,462
|
)
|
-
|
$ |
-
|
|||||||||||||||||||
Share-based compensation
|
1,199,822
|
2
|
-
|
-
|
4,006
|
-
|
4,008
|
-
|
-
|
|||||||||||||||||||||||||||
Conversion of Series A shares to common stock
|
2,460,518
|
2
|
(2,460,518
|
)
|
(2
|
)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||
Acquisition of treasury shares
|
(1,011,748
|
)
|
(1
|
)
|
-
|
-
|
(2,199
|
)
|
-
|
(2,200
|
)
|
-
|
-
|
|||||||||||||||||||||||
Acquisition of Better Choice
|
3,915,856
|
3
|
-
|
-
|
23,490
|
-
|
23,493
|
2,633,678
|
20,059
|
|||||||||||||||||||||||||||
Acquisition of Bona Vida
|
18,003,273
|
18
|
-
|
-
|
108,002
|
-
|
108,020
|
-
|
-
|
|||||||||||||||||||||||||||
Shares and warrants issued pursuant to private issuance of public equity (PIPE) – net proceeds
|
5,744,991
|
6
|
-
|
-
|
15,670
|
-
|
15,676
|
-
|
-
|
|||||||||||||||||||||||||||
Conversion of Series E Preferred Stock
|
1,175,000
|
1
|
-
|
-
|
7,050
|
-
|
7,051
|
(925,758
|
)
|
(7,052
|
)
|
|||||||||||||||||||||||||
Net and comprehensive loss available to common stockholders
|
-
|
-
|
-
|
-
|
-
|
(161,533
|
)
|
(161,533
|
)
|
-
|
-
|
|||||||||||||||||||||||||
Balance as of June 30, 2019
|
43,168,161
|
$
|
43
|
-
|
$
|
-
|
$
|
170,017
|
$
|
(181,007
|
)
|
$
|
(10,947
|
)
|
1,707,920
|
$
|
13,007
|
Six Months Ended June 30,
|
||||||||
2020
|
2019
|
|||||||
Cash Flow from Operating Activities:
|
||||||||
Net and comprehensive loss available to common stockholders
|
$
|
(27,926
|
)
|
$
|
(164,313
|
)
|
||
Adjustments to reconcile net and comprehensive loss to net cash used in operating activities:
|
||||||||
Non-cash expenses
|
||||||||
Shares and warrants issued to third parties for services
|
10,182
|
-
|
||||||
Modification of warrants
|
43
|
-
|
||||||
Contract termination costs
|
649
|
-
|
||||||
Depreciation and amortization
|
866
|
45
|
||||||
Amortization of debt issuance costs and discounts
|
2,353
|
-
|
||||||
Share-based compensation
|
5,504
|
4,212
|
||||||
Lease expenses
|
(3
|
)
|
2
|
|||||
Change in fair value of warrant derivative liability
|
2,095
|
193
|
||||||
Payment In Kind (PIK) interest expense on notes payable
|
939
|
-
|
||||||
Loss on acquisitions
|
-
|
149,988
|
||||||
Changes in operating assets and liabilities, net of effects of business acquisition:
|
||||||||
Accounts receivable, net
|
1,621
|
(27
|
)
|
|||||
Inventories, net
|
1,161
|
42
|
||||||
Prepaid expenses and other current assets
|
176
|
|
(466
|
)
|
||||
Other assets
|
(84 | ) |
(457
|
)
|
||||
Accounts payable
|
(5
|
)
|
(32
|
)
|
||||
Accrued liabilities
|
10
|
1,627
|
||||||
Deferred revenue
|
43
|
252
|
||||||
Change in lease liability
|
-
|
457
|
||||||
Other
|
208
|
(4
|
)
|
|||||
Cash Used in Operating Activities
|
$
|
(2,168
|
)
|
$
|
(8,481
|
)
|
||
Cash Flow from Investing Activities
|
||||||||
Cash acquired in the May Acquisitions
|
$
|
-
|
$
|
1,955
|
||||
Security deposits
|
-
|
(81
|
)
|
|||||
Acquisition of property and equipment, net
|
(6
|
)
|
(4
|
)
|
||||
Cash (Used in) Provided by Investing Activities
|
$ |
(6
|
)
|
$ |
1,870
|
|||
Cash Flow from Financing Activities
|
||||||||
Proceeds from shares issued pursuant to private placement, net
|
$
|
-
|
$
|
15,826
|
||||
Payment of old debt
|
-
|
(6,200
|
)
|
|||||
Proceeds from issuance of debt
|
-
|
6,200
|
||||||
Proceeds from revolving line of credit
|
1,075
|
-
|
||||||
Payments on revolving line of credit
|
(300
|
)
|
-
|
|||||
Proceeds from PPP loans
|
852
|
-
|
||||||
Proceeds from June 2020 Notes
|
1,500
|
-
|
||||||
Cash advance, net
|
-
|
(1,899
|
)
|
|||||
Cash Provided by Financing Activities
|
$
|
3,127
|
$
|
13,927
|
||||
Net Increase in Cash and cash equivalents and Restricted cash
|
$
|
953
|
$
|
7,316
|
||||
Total Cash and cash equivalents, Beginning of Period
|
2,534
|
3,946
|
||||||
Total Cash and cash equivalents and Restricted cash, End of Period
|
$
|
3,487
|
$
|
11,262
|
Right-of-use assets and operating lease liability acquired under operating leases
|
||||
Right-of-use assets recorded upon adoption of ASC 842
|
$
|
421
|
||
Operating lease liability recorded upon adoption of ASC 842
|
(429
|
)
|
||
Noncash acquisition of right-of-use assets for leases entered into during period
|
607
|
|||
Noncash acquisition of operating lease liability for leases entered into during the period
|
(594
|
)
|
Dollars in thousands
|
||||
Total Purchase Price
|
$
|
38,244
|
||
Assets
|
||||
Property and equipment
|
$
|
260
|
||
Accounts receivable
|
5,540
|
|||
Inventories
|
5,160
|
|||
Intangible assets
|
14,690
|
|||
Other assets
|
329
|
|||
Total assets
|
25,979
|
|||
Liabilities
|
||||
Accounts payable
|
4,628
|
|||
Accrued liabilities
|
1,553
|
|||
Long term liability
|
168
|
|||
Total liabilities
|
6,349
|
|||
Net assets acquired
|
19,630
|
|||
Goodwill
|
$
|
18,614
|
Dollars in thousands
|
Better Choice
Company
|
Bona Vida
|
Total
|
|||||||||
Total Purchase Price
|
$
|
37,949
|
$
|
108,620
|
$
|
146,569
|
||||||
Net Assets (Liabilities) Acquired:
|
||||||||||||
Assets
|
|
|
|
|||||||||
Cash and cash equivalents
|
7 |
384 |
391 |
|||||||||
Restricted cash
|
-
|
25
|
25
|
|||||||||
Accounts receivable
|
-
|
69
|
69
|
|||||||||
Inventories
|
-
|
95
|
95
|
|||||||||
Prepaid expenses and other current assets
|
32
|
348
|
380
|
|||||||||
Intangible assets
|
986
|
-
|
986
|
|||||||||
Other assets
|
-
|
74
|
74
|
|||||||||
Total Assets
|
1,025
|
995
|
2,020
|
|||||||||
Liabilities
|
||||||||||||
Warrant derivative liability
|
(2,130
|
)
|
-
|
(2,130
|
)
|
|||||||
Accounts payable & accrued liabilities
|
(544
|
)
|
(153
|
)
|
(697
|
)
|
||||||
Total Liabilities
|
(2,674
|
)
|
(153
|
)
|
(2,827
|
)
|
||||||
Net Assets (Liabilities) Acquired
|
(1,649
|
)
|
842
|
(807
|
)
|
|||||||
Loss on Acquisitions
|
$
|
(39,598
|
)
|
$
|
(107,778
|
)
|
$
|
(147,376
|
)
|
|||
Correction recorded in the third quarter of 2019
|
(2,612 |
) |
||||||||||
Loss on acquisitions as reported for the six months ended June 30, 2019
|
$ |
(149,988 |
) |
Dollars in thousands
|
June 30, 2020
|
December 31, 2019
|
||||||
Food, treats and supplements
|
$
|
5,454
|
$
|
6,425
|
||||
Inventory packaging and supplies
|
512
|
504
|
||||||
Other products and accessories
|
17
|
73
|
||||||
Total Inventories |
5,983
|
7,002
|
||||||
Inventory reserve
|
(563
|
)
|
(422
|
)
|
||||
Inventories, net
|
$
|
5,420 $
|
$
|
6,580
|
Dollars in thousands
|
June 30, 2020
|
December 31, 2019
|
||||||
Equipment
|
$
|
225
|
$
|
222
|
||||
Furniture and fixtures
|
164
|
138
|
||||||
Computer software
|
115
|
115
|
||||||
Computer equipment
|
4
|
4
|
||||||
Total property and equipment
|
508
|
479
|
||||||
Accumulated depreciation
|
(187
|
)
|
(62
|
)
|
||||
Property and equipment, net
|
$
|
321
|
$
|
417
|
Dollars in thousands |
June 30,2020
|
December 31, 2019 |
||||||
Accrued professional fees
|
$
|
2,039
|
$
|
1,695
|
||||
Accrued sales tax
|
1,028
|
1,233
|
||||||
Accrued payroll and benefits
|
916
|
994
|
||||||
Accrued trade promotions
|
186
|
357
|
||||||
Accrued dividends
|
324
|
256
|
||||||
Accrued interest
|
228
|
109
|
||||||
Other
|
10
|
77
|
||||||
Total accrued liabilities
|
$
|
4,731
|
$
|
4,721
|
For the Six Months Ended
|
For the Three Months Ended
|
|||||||||||||||
Dollars in thousands
|
June 30,
2020
|
June 30,
2019
|
June 30,
2020
|
June 30,
2019
|
||||||||||||
Operating lease costs
|
$
|
221
|
$ |
124
|
$ |
111
|
$ |
80
|
||||||||
Variable lease costs
|
16 |
16
|
8 |
8
|
||||||||||||
Total operating lease costs
|
$ |
237 |
$ |
140 |
$ |
119 | $ |
88 |
Remainder of 2020
|
$
|
226
|
||
2021
|
464
|
|||
2022
|
246
|
|||
2023
|
7 | |||
Total minimum lease payments
|
$
|
943 | ||
Less: amount of lease payments representing interest
|
110 | |||
Present value of future minimum lease payments
|
$
|
833
|
||
Less: current obligations under leases
|
|
341
|
||
Long-term lease obligations
|
$
|
492
|
June 30, 2020
|
|||||||||||||||
Weighted-Average
Remaining Useful
Lives (in years)
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net Carrying
Amount
|
||||||||||||
Customer relationships
|
7
|
$
|
7,500
|
$
|
(577
|
)
|
$
|
6,923
|
|||||||
Trade name
|
15
|
7,190
|
(235
|
)
|
6,955
|
||||||||||
Total intangible assets
|
$
|
14,690
|
$
|
(812
|
)
|
$
|
13,878
|
December 31, 2019
|
|||||||||||||||
Weighted-Average
Remaining Useful
Lives (in years)
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net Carrying
Amount
|
||||||||||||
Customer relationships
|
7 |
$
|
7,500
|
$
|
(35
|
)
|
$
|
7,465
|
|||||||
Trade name
|
15
|
7,190
|
(14
|
)
|
7,176
|
||||||||||
Total intangible assets
|
$
|
14,690
|
$
|
(49
|
)
|
$
|
14,641
|
Dollars in thousands
Years ended December 31,
|
||||
Remainder of 2020
|
$
|
739
|
||
2021
|
1,551
|
|||
2022
|
1,551
|
|||
2023
|
1,551
|
|||
2024
|
1,551
|
|||
Thereafter
|
6,935
|
|||
$
|
13,878
|
June 30, 2020
|
December 31, 2019
|
|||||||||||||||||||||
Amount
|
Rate
|
Maturity
Date
|
Amount
|
Rate
|
Maturity
Date
|
|||||||||||||||||
Short term loan, net
|
$
|
18,157
|
(1
|
)
|
12/19/2020
|
$
|
16,061
|
(1
|
)
|
12/19/2020
|
||||||||||||
Line of credit, net
|
5,687
|
(1
|
)
|
12/19/2020
|
4,819
|
(1
|
)
|
12/19/2020
|
||||||||||||||
November 2019 notes payable, net (November 2019 Notes)
|
2,644
|
10
|
%
|
6/30/2023
|
2,769
|
10
|
%
|
11/4/2021
|
||||||||||||||
December 2019 senior notes payable, net (Seller Notes)
|
9,664
|
10
|
%
|
6/30/2023
|
9,191
|
10
|
%
|
6/30/2023
|
||||||||||||||
December 2019 junior notes payable, net (Seller Notes)
|
4,626
|
10 |
% |
6/30/2023
|
4,410
|
10 |
% |
6/30/2023
|
||||||||||||||
ABG Notes
|
660
|
10
|
%
|
6/30/2023
|
-
|
-
|
-
|
|||||||||||||||
June 2020 notes payable, net (June 2020 Notes)
|
-
|
10
|
%
|
6/30/2023
|
-
|
-
|
-
|
|||||||||||||||
Halo PPP Loan
|
431
|
1
|
%
|
5/3/2022
|
- |
-
|
||||||||||||||||
TruPet PPP Loan
|
421
|
.98
|
%
|
4/6/2022
|
-
|
-
|
-
|
|||||||||||||||
Total debt
|
$
|
42,290
|
$
|
37,250
|
(1)
|
Interest at Bank of Montreal Prime plus 8.05%
|
Dollars in thousands
|
Warrant derivative liability
|
|||
Balance as of December 31, 2019
|
$
|
2,220
|
||
Change in fair value of derivative liability
|
(1,379
|
)
|
||
Balance as of March 31, 2020
|
$
|
841
|
||
Change in fair value of derivative liability
|
3,474
|
|||
Balance as of June 30, 2020
|
$
|
4,315
|
Warrant derivative liability
|
May 6, 2019
|
December 31, 2019
|
June 30, 2020
|
|||||||||
Stock price
|
$
|
6.00
|
$
|
2.70
|
$
|
1.90
|
||||||
Exercise price
|
$
|
3.90
|
$
|
1.62
|
$
|
0.75
|
||||||
Expected remaining term (in years)
|
1.60 - 1.68
|
0.95 - 1.02
|
0.472
|
|||||||||
Volatility
|
64
|
%
|
69
|
%
|
85
|
%
|
||||||
Risk-free interest rate
|
2.39
|
%
|
1.60
|
%
|
0.18
|
%
|
June 30, 2020 December 31, 2019
|
||||||||
Conversion of Series E
|
1,760,903
|
1,760,903
|
||||||
Exercise of options to purchase common stock
|
7,471,608
|
7,791,833
|
||||||
Warrants to purchase common stock
|
17,087,976
|
16,981,854
|
||||||
Notes payable
|
7,163,589
|
4,437,500
|
||||||
Total
|
33,484,076
|
30,972,090
|
Warrants
|
Weighted Average
Exercise Price
|
|||||||
Warrants outstanding as of December 31, 2019
|
16,981,854
|
$
|
3.23
|
|||||
Issued
|
3,064,456
|
1.15
|
||||||
Terminated
|
(2,958,334
|
)
|
(5.12
|
) |
||||
Warrants outstanding as of June 30, 2020
|
17,087,976
|
$
|
2.37
|
Six Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||
2020 |
2019
|
2020 |
2019
|
|||||||||||||
Common stockholders | ||||||||||||||||
Numerator: | ||||||||||||||||
Net and comprehensive loss
|
$ | (27,858 | ) |
$
|
(164,286
|
)
|
$
|
(18,404
|
)
|
$
|
(161,506
|
)
|
||||
Less: Preferred stock dividends
|
68 |
27
|
34
|
27
|
||||||||||||
Net and comprehensive loss available to common stockholders
|
$ | (27,926 | ) |
$
|
(164,313
|
)
|
$
|
(18,438
|
)
|
$
|
(161,533
|
) | ||||
Denominator:
|
||||||||||||||||
Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted
|
48,733,052
|
21,202,188
|
48,939,708
|
30,638,048
|
||||||||||||
Net loss per share attributable to common stockholders, basic and diluted |
$
|
(0.57
|
)
|
$
|
(7.75
|
)
|
$
|
(0.38
|
)
|
$
|
(5.27
|
) |
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
$ in thousands |
2020
|
2019 |
Change
|
% |
||||||||||||
Net sales
|
$ |
22,167 |
$ |
7,635
|
$ |
14,532
|
190
|
%
|
||||||||
Cost of goods sold
|
13,886 |
4,082
|
9,804
|
240
|
%
|
|||||||||||
Gross profit
|
8,281 |
3,553
|
4,728
|
133
|
%
|
|||||||||||
Operating expenses:
|
||||||||||||||||
General and administrative expense
|
19,650 |
7,174
|
12,476
|
174
|
%
|
|||||||||||
Share-based compensation
|
5,504 |
4,212
|
1,292
|
31
|
%
|
|||||||||||
Sales and marketing
|
3,807 |
5,597
|
(1,790
|
)
|
(32
|
%)
|
||||||||||
Customer service and warehousing
|
352 |
551 | (199 | ) |
(36
|
%)
|
||||||||||
Total operating expenses
|
29,313 |
17,534
|
11,779
|
67
|
%
|
|||||||||||
Loss from operations
|
$ | (21,032 | ) |
$
|
(13,981
|
)
|
$
|
(7,051
|
)
|
50
|
%
|
$ in thousands
|
2020 |
2019 |
Change |
% |
||||||||||||
Net sales
|
$ | 9,941 |
$ |
4,084
|
$ |
5,857
|
143
|
%
|
||||||||
Cost of goods sold
|
5,817 |
2,421
|
3,396
|
140
|
%
|
|||||||||||
Gross profit
|
4,124 |
1,663
|
2,461
|
148
|
%
|
|||||||||||
Operating expenses:
|
||||||||||||||||
General and administrative expense
|
11,594 |
5,211
|
6,383
|
122
|
%
|
|||||||||||
Share-based compensation
|
3,020 |
4,006
|
(986
|
)
|
(25
|
%)
|
||||||||||
Sales and marketing
|
1,848 |
3,412
|
(1,564
|
)
|
(46
|
%)
|
||||||||||
Customer service and warehousing
|
162 |
297 |
(135
|
) |
(45
|
%)
|
||||||||||
Total operating expenses
|
16,624 |
12,926
|
3,698
|
29
|
%
|
|||||||||||
Loss from operations
|
$ | (12,500 | ) | $ |
(11,263
|
)
|
$
|
(1,237
|
)
|
11
|
%
|
Six Months Ended June 30,
|
||||||||
$ in thousands | 2020 |
2019 |
||||||
Cash flows (used in) provided by: | ||||||||
Operating activities
|
$ | (2,168 | ) |
$
|
(8,481
|
)
|
||
Investing activities
|
(6 | ) |
1,870
|
|||||
Financing activities
|
3,127 |
13,927
|
||||||
Net increase in cash and cash equivalents and restricted cash
|
$ | 953 |
$
|
7,316
|
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4. |
CONTROLS AND PROCEDURES
|
ITEM 1. |
LEGAL PROCEEDINGS
|
ITEM 1A. |
ITEM 2. |
ITEM 3. |
ITEM 4. |
ITEM 5. |
OTHER INFORMATION
|
ITEM 6. |
EXHIBITS
|
Exhibit
|
Exhibit Description
|
Form
|
File
No.
