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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 5/13/20 Better Choice Co Inc. S-1/A 112:12M Broadridge Fin’l So… Inc |
Document/Exhibit Description Pages Size 1: S-1/A Pre-Effective Amendment to Registration Statement HTML 3.63M (General Form) 2: EX-21.1 Subsidiaries List HTML 29K 3: EX-23.1 Consent of Experts or Counsel HTML 29K 4: EX-23.2 Consent of Experts or Counsel HTML 32K 5: EX-23.3 Consent of Experts or Counsel HTML 30K 56: R1 Document and Entity Information HTML 43K 90: R2 Consolidated Balance Sheets HTML 141K 80: R3 Consolidated Balance Sheets (Parentheticals) HTML 69K 13: R4 Consolidated Statements of Operations and HTML 79K Comprehensive Loss 53: R5 Consolidated Statements of Stockholders' Deficit HTML 148K 89: R6 Consolidated Statements of Cash Flows HTML 147K 77: R7 Consolidated Statements of Cash Flows HTML 76K (Parenthetical) 15: R8 Nature of business and summary of significant HTML 89K accounting policies 51: R9 Acquisitions HTML 86K 109: R10 Revenue HTML 39K 72: R11 Inventories HTML 40K 37: R12 Prepaid expenses and other current assets HTML 42K 49: R13 Property and equipment HTML 42K 110: R14 Accrued liabilities HTML 45K 73: R15 Operating leases HTML 61K 38: R16 Intangible assets, royalties and goodwill HTML 58K 50: R17 Line of credit, short term loan and notes payable HTML 66K 108: R18 Warrant derivative liability HTML 47K 74: R19 Other liabilities HTML 38K 12: R20 Commitments and contingencies HTML 34K 54: R21 Redeemable series E convertible preferred stock HTML 39K 88: R22 Stockholders' deficit HTML 91K 78: R23 Employee benefit plans HTML 33K 14: R24 Related party transactions HTML 36K 55: R25 Income taxes HTML 58K 91: R26 Major suppliers HTML 32K 79: R27 Concentration of credit risk and off-balance sheet HTML 35K risk 16: R28 Net loss per share HTML 44K 52: R29 Subsequent events HTML 43K 47: R30 Nature of business and summary of significant HTML 161K accounting policies (Policies) 35: R31 Nature of business and summary of significant HTML 35K accounting policies (Tables) 76: R32 Acquisitions (Tables) HTML 84K 112: R33 Inventories (Tables) HTML 42K 46: R34 Prepaid expenses and other current assets (Tables) HTML 40K 34: R35 Property and equipment (Tables) HTML 42K 75: R36 Accrued liabilities (Tables) HTML 41K 111: R37 Operating leases (Tables) HTML 61K 48: R38 Intangible assets, royalties and goodwill (Tables) HTML 58K 33: R39 Line of credit, short term loan and notes payable HTML 58K (Tables) 62: R40 Warrant derivative liability (Tables) HTML 44K 25: R41 Other liabilities (Tables) HTML 37K 82: R42 Stockholders' deficit (Tables) HTML 72K 93: R43 Income taxes (Tables) HTML 57K 61: R44 Net loss per share (Tables) HTML 43K 23: R45 Nature of business and summary of significant HTML 43K accounting policies, Basis of presentation and consolidation (Details) 81: R46 Nature of business and summary of significant HTML 37K accounting policies, Restricted cash (Details) 92: R47 Nature of business and summary of significant HTML 36K accounting policies, Accounts receivable and allowance for doubtful accounts (Details) 63: R48 Nature of business and Summary of Significant HTML 50K Accounting Policies, Property and equipment (Details) 22: R49 Nature of business and summary of significant HTML 35K accounting policies, Goodwill (Details) 30: R50 Nature of business and summary of significant HTML 39K accounting policies, Advertising & Share-based compensation (Details) 44: R51 Nature of business and summary of significant HTML 32K accounting policies, Segment information (Details) 100: R52 Nature of business and summary of significant HTML 35K accounting policies, Commitments and contingencies (Details) 64: R53 Nature of business and summary of significant HTML 37K accounting policies, Recently issued accounting pronouncements (Details) 31: R54 Acquisitions, Acquisition of Halo (Details) HTML 120K 45: R55 Acquisitions, Pro Forma Information (Unaudited) HTML 37K (Details) 101: R56 Acquisitions, Reverse Acquisitions of Better HTML 115K Choice and Bona Vida by TruPet (Details) 65: R57 Revenue (Details) HTML 63K 32: R58 Inventories (Details) HTML 45K 43: R59 Prepaid expenses and other current assets HTML 69K (Details) 96: R60 Property and equipment (Details) HTML 53K 83: R61 Accrued liabilities (Details) HTML 60K 18: R62 Operating leases, Terms (Details) HTML 41K 57: R63 Operating leases, Assets and liabilities (Details) HTML 53K 99: R64 Operating leases, Lease cost (Details) HTML 47K 86: R65 Operating leases, Maturity of lease liabilities HTML 50K (Details) 21: R66 Operating leases, Future Minimum Lease Payments HTML 48K under Contractually-Obligated Leases (Details) 60: R67 Intangible assets, royalties and goodwill HTML 84K (Details) 94: R68 Intangible assets, royalties and goodwill, HTML 51K Estimated Future Amortization of Amortizable Intangible Assets (Details) 87: R69 Line of credit, short term loan and notes payable, HTML 73K Components of Debt (Details) 71: R70 Line of credit, short term loan and notes payable, HTML 73K TruPet Line of Credit, Due to Related Parties and Revolving Line of Credit (Details) 105: R71 Line of credit, short term loan and notes payable, HTML 72K Short Term Loan and Line of Credit (Details) 42: R72 Line of credit, short term loan and notes payable, HTML 70K Notes Payable (Details) 29: R73 Warrant derivative liability, Private placement HTML 71K (Details) 68: R74 Warrant derivative liability, Fair value of HTML 38K derivative liabilities (Details) 102: R75 Warrant derivative liability, Fair value HTML 47K measurements and valuation techniques (Details) 39: R76 Other liabilities (Details) HTML 42K 26: R77 Commitments and contingencies (Details) HTML 32K 67: R78 Redeemable series E convertible preferred stock HTML 67K (Details) 107: R79 Stockholders' deficit, Acquisition, Contribution HTML 50K and Distributions of Capital (Details) 70: R80 Stockholders' deficit, Preferred Stock (Details) HTML 46K 104: R81 Stockholders' deficit, Common Stock (Details) HTML 137K 41: R82 Stockholders' deficit, Share-based compensation HTML 44K (Details) 28: R83 Stockholders' deficit, Incentive Award Plan HTML 80K (Details) 69: R84 Stockholders' deficit, Options Granted and HTML 141K Outstanding (Details) 103: R85 Stockholders' deficit, Warrants (Details) HTML 96K 40: R86 Employee benefit plans (Details) HTML 40K 27: R87 Related party transactions (Details) HTML 76K 66: R88 Income taxes (Details) HTML 45K 106: R89 Income taxes, Effective Income Tax Rate HTML 75K Reconciliation (Details) 97: R90 Income taxes, Deferred Tax Assets and Liabilities HTML 65K (Details) 84: R91 Income taxes, Valuation Allowance (Details) HTML 39K 19: R92 Major suppliers (Details) HTML 39K 58: R93 Concentration of credit risk and off-balance sheet HTML 38K risk (Details) 98: R94 Net loss per share (Details) HTML 46K 85: R95 Subsequent events, Stock and Warrant Issuance HTML 46K (Details) 20: R96 Subsequent events, Amended November 2019 Notes HTML 35K (Details) 59: R97 Subsequent events, ABG Termination (Details) HTML 58K 95: R98 Subsequent events, COVID-19 (Details) HTML 38K 24: XML IDEA XML File -- Filing Summary XML 211K 17: EXCEL IDEA Workbook of Financial Reports XLSX 129K 6: EX-101.INS XBRL Instance -- senz-20200513 XML 2.03M 8: EX-101.CAL XBRL Calculations -- senz-20200513_cal XML 281K 9: EX-101.DEF XBRL Definitions -- senz-20200513_def XML 1.47M 10: EX-101.LAB XBRL Labels -- senz-20200513_lab XML 2.73M 11: EX-101.PRE XBRL Presentations -- senz-20200513_pre XML 1.86M 7: EX-101.SCH XBRL Schema -- senz-20200513 XSD 267K 36: ZIP XBRL Zipped Folder -- 0001140361-20-011563-xbrl Zip 304K
DELAWARE (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) | | | 5961 (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER) | | | 83-4284557
(I.R.S. EMPLOYER IDENTIFICATION NUMBER) |
LARGE ACCELERATED FILER | | | ☐ | | | ACCELERATED
FILER | | | ☐ |
Non-accelerated filer | | | ☒ | | | Smaller
reporting company | | | ☒ |
| | | | Emerging
growth company | | | ☐ |
Title of Each Class of Securities To Be Registered | | | Amount
to be Registered(1) | | | Proposed Maximum Offering Price Per Share(2) | | | Proposed
Maximum Aggregate Offering Price(2) | | | Amount of Registration Fee(4) |
Common Stock, par value $0.001 per share | | | 46,765,215 | | | $3.15 | | | $147,310,427.25 | | | $19,120.89 |
Common
Stock, par value $0.001 per share | | | 15,842,664 | | | $0.80(3) | | | $12,674,131.20(3) | | | $1,645.10 |
(1) | In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act. |
(2) | Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended. Shares of the
registrant’s common stock are eligible for trading on the over-the-counter market. |
(3) | The maximum price per share and the maximum aggregate offering price are based on the average of the $0.80 (high) and $0.80 (low) sale price of the registrant’s common stock as reported on the over-the-counter market on May 12, 2020. |
(4) | The registrant previously paid $19,120.89 to register an aggregate of 46,765,215
shares. An additional $1,645.10 has been paid to cover the registration fee of the additional 15,842,664 shares included in this amendment. |
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• | Reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; |
• | Not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002; and |
• | Reduced disclosure obligations for our annual and quarterly reports, proxy statements and registration statements. |
• | 6,536,586 warrants to purchase our common stock at a weighted average exercise price of $3.52 per share that we issued in the May Private Placement and the December Private Placement (as defined herein) (together, the “Private Placements”); |
• | 7,853,371 shares of common stock underlying options to purchase common stock at a weighted average exercise price of $1.81 per share that we granted under the Company’s 2019 Incentive Award Plan (the “2019 Amended Plan”) to our directors, executive officers key employees
and third-party contractors in connection with the private placement (of which 3,353,371 options have vested). |
• | establish our brands and reputation as a well-managed enterprise committed to delivering premium quality products to the pet health and wellness industry; |
• | enter into distribution and other strategic arrangements with retailers and other potential distributors of our products; |
• | continue to effectively compete in specialty channels and respond to competitive developments; |
• | continue
to market and sell our products through a multi-channel distribution strategy and achieve joint growth targets with our distribution partners; |
• | expand and maintain brand loyalty; |
• | develop new proprietary value-branded products and product line extensions that appeal to consumers; |
• | maintain and, to the extent necessary, improve our high standards for product quality, safety and integrity; |
• | maintain
sources from suppliers that comply with all federal, state and local laws for the required supply of quality ingredients to meet our growing demand; |
• | identify and successfully enter and market our products in new geographic markets and market segments; |
• | execute value-focused pricing strategies that position our products as premium, great tasting, all natural products offered at a competitive price; |
• | maintain compliance with all federal, state and local laws related to our products; and |
• | attract, integrate, retain and motivate qualified personnel. |
• | the inability to integrate the respective businesses of Bona Vida, Halo and TruPet in a manner that permits the combined business to achieve the synergies anticipated to result from the acquisitions, which could result in the anticipated benefits of the acquisitions
not being realized partly or wholly in the time frame currently anticipated or at all; |
• | integrating personnel from the three companies while maintaining focus on safety and providing consistent, high quality products and customer service; and |
• | performance shortfalls at one or all of the companies as a result of the diversion of management's attention caused by the acquisitions and integrating the companies' operations. |
• | problems
integrating the purchased business, facilities, technologies or products; |
• | issues maintaining uniform standards, procedures, controls and policies; |
• | assumed liabilities, including for compliance issues prior to the time we will enter into a transaction with such party; |
• | unanticipated costs associated with acquisitions, investments or strategic alliances; |
• | diversion
of management's attention from our existing business; |
• | adverse effects on existing business relationships with suppliers, third-party contract manufacturers, and retail customers; |
• | risks associated with entering new markets in which we have limited or no experience; |
• | potential write-offs of acquired assets and/or an impairment of any goodwill recorded as a result of an acquisition;18 |
• | potential
loss of key employees of acquired businesses; and |
• | increased legal and accounting compliance costs. |
• | the
number of shares of our common stock publicly owned and available for trading; |
• | actual or anticipated quarterly variations in our results of operations or those of our competitors; |
• | our actual or anticipated operating performance and the operating performance of similar companies in our industry; |
• | our announcements or our competitors’ announcements regarding, significant contracts, acquisitions, or strategic investments; |
• | general economic conditions and their impact on the pet food markets; |