|
Exhibit
|
Filing
date
|
Filed /
Furnished
Herewith
|
Agreement and Plan of Merger, dated February 28, 2019, by and among the Company, BBC Merger Sub, Inc. and Bona Vida, Inc.
|
8-K
|
333-161943
|
2.1
|
05/10/2019
|
||
First Amendment to Agreement and Plan of Merger, dated February 28, 2019, by and among the Company, BBC Merger Sub, Inc., and Bona Vida, Inc., dated May 3, 2019
|
8-K
|
333-161943
|
2.2
|
05/10/2019
|
||
Securities Exchange Agreement, dated February 2, 2019, by and among the Company, TruPet LLC and the members of TruPet LLC
|
8-K
|
333-161943
|
2.3
|
05/10/2019
|
||
First Amendment to Securities Exchange Agreement, dated February 2, 2019, by and among the Company, TruPet LLC and the members of TruPet LLC, dated May 6, 2019
|
8-K
|
333-161943
|
2.4
|
05/10/2019
|
||
Amended and Restated Stock Purchase Agreement, dated December 18, 2019, by and among the Company, Halo, Purely For Pets, Inc., Thriving Paws, LLC and HH-Halo LP
|
8-K
|
333-161943
|
2.1
|
12/26/2019
|
||
Certificate of Incorporation, dated January 1, 2019
|
10-Q
|
333-161943
|
3.1
|
04/15/2019
|
||
Certificate of Amendment to Certificate of Incorporation, dated February 1, 2019
|
10-Q
|
333-161943
|
3.2
|
04/15/2019
|
||
Certificate of Amendment to Certificate of Incorporation, dated March 13, 2019
|
8-K
|
333-161943
|
3.1
|
03/20/2019
|
||
Certificate of Amendment to Certificate of Incorporation, dated April 18, 2019
|
10-KT
|
333-161943
|
3.5
|
07/25/2019
|
||
3.5 | Certificate of Amendment to Certificate of Incorporation, dated July 30, 2020 | 8-K | 333-161943 | 99.1 | 07/30/2020 | |
Certificate of Merger of Sport Endurance, Inc. with and into the Company
|
10-Q
|
333-161943
|
3.4
|
04/15/2019
|
||
Bylaws
|
10-Q
|
333-161943
|
3.5
|
04/15/2019
|
||
Amended and Restated Certificate of Designation for Series E Convertible Preferred Stock
|
8-K
|
333-161943
|
3.1
|
05/23/2019
|
||
Form of Common Stock Purchase Warrant in connection with the May 2019 private placement
|
8-K
|
333-161943
|
4.1
|
04/30/2019
|
||
Form of Tranche 1 Common Stock Purchase Warrant, dated September 17, 2019, by and between the Registrant and Bruce Linton
|
8-K
|
333-161943
|
4.1
|
09/23/2019
|
||
Form of Tranche 2 Common Stock Purchase Warrant, dated September 17, 2019, by and between the Company and Bruce Linton
|
8-K
|
333-161943
|
4.2
|
09/23/2019
|
Exhibit
|
Exhibit Description
|
Form
|
File
No.
|
Exhibit
|
Filing
date
|
Filed /
Furnished
Herewith
|
Form of Additional Common Stock Purchase Warrant, dated September 17, 2019, by and between the Company and Bruce Linton
|
8-K
|
333-161943
|
4.3
|
09/23/2019
|
||
Form of Subordinated Convertible Promissory Note in connection with the November 2019 private placement
|
8-K
|
333-161943
|
4.1
|
11/15/2019
|
||
Form of Common Stock Purchase Warrant in connection with the November 2019 private placement
|
8-K
|
333-161943
|
4.2
|
11/15/2019
|
||
Form of Subordinated Convertible Promissory Note, dated December 19, 2019, by and among the Company and the Halo Sellers listed on the signature pages thereto
|
10-Q
|
333-161943
|
4.7
|
01/31/2020
|
||
Form of Common Stock Purchase Warrant, dated December 19, 2019, by and among the Company and the Halo Sellers
|
10-Q
|
333-161943
|
4.8
|
01/31/2020
|
||
Form of Common Stock Purchase Warrant, dated December 19, 2019, by and among the Company and the Shareholder Personal Guarantors
|
10-Q
|
333-161943
|
4.10
|
01/31/2020
|
||
Form of Common Stock Purchase Warrant Agreement in connection with the December 2018 private placement
|
8-K
|
333-161943
|
4.1
|
12/13/2018
|
||
Form of Common Stock Purchase Warrant in connection with the June 2020 private placement.
|
10-Q |
333-161943 |
4.11
|
06/25/2020 |
||
4.12 |
Form of Subordinated Convertible Promissory Note in connection with the June 2020 private placement.
|
10-Q |
333-161943 | 4.12 |
06/25/2020 | |
4.13 |
Form of Subscription Agreement in connection with the June 2020 private placement.
|
10-Q |
333-161943 | 4.13 |
06/25/2020 | |
4.14 |
Form of Registration Rights Agreement by and among the Company and the persons listed on the signature pages thereto in connection with the June 2020 private placement.
|
10-Q |
333-161943 | 4.14 |
06/25/2020 | |
4.15 |
Form of Amendment to November 2019 Notes, Seller Notes and ABG Notes |
* |
||||
4.16 |
Form of July 2020 Common Stock Purchase Warrants |
8-K |
333-161943 |
10.5 |
07/21/2020 |
|
Loan Agreement dated May 6, 2019, between the Company and Franklin Synergy Bank
|
8-K
|
333-161943
|
10.1
|
05/10/2019
|
||
Security Agreement dated May 6, 2019, between the Company and Franklin Synergy Bank
|
8-K
|
333-161943
|
10.2
|
05/10/2019
|
||
Guaranty Agreement, dated April 8, 2019, by TruPet LLC in favor of Franklin Synergy Bank
|
S-1
|
333-234349
|
10.17
|
10/28/2019
|
||
Form of Revolving Line of Credit Promissory Note dated 2019
|
8-K
|
333-161943
|
10.3
|
05/10/2019
|
||
Guaranty Agreement, dated April 8, 2019, by Bona Vida, Inc. in favor of Franklin Synergy Bank
|
S-1
|
333-234349
|
10.16
|
10/28/2019
|
||
Loan Facilities Credit Letter Agreement, dated December 19, 2019, by and among the Better Choice Company Inc., Halo, Purely for Pets, Inc., Bona Vida Inc., TruPet LLC and Bridging Finance Inc., as agent.
|
10-Q
|
333-161943
|
10.1
|
01/31/2020
|
||
Pledge and Security Agreement, dated December 19, 2019, by and among the Company, Halo, Purely or Pets, Inc., Bona Vida, Inc., TruPet LLC and Bridging Finance Inc., as Administrative Agent
|
10-Q
|
333-161943
|
10.2
|
01/31/2020
|
||
Continuing Guaranty of Halo, Purely for Pets, Inc., Bona Vida Inc., TruPet LLC, dated December 19, 2019
|
10-Q
|
333-161943
|
10.3
|
01/31/2020
|
||
Form of Subscription Agreement, dated December 19, 2019, by and among the Company and the Halo Sellers
|
10-Q
|
333-161943
|
10.6
|
01/31/2020
|
Exhibit |
Exhibit Description
|
Form
|
File No.
|
Exhibit
|
Filing
date
|
Filed /
Furnished
Herewith
|
Continuing Personal Guaranty of John Word, Lori Taylor and Michael Young, dated December 19, 2019
|
10-Q
|
333-161943
|
10.4
|
01/31/2020
|
||
Registration Rights Agreement, dated May 6, 2019, by and among the Company and the persons listed on the signature pages thereto in connection with the May 2019 private placement
|
S-1
|
333-234349
|
10.2
|
10/28/2019
|
||
First Amendment, dated June 10, 2019, to Registration Rights Agreement, dated May 6, 2019, by and among the Company and the stockholders party thereto
|
S-1
|
333-234349
|
10.3
|
10/28/2019
|
||
Form of Subscription Agreement dated April 25, 2019 in connection with the May 2019 private placement
|
8-K
|
333-161943
|
10.1
|
04/30/2019
|
||
Registration Rights Agreement, dated as of May 6, 2019, by and among Better Choice Company Inc. and the former stockholders of Bona Vida listed on the signature pages thereto
|
8-K
|
333-161943
|
4.1
|
05/10/2019
|
||
Registration Rights Agreement, dated as of May 6, 2019, by and among Better Choice Company Inc. and the former member of TruPet listed on the signature pages thereto
|
8-K
|
333-161943
|
4.2
|
05/10/2019
|
||
Form of Registration Rights Agreement by and among the Company and the persons listed on the signature pages thereto in connection with the November 2019 private placement
|
8-K
|
333-161943
|
4.3
|
11/15/2019
|
||
Form of Subscription Agreement in connection with the November 2019 private placement
|
8-K
|
333-161943
|
10.1
|
11/15/2019
|
||
10.18 |
Business Loan Agreement, dated as of July 16, 2020, by and among the Company, Halo, TruPet, Bona Vida (the “Credit Parties”), and
Citizens Bank |
8-K |
333-161943 |
10.1 |
07/21/2020 |
|
10.19 |
Promissory Note, dated as of July 16, 2020, issued by the Credit Parties in favor of Citizens Bank |
8-K |
333-161943 |
10.2 |
07/21/2020 |
|
10.20 |
Commercial Security Agreement, dated as of July 16, 2020, by and among the Credit Parties and Citizens Bank |
8-K |
333-161943 |
10.3 |
07/21/2020 |
|
10.21 |
Commercial Guaranty, dated as of July 16, 2020, by and between Citizens Bank and John M. Word, III |
8-K |
333-161943 |
10.4 |
07/21/2020 |
|
Better Choice Company Inc. Amended and Restated 2019 Incentive Award Plan
|
10-K |
333-161943 | 10.19 |
5/4/2020 |
|
|
Form of 2019 Incentive Aware Plan Stock Option Agreement
|
S-1
|
333-234349
|
10.7
|
10/28/2019
|
||
Form of Indemnification Agreement by and among the Company and its officers and directors
|
S-1
|
333-234349
|
10.8
|
10/28/2019
|
||
Independent Contractor Agreement, dated September 17, 2019, by and between the Company and Bruce Linton
|
8-K
|
333-161943
|
10.1
|
09/23/2019
|
||
Employment Agreement, dated February 1, 2019, for David Lelong
|
8-K
|
333-161943
|
10.1
|
02/07/2019
|
||
Employment Agreement, dated as of May 6, 2019, by and between the Company and Damian Dalla-Longa
|
10-Q
|
333-161943
|
10.6
|
10/09/2019
|
||
Resignation Letter from Damian Dalla-Longa, dated February 5, 2020
|
8-K
|
333-161943
|
10.3
|
02/11/2020
|
Exhibit |
Exhibit Description
|
Form
|
File No.
|
Exhibit
|
Filing
date
|
Filed /
Furnished
Herewith
|
Amendment to Employment Agreement, dated February 10, 2020, by and between Damian Dalla-Longa and the Company
|
8-K
|
333-161943
|
10.4
|
02/11/2020
|
||
Employment Agreement, dated as of May 6, 2019, by and between the Company and Lori Taylor
|
10-Q
|
333-161943
|
10.7
|
10/09/2019
|
||
Separation Agreement, dated as of September 13, 2019, by and between the Company and Lori Taylor
|
10-K |
333-161943 |
10.28 |
5/4/2020 |
|
|
Employment Agreement, dated May 6, 2019, by and among the Company and Anthony Santarsiero
|
S-1
|
333-234349
|
10.11
|
10/28/2019
|
||
Employment Agreement, dated June 29, 2019, by and among the Company and Andreas Schulmeyer
|
S-1
|
333-234349
|
10.12
|
10/28/2019
|
||
Employment Agreement, dated December 19, 2019, by and between the Company, Werner von Pein, and Halo
|
8-K
|
333-161943
|
10.1
|
02/11/2020
|
||
Amendment to Employment Agreement, dated February 10, 2020, by and between Werner von Pein and the Company
|
8-K
|
333-161943
|
10.2
|
02/11/2020
|
||
Subsidiaries of the Company
|
10-K |
333-161943 |
21.1 |
5/4/2020 |
|
|
Certification of Principal Executive Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
|
*
|
|||||
Certification of Principal Financial Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.
|
*
|
|||||
Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002
|
*
|
|||||
101.INS
|
XBRL Instance Document
|
*
|
||||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
*
|
||||
101.CAL
|
XBRL Taxonomy Extension Calculation Document
|
*
|
||||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
*
|
||||
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
*
|
||||
101.PRE
|
XBRL Taxonomy Extension Presentation Link Document.
|
*
|
Exhibit |
Exhibit Description
|
Form
|
File No.
|
Exhibit
|
Filing
date
|
Filed /
Furnished
Herewith
|
Document.
|
†
|
Indicates a management contract or any compensatory plan, contract or arrangement.
|
#
|
Certain schedules and similar attachments to this agreement have been omitted in accordance with Item 601(b)(5) of Regulation S-K. The Company will furnish copies of any schedules or
similar attachments to the SEC upon request.
|
***
|
Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the
registrant if publicly disclosed.
|
BETTER CHOICE COMPANY INC.
|
||
Date: August 14, 2020
|
By:
|
/s/ WERNER VON PEIN |
Werner von Pein
|
||
Chief Executive Officer
(Principal Executive Officer)
|
||
Date: August 14, 2020
|
By:
|
/s/ SHARLA COOK |
Sharla Cook
|
||
Principal Financial and Accounting Officer
|
|
June 19, 2020
|
Re:
|
Waiver of Terms
|
Very truly yours,
|
||
BETTER CHOICE COMPANY INC.