• | the overall performance of the equity markets; |
• | threatened or actual litigation; |
• | changes in laws or regulations relating to our industry; |
• | any
major change in our board of directors or management; |
• | publication of research reports about us or our industry or changes in recommendations or withdrawal of research coverage by securities analysts; and |
• | sales or expected sales of shares of our common stock by us, and our officers, directors, and significant stockholders. |
• | Reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; |
• | Not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002; and |
• | Reduced
disclosure obligations for our annual and quarterly reports, proxy statements and registration statements. |
• | We
will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. |
• | We may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law. |
• | We are required
to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification. |
• | We will not be obligated pursuant to the indemnification agreements entered into with our directors and executive officers to indemnify a person with respect to proceedings initiated by that person, except with respect to proceedings to enforce an indemnitees right to indemnification or advancement of expenses, proceedings authorized by our board of directors and if offered by us in our sole discretion. |
• | The
rights conferred in our certificate of incorporation are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons. |
• | We may not retroactively amend our certificate of incorporation or indemnification agreement provisions to reduce our indemnification obligations to directors, officers, employees and agents. |
• | adverse impacts from the pandemic involving the novel coronavirus known as COVID-19; |
• | our ability to successfully implement our growth strategy; |
• | failure to achieve growth or manage anticipated growth; |
• | our ability to achieve or maintain profitability;
|
• | our significant indebtedness; |
• | our ability to continue as a going concern; |
• | our ability to generate sufficient cash flow to run our operations, service our debt and make necessary capital expenditures; |
• | our ability to establish and maintain effective internal control over financial reporting; |
• | our
limited operating history; |
• | our ability to successfully integrate Bona Vida’s, Halo’s and TruPet’s businesses and realize anticipated benefits with these acquisitions and with other acquisitions or investments we may make; |
• | our dependence on our subsidiaries for payments, advances and transfers of funds due to our holding company status; |
• | our ability to successfully develop additional products and services or successfully
commercialize such products and services; |
• | competition in our market; |
• | our ability to attract new and retain existing customers; |
• | our exposure to product liability claims; |
• | interruption in our sourcing operations; |
• | our or our third-party contract manufacturers’ and suppliers’ ability to comply with legal and regulatory requirements; |
• | our
brand reputation; |
• | compliance with data privacy rules; |
• | our compliance with applicable regulations issued by the U.S. Drug Enforcement Administration (“DEA”), the U.S. Food and Drug Administration (“FDA”), the U.S. Federal Trade Commission (“FTC”), the U.S. Department of Agriculture (“USDA”), and other federal, state and local regulatory authorities, including those regarding marketing pet food, products and supplements with CBD; |
• | uncertainty regarding the status of hemp and hemp-based
products under U.S. law; |
• | risk of our products being recalled for a variety of reasons, including product defects, packaging safety and inadequate or inaccurate labeling disclosure; |
• | risk of shifting customer demand in relation to raw pet foods, premium kibble and canned pet food products, CBD and hemp products for pets and failure to respond to such changes in customer taste quickly and effectively; and |
• | the other risks identified in this prospectus including, without limitation, those under “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as such factors may updated from time to time in our other filings with the SEC. |
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In thousands (except shares) | | | |
Cash and cash equivalents | | | $2,361 |
Long-term
debt, including current maturities: | | | |
Loan Facilities, net | | | $20,880 |
Notes
Payable, net | | | 16,370 |
Total debt, net of deferred financing costs | | | 37,250 |
Stockholders’
Deficit: | | | |
Series E preferred stock, $0.001 par value, 2,900,000 shares authorized, 1,387,378 shares issued and outstanding | | | 10,566 |
Common
stock, $0.001 par value, 88,000,000 shares authorized, 47,977,390 shares issued and outstanding | | | 48 |
Additional paid-in capital | | | 194,150 |
Accumulated
deficit | | | (201,269) |
Total stockholders’ deficit | | | (7,071) |
Total
capitalization | | | $30,179 |
| | Consolidated
| | | Historical Halo | | | Adjustments | | | Ref.
| | | Combined Pro Forma | |
| | | | | | | | | | ||||||
Net
sales | | | $15,577 | | | $32,576 | | | $(3,657)
| | | A | | | $44,496 |
Cost
of goods sold | | | 9,717 | | | 21,352
| | | (1,418) | | | A | | | 29,651
|
Gross profit | | | 5,860 | | | 11,224
| | | (2,239) | | | | | 14,845
| |
Operating expenses: | | | | | | | | | | | |||||
General
and administrative | | | 19,782 | | | 7,521 | | | (4,898)
| | | A, B, C | | | 22,405 |
Share-based
compensation | | | 10,280 | | | —
| | | 309 | | | D | | | 10,589
|
Sales and marketing | | | 10,138 | | | 6,711
| | | — | | | | | 16,849
| |
Customer service and warehousing | | | 1,097 | | | —
| | | — | | | | | 1,097
| |
Impairment of intangible asset | | | 889 | | | —
| | | — | | | | | 889
| |
Loss on disposal of equipment | | | — | | | 64
| | | — | | | | | 64
| |
Total operating expenses | | | 42,186 | | | 14,296
| | | (4,589) | | | | | 51,893
| |
Loss from operations | | | (36,326) | | | (3,072)
| | | 2,350 | | | | | (37,048)
| |
Other (expense) income | | | | | | | | | | | |||||
Interest
expense | | | (670) | | | (272) | | | (3,995)
| | | E,F | | | (4,937) |
Loss
on acquisitions | | | (147,376) | | | — | | | —
| | | | | (147,376) | |
Change
in fair value of warrant derivative liability | | | (90) | | | —
| | | — | | | | | (90)
| |
Total other (expense) income | | | (148,136) | | | (272)
| | | (3,995) | | | | | (152,403)
| |
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| | | | | | | | | | ||||||
Net
and comprehensive loss | | | $(184,462) | | | $(3,344)
| | | $(1,645) | | | | | $(189,451)
| |
Preferred dividends | | | 109 | | | —
| | | — | | | | | 109
| |
Net and comprehensive loss available to common stockholders | | | $(184,571) | | | $(3,344)
| | | $(1,645) | | | | | $(189,560)
| |
Earnings per Share, Basic & Diluted | | | $(5.55) | | | | | | | | | $(5.36)
| |||
Weighted average shares, basic and diluted | | | 33,238,600 | | | | | | | | | 35,372,990 |
$ in thousands | | | 2019 | | | 2018 | | | Change | | | % |
Net
sales | | | $15,577 | | | $14,785 | | | $792 | | | 5% |
Cost
of goods sold | | | 9,717 | | | 7,489 | | | 2,228 | | | 30% |
Gross
profit | | | 5,860 | | | 7,296 | | | (1,436) | | | -20% |
Operating
expenses: | | | | | | | | | ||||
General
and administrative | | | 19,782 | | | 6,055 | | | 13,727 | | | 227% |
Share-based
compensation | | | 10,280 | | | 431 | | | 9,849 | | | * |
Sales
and marketing | | | 10,138 | | | 4,981 | | | 5,157 | | | 104% |
Customer
service and warehousing | | | 1,097 | | | 987 | | | 110 | | | 11% |
Impairment
of intangible asset | | | 889 | | | — | | | 889 | | | 100% |
Total
operating expenses | | | 42,186 | | | 12,454 | | | 29,732 | | | 239% |
Loss
from operations | | | $(36,326) | | | $(5,158) | | | $(31,168) | | | 587% |
* | Not meaningful |
| | December 31, | ||||
$
in thousands | | | 2019 | | | 2018 |
Cash
flows (used in) provided by: | | | | | ||
| | $(20,969) | | | $(6,903) | |
Investing
activities | | | (20,207) | | | (31) |
Financing
activities | | | 39,764 | | | 10,723 |
Net
(decrease) increase in cash and cash equivalents | | | $(1,412) | | | $3,789 |
• | restrictions on the marketing or manufacturing of a product; |
• | required modification of promotional materials or issuance of corrective marketing information; |
• | issuance of safety alerts, press releases, or other communications containing warnings or other safety information about a product; |
• | warning
or untitled letters; |
• | product seizure or detention; |
• | refusal to permit the import or export of products; |
• | fines, injunctions, or consent decrees; and |
• | imposition of civil or criminal penalties. |
Name | | | Age
| | | Position | | | Director Since |
| | 77 | | | Chief Executive Officer | | | n/a | |
Andreas
Schulmeyer(1) | | | 56 | | | Chief Financial Officer | | | n/a |
| | 39 | | | Vice President, Finance and Accounting | | | n/a | |
Anthony
Santarsiero | | | 36 | | | President and Chief Operating Officer | | | n/a |
| | 40 | | | Chairman of the Board of Directors | | | 2019 | |
| | 59 | | | Director | | | 2020 | |
| | 35 | | | Director | | | 2019 | |
| | 58 | | | Director | | | 2019 | |
| | 55 | | | Director | | | 2020 | |
| | 50 | | | Director | | | 2019 | |
| | 73 | | | Director | | | 2020 |
(1) | On May 8, 2020, we entered into an agreement with Mr. Schulmeyer whereby he is resigning as our Chief Financial Officer, to be effective on May 22, 2020. |
Name and Principal Position | | | Year(1) | | | Salary
($) | | | Bonus ($) | | | Stock Awards ($) | | | Option
Awards ($)(2) | | | Non-Equity Incentive Plan Compensation ($) | | | All Other Compensation ($) | | | Total |
| | 2019 | | | $192,857 | | | $100,000 | | | $600,000 | | | $3,572,699 | | | $0 | | | $0 | | | $4,465,556 | |
| | | | | | | | | | | | | | | | |||||||||
Andreas
Schulmeyer(4) Chief Financial Officer | | | 2019 | | | $105,769 | | | $0 | | | $0 | | | $1,877,285 | | | $0 | | | $37,011 | | | $2,020,065 |
| | | | | | | | | | | | | | | | |||||||||
Anthony
Santarsiero(5) President and Chief Operating Officer | | | 2019 | | | $166,047 | | | 25,000 | | | $0 | | | $3,077,101 | | | $0 | | | $5,740 | | | $3,273,888 |
| | | | | | | | | | | | | | | | |||||||||
| | 2019 | | | $139,615 | | | 155,000 | | | $0 | | | $3,424,828 | | | $0 | | | $414,237 | | | $4,133,680 | |
| | | | | | | | | | | | | | | | |||||||||
David
Lelong(7) | | | 2019 | | | $156,000 | | | $0 | | | $0 | | | $0 | | | $0 | | | $29,982 | | | $185,982 |
Former
President, CEO and CFO | | | 2018 | | | $96,000 | | | $0 | | | $0 | | | $154,983 | | | $0 | | | $0 | | | $250,983 |
(1) | Messrs. Dalla-Longa and Santarsiero and Ms. Taylor each commenced employment with us in May 2019. Mr. Schulmeyer was appointed as our Chief Financial Officer in June 2019 and commenced employment with us in July 2019. |
(2) | The value in this column reflects the aggregate grant date fair value of the stock option award and the incremental value due to the repricing on December 19, 2019 as computed in accordance with ASC
Topic 718. Information regarding the valuation assumptions used in the calculations are included in “Note 15 – Stockholders’ deficit” to our audited consolidated financial statements included in this prospectus. |
(3) | Mr. Dalla-Longa received (i) a signing bonus of $100,000 as per his employment contract with Better Choice, and (ii) an award of 100,000 shares in lieu of the change of control payment contained in his Bona Vida employment contract. On February 5, 2020, Mr. Dalla-Longa resigned as our Chief Executive Officer and was simultaneously appointed to
Executive Vice President, Corporate Development. |
(4) | Mr. Schulmeyer received (i) $32,876 in compensation for work prior to joining the Company and (ii) $4,135 in matching 401(k) payments. On May 8, 2020, we entered into an agreement with Mr. Schulmeyer whereby he is resigning as our Chief Financial Officer, to be effective on May 22, 2020. |
(5) | Mr. Santarsiero received (i) a signing bonus of $25,000 as per his employment contract
and (ii) $5,740 in matching 401(k) payments. |
(6) | Ms. Taylor ceased serving as our co-Chief Executive Officer on September 13, 2019 and her employment with us terminated as of November 12, 2019. She received (i) a sign on bonus of $155,000 as per her employment contract, (ii) $14,000 in car allowance payments, (iii) $300,000 of severance pay, (iv) $70,567 of insurance payments, and (v)$29,670 as a consultant to TruPet. |
(7) | Mr. Lelong
ceased serving as our Chief Executive Officer on March 14, 2019 and as our President and Chief Financial Officer on May 28, 2019. Salary includes $124,000 in accrued compensation. Mr. Lelong received $5,982 in interest on accrued salary payments and $24,000 as a contractor. |
• | “cause” means (i) executive is convicted of, or pleads guilty or nolo contendere to, a felony related to our business; (ii) executive, in carrying out his duties hereunder, has acted with gross negligence or intentional misconduct resulting, in any case, in material harm to us; (iii) executive misappropriates Company funds or otherwise defrauds us including a material amount of money or property; (iv) executive breaches his fiduciary duty to the