|
||
By:
|
||
Werner von Pein
|
||
Chief Executive Officer
|
ACCEPTED AND AGREED:
|
|||
[NOTEHOLDER]
|
|||
By:
|
|||
Name:
|
|||
Title:
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Aug. 12, 2020 |
|
Cover [Abstract] | ||
Entity Registrant Name | Better Choice Co Inc. | |
Entity Central Index Key | 0001471727 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 48,939,708 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Address, State or Province | FL |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Condensed Consolidated Balance Sheets [Abstract] | ||
Redeemable Series E preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Redeemable Series E preferred stock, shares authorized (in shares) | 2,900,000 | 2,900,000 |
Redeemable Series E preferred stock, shares issued (in shares) | 1,387,378 | 1,387,378 |
Redeemable Series E preferred stock, shares outstanding (in shares) | 1,387,378 | 1,387,378 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 88,000,000 | 88,000,000 |
Common stock, shares issued (in shares) | 48,939,708 | 47,977,390 |
Common stock, shares outstanding (in shares) | 48,939,708 | 47,977,390 |
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Condensed Consolidated Statements of Operations and Comprehensive Loss [Abstract] | ||||
Net sales | $ 9,941 | $ 4,084 | $ 22,167 | $ 7,635 |
Cost of goods sold | 5,817 | 2,421 | 13,886 | 4,082 |
Gross profit | 4,124 | 1,663 | 8,281 | 3,553 |
Operating expenses: | ||||
General and administrative | 11,594 | 5,211 | 19,650 | 7,174 |
Share-based compensation | 3,020 | 4,006 | 5,504 | 4,212 |
Sales and marketing | 1,848 | 3,412 | 3,807 | 5,597 |
Customer service and warehousing | 162 | 297 | 352 | 551 |
Total operating expenses | 16,624 | 12,926 | 29,313 | 17,534 |
Loss from operations | (12,500) | (11,263) | (21,032) | (13,981) |
Other expense: | ||||
Interest expense, net | 2,430 | 62 | 4,731 | 124 |
Loss on Acquisitions | 0 | 149,988 | 0 | 149,988 |
Change in fair value of warrant derivative liability | 3,474 | 193 | 2,095 | 193 |
Total other expense, net | 5,904 | 150,243 | 6,826 | 150,305 |
Net and comprehensive loss | (18,404) | (161,506) | (27,858) | (164,286) |
Preferred dividends | 34 | 27 | 68 | 27 |
Net and comprehensive loss available to common stockholders | $ (18,438) | $ (161,533) | $ (27,926) | $ (164,313) |
Weighted average number of shares outstanding, basic and diluted (in shares) | 48,939,708 | 30,638,048 | 48,733,052 | 21,202,188 |
Loss per share, basic and diluted (in dollars per share) | $ (0.38) | $ (5.27) | $ (0.57) | $ (7.75) |
Condensed Consolidated Statements of Stockholders' Deficit - USD ($) $ in Thousands |
Common Stock [Member] |
Common Stock [Member]
Better Choice [Member]
|
Common Stock [Member]
Bona Vida, Inc. [Member]
|
Common Stock [Member]
June 2020 Notes [Member]
|
Common Stock [Member]
Seller Notes and ABG Notes [Member]
|
Common Stock [Member]
Series A Preferred Stock [Member]
|
Common Stock [Member]
Series E Preferred Stock [Member]
|
Preferred Stock [Member]
Series A Preferred Stock [Member]
|
Preferred Stock [Member]
Series A Preferred Stock [Member]
Better Choice [Member]
|
Preferred Stock [Member]
Series A Preferred Stock [Member]
Bona Vida, Inc. [Member]
|
Preferred Stock [Member]
Series E Preferred Stock [Member]
|
Preferred Stock [Member]
Series E Preferred Stock [Member]
Better Choice [Member]
|
Preferred Stock [Member]
Series E Preferred Stock [Member]
June 2020 Notes [Member]
|
Preferred Stock [Member]
Series E Preferred Stock [Member]
Seller Notes and ABG Notes [Member]
|
Additional Paid-in Capital [Member] |
Additional Paid-in Capital [Member]
Better Choice [Member]
|
Additional Paid-in Capital [Member]
Bona Vida, Inc. [Member]
|
Additional Paid-in Capital [Member]
June 2020 Notes [Member]
|
Additional Paid-in Capital [Member]
Seller Notes and ABG Notes [Member]
|
Additional Paid-in Capital [Member]
Series A Preferred Stock [Member]
|
Additional Paid-in Capital [Member]
Series E Preferred Stock [Member]
|
Accumulated Deficit [Member] |
Accumulated Deficit [Member]
Better Choice [Member]
|
Accumulated Deficit [Member]
Bona Vida, Inc. [Member]
|
Accumulated Deficit [Member]
June 2020 Notes [Member]
|
Accumulated Deficit [Member]
Seller Notes and ABG Notes [Member]
|
Accumulated Deficit [Member]
Series A Preferred Stock [Member]
|
Accumulated Deficit [Member]
Series E Preferred Stock [Member]
|
Total |
Better Choice [Member] |
Bona Vida, Inc. [Member] |
June 2020 Notes [Member] |
Seller Notes and ABG Notes [Member] |
Series A Preferred Stock [Member] |
Series E Preferred Stock [Member] |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2018 | $ 12 | $ 2 | $ 0 | $ 13,642 | $ (16,698) | $ (3,042) | |||||||||||||||||||||||||||||
Balance (in shares) at Dec. 31, 2018 | 11,661,485 | 2,391,403 | 0 | ||||||||||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||||||||||||||||
Shares issued pursuant to a private placement - net proceeds | $ 0 | $ 0 | 150 | 0 | 150 | ||||||||||||||||||||||||||||||
Shares issued pursuant to a private placement - net proceeds (in shares) | 0 | 69,115 | |||||||||||||||||||||||||||||||||
Share-based compensation | $ 0 | $ 0 | 206 | 0 | 206 | ||||||||||||||||||||||||||||||
Share-based compensation (in shares) | 18,964 | 0 | |||||||||||||||||||||||||||||||||
Net and comprehensive loss available to common stockholders | $ 0 | $ 0 | 0 | (2,776) | (2,776) | ||||||||||||||||||||||||||||||
Balance at Mar. 31, 2019 | $ 12 | $ 2 | $ 0 | 13,998 | (19,474) | (5,462) | |||||||||||||||||||||||||||||
Balance (in shares) at Mar. 31, 2019 | 11,680,449 | 2,460,518 | |||||||||||||||||||||||||||||||||
Balance at Dec. 31, 2018 | $ 12 | $ 2 | $ 0 | 13,642 | (16,698) | (3,042) | |||||||||||||||||||||||||||||
Balance (in shares) at Dec. 31, 2018 | 11,661,485 | 2,391,403 | 0 | ||||||||||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||||||||||||||||
Net and comprehensive loss available to common stockholders | (164,313) | ||||||||||||||||||||||||||||||||||
Balance at Jun. 30, 2019 | $ 43 | $ 0 | $ 13,007 | 170,017 | (181,007) | (10,947) | |||||||||||||||||||||||||||||
Balance (in shares) at Jun. 30, 2019 | 43,168,161 | 0 | 1,707,920 | ||||||||||||||||||||||||||||||||
Balance at Mar. 31, 2019 | $ 12 | $ 2 | $ 0 | 13,998 | (19,474) | (5,462) | |||||||||||||||||||||||||||||
Balance (in shares) at Mar. 31, 2019 | 11,680,449 | 2,460,518 | |||||||||||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||||||||||||||||
Share-based compensation | $ 2 | 4,006 | 0 | 4,008 | |||||||||||||||||||||||||||||||
Share-based compensation (in shares) | 1,199,822 | 0 | |||||||||||||||||||||||||||||||||
Conversion of Stock | $ 2 | $ 1 | $ (2) | $ (7,052) | $ 0 | $ 7,050 | $ 0 | $ 0 | $ 0 | $ 7,051 | |||||||||||||||||||||||||
Conversion of Stock (in shares) | 2,460,518 | 1,175,000 | (2,460,518) | (925,758) | |||||||||||||||||||||||||||||||
Acquisition | $ 3 | $ 18 | $ 0 | $ 0 | $ 20,059 | $ 23,490 | $ 108,002 | $ 0 | $ 0 | $ 23,493 | $ 108,020 | ||||||||||||||||||||||||
Acquisition of business (in shares) | 3,915,856 | 18,003,273 | 0 | 0 | 2,633,678 | ||||||||||||||||||||||||||||||
Shares and warrants issued pursuant to private issuance of public equity (PIPE)- net proceeds | $ 6 | $ 0 | 15,670 | 0 | 15,676 | ||||||||||||||||||||||||||||||
Shares and warrants issued pursuant to private issuance of public equity (PIPE)- net proceeds (in shares) | 5,744,991 | 0 | |||||||||||||||||||||||||||||||||
Acquisitions of treasury shares | $ (1) | $ 0 | (2,199) | 0 | (2,200) | ||||||||||||||||||||||||||||||
Acquisition of treasury (in shares) | (1,011,748) | 0 | |||||||||||||||||||||||||||||||||
Net and comprehensive loss available to common stockholders | $ 0 | $ 0 | 0 | (161,533) | (161,533) | ||||||||||||||||||||||||||||||
Balance at Jun. 30, 2019 | $ 43 | $ 0 | $ 13,007 | 170,017 | (181,007) | (10,947) | |||||||||||||||||||||||||||||
Balance (in shares) at Jun. 30, 2019 | 43,168,161 | 0 | 1,707,920 | ||||||||||||||||||||||||||||||||
Balance at Dec. 31, 2019 | $ 48 | $ 10,566 | 194,150 | (201,269) | (7,071) | ||||||||||||||||||||||||||||||
Balance (in shares) at Dec. 31, 2019 | 47,977,390 | 1,387,378 | |||||||||||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||||||||||||||||
Shares issued pursuant to a private placement - net proceeds | $ 0 | $ 0 | 500 | 0 | 500 | ||||||||||||||||||||||||||||||
Shares issued pursuant to a private placement - net proceeds (in shares) | 308,642 | ||||||||||||||||||||||||||||||||||
Share-based compensation | $ 1 | 0 | 2,484 | 0 | 2,485 | ||||||||||||||||||||||||||||||
Share-based compensation (in shares) | 455,956 | ||||||||||||||||||||||||||||||||||
Shares and warrants issued to third party for contract termination | $ 0 | 0 | 198 | 0 | 198 | ||||||||||||||||||||||||||||||
Shares and warrants issued to third party for contract termination (in shares) | 72,720 | ||||||||||||||||||||||||||||||||||
Shares issued to third parties for services | $ 0 | 0 | 125 | 0 | 125 | ||||||||||||||||||||||||||||||
Stock issued to third parties for services (in shares) | 125,000 | ||||||||||||||||||||||||||||||||||
Warrants issued to third parties for services | $ 0 | 0 | 2,594 | 0 | 2,594 | ||||||||||||||||||||||||||||||
Net and comprehensive loss available to common stockholders | 0 | 0 | 0 | (9,488) | (9,488) | ||||||||||||||||||||||||||||||
Balance at Mar. 31, 2020 | $ 49 | $ 10,566 | 200,051 | (210,757) | (10,657) | ||||||||||||||||||||||||||||||
Balance (in shares) at Mar. 31, 2020 | 48,939,708 | 1,387,378 | |||||||||||||||||||||||||||||||||
Balance at Dec. 31, 2019 | $ 48 | $ 10,566 | 194,150 | (201,269) | (7,071) | ||||||||||||||||||||||||||||||
Balance (in shares) at Dec. 31, 2019 | 47,977,390 | 1,387,378 | |||||||||||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||||||||||||||||
Net and comprehensive loss available to common stockholders | (27,926) | ||||||||||||||||||||||||||||||||||
Balance at Jun. 30, 2020 | $ 49 | $ 10,566 | 212,532 | (229,195) | (16,614) | ||||||||||||||||||||||||||||||
Balance (in shares) at Jun. 30, 2020 | 48,939,708 | 1,387,378 | |||||||||||||||||||||||||||||||||
Balance at Mar. 31, 2020 | $ 49 | $ 10,566 | 200,051 | (210,757) | (10,657) | ||||||||||||||||||||||||||||||
Balance (in shares) at Mar. 31, 2020 | 48,939,708 | 1,387,378 | |||||||||||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||||||||||||||||
Share-based compensation | $ 0 | $ 0 | 3,020 | 0 | 3,020 | ||||||||||||||||||||||||||||||
Share-based compensation (in shares) | 0 | ||||||||||||||||||||||||||||||||||
Conversion of Stock | $ 0 | $ 0 | $ 1,163 | $ 0 | $ 1,163 | ||||||||||||||||||||||||||||||
Conversion of Stock (in shares) | 0 | ||||||||||||||||||||||||||||||||||
Warrants issued to third parties for services | $ 0 | 0 | 7,390 | 0 | 7,390 | ||||||||||||||||||||||||||||||
Warrants issued in connection with the Notes | $ 0 | $ 0 | $ 337 | $ 0 | $ 337 | ||||||||||||||||||||||||||||||
Modification of conversion feature for November 2019 Notes, Seller Notes, and ABG Notes | $ 0 | $ 0 | $ 528 | $ 0 | $ 528 | ||||||||||||||||||||||||||||||
Modification of warrants | 0 | 0 | 43 | 0 | 43 | ||||||||||||||||||||||||||||||
Net and comprehensive loss available to common stockholders | 0 | 0 | 0 | (18,438) | (18,438) | ||||||||||||||||||||||||||||||
Balance at Jun. 30, 2020 | $ 49 | $ 10,566 | $ 212,532 | $ (229,195) | $ (16,614) | ||||||||||||||||||||||||||||||
Balance (in shares) at Jun. 30, 2020 | 48,939,708 | 1,387,378 |
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Supplemental Cash Flow Information | ||
Income taxes paid | $ 0.0 | $ 0.0 |
Cash interest paid | $ 1.4 | $ 0.1 |
Nature of Business and Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Nature of Business and Summary of Significant Accounting Policies [Abstract] | |
Nature of Business and Summary of Significant Accounting Policies | Note 1 – Nature of Business and Summary of Significant Accounting Policies Nature of the Business Better Choice Company Inc. is a rapidly growing animal health and wellness company committed to leading the industry shift toward pet products and services that help dogs and cats live heathier, happier and longer lives. The Company sells the majority of its dog food, cat food and treats under the Halo and TruDog brands, which are focused, respectively, on providing sustainably sourced kibble and canned food derived from real whole meat, and minimally processed raw-diet dog food and treats. On May 6, 2019, the Company completed the reverse acquisition of TruPet LLC (“TruPet”) and Bona Vida Inc. (“Bona Vida”) in a pair of all stock transactions (together referred to as the “May Acquisitions”) through the issuance of shares of common stock. Following the completion of the May Acquisitions, the business conducted by the Company became primarily the businesses conducted by TruPet and Bona Vida. As a result, the consolidated financial statements for the year ended December 31, 2019 are comprised of the results of TruPet for the period between January 1, 2019 and December 31, 2019 and the results of Bona Vida beginning May 6, 2019 through December 31, 2019. The Company completed the acquisition of Halo on December 19, 2019 (see “Note 2 – Acquisitions”). Accordingly, Halo’s operations are included in the Company’s consolidated financial statements beginning on December 19, 2019. Basis of Presentation The condensed consolidated financial statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair statement of the results for interim periods. Results of operations for interim periods may not be representative of results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”). Tables are presented in U.S. dollars (thousands) and percentage as rounded up or down. In the notes, the Company represents U.S. dollars (millions) and percentage as rounded up or down. Consolidation The Company’s interim condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The financial statements are presented on a consolidated basis subsequent to acquisitions and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Going Concern Considerations The Company is subject to risks common in the pet wellness consumer market including, but not limited to, dependence on key personnel, competitive forces, successful marketing and sale of its products, the successful protection of its proprietary technologies, ability to grow into new markets, and compliance with government regulations. In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. Uncertainties regarding the economic impact of COVID-19, the disease caused by the novel coronavirus, are likely to result in sustained market turmoil which could also negatively impact the Company’s business, financial condition, and cash flows. The Company has continually incurred losses and has an accumulated deficit. The Company continues to rely on current investors and the public markets to finance these losses through debt and/or equity issuances. These operating losses and the outstanding debt create substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date these interim condensed consolidated financial statements are issued. The Company is implementing plans to achieve cost savings and other strategic objectives to address these conditions. The Company expects cost savings from consolidation of third-party manufacturers, optimizing shipping and warehousing as well as overhead cost reductions. The business is focused on growing the most profitable channels while reducing investments in areas that are not expected to have long-term benefits. The accompanying interim condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and payments of liabilities in the ordinary course of business. Accordingly, the interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of and classification of liabilities that may result should the Company be unable to continue as a going concern. Restricted cash The Company is required to maintain a restricted cash balance of less than $0.1 million and $0.2 million as of June 30, 2020 and December 31, 2019 associated with a business credit card and credit card clearance operations. Allowance for doubtful accounts Accounts receivable consist of unpaid buyer invoices from the Company’s Retail customers and credit card payments receivable from third-party credit card processing companies. Accounts receivable is stated at the amount billed to customers, net of point of sale and cash discounts. The Company recorded a less than $0.1 million allowance for doubtful accounts as of June 30, 2020 and December 31, 2019, respectively. Goodwill Goodwill of $18.6 million was recognized as of December 31, 2019 in connection with the Halo Acquisition (see “Note 2 – Acquisitions”). No impairment was recognized as of June 30, 2020 and December 31, 2019, respectively. Intangible assets The Company acquired an intangible asset related to the Houndog license with the acquisition of Bona Vida on May 6, 2019. The Company fully impaired the asset as of December 31, 2019 as the Company terminated the contract on January 13, 2020. The Company also acquired intangible assets consisting of customer relationships and trade name with the acquisition of Halo on December 19, 2019. There were no indicators of impairment of intangible assets as of June 30, 2020. Leases The Company’s leases relate to its corporate offices and warehouses. Effective January 1, 2019, the Company adopted the FASB guidance on leases (“Topic 842”), which requires leases with durations greater than twelve months to be recognized on the balance sheets. The Company adopted Topic 842 using the modified retrospective transition approach. Redeemable convertible preferred stock The Company’s Redeemable Series E Convertible Preferred Stock (the “Series E”) contains redemption provisions that require it to be presented outside of stockholders’ deficit. Changes in the redemption value of the redeemable convertible preferred stock, if any, are recorded immediately in the period occurred as an adjustment to additional paid-in capital in the condensed consolidated balance sheets. Income taxes The Company was incorporated on May 6, 2019. Prior to this date, the Company operated as a flow through entity for state and United States federal tax purposes. The Company files a U.S. federal and state income tax return including its wholly owned subsidiaries. As of June 30, 2020 and December 31, 2019, the Company does not have any uncertain income tax positions. Revenue The Company recognizes revenue to depict the transfer of promised goods to the customer in an amount the reflects the consideration to which the Company expects to be entitled in exchange for those goods in accordance with the provisions of ASC 606, “Revenue from Contracts with Customers”. Fair value of financial instruments The warrant derivative liability is remeasured at fair value each reporting period and represents a Level 3 financial instrument. Reclassification of prior period presentation Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no material effect on the reported results. Recently issued accounting pronouncements The Company has reviewed the Accounting Standards Update (ASU), accounting pronouncements and interpretations thereof issued by the FASB that have effective dates during the reporting period and in future periods. Recently adopted: ASU 2018-13 “Fair Value Measurement” In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This new guidance removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This new guidance was effective for the Company beginning on January 1, 2020 and did not have a material impact on the Company’s condensed consolidated financial statements. ASU 2018-15 “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40)” In August 2018, the FASB issued ASU 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)” to amend ASU 2015-05 in an effort to provide additional guidance on the accounting for costs implementation activities performed in a cloud computing arrangement that is a service contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalizing implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The new standard was effective for the Company on January 1, 2020. The Company has no internal use software. Issued but not Yet Adopted: ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326)” Codification Improvements to Financial Instruments-Credit Losses (Topic 326). Subsequent updates were released in November 2018 (ASU No. 2018-19), November 2019 (ASU No. 2019-10 and 2019-11) and February 2020 (ASU No. 2020-02) that provided additional guidance on this Topic. This ASU introduces the current expected credit loss (CECL) model, which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. The standard is effective for the Company on January 1, 2023, and early adoption is permitted. The Company is currently evaluating the impact the new standard will have on its consolidated financial statements and related disclosures. ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019- 12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. ASU 2020-04 “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting” In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (IBORs) and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The ASU can be adopted no later than December 1, 2022 with early adoption permitted. The Company is currently evaluating the impact the standard will have on its consolidated financial statements and related disclosures. ASU 2020-03 “Codification Improvements to Financial Instruments” In March 2020, FASB issued ASU 2020-03. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The Company is evaluating the impact the accounting guidance will have on its consolidated financial statements and related disclosures. The Company has carefully considered other new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Company’s reported balance sheets or operations. |