Company resulting in material profit to him, directly or indirectly; (v) executive materially breaches any agreement with the Company and fails to cure such breach within 10 days of receipt of notice, unless the act is incapable of being cured; (vi) executive breaches any non-compete or confidential information provision of the NEO Employment Agreement; (vii) executive becomes subject to a preliminary or permanent injunction issued by a United States District Court enjoining executive from violating any securities law administered or regulated by the SEC; (viii) executive becomes subject to a cease and desist order or other order issued by the SEC after an opportunity for a hearing; (ix) executive refuses to carry out a resolution adopted by the board of directors at a meeting in which executive was offered a reasonable opportunity to argue that the resolution
should not be adopted; or (x) executive abuses alcohol or drugs in a manner that interferes with the successful performance of executive’s duties; |
• | “good reason” means any one or more of the following: (i) a material diminution in executive’s authority, duties or responsibilities due to no fault of executive other than temporarily while executive is physically or mentally incapacitated or as required by applicable law; (ii) we require executive to change his principal business office to a location that is greater than 20 miles from executive’s current office, (iii) a change in the executive’s overall compensation or bonus structure such that the executive’s overall compensation is materially diminished; or (iv) any other action or inaction that constitutes a material breach by us under the NEO
Employment Agreement. |
• | “cause”
means (i) executive is convicted of, or pleads guilty or nolo contendere to, a felony related to our business; (ii) executive, in carrying out his duties hereunder, has acted with gross negligence or intentional misconduct resulting, in any case, in material harm to us; (iii) executive misappropriates Company funds or otherwise defrauds us including a material amount of money or property; (iv) executive breaches his fiduciary duty to the Company resulting in material profit to him, directly or indirectly; (v) executive materially breaches any agreement with the Company and fails to cure such breach within 10 days of receipt of notice, unless the act is incapable of being cured; (vi) executive breaches any non-compete or confidential information provision of the Lelong Employment
Agreement; (vii) executive becomes subject to a preliminary or permanent injunction issued by a United States District Court enjoining executive from violating any securities law administered or regulated by the SEC; (viii) executive becomes subject to a cease and desist order or other order issued by the SEC after an opportunity for a hearing; (ix) executive refuses to carry out a resolution adopted by the board of directors at a meeting in which executive was offered a reasonable opportunity to argue that the resolution should not be adopted; or (x) executive abuses alcohol or drugs in a manner that interferes with the successful performance of his duties; |
• | “change of control” has the same meaning given to such term in Treasury Regulation Section 1.409A-3(i)(5); and |
• | “good reason” means any one or more of the following: (i) a material diminution in executive’s authority, duties or responsibilities due to no fault of executive other than temporarily while executive is physically or mentally incapacitated or as required by applicable law; (ii) we require executive to change his principal business office to a location other than the New York, New York metropolitan area, or (iii) any other action or inaction that constitutes a material breach by us under the Lelong Employment Agreement. |
Named Executive Officer | | | Annual Base Salary |
| | $300,000 | |
Andreas Schulmeyer | | | $250,000 |
Anthony
Santarsiero | | | $250,000 |
| | $300,000 | |
David
Lelong | | | $64,000 |
| | Option
Awards | |||||||||||||
Name | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number
of Securities Underlying Unexercised Options (#) Unexercisable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option
Exercise Price ($) | | | Option Expiration Date |
David Lelong | | | 19,231 | | | (a) | | | — | | | $6.76 | | | 12/21/23 |
Anthony
Santarsiero | | | 333,333 | | | —(b) | | | 766,667 | | | 1.82 | | | various |
Andreas
Schulmeyer | | | 141,666 | | | —(c) | | | 728,705 | | | various | | | various |
| | 400,000 | | | —(d) | | | 800,000 | | | 1.82 | | | 5/2/2029 | |
| | 1,150,000 | | | —(e) | | | — | | | 1.82 | | | 5/2/2029 |
(a) | Options fully vested upon the consummation of the May Acquisitions. |
(b) | Options vest on a monthly basis over a two year period (1/24 of award per month). Mr. Santarsiero’s options were issued at various times during the year. |
• | 1,000,000 options were issued at $5.00 per share on May 2, 2019
and repriced to $1.82 per share on December 19, 2019; |
• | 100,000 options were issued at $1.82 per share on December 19, 2019. |
(c) | Options vest on a monthly basis over a two year period (1/24 of award per month). Mr. Schulmeyer’s options were issued at various times during the year. |
• | 500,000
options were issued at $6.35 per share on June 29, 2019 and repriced to $1.82 per share on December 19, 2019; |
• | 100,000 options were issued at $3.90 per share on August 30, 2019 and repriced to $1.82 per share on December 19, 2019; |
• | 250,000 options were issued at $1.94 per share on December 11, 2019 and repriced to $1.82 per share on December 19, 2019; and |
• | 20,371 options were issued at $2.70 per share on December 31, 2019. |
(d) | Options vest on a monthly basis over a two year period (1/24 of award per month). The options were issued at $5.00 per share on May 2, 2019 and repriced to $1.82 per share on December 19, 2019. |
(e) | Options fully vested on November 12,
2019 as per the Separation Agreement by and between the Company and Ms. Taylor. The options were issued at $5.00 per share on May 2, 2019 and repriced to $1.82 per share on December 19, 2019. |
Name | | | Fees Earned or Paid in Cash | | | Stock
Awards | | | Option Awards | | | Non-equity Incentive Plan Compensation | | | All
Other Compensation | | | Total Compensation |
| | $32,534 | | | $N/A | | | $1,488,624 | | | $ | | | $ | | | $1,521,158 | |
Jeff
Davis | | | 32,534 | | | N/A | | | 1,488,624 | | | | | | | 1,521,158 | ||
Michael
Galego | | | 32,534 | | | N/A | | | 1,488,624 | | | | | 15,534(a) | | | 1,536,692 |
(a) | Cash compensation as director of Bona Vida prorated from January 1, 2019 to May 5, 2019. |
Name | | | Options Outstanding at Fiscal Year End |
Michael
Galego | | | 500,000 |
| | 519,231 | |
Jeff
Davis | | | 500,000 |
| | Amount
and Nature of Beneficial Ownership(1) | | | % of Total Voting Power | ||||||||||
| | Common
Stock | | | Series E Preferred Stock | | | ||||||||
| | Shares | | | % | | | Shares | | | % | | | ||
Name
of Beneficial Owner | | | | | | | | | | | |||||
Holders
of More than 5% | | | | | | | | | | | |||||
Navy
Capital Green Fund LP(2) | | | 2,544,415 | | | 5.2% | | | — | | | * | | | 5.0% |
Thriving
Paws LLC(3) | | | 3,483,546 | | | 6.9% | | | — | | | * | | | 6.7% |
HH-Halo
LP(4) | | | 3,478,531 | | | 6.7% | | | — | | | * | | | 6.5% |
Directors
and Executive Officers | | | | | | | | | | | |||||
| | 53,991 | | | 0.1% | | | — | | | * | | | 0.1% | |
Andreas
Schulmeyer(6) | | | 339,365 | | | 0.7% | | | — | | | * | | | 0.7% |
Anthony
Santarsiero(7) | | | 1,523,875 | | | 3.1% | | | — | | | * | | | 3.0% |
| | 1,553,696 | | | 3.1% | | | — | | | * | | | 3.0% | |
| | 150,000 | | | 0.3% | | | — | | | * | | | 0.3% | |
| | 2,409,891 | | | 4.9% | | | — | | | * | | | 4.7% | |
Jeff
D. Davis(11) | | | 270,833 | | | 0.6% | | | — | | | * | | | 0.5% |
Clinton
Gee(12) | | | 150,000 | | | 0.3% | | | — | | | * | | | 0.3% |
David
Lelong(13) | | | 19,231 | | | 0.0% | | | — | | | * | | | 0.0% |
Lori
Taylor(14) | | | 8,082,027 | | | 15.7% | | | — | | | * | | | 15.2% |
John
M. Word III(15) | | | 10,147,261 | | | 18.7% | | | — | | | * | | | 18.1% |
All
directors and executive officers as a group (11 persons)(13) | | | 24,700,170 | | | 47.5% | | | — | | | * | | | 46.0% |
* | Represents less than 1% of the number of shares of our common stock outstanding. |
(1) | Beneficial ownership of shares and percentage ownership are determined in accordance with the SEC’s rules. In calculating the number of shares beneficially owned by an individual or entity and the percentage ownership of that individual or entity, shares underlying options, warrants or restricted stock units held by that individual or entity that are either currently exercisable or exercisable within 60 days
from the date hereof are deemed outstanding. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other individual or entity. Unless otherwise indicated and subject to community property laws where applicable, the individuals and entities named in the table above have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them. |
(2) | Includes (i) 2,482,687 shares of common stock and (ii) 61,728 shares of our common stock underlying warrants exercisable within 60 days of April 24, 2020. Navy Capital Green Management, LLC (“Navy Management”) is the investment advisor of Navy Capital Green Fund LP (“Green Fund”) and consequently
has voting control and investment discretion over securities held by Green Fund. Mr. Sean Stiefel, Chief Executive Officer of Navy Management has voting control over Green Fund. As a result of the foregoing, each of Mr. Sean Stiefel and Navy Management may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the shares of common stock beneficially owned by Green Fund. |
(3) | Includes (i) 1,884,989 shares of common stock, (ii) 1,291,563 shares of common stock underlying subordinated convertible notes exercisable within 60 days of April 24, 2020, and (iii) 306,994 shares of common stock underlying warrants exercisable within 60 days of April 24,
2020. Thriving Paws, LLC (“Thriving Paws”) is controlled by Pegasus Partners III, L.P. (“PP III”). PP III is managed by Pegasus Capital Advisors III, L.P. (“PCA III”), which is controlled, indirectly, by Craig Cogut. As a result of the foregoing, each of Mr. Cogut, PCA III and PP III may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the shares of common stock beneficially owned by Thriving Paws. |
(4) | Includes (i) 232,976 shares of common stock, (ii) 2,622,264 shares of common stock underlying subordinated convertible notes exercisable within 60 days of April 24, 2020, and (iii) 623,291 shares of common stock underlying warrants exercisable
within 60 days of April 24, 2020. Thomas O. Hicks is the managing member of HEP Partners LLC, which is the investment manager of HH-Halo LP (“HH-Halo”), and consequently has voting control and investment discretion over securities held by HH-Halo. Mack H. Hicks is the manager of HH-Halo GP LLC, which is the general partner of HH-Halo GP LP, the general partner of HH-Halo. As a result of the foregoing, each of Thomas O. Hicks and Mack H. Hicks may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the shares of common stock beneficially owned by HH-Halo. Each of Thomas O. Hicks and Mack H. Hicks disclaims beneficial ownership of such shares. |
(5) | Includes (i) 16,425 shares of common stock, (ii) 30,351 shares of common stock underlying subordinated convertible notes exercisable within 60 days of April 24, 2020, and (iii) 7,215 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(6) | Includes
(i) 5,956 shares of common stock and (ii) 333,409 shares of common stock underlying options exercisable within 60 days of April 24, 2020. |
(7) | Includes (i) 957,209 shares of common stock and (ii) 566,666 shares of common stock underlying options exercisable within 60 days of April 24, 2020. |
(8) | Includes (i) 876,904 shares of common stock, (ii) 290,064 shares of common stock underlying options exercisable within 60 days of April 24, 2020, and (iii) 386,728 shares of common
stock underlying warrants exercisable within 60 days of April 24, 2020. |
(9) | Includes 150,000 shares of common stock. |
(10) | Includes (i) 1,759,891 shares of common stock and (ii) 650,000 shares of common stock underlying options exercisable within 60 days of April 24, 2020. |
(11) | Consists of 270,833 shares of common stock underlying option exercisable within 60 days of April 24,
2020. |
(12) | Includes 150,000 shares of common stock. |
(13) | Includes 19,231 shares of common stock underlying options exercisable within 60 days of April 24, 2020. |
(14) | Includes (i) 5,632,027 shares of common stock held directly by Blue Sky Holdings Trust which are beneficially owned by Lori Taylor, (ii) 1,150,000 shares of common stock underlying options exercisable
within 60 days of April 24, 2020 held directly by Ms. Taylor, and (iii) 1,300,000 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held directly by Ms. Taylor. Ms. Taylor is the trustee, compliance officer, and protector of Blue Sky Holdings Trust. The address of Blue Sky Holdings Trust is 552 Locust Run Road, Cincinnati, OH 45245. |
(15) | Includes (i) 4,906,824 shares of common stock, (ii) 359,937
shares of common stock underlying subordinated convertible notes exercisable within 60 days of April 24, 2020, and (iii) 4,880,500 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
| | Beneficial
Ownership Prior to Registration | | | Shares Registered Pursuant to this Prospectus (Maximum Number that May be Sold) | | | Beneficial
Ownership after Registration Assuming All Shares are Sold | |||||||
| | Shares | | | %
| | | Shares | | | % | ||||
Selling
Stockholders | | | | | | | | | | | |||||
Holders
of More than 5% | | | | | | | | | | | |||||
Navy
Capital Green Fund LP(1) | | | 2,544,415 | | | 5.2% | | | 2,544,415 | | | —
| | | — |
Thriving Paws LLC(2) | | | 3,483,546 | | | 6.9% | | | 3,483,546 | | | —
| | | — |
HH-Halo LP(3) | | | 3,478,531 | | | 6.7% | | | 3,478,531 | | | —