Acquisitions |
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Acquisitions | Note 2 - Acquisitions Acquisition of Halo On October 15, 2019, the Company entered into a Stock Purchase Agreement (the “Agreement”) to acquire Halo and the acquisition (the “Halo Acquisition”) was completed on December 19, 2019 (“Halo Acquisition Date”) for $38.2 million. The consideration was subject to customary adjustments for Halo’s net working capital, cash, and indebtedness, and consisted of a combination of cash consideration ($20.5 million), shares of the Company’s common stock ($3.9 million), seller notes ($15.0 million), and seller warrants ($0.3 million). The Halo Acquisition was accounted for under the purchase method of accounting, and accordingly, the purchase price was allocated to the identifiable assets and liabilities based on their estimated fair values at the Halo Acquisition Date. The determination of the preliminary purchase price allocation to specific assets acquired and liabilities assumed is incomplete for Halo. The preliminary purchase price allocation may change in future periods as the fair value estimates of assets and liabilities and the valuation of the related tax assets and liabilities are completed. The preliminary purchase price allocation is summarized as follows:
The intangible assets acquired relate to customer relationships and trade name. Acquired customer relationships are finite-lived intangible assets and are amortized over their estimated life of 7 years using the straight-line method, which approximates the customer attrition rate, reflecting the pattern of economic benefits associated with these assets. All of Halo’s products and services are sold under the “Halo” trade name, and each major product is identified by this trade name. The trade name is a finite-lived intangible asset and is being amortized over its estimated life of 15 years using the straight-line method, which reflects the pattern of economic benefits associated with this asset. The excess of purchase price over the fair value amounts assigned to the identifiable assets acquired and liabilities assumed represents goodwill from the acquisition. The Company believes the factors that contributed to goodwill include the acquisition of a talented workforce and administrative cost synergies. The Company does not expect any portion of this goodwill to be deductible for tax purposes. See “Note 9 – Intangible assets, royalties, and goodwill” for more information. Reverse Acquisitions of Better Choice and Bona Vida by TruPet On May 6, 2019, Better Choice Company completed the reverse acquisitions of TruPet and Bona Vida whereby TruPet is considered the acquirer for accounting and financial reporting purposes. The acquisitions were accounted for as asset acquisitions. The purchase price for Better Choice Company was $37.9 million and has been allocated based on an estimate of the fair value of Better Choice Company’s assets acquired and liabilities assumed with the remainder recorded as an expense. The loss on acquisition of Better Choice Company’s net liabilities is $39.6 million. The purchase price for Bona Vida was $108.6 million and the estimated purchase price has been allocated based on an estimate of the fair value of assets acquired and liabilities assumed. The excess of the purchase price over the net assets acquired has been recorded as an expense. The loss on acquisition of Bona Vida’s net assets is $107.8 million. On May 6, 2019, the fair value of assets and liabilities acquired was:
In connection with the preparation of the Company’s consolidated financial statements for the period ended September 30, 2019, the Company identified an error in the consolidated financial statements for the six month period ended June 30, 2019 related to the overstatement of loss on acquisitions of $2.6 million in the consolidated statement of operations and comprehensive loss. This was primarily due to a change in the estimated purchase price, which also resulted in errors in the statement of stockholders’ deficit and statement of cash flows. The errors were all corrected during the three-month period ended September 30, 2019. The Company believes the correction of these errors is not material to the consolidated financial statements as of and for the period ended June 30, 2019. |
Revenue |
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Revenue [Abstract] | |
Revenue | Note 3 - Revenue The Company has two categories of revenue channels: retail-partner based (“Retail”), which includes the sale of product to e-commerce retailers, pet specialty chains, grocery, mass and distributors, and direct to consumer, (“DTC”), which is focused on driving consumers to directly purchase product through its online web platform. Retail-partner based channel The Company’s Retail channel includes the sale of goods to customers for resale. The Company records revenue net of discounts. Discounts primarily consist of early pay discounts, general percentage allowances and contractual trade promotions such as auto-ship subscriptions, and cooperative agreements with third party distributors. Retail-partner based customers are not subject to sales tax. The Retail channel represents 73% and 75% of consolidated revenue for the three and six months ended June 30, 2020, respectively, and 11% for the three and six months ended June 30, 2019. Shipping costs associated with moving finished products to customers through third party carriers were less than $0.1 million and $0.1 million for the three and six months ended June 30, 2020, respectively, and no shipping costs were recorded for the three and six months ended June 30, 2019, respectively. Such shipping costs are recorded as part of general and administrative expenses. Direct to consumer channel The Company’s DTC products are offered through online stores where customers place orders directly for delivery across the United States. The DTC channel represents 27% and 25% of consolidated revenue of the Company for the three and six months ended June 30, 2020, respectively, and 89% for the three and six months ended June 30, 2019. Shipping costs associated with moving finished products to customers were $0.3 million and $0.7 million for the three and six months ended June 30, 2020, respectively, and $0.6 million and $1.2 million for the three and six months ended June 30, 2019, respectively. Such shipping costs are recorded as part of general and administrative expenses. The Company’s DTC loyalty program enables customers to accumulate points based on spending. A portion of revenue is deferred at the time of the sale when points are earned and recognized when the loyalty points are redeemed. As of June 30, 2020 and December 31, 2019, customers held unredeemed loyalty program awards of $0.3 million and $0.2 million, respectively. The Company recognized revenue of $0.1 million and $0.3 million from the loyalty program for the three and six months ended June 30, 2020, respectively, and less than $0.1 million and $0.1 million for the three and six months ended June 30, 2019, respectively. The amount included in net sales related to recoveries of shipping costs from customers for direct to consumer sales was $0.1 million and $0.2 million for the three and six months ended June 30, 2020, respectively, and $0.2 million and $0.4 million for the three and six months ended June 30, 2019, respectively. |
Inventories |
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Inventories | Note 4 - Inventories Inventories are summarized as follows:
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Prepaid expenses and other current assets | Note 5 – Prepaid expenses and other current assets On August 28, 2019, the Company entered into a radio advertising agreement with iHeart and issued 1,000,000 shares of common stock valued at $3.4 million for future advertising to be provided to the Company from August 2019 to August 2021. The Company issued an additional 125,000 shares valued at $0.1 million on March 5, 2020 pursuant to the agreement. The agreement requires the Company to spend a minimum amount for talent and other direct iHeart costs. The Company committed to using $1.7 million of the media inventory by August 28, 2020, with the remainder of the advertising available through August 28, 2021. The Company is in the process of amending the contract to extend the dates by which the related media spend is to be used and expects an amendment to be finalized prior to the first commitment date. Prepaid advertising was $3.0 million as of June 30, 2020 and $2.8 million as of December 31, 2019. Of the total prepaid amount, $2.6 million and $1.7 million is recorded in prepaid expenses and other current assets and $0.4 million and $1.1 million in other noncurrent assets as of June 30, 2020 and December 31, 2019, respectively. |
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Property and equipment | Note 6 - Property and equipment Property and equipment consist of the following:
Depreciation expense was less than $0.1 million and $0.1 million for the three and six months ended June 30, 2020, respectively, and less than $0.1 million for both the three and six months ended June 30, 2019. Depreciation expense is included as a component of general and administrative expenses. |
Accrued liabilities |
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Accrued liabilities | Note 7 – Accrued liabilities Accrued liabilities consist of the following:
Pursuant to waiver letters executed by each investor, the holders of the Company’s Series E preferred stock agreed to waive their right to the distribution of dividends until October 22, 2020. Accrued dividends related to the Series E are $0.3 million as of June 30, 2020 and December 31, 2019, respectively, and remain unpaid. |
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Operating leases | Note 8 – Operating leases The table below presents certain information related to the lease costs for operating leases for the three and six months ended June 30, 2020 and 2019:
As of June 30, 2020, the weighted-average remaining operating lease term was 2.1 years and the incremental borrowing rate was 12.5% for operating leases recognized on the Company’s condensed consolidated balance sheets. Short term lease costs, excluding expenses relating to leases with a lease term of one month or less, were less than $0.1 million for both the three and six months ended June 30, 2020, respectively. During the three and six months ended June 30, 2019, the Company recorded no short term lease costs. Rent expense was $0.1 and $0.2 million for the three and six months ended June 30, 2020, respectively, and $0.1 million for both the three and six months ended June 30, 2019. Undiscounted cash flows The table below reconciles the undiscounted cash flows for the remaining term of the operating lease liabilities recorded on the condensed consolidated balance sheets. Operating Leases
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Intangible assets, royalties and goodwill | Note 9 – Intangible assets, royalties, and goodwill Intangible assets and royalties The Company’s intangible assets as of June 30, 2020 and December 31, 2019 consist of customer relationships and trade name acquired in the Halo Acquisition. The customer relationships and trade name are amortized over their estimated useful lives of 7 and 15 years respectively, using the straight-line method. In May 2019, the Company acquired a licensing agreement with Authentic Brands and Elvis Presley Enterprises (“ABG”) whereby Better Choice was to sell newly developed hemp-derived CBD products that will be marketed under the Elvis Presley Houndog name. The license agreement required an upfront equity payment of $1.0 million worth of common stock and the license was recorded at its amortized cost which approximated fair value. The Company does not plan to use the license in the future and therefore terminated the agreement on January 13, 2020. The Company recognized an impairment charge for the net book value of the licensing agreement as of and for the year ended December 31, 2019. As part of the termination, the Company: (1) paid ABG $0.1 million in cash upon the signing of the termination agreement on January 13, 2020, (2) issued ABG 72,720 shares of the Company’s common stock on January 13, 2020, (3) agreed to pay ABG $0.1 million in cash in four equal installments each month from July 31, 2020 through October 31, 2020, (4) issued ABG $0.6 million aggregate principal amount of Subordinated Promissory Notes (the “ABG Notes”) effective January 20, 2020, and (5) issued ABG a common stock purchase warrant (the “ABG Warrants”) equal to a fair value of $150,000 on January 20, 2020. The terms of the ABG Notes match those of the Seller Notes, including convertible features exercisable any time after the date of issuance, a 10% interest rate and maturity date of June 30, 2023. The ABG Warrants are exercisable for 24 months from the date of the consummation of an IPO (as defined in the ABG Warrants) and carried an initial exercise price equal to the greater of (i) $5.00 per share or (ii) the price at which the common stock was sold in the IPO. The fair values of the ABG Notes and ABG Warrants on their issuance dates were $0.6 million and less than $0.1 million, respectively. On June 24, 2020, the exercise price of the ABG Warrants was amended in connection with the issuance of the June 2020 Notes (defined below) to lower the maximum exercise price from $5.00 to $4.25 per share. The total cost of the contract termination noted above is measured at its fair value of $1.1 million and is included in general and administrative expense. The Company’s intangible assets are as follows: Dollars in thousands
The Company did not have intangible assets or amortization expense during the three and six months ended June 30, 2019. The estimated future amortization of intangible assets over the weighted average remaining useful life of 10.5 years is as follows:
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Debt |
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Debt | Note 10 - Debt The components of the Company’s debt consist of the following:
Short term loan and line of credit On the Halo Acquisition Date, the Company entered into a Loan Facilities Agreement (the “Facilities Agreement”) by and among the Company, as the borrower, the several lenders from time to time parties thereto (collectively, the “Lenders”) and a private debt lender, as agent (the “Agent”). The Facilities Agreement provides for (i) a term loan facility of $20.5 million and (ii) a revolving demand loan facility not to exceed $7.5 million. As of June 30, 2020 and December 31, 2019, the term loan outstanding was $18.2 million and $16.1 million, net of debt issuance costs and discounts of $2.3 million and $4.4 million, respectively, and the line of credit outstanding was $5.7 million and $4.8 million, respectively, net of debt issuance costs of $0.1 million and $0.2 million, respectively. The debt issuance costs and discounts are amortized using the effective interest method. The term loan and line of credit are scheduled to mature on December 19, 2020 or such earlier date on which a demand is made by the Agent or any Lender. Certain directors and shareholders of the Company (“Shareholder Guarantors”) agreed to enter into a Continuing Guaranty (the “Shareholder Guaranties”) in the amount of $20.0 million and guarantee the Company’s obligations under the agreement. As consideration for the Shareholder Guaranties, the Company agreed to issue common stock purchase warrants to the Shareholder Guarantors in an amount equal to 0.325 warrants for each dollar of debt under the agreement guaranteed by such Shareholder Guarantors (the “Guarantor Warrants”). The Guarantor Warrants are exercisable any time from the date of issuance for up to 24 months from the date of the consummation of an IPO (as defined therein) at an exercise price $1.82 per share. The Guarantor Warrants had a fair value of $4.2 million on the date of issuance. As of June 30, 2020 and December 31, 2019, the Company was in compliance with its debt covenants. Notes payable On November 4, 2019, the Company issued $2.8 million of subordinated convertible notes (the “November 2019 Notes”) which carry a 10% interest rate and mature on November 4, 2021. The interest is payable in arrears on March 31, June 30, September 30 and December 31 of each year. Payment in kind (“PIK”) interest is payable by increasing the aggregate principal amount of the November 2019 Notes. The November 2019 Notes are exercisable any time from the date of issuance and carried an initial conversion price of the lower of (a) $4.00 per share or (b) the IPO Price. The IPO Price is the price at which the Company’s stock will be sold in a future IPO. The Company issued incremental warrants associated with the November 2019 Notes with a fair value of less than $0.1 million on the date of issuance. The November 2019 Notes were amended on January 6, 2020. The amendment incorporates only the preferable terms of the Seller Notes as noted below, and all other terms and provisions of the November 2019 Notes remain in full force and effect. Pursuant to the amended November 2019 Notes, PIK interest shall be payable by increasing the aggregate principal amount of the November 2019 Notes. As amended, for so long as any event of default (as defined in the November 2019 Note) exists, interest shall accrue on the November 2019 Note principal at the default interest rate of 12.0% per annum, and such accrued interest shall be immediately due and payable. The November 2019 Notes were amended for the second time on June 24, 2020 in connection with the issuance of the June 2020 Notes. The amendment lowers the maximum conversion price applicable to the conversion of these notes from $4.00 per share to $3.75 per share and extends the maturity date from November 4, 2021 to June 30, 2023. Under the applicable accounting guidance, the Company accounted for the change in conversion price as a modification of the debt instrument. The Company recognized the increase in the fair value of the conversion option of $0.3 million as a reduction to the carrying amount of the debt instrument by increasing the associated debt discount with a corresponding increase in additional paid-in capital. As of June 30, 2020 and December 31, 2019, the aggregate amount of November 2019 Notes outstanding was $2.6 million and $2.8 million, respectively, net of discounts of less than $0.3 million and less than $0.1 million, respectively. The discounts are being amortized over the life of the November 2019 Notes using the effective interest method. On December 19, 2019, the Company issued $10.0 million and $5.0 million in senior subordinated convertible notes (the “Senior Seller Notes”) and junior subordinated convertible notes (the “Junior Seller Notes”), jointly the “Seller Notes” to the sellers of Halo. The Seller Notes are exercisable any time from the date of issuance and carry a 10% interest rate and mature on June 30, 2023. Interest is payable in arrears on March 31, June 30, September 30 and December 