| | | — |
Directors and Executive Officers | | | | | | | | | | | |||||
| | 53,991 | | | * | | | 53,991 | | | —
| | | — | |
Andreas Schulmeyer(5) | | | 339,365 | | | * | | | 5,956 | | | 333,409
| | | * |
Anthony Santarsiero(6) | | | 1,523,875 | | | 3.1% | | | 957,209 | | | 566,666
| | | 1.1% |
| | 1,948,908 | | | 3.9% | | | 1,658,844 | | | 290,064
| | | * | |
| | 2,409,891 | | | 4.9% | | | 1,759,891 | | | 650,000
| | | 1.3% | |
Lori Taylor(9) | | | 8,082,027 | | | 15.7% | | | 6,932,027 | | | 1,150,000
| | | 2.2% |
John M. Word III(10) | | | 10,147,261 | | | 18.7% | | | 10,147,261 | | | —
| | | — |
Other Selling Stockholders | | | | | | | | | | | |||||
Aaron
McIntosh(11) | | | 1,673,441 | | | 3.4% | | | 1,673,441 | | | —
| | | — |
Matthew MacIsaac(12) | | | 1,833,334 | | | 3.7% | | | 1,833,334 | | | —
| | | — |
William T. Holland(13) | | | 292,688 | | | * | | | 292,688 | | | —
| | | — |
Chris Rowan(14) | | | 416,666 | | | * | | | 416,666 | | | —
| | | — |
Peter Hanziioannou(15) | | | 571,787 | | | 1.2% | | | 571,787 | | | —
| | | — |
Glen Gibbons(16) | | | 1,659,781 | | | 3.4% | | | 1,659,781 | | | —
| | | — |
Ryan Rezaie(17) | | | 1,314,362 | | | 2.7% | | | 1,314,362 | | | —
| | | — |
Moez Kassam(18) | | | 1,587,067 | | | 3.2% | | | 1,587,067 | | | —
| | | — |
Julian Bharti(19) | | | 1,366,870 | | | 2.8% | | | 1,366,870 | | | —
| | | — |
Juan Santori(20) | | | 1,129,177 | | | 2.3% | | | 1,129,177 | | | —
| | | — |
iHeart Media, Inc.(21) | | | 1,125,000 | | | 2.3% | | | 1,125,000 | | | —
| | | — |
| | Beneficial
Ownership Prior to Registration | | | Shares Registered Pursuant to this Prospectus (Maximum Number that May be Sold) | | | Beneficial
Ownership after Registration Assuming All Shares are Sold | |||||||
| | Shares | | | %
| | | Shares | | | % | ||||
Andreas
Muhlbauer(22) | | | 820,630 | | | 1.7% | | | 820,630 | | | —
| | | — |
Kyle McCollum(23) | | | 1,006,778 | | | 2.0% | | | 806,778 | | | 200,000
| | | * |
Vageesh Naik(24) | | | 702,832 | | | 1.4% | | | 702,832 | | | —
| | | — |
Edward J Brown Jr.(25) | | | 1,049,249 | | | 2.1% | | | 1,049,249 | | | —
| | | — |
Dean Neuls(26) | | | 693,499 | | | 1.4% | | | 693,499 | | | —
| | | — |
Darren Richie(27) | | | 569,105 | | | 1.2% | | | 569,105 | | | —
| | | — |
James Salter(28) | | | 666,668 | | | 1.4% | | | 666,668 | | | —
| | | — |
Ryan Wertman(29) | | | 308,642 | | | * | | | 308,642 | | | —
| | | — |
Xuesong Yu(30) | | | 505,874 | | | 1.0% | | | 505,874 | | | —
| | | — |
Filipp Chebotarev(31) | | | 942,896 | | | 1.9% | | | 942,896 | | | —
| | | — |
Matthew Rollason(32) | | | 456,598 | | | * | | | 456,598 | | | —
| | | — |
Daniel Gosselin(33) | | | 750,000 | | | 1.5% | | | 750,000 | | | —
| | | — |
Dustin Bauste(34) | | | 412,389 | | | * | | | 124,778 | | | 287,611
| | | * |
David Bender(35) | | | 666,666 | | | 1.4% | | | 666,666 | | | —
| | | — |
Craig Bridgman(36) | | | 554,918 | | | 1.1% | | | 554,918 | | | —
| | | — |
Fletcher Robbe & Kimberly Eves Ramser(37) | | | 304,878 | | | * | | | 304,878 | | | —
| | | — |
Daniel B. Santarsiero(38) | | | 344,332 | | | * | | | 344,332 | | | —
| | | — |
Simon Conway(39) | | | 559,354 | | | 1.1% | | | 559,354 | | | —
| | | — |
Marlio Mauricio Diaz Cardona(40) | | | 302,171 | | | * | | | 302,171 | | | —
| | | — |
Neil Selfe(41) | | | 354,037 | | | * | | | 354,037 | | | —
| | | — |
James Frank Allan(42) | | | 423,741 | | | * | | | 423,741 | | | —
| | | — |
Stan Bharti(43) | | | 160,908 | | | * | | | 160,908 | | | —
| | | — |
Michelle Ruble(44) | | | 160,392 | | | * | | | 160,392 | | | —
| | | — |
Will Mullis(45) | | | 160,392 | | | * | | | 160,392 | | | —
| | | — |
Nate Bachman(46) | | | 152,057 | | | * | | | 152,057 | | | —
| | | — |
George Scorsis(47) | | | 191,551 | | | * | | | 191,551 | | | —
| | | — |
Walied Soliman(48) | | | 150,557 | | | * | | | 150,557 | | | —
| | | — |
Marc Lustig(49) | | | 149,287 | | | * | | | 149,287 | | | —
| | | — |
Brett Lindros(50) | | | 170,681 | | | * | | | 170,681 | | | —
| | | — |
Igor Gimelshtein(51) | | | 144,817 | | | * | | | 144,817 | | | —
| | | — |
Marcus Tzaferis(52) | | | 143,852 | | | * | | | 143,852 | | | —
| | | — |
David Lubotta(53) | | | 143,029 | | | * | | | 143,029 | | | —
| | | — |
Felix Narhi(54) | | | 615,860 | | | 1.3% | | | 615,860 | | | —
| | | — |
Jon Howard(55) | | | 203,500 | | | * | | | 203,500 | | | —
| | | — |
Ashwant Venkatram(56) | | | 135,501 | | | * | | | 135,501 | | | —
| | | — |
Gaspar Patronas(57) | | | 135,501 | | | * | | | 135,501 | | | —
| | | — |
Anthony Smith(58) | | | 135,501 | | | * | | | 135,501 | | | —
| | | — |
Andrew Finkle(59) | | | 256,506 | | | * | | | 256,506 | | | —
| | | — |
Stephanie Kubacki(60) | | | 118,564 | | | * | | | 118,564 | | | —
| | | — |
Lanny James Viegut(61) | | | 117,846 | | | * | | | 117,846 | | | —
| | | — |
Matthew Pinz(62) | | | 118,190 | | | * | | | 118,190 | | | —
| | | — |
Sander Gerber(63) | | | 216,666 | | | * | | | 216,666 | | | —
| | | — |
Richard Gibbons(64) | | | 135,559 | | | * | | | 135,559 | | | —
| | | — |
Talaal Rshaidat(65) | | | 84,688 | | | * | | | 84,688 | | | —
| | | — |
William Colton Saunders(66) | | | 84,688 | | | * | | | 84,688 | | | —
| | | — |
David Batalion(67) | | | 166,666 | | | * | | | 166,666 | | | —
| | | — |
David Wargo(68) | | | 45,202 | | | * | | | 45,202 | | | —
| | | — |
| | Beneficial
Ownership Prior to Registration | | | Shares Registered Pursuant to this Prospectus (Maximum Number that May be Sold) | | | Beneficial
Ownership after Registration Assuming All Shares are Sold | |||||||
| | Shares | | | %
| | | Shares | | | % | ||||
Mark
Souvenir(69) | | | 11,301 | | | * | | | 11,301 | | | —
| | | — |
David Vozick(70) | | | 76,028 | | | * | | | 76,028 | | | —
| | | — |
Adria Hou(71) | | | 75,278 | | | * | | | 75,278 | | | —
| | | — |
Ben Shapiro(72) | | | 150,000 | | | * | | | 150,000 | | | —
| | | — |
Ephraim Fields(73) | | | 140,000 | | | * | | | 140,000 | | | —
| | | — |
Richard Feldman(74) | | | 140,000 | | | * | | | 140,000 | | | —
| | | — |
Michael Galego(75) | | | 432,729 | | | * | | | 161,896 | | | 270,833
| | | * |
Eugene C McBurney(76) | | | 213,551 | | | * | | | 213,551 | | | —
| | | — |
Edward Ilyadzhanov(77) | | | 161,586 | | | * | | | 161,586 | | | —
| | | — |
Vijay Mansukhani(78) | | | 133,332 | | | * | | | 133,332 | | | —
| | | — |
Brad White(79) | | | 163,824 | | | * | | | 163,824 | | | —
| | | — |
Akshay Mansukhani(80) | | | 100,000 | | | * | | | 100,000 | | | —
| | | — |
Ayesha Mansukhani(81) | | | 100,000 | | | * | | | 100,000 | | | —
| | | — |
Brianna Kristen Davies(82) | | | 40,227 | | | * | | | 40,227 | | | —
| | | — |
Justin Moorehead(83) | | | 40,227 | | | * | | | 40,227 | | | —
| | | — |
Michael Kelly(84) | | | 84,759 | | | * | | | 84,759 | | | —
| | | — |
Winston Miles(85) | | | 32,182 | | | * | | | 32,182 | | | —
| | | — |
Dev Motwani(86) | | | 25,642 | | | * | | | 25,642 | | | —