31 of each year. PIK interest is payable by increasing the aggregate principal amount of the Seller Notes. The Seller Notes carried an initial conversion price of the lower of (a) $4.00 per share or (b) the IPO Price. The Seller Notes were amended on June 24, 2020 in connection with the issuance of the June 2020 Notes. The amendment lowers the maximum conversion price applicable to the conversion of these notes from $4.00 per share to $3.75 per share. The Company accounted for the change in the conversion price as a modification of the debt instrument. The Company recognized the increase in the fair value of the conversion option of less than of $0.3 million as a reduction to the carrying amounts of the debt instruments by increasing the associated debt discounts with a corresponding increase in additional paid-in capital. As of June 30, 2020, the Senior Seller Notes outstanding were $9.7 million, net of discounts of $0.9 million, and the Junior Seller Notes outstanding were $4.6 million, net of discounts of $0.6 million. As of December 31, 2019, the Senior Seller Notes outstanding were $9.2 million, net of discounts of $0.9 million, and the Junior Seller Notes outstanding were $4.4 million, net of discounts of $0.5 million. The discounts are being amortized over the life of the Seller Notes using the effective interest method. On January 13, 2020, the Company issued $0.6 million in senior subordinated convertible notes to ABG. The ABG Notes are exercisable any time from the date of issuance and carry a 10% interest rate and mature on June 30, 2023. The interest is payable in arrears on March 31, June 30, September 30 and December 31 of each year. PIK interest is payable by increasing the aggregate principal amount of the ABG Notes. The ABG Notes carried an initial conversion price of the lower of (a) $4.00 per share or (b) the IPO Price. The ABG Notes were amended on June 24, 2020 in connection with the issuance of the June 2020 Notes. The amendment lowers the maximum conversion price applicable to the conversion of these notes from $4.00 per share to $3.75 per share. The Company accounted for the change in the conversion price as a modification of the debt instrument. The Company recognized the increase in the fair value of the conversion option of less than $0.1 million as a reduction to the carrying amount of the debt instrument by decreasing the associated debt premium with a corresponding increase in additional paid-in capital. As of June 30, 2020, the ABG Notes outstanding was $0.7 million, including a debt premium of less than $0.1 million. The debt premium is being amortized over the life of the ABG Notes using the effective interest method. On June 24, 2020, the Company issued $1.5 million in subordinated convertible promissory notes (the “June 2020 Notes”) which carry a 10% interest rate and mature on June 30, 2023. The interest is payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year. PIK interest is payable by increasing the aggregate principal amount of the June 2020 Notes. The June 2020 Notes are exercisable any time from the date of issuance and carry a conversion price $0.75 per share. The June 2020 Notes are also convertible automatically upon the Company’s consummation of an initial public offering or change in control (each as defined in the June 2020 Notes). The Company evaluated the conversion option within the June 2020 Notes to determine whether the conversion price was beneficial to the note holders. The Company recorded a beneficial conversion feature (“BCF”) related to the issuance of the June 2020 Notes. The BCF for the June 2020 Notes was recognized and measured by allocating a portion of the proceeds to beneficial conversion feature, based on relative fair value, and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion feature. The Company will accrete the discount recorded in connection with the BCF valuation as interest expense over the term of the June 2020 Notes, using the effective interest rate method. As of June 30, 2020, the amount outstanding on the June 2020 Notes was $0.0 million, net of discounts of $1.5 million. The discounts are being amortized over the life of the June 2020 Notes using the effective interest method. The exercise, conversion or exchange of convertible securities, including for other securities, will dilute the percentage ownership of the Company’s stockholders. The dilutive effect of the exercise or conversion of these securities may adversely affect the Company’s ability to obtain additional capital. As of June 30, 2020 and December 31, 2019, the Company was in compliance with all covenant requirements and there were no events of default. All notes payable are subordinated to the short term loan and line of credit. PPP loans On April 10, 2020, TruPet, LLC, a wholly owned subsidiary of Better Choice Company Inc., was granted a loan from JPMorgan Chase Bank, N.A. in the aggregate amount of $0.4 million, pursuant to the Paycheck Protection Program (PPP) under Division A, Title I of the CARES Act (the “TruPet PPP Loan”). The loan matures on April 6, 2022, and bears interest at a rate of 0.98% per annum, payable monthly, commencing on November 6, 2020. As of June 30, 2020, the TruPet PPP Loan outstanding was $0.4 million. On May 7, 2020, Halo, Purely for Pets, Inc., a wholly owned subsidiary of Better Choice Company Inc., was granted a loan from JPMorgan Chase Bank, N.A. in the aggregate amount of $0.4 million, pursuant to the PPP (the “Halo PPP Loan”). The loan matures on May 3, 2022, and bears interest at a rate of 1.00% per annum, payable monthly, commencing on November 1, 2020. As of June 30, 2020, the Halo PPP Loan outstanding was $0.4 million. Under the terms of the PPP, certain amounts of the loans may be forgiven if they are used for qualifying expenses as described in the CARES Act. The Company intends to use the entire loan amounts for qualifying expenses. The Company recorded interest expense related to its outstanding indebtedness of $2.4 million and $4.7 million for the three and six months ended June 30, 2020, respectively, and less than $0.1 million and $0.1 million for the three and six months ended June 30, 2019, respectively. The carrying amounts of the November 2019, Senior Seller Notes and Junior Seller Notes, ABG Notes, June 2020 Notes and PPP loans were approximately $2.6 million, $9.7 million $4.6 million, $0.7 million, $0.0 million, and $0.9 million, respectively, as of June 30, 2020. The carrying amounts of these debt instruments approximate fair value which is based on observable inputs, including quoted and market prices (Level 2). The carrying amount of the Company’s short term loan approximates fair value due to its short term nature. The carrying amount for the Company’s line of credit approximates fair value as the instrument has a variable interest rate that approximates market rates. |
Warrant derivative liability |
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Warrant derivative liability [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant derivative liability | Note 11 – Warrant derivative liability On December 12, 2018, the Company closed a private placement offering (the “December Offering”) of 1,425,641 units (the “Units”), each unit consisting of (i) one share of the Company’s common stock and (ii) a warrant to purchase one half of a share of common stock. The Units were offered at a fixed price of $1.95 per Unit for gross proceeds of $2.8 million. Costs associated with the December Offering were $0.1 million, and net proceeds were $2.7 million. The December Offering generated $2.6 million of net proceeds that were received by the Company during the year ended December 31, 2018 for the sale of 1,400,000 Units, and $0.1 million of the net proceeds were received on January 8, 2019 for the sale of 25,641 Units. The warrants are exercisable anytime from the date of issuance over a two-year period and carried an initial exercise price of $3.90 per share. The warrants include an option to settle in cash in the event of a change of control of the Company and a reset feature if the Company issues shares of common stock with a strike price below the exercise price of the warrants, which requires the Company to record the warrants as a derivative liability. The Company calculates the fair value of the derivative liability through a Monte Carlo Model that values the warrants based upon a probability weighted discounted cash flow model. During January 2020, the Company issued shares below the exercise price of the warrants acquired on May 6, 2019. Pursuant to the warrant agreement, the Company issued an additional 1,003,232 warrants on March 17, 2020 to certain of its warrant holders at an exercise price of $1.62 and modified the exercise price of the existing warrants to $1.62. During June 2020, the Company issued common stock equivalents below the exercise price of the warrants issued on March 17, 2020. Pursuant to the warrant agreement, the Company will issue an additional 1,990,624 warrants to certain of its warrant holders at an exercise price of $0.75 and will modify the exercise price of the existing warrants to $0.75. The warrants are valued based on future assumptions and, as the reset triggers were known events on June 30, 2020 and December 31, 2019, the Company included the triggers in the valuations performed as of June 30, 2020 and December 31, 2019. The following schedule shows the fair value of the warrant derivative liability as of June 30, 2020 and December 31, 2019, and the change in fair value during the three and six months ended June 30, 2020:
The valuation of the warrants is subject to uncertainty as a result of the unobservable inputs. If the volatility rate or risk-free interest rate were to change, the value of the warrants would be impacted. As of June 30, 2020, the Company would be required to pay $4.4 million if all warrants were settled in cash or issue 3,706,679 shares if all warrants were settled in shares. |
Other liabilities |
6 Months Ended |
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Jun. 30, 2020 | |
Other liabilities [Abstract] | |
Other liabilities | Note 12 – Other liabilities As of June 30, 2020 and December 31, 2019, other liabilities consisted of $0.2 million related to a reserve for a potential customer dispute settlement and $0.5 million as a prepayment for the issuance of common stock, respectively. |
Commitments and contingencies |
6 Months Ended |
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Jun. 30, 2020 | |
Commitments and contingencies [Abstract] | |
Commitments and contingencies | Note 13 – Commitments and contingencies In the normal course of business, the Company may be subject to various legal claims and contingencies that arise, including claims related to commercial transactions, product liability, health and safety, taxes, environmental matters, employee matters and other matters. Litigation is subject to numerous uncertainties and the outcome of individual claims and contingencies is not predictable. It is possible that some legal matters for which reserves have or have not been established could result in an unfavorable outcome for the Company and any such unfavorable outcome could be of a material nature or have a material adverse effect on the Company’s consolidated financial condition, results of operations and cash flows. Management is not aware of any claims or lawsuits that may have a material adverse effect on the consolidated financial position or results of operations of the Company. The Company had no purchase obligations as of June 30, 2020 and December 31, 2019. |
Stockholders' deficit |
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Stockholders' deficit [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' deficit | Note 14 - Stockholders’ deficit As a result of the reverse acquisition of Better Choice Company and Bona Vida by TruPet in May 2019, the historical TruPet members’ equity (units and incentive units) have been re-cast to reflect the equivalent Better Choice common stock for all periods presented after the transaction. Prior to the transaction in May 2019, TruPet was a limited liability company and as such, the concept of authorized shares was not relevant. A summary of equity transactions for the six months ended June 30, 2020 and 2019 is set forth below: On February 12, 2019, the Company issued 69,115 Series A Preferred Units in a private placement at $2.17 per unit. The proceeds were approximately $0.2 million, net of share issuance costs. On May 6, 2019, all Series A Preferred Shares were converted to 2,460,518 shares of common stock. On May 6, 2019, the Company acquired 1,011,748 shares of common stock valued at $6.1 million representing its initial 7% investment in TruPet. These shares are recorded as an acquisition of treasury shares. On May 6, 2019, the Company issued 5,744,991 million units for gross proceeds of $3.00 per unit in a PIPE transaction. Each unit included one share of common stock of Better Choice Company stock and a warrant to purchase an additional share. The shares issued in the PIPE are subject to the Securities and Exchange Commission’s Rule 144 restrictions which require the purchasers of the PIPE units to hold the shares for at least 6 months from the date of issuance. The funds raised from the PIPE were used to fund the operations of the combined company. Net proceeds of $15.7 million were received in the private placement, allocable between shares of common stock and warrants. On May 6, 2019, the Company acquired 2,633,678 outstanding shares of Series E, which represented an element of the purchase price and were recorded at fair value (on an as converted into common stock basis) based on the $6.00 per share closing price of Better Choice Company’s shares of common stock as they remained outstanding after the reverse acquisitions discussed in “Note 2 - Acquisitions” above. The Series E has a stated value of $0.99 per share; is convertible to common stock at a price of $0.78 per share. On May 10, 2019 and May 13, 2019, holders of the Company’s Series E converted 689,394 and 236,364 preferred shares into 875,000 and 300,000 shares of the Company’s common stock, respectively. Pursuant to the employment agreement of an officer with Bona Vida dated October 29, 2018, the officer was entitled to a $500,000 change of control payment. The officer later agreed to receive 100,000 shares of Better Choice Company common stock. The 100,000 shares of common stock were valued at $6.00 per share, which was the market value as of the date of the May Acquisitions. On January 2, 2020, the Company issued 308,642 shares of common stock to an investor for net proceeds of $0.5 million, net of issuance costs of less than $0.1 million. On January 13, 2020, the Company issued 72,720 shares of common stock to ABG in connection with the termination of a licensing agreement discussed in “Note 9 – Intangible assets, royalties and goodwill”. On March 3, 2020, the Company issued 450,000 shares of restricted common stock to three nonemployee directors in return for services provided in their capacity as directors. On March 5, 2020, the Company issued 125,000 shares of common stock for advertising services. On March 30, 2020, the Company issued 5,956 restricted shares of common stock to an officer of the Company. The Company has reserved common stock for future issuance as follows:
Warrants On May 6, 2019, in connection with the May Acquisitions, the Company acquired 712,823 warrants to purchase common stock with a weighted average exercise price of $3.90. The Company also issued 5,744,991 warrants with an exercise price of $4.25 on May 6, 2019 as part of the PIPE. Additionally, in connection with the PIPE transaction, the Company issued 220,539 warrants to brokers with an exercise price of $3.00. The warrants are exercisable on the date of issuance and expire 24 months from the date of the consummation of a future IPO. On September 17, 2019, a Company advisor was issued 2,500,000 warrants with an exercise price of $0.10 and 1,500,000 warrants with an exercise price of $10.00. The warrants were exercisable as follows: 1,250,000 of the warrants with the $0.10 exercise price (the “Tranche 1 Warrants”) were exercisable on the earlier of the twelve- month anniversary of the issuance date or immediately prior to a change in control subject to the advisor’s continued service to the Company; the remaining 1,250,000 of the warrants with the $0.10 exercise price (the “Tranche 2 Warrants”) and the 1,500,000 warrants with the $10.00 exercise price (the Tranche 3 Warrants) were exercisable on the earlier of the eighteen-month anniversary of the issuance date or immediately prior to a change in control subject to the advisor’s continued service to the Company. On June 1, 2020, the Company entered into a termination agreement (the “Termination Agreement”) with the advisor. Pursuant to the terms of the Termination Agreement, the Tranche 1 Warrants were amended to reduce the number of shares of common stock purchasable thereunder to 1,041,666 shares, and the Tranche 2 Warrants and Tranche 3 Warrants were cancelled. The Tranche 1 Warrants (as amended pursuant to the Termination Agreement) were fully vested as of the date of the termination of the agreement and will remain exercisable until September 17, 2029. Furthermore, if the Company engages in any restricted business line as defined in the Termination Agreement, the Company will issue to the former advisor additional shares of common stock based on formulas intended to compensate the former advisor for the warrants that were reduced or terminated. In connection with the Termination Agreement, the Company recorded expense of $5.7 million during the three and six months ended June 30, 2020. This amount is included in general and administrative expense. On November 4, 2019, the Company issued 11,000 warrants in connection with the November 2019 Notes. The warrants are exercisable on the date of issuance and expire 24 months from the date of the consummation of a future initial public offering (“IPO”). The warrants carried an initial exercise price equal to the greater of (i) $5.00 per share or (ii) the price at which the common stock of the Company was sold in the IPO. On December 19, 2019, the Company issued 937,500 Seller Warrants in connection with the Seller Notes. The warrants are exercisable on the date of issuance and expire 24 months from the date of the consummation of a future initial public offering (“IPO”). The warrants carried an initial exercise price equal to the greater of (i) $5.00 per share or (ii) the price at which the common stock of the Company was sold in the IPO. On June 24, 2020, the warrants related to the November 2019 Notes and Seller Notes were amended in connection with the issuance of the June 2020 Notes to lower the maximum exercise price applicable to these warrants from $5.00 to $4.25 per share. The decrease in the exercise price resulted in an increase to the fair value of the warrants of less than $0.2 million which the Company recognized in general and administrative expense. On December 19, 2019 the Company issued 6,500,000 warrants with an exercise price of $1.82 in conjunction with the short term loan (the “Guarantor Warrants”). The warrants are exercisable on the date of issuance and expire 24 months from the date of the consummation of a future IPO. On March 17, 2020, 1,003,232 warrants were issued to holders of warrants issued on May 6, 2019 due to the dilutive impact of subsequent issuances. The Company will issue an additional 1,990,624 warrants to holders of these warrants due to the further dilutive impact of subsequent issuances. On June 24, 2020, the Company issued common stock purchase warrants (the “June 2020 Warrants”) to purchase up to 1,000,000 shares of the Company’s common stock at $1.25 per share in connection with the June 2020 Notes. The June 2020 Warrants are exercisable on the date of issuance and expire on the earlier of (i) 84 months from the date of the consummation of an underwritten public offering or other uplist transaction or (ii) June 30, 2030. On June 24, 2020, the Company issued warrants to purchase up to 1,000,000 shares of the Company’s common stock at $1.25 per share to two nonemployee directors. The warrants are exercisable on the date of issuance and expire on the earlier of (i) 84 months from the date of the consummation of an underwritten public offering or other uplist transaction or (ii) June 30, 2030.
The intrinsic value of outstanding warrants was $5.7 million and $12.2 million as of June 30, 2020 and December 31, 2019, respectively. |
Share-based compensation |
6 Months Ended |
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Jun. 30, 2020 | |
Share-based compensation [Abstract] | |
Share-based compensation | Note 15 - Share-based compensation The Company recognizes compensation cost for stock awards with only service conditions that have a graded vesting schedule on a straight-line basis over the service period for each separate vesting portion of the award as if the award was, in-substance, multiple awards. During the three and six months ended June 30, 2020, the Company recognized $3.0 million and $5.5 million of share-based compensation expense, respectively. During the three and six months ended June 30, 2019 $4.0 million and $4.2 million of share-based compensation expense was recognized, respectively. The Company acquired the Better Choice Company Inc. 2019 Incentive Award Plan (the “2019 Plan”) which became effective as of April 29, 2019. The 2019 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, other stock or cash-based awards or a dividend equivalent award (each an “Award”). On November 11, 2019, the Company received shareholder approval for the Amended and Restated 2019 Incentive Award Plan (the “Amended 2019 Plan”). Under the Amended 2019 Plan, the number of option awards available for issuance increased from 6,000,000 to 9,000,000 on December 19, 2019. During the three and six months ended June 30, 2020, the Company granted 200,000 and 300,000 stock options, respectively. During the three and six months ended June 30, 2019, the Company granted 5,833,000 stock options. |
Related party transactions |
6 Months Ended |
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Jun. 30, 2020 | |
Related party transactions [Abstract] | |
Related party transactions | Note 16 - Related party transactions Marketing services A company controlled by a member of the board of directors provides online traffic acquisition marketing services for the Company. The Company incurred immaterial amounts for their services during the three and six months ended June 30, 2020 and 2019, respectively. The service contract has a 30-day termination clause. As of June 30, 2020 and December 31, 2019 the outstanding balance was less than $0.1 million and was included in accounts payable in the condensed consolidated balance sheets. Notes payable The Company issued $1.4 million of subordinated convertible notes to a member of the board of directors during the year ended December 2019, and $0.8 million of subordinated convertible notes to the same director during June 2020. The notes remain outstanding as of June 30, 2020. Interest related to the subordinated convertible notes was less than $0.1 million and $0.1 million for the three and six months ended June 30, 2020, respectively. Halo transaction bonus and notes payable The Company issued $0.1 million of subordinated convertible notes to an executive in satisfaction of a transaction bonus as per his employment agreement upon the close of the Halo Acquisition in December 2019. These convertible notes are outstanding as of June 30, 2020. |
Income taxes |
6 Months Ended |
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Jun. 30, 2020 | |
Income taxes [Abstract] | |
Income taxes | Note 17 - Income taxes For the periods ended June 30, 2020 and 2019, the Company recorded no current or deferred income tax expense. The Company’s effective tax rate of 0% differs from the United States federal statutory rate of 21% primarily because the Company’s losses have been fully offset by a valuation allowance due to uncertainty of realizing the tax benefit of net operating losses (“NOLs”) for the periods ended June 30, 2020 and year ended December 31, 2019. The Company’s deferred tax assets attributed to net operating loss carryforwards begin to expire in 2027. On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company continues to examine the impact that the CARES Act may have on its business but does not expect the impact to be material. The ultimate realization of deferred taxes is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. On the basis of management’s assessment, a valuation allowance equal to the net deferred tax assets was recorded since it is more likely than not that the deferred tax assets will not be realized. The Company has no accrued interest and penalties related to uncertain income tax positions. The Company does not anticipate that the amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months. As of June 30, 2020 and December 31, 2019, the Company does not have any significant uncertain tax positions. If incurred, the Company would classify interest and penalties on uncertain tax positions as income tax expense. The Company’s income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction. For the period ended May 6, 2019, the Company was a Limited Liability Company, taxed as a partnership. Thus, all of the Company’s income and losses flowed through to the owners. The company converted to a C-Corporation, subject to income tax on May 6, 2019, the date of the May Acquisitions. |
Major suppliers |
6 Months Ended |
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Jun. 30, 2020 | |
Major suppliers [Abstract] | |
Major suppliers | Note 18 - Major suppliers The Company sourced approximately 77% of its inventory purchases from three vendors for the six months ended June 30, 2020. The Company sourced approximately 83% of its inventory purchases from one vendor for the six months ended June 30, 2019. |
Concentration of credit risk and off-balance sheet risk |
6 Months Ended |
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Jun. 30, 2020 | |
Concentration of credit risk and off-balance sheet risk [Abstract] | |
Concentration of credit risk and off-balance sheet risk | Note 19 - Concentration of credit risk and off-balance sheet risk Cash and cash equivalents and accounts receivable potentially subject the Company to concentrations of credit risk. As of June 30, 2020 and December 31, 2019 the Company’s cash and cash equivalents were deposited in accounts at several financial institutions. The Company maintains its cash and cash equivalents with high-quality, accredited financial institutions and, accordingly, such funds are subject to minimal credit risk. The Company may maintain balances with financial institutions in excess of federally insured limits. The Company has not experienced any losses historically in these accounts and believes it is not exposed to significant credit risk in its cash and cash equivalents. The Company has no significant off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts, or other hedging arrangements. Accounts receivable from two customers represented 71% of accounts receivable as of June 30, 2020. Accounts receivable from one customer represented 44% of accounts receivable as of December 31, 2019. Two customers represented 39% of gross sales for the six months ended June 30, 2020. None of the Company’s customers represented over 10% of gross sales for the six months ended June 30, 2019. |
Net loss per share |
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Net loss per share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss per share | Note 20 - Net loss per share Basic and diluted net loss per share attributable to common stockholders is presented using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that has not yet been recognized are collectively assumed to be used to repurchase shares. Basic and diluted net loss per share is calculated by dividing net and comprehensive loss attributable to common stockholders by the weighted-average shares outstanding during the period. For the three and six months ended June 30, 2020 and 2019, the Company’s basic and diluted net and comprehensive loss per share attributable to common stockholders are the same, because the Company has generated a net loss to common stockholders and common stock equivalents are excluded from diluted net loss per share as they have an antidilutive impact. The following table sets forth basic and diluted net loss per share attributable to common stockholders for the three and six months ended June 30, 2020 and 2019: Dollars in thousands except per share amounts
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Subsequent events |
6 Months Ended |
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Jun. 30, 2020 | |
Subsequent events [Abstract] | |
Subsequent events | Note 21 - Subsequent events Revolving line of credit and guarantor warrants On July 16, 2020, the Company received a revolving line of credit in the aggregate amount of $7.5 million (the “ABL Facility”) from Citizens Business Bank, a California banking corporation, pursuant to a business loan agreement (the “ABL Agreement”). The proceeds of the ABL Facility will be used (i) to repay all principal, interest and fees outstanding under the Company’s existing revolving credit facility and (ii) for general corporate purposes. The ABL Facility matures on July 5, 2022 and bears interest at a variable rate of LIBOR plus 250 basis points, with an interest rate floor of 3.25% per annum. Accrued interest on the ABL Facility is payable monthly, commencing on August 5, 2020. The ABL Facility provides for customary financial covenants that commence on December 31, 2020 and customary events of default. The Company may prepay the principal of the ABL Facility at any time without penalty. The ABL Facility is secured by a general security interest on the assets of the Company and is personally guaranteed by a member of the Company’s board of directors. In consideration of the personal guaranty, the Company issued common stock purchase warrants (the “July 2020 Warrants”) to purchase up to 300,000 shares of the Company’s common stock at a price equal to $1.05 per share. The July 2020 Warrants are exercisable on the date of issuance and expire on the earlier of (i) 84 months from the date of the consummation of an underwritten public offering or other uplist transaction or (ii) June 30, 2030. Warrant issuances On July 20, 2020, the Company issued common stock purchase warrants to purchase up to 200,000 shares of the Company’s common stock at price equal to $1.05 per share. The warrants are exercisable on the date of issuance and expire on the earlier of (i) 84 months from the date of the consummation of an underwritten public offering or other uplist transaction or (ii) June 30, 2030. Common Stock On July 31, 2020 Better Choice Company Inc. filed a certificate of incorporation with the State of Delaware which increased the number of authorized shares of common stock from 88,000,000 to 200,000,000. |
Nature of Business and Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2020 | |
Nature of Business and Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements reflect all normal recurring adjustments which, in management’s opinion, are necessary for a fair statement of the results for interim periods. Results of operations for interim periods may not be representative of results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”). Tables are presented in U.S. dollars (thousands) and percentage as rounded up or down. In the notes, the Company represents U.S. dollars (millions) and percentage as rounded up or down. Consolidation The Company’s interim condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The financial statements are presented on a consolidated basis subsequent to acquisitions and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
Going Concern Considerations | Going Concern Considerations The Company is subject to risks common in the pet wellness consumer market including, but not limited to, dependence on key personnel, competitive forces, successful marketing and sale of its products, the successful protection of its proprietary technologies, ability to grow into new markets, and compliance with government regulations. In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. Uncertainties regarding the economic impact of COVID-19, the disease caused by the novel coronavirus, are likely to result in sustained market turmoil which could also negatively impact the Company’s business, financial condition, and cash flows. The Company has continually incurred losses and has an accumulated deficit. The Company continues to rely on current investors and the public markets to finance these losses through debt and/or equity issuances. These operating losses and the outstanding debt create substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date these interim condensed consolidated financial statements are issued. The Company is implementing plans to achieve cost savings and other strategic objectives to address these conditions. The Company expects cost savings from consolidation of third-party manufacturers, optimizing shipping and warehousing as well as overhead cost reductions. The business is focused on growing the most profitable channels while reducing investments in areas that are not expected to have long-term benefits. The accompanying interim condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and payments of liabilities in the ordinary course of business. Accordingly, the interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of and classification of liabilities that may result should the Company be unable to continue as a going concern. |
Restricted cash | Restricted cash The Company is required to maintain a restricted cash balance of less than $0.1 million and $0.2 million as of June 30, 2020 and December 31, 2019 associated with a business credit card and credit card clearance operations. |
Allowance for doubtful accounts | Allowance for doubtful accounts Accounts receivable consist of unpaid buyer invoices from the Company’s Retail customers and credit card payments receivable from third-party credit card processing companies. Accounts receivable is stated at the amount billed to customers, net of point of sale and cash discounts. The Company recorded a less than $0.1 million allowance for doubtful accounts as of June 30, 2020 and December 31, 2019, respectively. |
Goodwill | Goodwill Goodwill of $18.6 million was recognized as of December 31, 2019 in connection with the Halo Acquisition (see “Note 2 – Acquisitions”). No impairment was recognized as of June 30, 2020 and December 31, 2019, respectively. |
Intangible assets | Intangible assets The Company acquired an intangible asset related to the Houndog license with the acquisition of Bona Vida on May 6, 2019. The Company fully impaired the asset as of December 31, 2019 as the Company terminated the contract on January 13, 2020. The Company also acquired intangible assets consisting of customer relationships and trade name with the acquisition of Halo on December 19, 2019. There were no indicators of impairment of intangible assets as of June 30, 2020. |
Leases | Leases The Company’s leases relate to its corporate offices and warehouses. Effective January 1, 2019, the Company adopted the FASB guidance on leases (“Topic 842”), which requires leases with durations greater than twelve months to be recognized on the balance sheets. The Company adopted Topic 842 using the modified retrospective transition approach. |
Redeemable convertible preferred stock | Redeemable convertible preferred stock The Company’s Redeemable Series E Convertible Preferred Stock (the “Series E”) contains redemption provisions that require it to be presented outside of stockholders’ deficit. Changes in the redemption value of the redeemable convertible preferred stock, if any, are recorded immediately in the period occurred as an adjustment to additional paid-in capital in the condensed consolidated balance sheets. |
Income taxes | Income taxes The Company was incorporated on May 6, 2019. Prior to this date, the Company operated as a flow through entity for state and United States federal tax purposes. The Company files a U.S. federal and state income tax return including its wholly owned subsidiaries. As of June 30, 2020 and December 31, 2019, the Company does not have any uncertain income tax positions. |
Revenue | Revenue The Company recognizes revenue to depict the transfer of promised goods to the customer in an amount the reflects the consideration to which the Company expects to be entitled in exchange for those goods in accordance with the provisions of ASC 606, “Revenue from Contracts with Customers”. |
Fair value of financial instruments | Fair value of financial instruments The warrant derivative liability is remeasured at fair value each reporting period and represents a Level 3 financial instrument. |
Reclassification of prior period presentation | Reclassification of prior period presentation Certain reclassifications have been made to conform the prior period data to the current presentation. These reclassifications had no material effect on the reported results. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements The Company has reviewed the Accounting Standards Update (ASU), accounting pronouncements and interpretations thereof issued by the FASB that have effective dates during the reporting period and in future periods. Recently adopted: ASU 2018-13 “Fair Value Measurement” In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This new guidance removes certain disclosure requirements related to the fair value hierarchy, modifies existing disclosure requirements related to measurement uncertainty and adds new disclosure requirements. The new disclosure requirements include disclosing the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This new guidance was effective for the Company beginning on January 1, 2020 and did not have a material impact on the Company’s condensed consolidated financial statements. ASU 2018-15 “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40)” In August 2018, the FASB issued ASU 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)” to amend ASU 2015-05 in an effort to provide additional guidance on the accounting for costs implementation activities performed in a cloud computing arrangement that is a service contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this update also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalizing implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The new standard was effective for the Company on January 1, 2020. The Company has no internal use software. Issued but not Yet Adopted: ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326)” Codification Improvements to Financial Instruments-Credit Losses (Topic 326). Subsequent updates were released in November 2018 (ASU No. 2018-19), November 2019 (ASU No. 2019-10 and 2019-11) and February 2020 (ASU No. 2020-02) that provided additional guidance on this Topic. This ASU introduces the current expected credit loss (CECL) model, which will require an entity to measure credit losses for certain financial instruments and financial assets, including trade receivables. Under this update, on initial recognition and at each reporting period, an entity will be required to recognize an allowance that reflects the entity’s current estimate of credit losses expected to be incurred over the life of the financial instrument. The standard is effective for the Company on January 1, 2023, and early adoption is permitted. The Company is currently evaluating the impact the new standard will have on its consolidated financial statements and related disclosures. ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019- 12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. ASU 2020-04 “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting” In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (IBORs) and, particularly, the risk of cessation of the London Interbank Offered Rate (LIBOR), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The ASU can be adopted no later than December 1, 2022 with early adoption permitted. The Company is currently evaluating the impact the standard will have on its consolidated financial statements and related disclosures. ASU 2020-03 “Codification Improvements to Financial Instruments” In March 2020, FASB issued ASU 2020-03. This ASU improves and clarifies various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The amendments have different effective dates. The Company is evaluating the impact the accounting guidance will have on its consolidated financial statements and related disclosures. The Company has carefully considered other new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the Company’s reported balance sheets or operations. |
Acquisitions (Tables) |
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Halo Acquisition [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Acquired | The preliminary purchase price allocation is summarized as follows:
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Assets and Liabilities Acquired | On May 6, 2019, the fair value of assets and liabilities acquired was:
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Inventories (Tables) |
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Inventories | Inventories are summarized as follows:
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Property and equipment (Tables) |
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Property and Equipment | Property and equipment consist of the following:
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Accrued liabilities (Tables) |
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Accrued Liabilities | Accrued liabilities consist of the following:
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Operating leases (Tables) |
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Certain Information Related to Lease Costs for Operating Leases | The table below presents certain information related to the lease costs for operating leases for the three and six months ended June 30, 2020 and 2019:
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Reconciliation of Undiscounted Cash Flows for Remaining Term of Operating Lease Liabilities | The table below reconciles the undiscounted cash flows for the remaining term of the operating lease liabilities recorded on the condensed consolidated balance sheets. Operating Leases
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Intangible assets, royalties and goodwill (Tables) |
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets, royalties and goodwill [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | The Company’s intangible assets are as follows: Dollars in thousands
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Estimated Future Amortization of Intangible Assets | The estimated future amortization of intangible assets over the weighted average remaining useful life of 10.5 years is as follows:
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Debt (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Debt | The components of the Company’s debt consist of the following:
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Warrant derivative liability (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant derivative liability [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in Fair Value of Warrant Derivative Liability | The following schedule shows the fair value of the warrant derivative liability as of June 30, 2020 and December 31, 2019, and the change in fair value during the three and six months ended June 30, 2020:
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Warrant Liability Fair Value Measurement Inputs and Valuation Techniques |
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Stockholders' deficit (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' deficit [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock for Future Issuance | The Company has reserved common stock for future issuance as follows:
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Activity of Warrants | On June 24, 2020, the Company issued warrants to purchase up to 1,000,000 shares of the Company’s common stock at $1.25 per share to two nonemployee directors. The warrants are exercisable on the date of issuance and expire on the earlier of (i) 84 months from the date of the consummation of an underwritten public offering or other uplist transaction or (ii) June 30, 2030.
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Net loss per share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss per share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Net Loss per Share Attributable to Common Stockholders | The following table sets forth basic and diluted net loss per share attributable to common stockholders for the three and six months ended June 30, 2020 and 2019: Dollars in thousands except per share amounts
|
Nature of Business and Summary of Significant Accounting Policies, Restricted Cash (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Business Credit Card [Member] | Maximum [Member] | ||
Restricted Cash [Abstract] | ||
Restricted cash | $ 0.1 | $ 0.2 |
Nature of Business and Summary of Significant Accounting Policies, Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Maximum [Member] | ||
Accounts Receivable, after Allowance for Credit Loss [Abstract] | ||
Allowance for doubtful accounts | $ 0.1 | $ 0.1 |
Nature of Business and Summary of Significant Accounting Policies, Goodwill (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
Dec. 19, 2019 |
|
Business Combination, Description [Abstract] | |||
Goodwill | $ 18,614 | $ 18,614 | |
Goodwill, impairment loss | $ 0 | 0 | |
Halo Acquisition [Member] | |||
Business Combination, Description [Abstract] | |||
Goodwill | $ 18,600 | $ 18,614 |
Inventories (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventories [Abstract] | ||
Food, treats and supplements | $ 5,454 | $ 6,425 |
Inventory packaging and supplies | 512 | 504 |
Other products and accessories | 17 | 73 |
Total inventories | 5,983 | 7,002 |
Inventory reserve | (563) | (422) |
Inventories, net | $ 5,420 | $ 6,580 |
Property and equipment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Property, Plant and Equipment, Net [Abstract] | |||||
Property, and equipment, gross | $ 508 | $ 508 | $ 479 | ||
Accumulated depreciation | (187) | (187) | (62) | ||
Property, and equipment, net | 321 | 321 | 417 | ||
Depreciation expense | 100 | ||||
Equipment [Member] | |||||
Property, Plant and Equipment, Net [Abstract] | |||||
Property, and equipment, gross | 225 | 225 | 222 | ||
Furniture and Fixtures [Member] | |||||
Property, Plant and Equipment, Net [Abstract] | |||||
Property, and equipment, gross | 164 | 164 | 138 | ||
Computer Software [Member] | |||||
Property, Plant and Equipment, Net [Abstract] | |||||
Property, and equipment, gross | 115 | 115 | 115 | ||
Computer Equipment [Member] | |||||
Property, Plant and Equipment, Net [Abstract] | |||||
Property, and equipment, gross | 4 | $ 4 | $ 4 | ||
Maximum [Member] | |||||
Property, Plant and Equipment, Net [Abstract] | |||||
Depreciation expense | $ 100 | $ 100 | $ 100 |
Accrued liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Accrued Liabilities Current [Abstract] | ||
Accrued professional fees | $ 2,039 | $ 1,695 |
Accrued sales tax | 1,028 | 1,233 |
Accrued payroll and benefits | 916 | 994 |
Accrued trade promotions | 186 | 357 |
Accrued dividends | 324 | 256 |
Accrued interest | 228 | 109 |
Other | 10 | 77 |
Total accrued liabilities | 4,731 | 4,721 |
Series E Preferred Stock [Member] | ||
Accrued Liabilities Current [Abstract] | ||
Accrued dividends | $ 300 | $ 300 |
Operating leases, Lease Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Operating Lease Costs [Abstract] | ||||
Operating lease costs | $ 111 | $ 80 | $ 221 | $ 124 |
Variable lease costs | 8 | 8 | 16 | 16 |
Total operating lease costs | $ 119 | 88 | $ 237 | 140 |
Weighted-average remaining operating lease term | 2 years 1 month 6 days | 2 years 1 month 6 days | ||
Incremental borrowing rate | 12.50% | 12.50% | ||
Short term lease costs | 0 | 0 | ||
Rent expense | $ 100 | $ 100 | $ 200 | $ 100 |
Maximum [Member] | ||||
Operating Lease Costs [Abstract] | ||||
Short term lease costs | $ 100 | $ 100 |
Operating leases, Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Maturity of Lease Liabilities [Abstract] | ||
Remainder of 2020 | $ 226 | |
2021 | 464 | |
2022 | 246 | |
2023 | 7 | |
Total minimum lease payments | 943 | |
Less: amount of lease payments representing interest | 110 | |
Present value of future minimum lease payments | 833 | |
Less: current obligations under leases | 341 | $ 345 |
Long-term lease obligations | $ 492 | $ 641 |
Intangible assets, royalties and goodwill, Estimated Future Amortization of Amortizable Intangible Assets (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
|
Intangible assets, royalties and goodwill [Abstract] | |||
Weighted average remaining useful life | 10 years 6 months | ||
Estimated Future Amortization of Amortizable Intangible Assets [Abstract] | |||
Remainder of 2020 | $ 739 | ||
2021 | 1,551 | ||
2022 | 1,551 | ||
2023 | 1,551 | ||
2024 | 1,551 | ||
Thereafter | 6,935 | ||
Net carrying amount | $ 13,878 | $ 14,641 | $ 0 |
Debt, Short Term Loan and Line of Credit (Details) - USD ($) $ / shares in Units, $ in Millions |
6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 24, 2020 |
Jun. 23, 2020 |
Dec. 19, 2019 |
|
Debt Instruments [Abstract] | |||||
Warrants, exercise price (in dollars per share) | $ 5.0 | $ 4.25 | |||
Short Term Loan and Line of Credit [Member] | |||||
Debt Instruments [Abstract] | |||||
Maturity date | Dec. 19, 2020 | ||||
Short Term Loan [Member] | |||||
Debt Instruments [Abstract] | |||||
Face amount | $ 18.2 | $ 16.1 | |||
Debt discount (premium) | $ 2.3 | $ 4.4 | |||
Maturity date | Dec. 19, 2020 | Dec. 19, 2020 | |||
Line of Credit [Member] | |||||
Debt Instruments [Abstract] | |||||
Face amount | $ 5.7 | $ 4.8 | |||
Debt discount (premium) | $ 0.1 | $ 0.2 | |||
Maturity date | Dec. 19, 2020 | Dec. 19, 2020 | |||
Shareholder Guaranties [Member] | |||||
Debt Instruments [Abstract] | |||||
Guaranty obligations | $ 20.0 | ||||
Warrants per share (in dollars per share) | $ 0.325 | ||||
Warrants, exercise price (in dollars per share) | $ 1.82 | ||||
Warrants, fair value | $ 4.2 | ||||
Shareholder Guaranties [Member] | Maximum [Member] | |||||
Debt Instruments [Abstract] | |||||
Warrants, exercisable period | 24 months | ||||
Revolving Credit Facility [Member] | |||||
Debt Instruments [Abstract] | |||||
Face amount | $ 7.5 |
Debt, Notes Payable (Details) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jan. 13, 2020 |
Dec. 19, 2019 |
Nov. 04, 2019 |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 24, 2020 |
Jun. 23, 2020 |
|
Debt Instruments [Abstract] | |||||||
Debt outstanding | $ 42,290 | $ 37,250 | |||||
November 2019 Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Face amount | $ 2,800 | ||||||
Long-term debt, interest rate | 10.00% | 10.00% | 10.00% | ||||
Maturity date | Jun. 30, 2023 | Nov. 04, 2021 | |||||
Conversion price (in dollars per share) | $ 4.00 | $ 3.75 | $ 4.00 | ||||
Debt outstanding | $ 2,644 | $ 2,769 | |||||
Default interest rate | 12.00% | ||||||
Fair value of debt | $ 300 | ||||||
November 2019 Notes [Member] | Maximum [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Increase in fair value of warrants | $ 100 | ||||||
Debt discount (premium) | $ 300 | $ 100 | |||||
June 2020 Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Face amount | $ 1,500 | ||||||
Long-term debt, interest rate | 10.00% | ||||||
Maturity date | Jun. 30, 2023 | ||||||
Conversion price (in dollars per share) | $ 0.75 | ||||||
Debt outstanding | $ 0 | ||||||
Debt discount (premium) | 1,500 | ||||||
Seller Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Long-term debt, interest rate | 10.00% | ||||||
Maturity date | Jun. 30, 2023 | ||||||
Conversion price (in dollars per share) | $ 4.00 | 3.75 | 4.00 | ||||
Seller Notes [Member] | Maximum [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Fair value of debt | $ 300 | ||||||
Senior Seller Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Face amount | $ 10,000 | ||||||
Long-term debt, interest rate | 10.00% | 10.00% | |||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||
Debt outstanding | $ 9,664 | $ 9,191 | |||||
Debt discount (premium) | $ 900 | $ 900 | |||||
Junior Seller Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Face amount | $ 5,000 | ||||||
Long-term debt, interest rate | 10.00% | 10.00% | |||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||
Debt outstanding | $ 4,626 | $ 4,410 | |||||
Debt discount (premium) | $ 600 | $ 500 | |||||
ABG Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Face amount | $ 600 | ||||||
Long-term debt, interest rate | 10.00% | 10.00% | |||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||
Conversion price (in dollars per share) | $ 4.00 | ||||||
Debt outstanding | $ 660 | $ 0 | |||||
ABG Notes [Member] | Maximum [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Debt discount (premium) | 100 | ||||||
Seller Notes and ABG Notes [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Conversion price (in dollars per share) | $ 3.75 | $ 4.00 | |||||
Seller Notes and ABG Notes [Member] | Maximum [Member] | |||||||
Debt Instruments [Abstract] | |||||||
Fair value of debt | $ 100 |
Debt, PPP Loans (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 13, 2020 |
Dec. 19, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
Jun. 24, 2020 |
May 07, 2020 |
Apr. 10, 2020 |
Nov. 04, 2019 |
|
Debt Instruments [Abstract] | |||||||||||
Debt outstanding | $ 42,290 | $ 42,290 | $ 37,250 | ||||||||
Interest expense | $ 2,400 | $ 4,700 | $ 100 | ||||||||
Maximum [Member] | |||||||||||
Debt Instruments [Abstract] | |||||||||||
Interest expense | $ 100 | ||||||||||
November 2019 Notes [Member] | |||||||||||
Debt Instruments [Abstract] | |||||||||||
Face amount | $ 2,800 | ||||||||||
Interest rate | 10.00% | 10.00% | 10.00% | 10.00% | |||||||
Maturity date | Jun. 30, 2023 | Nov. 04, 2021 | |||||||||
Debt outstanding | $ 2,644 | $ 2,644 | $ 2,769 | ||||||||
Seller Notes [Member] | |||||||||||
Debt Instruments [Abstract] | |||||||||||
Interest rate | 10.00% | ||||||||||
Maturity date | Jun. 30, 2023 | ||||||||||
Senior Seller Notes [Member] | |||||||||||
Debt Instruments [Abstract] | |||||||||||
Face amount | $ 10,000 | ||||||||||
Interest rate | 10.00% | 10.00% | 10.00% | ||||||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||||||
Debt outstanding | $ 9,664 | $ 9,664 | $ 9,191 | ||||||||
Junior Seller Notes [Member] | |||||||||||
Debt Instruments [Abstract] | |||||||||||
Face amount | $ 5,000 | ||||||||||
Interest rate | 10.00% | 10.00% | 10.00% | ||||||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||||||
Debt outstanding | $ 4,626 | $ 4,626 | $ 4,410 | ||||||||
ABG Notes [Member] | |||||||||||
Debt Instruments [Abstract] | |||||||||||
Face amount | $ 600 | ||||||||||
Interest rate | 10.00% | 10.00% | 10.00% | ||||||||
Maturity date | Jun. 30, 2023 | Jun. 30, 2023 | |||||||||
Debt outstanding | $ 660 | $ 660 | $ 0 | ||||||||
PPP Loan [Member] | |||||||||||
Debt Instruments [Abstract] | |||||||||||
Debt outstanding | 900 | $ 900 | |||||||||
June 2020 Notes [Member] | |||||||||||
Debt Instruments [Abstract] | |||||||||||
Face amount | $ 1,500 | ||||||||||
Interest rate | 10.00% | ||||||||||
Maturity date | Jun. 30, 2023 | ||||||||||
Debt outstanding | $ 0 | $ 0 | |||||||||
TruPet, LLC [Member] | PPP Loan [Member] | |||||||||||
Debt Instruments [Abstract] | |||||||||||
Face amount | $ 400 | ||||||||||
Interest rate | 0.98% | 0.98% | 0.98% | ||||||||
Maturity date | Apr. 06, 2022 | ||||||||||
Debt outstanding | $ 421 | $ 421 | $ 0 | ||||||||
Halo, Purely for Pets, Inc. [Member] | PPP Loan [Member] | |||||||||||
Debt Instruments [Abstract] | |||||||||||
Face amount | $ 400 | ||||||||||
Interest rate | 1.00% | 1.00% | 1.00% | ||||||||
Maturity date | May 03, 2022 | ||||||||||
Debt outstanding | $ 431 | $ 431 |
Warrant derivative liability, Private placement (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Jan. 08, 2019 |
Dec. 12, 2018 |
Dec. 31, 2018 |
Mar. 31, 2020 |
Mar. 31, 2019 |
Jun. 30, 2020 |
Jun. 24, 2020 |
Jun. 23, 2020 |
Mar. 17, 2020 |
|
Private Placement Offering [Abstract] | |||||||||
Units issued in private placement offering (in shares) | 1,425,641 | ||||||||
Unit price (in dollars per share) | $ 1.95 | ||||||||
Gross proceeds from private placement offering | $ 2.8 | ||||||||
Share issuance costs | 0.1 | ||||||||
Net proceeds from private placement offering | $ 2.7 | ||||||||
Warrants, exercise price (in dollars per share) | $ 5.0 | $ 4.25 | |||||||
Cash payable if warrants settled in cash | $ 4.4 | ||||||||
Warrant [Member] | |||||||||
Private Placement Offering [Abstract] | |||||||||
Number of shares issuable per unit (in shares) | 0.5 | 1,990,624 | 1,003,232 | ||||||
Warrants, exercisable period | 2 years | 84 months | |||||||
Warrants, exercise price (in dollars per share) | $ 3.90 | $ 1.25 | $ 1.62 | ||||||
Common Stock [Member] | |||||||||
Private Placement Offering [Abstract] | |||||||||
Number of shares issuable per unit (in shares) | 1 | ||||||||
Net proceeds from private placement offering | $ 0.1 | $ 2.6 | |||||||
Shares issued in private placement offering (in shares) | 25,641 | 1,400,000 | 308,642 | 0 | |||||
Number of warrants issuable if settled (in shares) | 3,706,679 | ||||||||
Common Stock [Member] | Warrant [Member] | |||||||||
Private Placement Offering [Abstract] | |||||||||
Number of shares issuable per unit (in shares) | 1,990,624 | ||||||||
Warrants, exercise price (in dollars per share) | $ 0.75 |
Warrant derivative liability, Fair value of warrant derivative liability (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Warrant Derivative Liability [Abstract] | ||||
Balance, beginning of period | $ 841 | $ 2,220 | $ 2,220 | |
Change in fair value of derivative liability | 3,474 | (1,379) | 2,095 | $ 193 |
Balance, end of period | $ 4,315 | $ 841 | $ 4,315 |
Warrant derivative liability, Fair value measurements and valuation techniques (Details) - Warrant [Member] |
Jun. 30, 2020
$ / shares
|
Dec. 31, 2019
$ / shares
|
May 06, 2019
$ / shares
|
---|---|---|---|
Stock Price [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 1.90 | 2.70 | 6.00 |
Exercise Price [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 0.75 | 1.62 | 3.90 |
Expected Remaining Term (in Years) [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 0.472 | ||
Expected Remaining Term (in Years) [Member] | Minimum [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 0.95 | 1.60 | |
Expected Remaining Term (in Years) [Member] | Maximum [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 1.02 | 1.68 | |
Volatility [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 0.85 | 0.69 | 0.64 |
Risk-free Interest Rate [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Abstract] | |||
Derivative liability | 0.0018 | 0.0160 | 0.0239 |
Other liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Other liabilities [Abstract] | ||
Reserve for potential customer dispute settlement | $ 0.2 | $ 0.2 |
Investor prepayment | $ 0.5 | $ 0.5 |
Commitments and contingencies (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Commitments and contingencies [Abstract] | ||
Purchase obligations | $ 0 | $ 0 |
Stockholders' deficit, Equity Transactions (Details) $ / shares in Units, $ in Thousands |
3 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 02, 2020
USD ($)
shares
|
May 06, 2019
USD ($)
$ / shares
shares
|
Feb. 12, 2019
USD ($)
$ / shares
shares
|
Dec. 12, 2018
USD ($)
$ / shares
shares
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
shares
|
Mar. 30, 2020
shares
|
Mar. 05, 2020
shares
|
Mar. 03, 2020
Director
shares
|
Jan. 13, 2020
shares
|
Dec. 31, 2019
shares
|
Oct. 29, 2018
USD ($)
|
|
Common Stock [Abstract] | ||||||||||||
Common stock, shares issued (in shares) | 48,939,708 | 47,977,390 | ||||||||||
Units issued in private placement offering (in shares) | 1,425,641 | |||||||||||
Unit price (in dollars per share) | $ / shares | $ 1.95 | |||||||||||
Gross proceeds from private placement offering | $ | $ 2,800 | |||||||||||
Share issuance costs | $ | $ 100 | |||||||||||
Value of shares acquired | $ | $ (2,200) | |||||||||||
Reserved Shares of Common Stock for Future Issuance [Abstract] | ||||||||||||
Conversion of Series E (in shares) | 1,760,903 | 1,760,903 | ||||||||||
Exercise of options to purchase common stock (in shares) | 7,471,608 | 7,791,833 | ||||||||||
Warrants to purchase common stock (in shares) | 17,087,976 | 16,981,854 | ||||||||||
Notes payable (in shares) | 7,163,589 | 4,437,500 | ||||||||||
Total (in shares) | 33,484,076 | 30,972,090 | ||||||||||
TruPet, LLC [Member] | ||||||||||||
Common Stock [Abstract] | ||||||||||||
Acquisition of treasury (in shares) | (1,011,748) | |||||||||||
Value of shares acquired | $ | $ (6,100) | |||||||||||
Initial ownership interest acquired | 7.00% | |||||||||||
Bona Vida, Inc. [Member] | ||||||||||||
Common Stock [Abstract] | ||||||||||||
Unit price (in dollars per share) | $ / shares | $ 6.00 | |||||||||||
Amount of change of control payment | $ | $ 500 | |||||||||||
Number of shares of common stock to be issued in consideration for change of control payment (in shares) | 100,000 | |||||||||||
Series A Preferred Units [Member] | ||||||||||||
Common Stock [Abstract] | ||||||||||||
Units issued in private placement offering (in shares) | 69,115 | |||||||||||
Unit price (in dollars per share) | $ / shares | $ 2.17 | |||||||||||
Gross proceeds from private placement offering | $ | $ 200 | |||||||||||
Shares issued in stock conversion (in shares) | 2,460,518 | |||||||||||
Common Stock [Member] | Advertising Services [Member] | ||||||||||||
Common Stock [Abstract] | ||||||||||||
Common stock, shares issued (in shares) | 125,000 | |||||||||||
Common Stock [Member] | Investor [Member] | ||||||||||||
Common Stock [Abstract] | ||||||||||||
Common stock, shares issued (in shares) | 308,642 | |||||||||||
Gross proceeds from private placement offering | $ | $ 500 | |||||||||||
Common Stock [Member] | Investor [Member] | Maximum [Member] | ||||||||||||
Common Stock [Abstract] | ||||||||||||
Share issuance costs | $ | $ 100 | |||||||||||
Common Stock [Member] | ABG [Member] | ||||||||||||
Common Stock [Abstract] | ||||||||||||
Common stock, shares issued (in shares) | 72,720 | |||||||||||
Restricted Stock [Member] | ||||||||||||
Common Stock [Abstract] | ||||||||||||
Common stock, shares issued (in shares) | 450,000 | |||||||||||
Number of non-employee directors | Director | 3 | |||||||||||
Restricted Stock [Member] | Officer [Member] | ||||||||||||
Common Stock [Abstract] | ||||||||||||
Common stock, shares issued (in shares) | 5,956 |
Stockholders' deficit, Warrants (Details) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 24, 2020
USD ($)
Director
$ / shares
shares
|
Mar. 17, 2020
$ / shares
shares
|
Dec. 19, 2019
$ / shares
shares
|
Nov. 04, 2019
USD ($)
$ / shares
shares
|
Sep. 17, 2019
$ / shares
shares
|
May 13, 2019
shares
|
May 10, 2019
shares
|
May 06, 2019
USD ($)
$ / shares
shares
|
Jun. 30, 2020
USD ($)
$ / shares
shares
|
Jun. 30, 2019
shares
|
Jun. 30, 2020
USD ($)
$ / shares
shares
|
Jun. 30, 2019
USD ($)
|
Jun. 23, 2020
$ / shares
|
Dec. 31, 2019
USD ($)
|
Dec. 12, 2018
$ / shares
shares
|
|
Number of Warrants [Abstract] | |||||||||||||||
Warrants outstanding (in shares) | 16,981,854 | ||||||||||||||
Issued (in shares) | 3,064,456 | ||||||||||||||
Terminated (in shares) | (2,958,334) | ||||||||||||||
Warrants outstanding (in shares) | 17,087,976 | 17,087,976 | |||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants outstanding (in dollars per share) | $ / shares | $ 3.23 | ||||||||||||||
Issued (in dollars per share) | $ / shares | 1.15 | ||||||||||||||
Terminated (in dollars per share) | $ / shares | (5.12) | ||||||||||||||
Warrants outstanding (in dollars per share) | $ / shares | $ 2.37 | $ 2.37 | |||||||||||||
Warrants acquired (in shares) | 712,823 | ||||||||||||||
Warrants acquired (in dollars per share) | $ / shares | $ 3.90 | ||||||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 5.0 | $ 4.25 | |||||||||||||
Proceeds from shares issued pursuant to private placement, net | $ | $ 0 | $ 15,826 | |||||||||||||
Unit price (in dollars per share) | $ / shares | $ 1.95 | ||||||||||||||
Warrants outstanding, intrinsic value | $ | $ 5,700 | 5,700 | $ 12,200 | ||||||||||||
November 2019 Notes [Member] | Maximum [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Increase in fair value of warrants | $ | $ 100 | ||||||||||||||
General and Administrative Expense [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Contract termination expense | $ | $ 5,700 | $ 5,700 | |||||||||||||
General and Administrative Expense [Member] | November 2019 Notes [Member] | Minimum [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Increase in fair value of warrants | $ | $ 200 | ||||||||||||||
Warrant [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 1.25 | $ 1.62 | $ 3.90 | $ 3.90 | |||||||||||
Warrants, exercisable period | 84 months | 2 years | 2 years | ||||||||||||
Number of shares issuable per unit (in shares) | 1,003,232 | 1,990,624 | 1,990,624 | 0.5 | |||||||||||
Number of non-employee directors | Director | 2 | ||||||||||||||
Warrant [Member] | Maximum [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Number of warrants issuable if settled (in shares) | 1,000,000 | ||||||||||||||
June 2020 Warrants [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 1.25 | ||||||||||||||
Warrants, exercisable period | 84 months | ||||||||||||||
June 2020 Warrants [Member] | Maximum [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Number of warrants issuable if settled (in shares) | 1,000,000 | ||||||||||||||
Series E Preferred Stock [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Number of shares acquired (in shares) | 2,633,678 | ||||||||||||||
Unit price (in dollars per share) | $ / shares | $ 6.00 | ||||||||||||||
Stated value (in dollars per share) | $ / shares | 0.99 | ||||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.78 | ||||||||||||||
Conversion of Stock (in shares) | (236,364) | (689,394) | |||||||||||||
Exercise Price $5.00 [Member] | |||||||||||||||
Number of Warrants [Abstract] | |||||||||||||||
Issued (in shares) | 937,500 | 11,000 | |||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 5.00 | $ 5.00 | |||||||||||||
Warrants, exercisable period | 24 months | 24 months | |||||||||||||
Exercise price $1.82 [Member] | |||||||||||||||
Number of Warrants [Abstract] | |||||||||||||||
Issued (in shares) | 6,500,000 | ||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 1.82 | ||||||||||||||
Warrants, exercisable period | 24 months | ||||||||||||||
Common Stock [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Conversion of Stock (in shares) | 300,000 | 875,000 | |||||||||||||
Number of shares issuable per unit (in shares) | 1 | ||||||||||||||
Number of warrants issuable if settled (in shares) | 3,706,679 | 3,706,679 | |||||||||||||
Common Stock [Member] | Warrant [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 0.75 | $ 0.75 | |||||||||||||
Number of shares issuable per unit (in shares) | 1,990,624 | 1,990,624 | |||||||||||||
Common Stock [Member] | Series E Preferred Stock [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Conversion of Stock (in shares) | 1,175,000 | ||||||||||||||
PIPE Transaction [Member] | |||||||||||||||
Number of Warrants [Abstract] | |||||||||||||||
Issued (in shares) | 1,003,232 | 5,744,991 | |||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 4.25 | ||||||||||||||
Gross proceeds from issuance of warrants (in dollars per share) | $ / shares | $ 3.00 | ||||||||||||||
Proceeds from shares issued pursuant to private placement, net | $ | $ 15,700 | ||||||||||||||
Holding period | 6 months | ||||||||||||||
Broker [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 3.00 | ||||||||||||||
Warrants, exercisable period | 24 months | ||||||||||||||
Broker [Member] | PIPE Transaction [Member] | |||||||||||||||
Number of Warrants [Abstract] | |||||||||||||||
Issued (in shares) | 220,539 | ||||||||||||||
Advisor [Member] | Tranche One [Member] | |||||||||||||||
Number of Warrants [Abstract] | |||||||||||||||
Warrants outstanding (in shares) | 1,041,666 | 1,041,666 | |||||||||||||
Advisor [Member] | Exercise Price $0.10 [Member] | |||||||||||||||
Number of Warrants [Abstract] | |||||||||||||||
Issued (in shares) | 2,500,000 | ||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 0.10 | ||||||||||||||
Advisor [Member] | Exercise Price $0.10 [Member] | Tranche One [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercisable period | 12 months | ||||||||||||||
Warrants exercisable (in shares) | 1,250,000 | ||||||||||||||
Advisor [Member] | Exercise Price $0.10 [Member] | Tranche Two [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercisable period | 12 months | ||||||||||||||
Warrants exercisable (in shares) | 1,250,000 | ||||||||||||||
Advisor [Member] | Exercise Price $10.00 [Member] | |||||||||||||||
Number of Warrants [Abstract] | |||||||||||||||
Issued (in shares) | 1,500,000 | ||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 10.00 | ||||||||||||||
Advisor [Member] | Exercise Price $10.00 [Member] | Tranche Three [Member] | |||||||||||||||
Weighted Average Exercise Price [Abstract] | |||||||||||||||
Warrants, exercisable period | 18 months | ||||||||||||||
Warrants exercisable (in shares) | 1,500,000 |
Share-based compensation (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 19, 2019 |
Apr. 29, 2019 |
|
Stock Awards [Abstract] | ||||||
Share-based compensation expense | $ 3.0 | $ 4.0 | $ 5.5 | $ 4.2 | ||
Stock Options [Member] | ||||||
Stock Awards [Abstract] | ||||||
Granted (in shares) | 200,000 | 5,833,000 | 300,000 | 5,833,000 | ||
2019 Incentive Award Plan [Member] | ||||||
Stock Awards [Abstract] | ||||||
Authorized issuance shares of common stock (in shares) | 6,000,000 | |||||
Amended and Restated Incentive Award Plan 2019 [Member] | ||||||
Stock Awards [Abstract] | ||||||
Authorized issuance shares of common stock (in shares) | 9,000,000 |
Related party transactions (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Related Party Transactions [Abstract] | ||
Subordinated convertible notes issued | $ 17,594 | $ 16,370 |
Subordinated Convertible Notes [Member] | Member of Board of Directors [Member] | ||
Related Party Transactions [Abstract] | ||
Subordinated convertible notes issued | 800 | 1,400 |
Subordinated Convertible Notes [Member] | Executive Officer [Member] | Halo Acquisition [Member] | ||
Related Party Transactions [Abstract] | ||
Subordinated convertible notes issued | 100 | |
Maximum [Member] | Subordinated Convertible Notes [Member] | Member of Board of Directors [Member] | ||
Related Party Transactions [Abstract] | ||
Interest amount | $ 100 | 100 |
Marketing Services [Member] | ||
Related Party Transactions [Abstract] | ||
Service contract termination clause | 30 days | |
Marketing Services [Member] | Maximum [Member] | ||
Related Party Transactions [Abstract] | ||
Outstanding balances due to related party | $ 100 | $ 100 |
Income taxes (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income taxes [Abstract] | ||
Current income tax expense | $ 0 | $ 0 |
Deferred income tax expense | $ 0 | $ 0 |
Effective tax rate | 0.00% | |
Federal statutory rate | 21.00% | |
Accrued interest and penalties related to uncertain tax positions | $ 0 |
Major suppliers (Details) - Vendor |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Concentration Risk [Abstract] | ||
Number of vendors utilized to purchase inventory | 3 | 1 |
Inventory Purchases [Member] | Supplier Concentration Risk [Member] | ||
Concentration Risk [Abstract] | ||
Concentration risk percentage | 77.00% | 83.00% |
Concentration of credit risk and off-balance sheet risk (Details) - Customer Concentration Risk [Member] - Customer |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Gross Sales [Member] | ||
Concentration Risk [Line Items] | ||
Number of customers | 2 | |
Concentration risk percentage | 39.00% | |
Accounts Receivable [Member] | ||
Concentration Risk [Line Items] | ||
Number of customers | 2 | 1 |
Concentration risk percentage | 71.00% | 44.00% |
Net loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Numerator [Abstract] | |||||
Net and comprehensive loss | $ (18,404) | $ (161,506) | $ (27,858) | $ (164,286) | |
Less: Preferred stock dividends | 34 | 27 | 68 | 27 | |
Net and comprehensive loss available to common stockholders | $ (18,438) | $ (9,488) | $ (161,533) | $ (27,926) | $ (164,313) |
Denominator [Abstract] | |||||
Weighted average shares used in computing net loss per share attributable to common stockholders, basic and diluted (in shares) | 48,939,708 | 30,638,048 | 48,733,052 | 21,202,188 | |
Net loss per share attributable to common stockholders, basic and diluted (in dollars per share) | $ (0.38) | $ (5.27) | $ (0.57) | $ (7.75) |
Subsequent events (Details) - USD ($) $ / shares in Units, $ in Millions |
Jul. 16, 2020 |
Jul. 31, 2020 |
Jul. 30, 2020 |
Jul. 20, 2020 |
Jun. 30, 2020 |
Jun. 24, 2020 |
Jun. 23, 2020 |
Dec. 31, 2019 |
Dec. 19, 2019 |
---|---|---|---|---|---|---|---|---|---|
Subsequent events [Abstract] | |||||||||
Exercise price of warrants (in dollars per share) | $ 5.0 | $ 4.25 | |||||||
Common stock, shares authorized (in shares) | 88,000,000 | 88,000,000 | |||||||
Revolving Credit Facility [Member] | |||||||||
Subsequent events [Abstract] | |||||||||
Face amount | $ 7.5 | ||||||||
Subsequent Event [Member] | |||||||||
Subsequent events [Abstract] | |||||||||
Common stock, shares authorized (in shares) | 200,000,000 | 88,000,000 | |||||||
Subsequent Event [Member] | July 2020 Warrants [Member] | |||||||||
Subsequent events [Abstract] | |||||||||
Number of warrants issuable if settled (in shares) | 300,000 | 200,000 | |||||||
Exercise price of warrants (in dollars per share) | $ 1.05 | $ 1.05 | |||||||
Term of warrants | 84 months | 84 months | |||||||
Subsequent Event [Member] | Citizens Business Bank [Member] | Revolving Credit Facility [Member] | ABL Facility [Member] | |||||||||
Subsequent events [Abstract] | |||||||||
Face amount | $ 7.5 | ||||||||
Maturity date | Jul. 05, 2022 | ||||||||
Subsequent Event [Member] | Citizens Business Bank [Member] | Revolving Credit Facility [Member] | ABL Facility [Member] | LIBOR [Member] | |||||||||
Subsequent events [Abstract] | |||||||||
Basis spread on variable interest rate | 2.50% | ||||||||
Subsequent Event [Member] | Citizens Business Bank [Member] | Revolving Credit Facility [Member] | ABL Facility [Member] | Floor Rate [Member] | |||||||||
Subsequent events [Abstract] | |||||||||
Interest rate | 3.25% |
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