| | | — |
Justus Parmar(87) | | | 56,506 | | | * | | | 56,506 | | | —
| | | — |
Ravi Sood(88) | | | 56,506 | | | * | | | 56,506 | | | —
| | | — |
Dana Gilman(89) | | | 56,506 | | | * | | | 56,506 | | | —
| | | — |
Chris Seay(90) | | | 56,506 | | | * | | | 56,506 | | | —
| | | — |
All Other Selling Stockholders(91) | | | 334,568 | | | * | | | 334,568 | | | —
| | | — |
* | Represents beneficial ownership of less than 1% |
(1) | Includes
(i) 2,482,687 shares of common stock and (ii) 61,728 shares of our common stock underlying warrants exercisable within 60 days of April 24, 2020. Navy Capital Green Management, LLC (“Navy Management”) is the investment advisor of Navy Capital Green Fund LP (“Green Fund”) and consequently has voting control and investment discretion over securities held by Green Fund. Mr. Sean Stiefel, Chief Executive Officer of Navy Management has voting control over Green Fund. As a result of the foregoing, each of Mr. Sean Stiefel and Navy Management may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the shares of common stock beneficially owned by Green Fund. |
(2) | Includes
(i) 1,884,989 shares of common stock, (ii) 1,291,563 shares of common stock underlying subordinated convertible notes exercisable within 60 days of April 24, 2020, and (iii) 306,994 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. Thriving Paws, LLC (“Thriving Paws”) is controlled by Pegasus Partners III, L.P. (“PP III”). PP III is managed by Pegasus Capital Advisors III, L.P. (“PCA III”), which is controlled, indirectly, by Craig Cogut. As a result of the foregoing, each of Mr. Cogut, PCA III and PP III may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the shares of common stock beneficially owned by Thriving Paws. |
(3) | Includes
(i) 232,976 shares of common stock, (ii) 2,622,264 shares of common stock underlying subordinated convertible notes exercisable within 60 days of April 24, 2020, and (iii) 623,291 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. Thomas O. Hicks is the managing member of HEP Partners LLC, which is the investment manager of HH-Halo LP (“HH-Halo”), and consequently has voting control and investment discretion over securities held by HH-Halo. Mack H. Hicks is the manager of HH-Halo GP LLC, which is the general partner of HH-Halo GP LP, the general partner of HH-Halo. As a result of the foregoing, each of Thomas O. Hicks and Mack H. Hicks may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the shares of common stock beneficially owned by HH-Halo. Each
of Thomas O. Hicks and Mack H. Hicks disclaims beneficial ownership of such shares. |
(4) | Includes (i) 16,425 shares of common stock, (ii) 30,351 shares of common stock underlying subordinated convertible notes exercisable within 60 days of April 24, 2020, and (iii) 7,215 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(5) | Includes (i) 5,956 shares of common stock and (ii) 333,409 shares of common stock underlying options exercisable within 60 days of April 24,
2020. |
(6) | Includes (i) 957,209 shares of common stock and (ii) 566,666 shares of common stock underlying options exercisable within 60 days of April 24, 2020. |
(7) | Includes (i) 876,904 shares of common stock, (ii) 290,064 shares of common stock underlying options exercisable within 60 days of April 24, 2020, (iii) 386,728 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020, (iv) 225,835 shares of common stock held by Cottingham Capital
Partners LLC, which is managed by Mr. Young, and (v) 169,377 shares of common stock held by Kristin Rogus, Mr. Young’s spouse. |
(8) | Includes (i) 1,759,891 shares of common stock and (ii) 650,000 shares of common stock underlying options exercisable within 60 days of April 24, 2020. |
(9) | Includes (i) 5,632,027 shares of common stock held directly by Blue Sky Holdings Trust which are beneficially owned by Lori
Taylor, (ii) 1,150,000 shares of common stock underlying options exercisable within 60 days of April 24, 2020 held directly by Ms. Taylor, and (iii) 1,300,000 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held directly by Ms. Taylor. Ms. Taylor is the trustee, compliance officer, and protector of Blue Sky Holdings Trust. |
(10) | Includes (i) 4,906,824 shares of common stock, (ii) 359,937 shares of common stock underlying subordinated convertible notes exercisable within 60 days of April 24, 2020, and (iii) 4,880,500 shares of common stock underlying warrants exercisable within 60 days of April 24,
2020. |
(11) | Includes 1,673,441 shares of common stock. |
(12) | Includes (i) 916,667 shares of common stock held by MMCAP International Inc. SPC, and (ii) 916,667 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by MMCAP International Inc. SPC. MMCAP International Inc. SPC. is managed by Mr. MacIsaac, who may be deemed to have beneficial ownership. |
(13) | Includes (i) 135,898
shares of common stock held by Eastwood Capital Corp, and (ii) 156,790 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Eastwood Capital Corp. Eastwood Capital Corp is managed by Mr. Holland, who may be deemed to have beneficial ownership. |
(14) | Includes (i) 8,333 shares of common stock, and (ii) 8,333 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020, (iii) 200,000 shares of common stock held by Gundyco ITF NewGen Equity Long Short Fund, and (iv) 200,000 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Gundyco ITF
NewGen Equity Long Short Fund. Gundyco ITF NewGen Equity Long Short Fund is managed by Mr. Rowan, who may be deemed to have beneficial ownership. |
(15) | Includes (i) 479,193 shares of common stock held by XIB Private Capital LP, and (ii) 92,594 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by XIB Private Capital LP. XIB Private Capital LP is managed by XIB Private Capital CP Inc., which is an entity controlled by and wholly owned by its Principals, Peter Hatziioannou and Sean McNulty, who may be deemed to have beneficial ownership. |
(16) | Includes
(i) 1,384,559 shares of common stock, (ii) 137,611 shares of common stock held by Caravel CAD Fund Ltd., and (iii) 137,611 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Caravel CAD Fund Ltd. Caravel CAD Fund Ltd. is managed by Mr. Gibbons, who may be deemed to have beneficial ownership. |
(17) | Includes 1,314,362 shares of common stock. |
(18) | Includes (i) 1,182,745 shares of common stock held by Anson Investments Master Fund LP, and (ii) 404,322 shares of common stock underlying warrants exercisable within 60 days of April 24,
2020 held by Anson Investments Master Fund LP. Anson Investments Master Fund LP is managed by Anson Advisors, Inc., which is an entity managed by Moez Kassam and Bruce Winson, who may be deemed to have beneficial ownership. |
(19) | Includes (i) 1,138,211 shares of common stock held by 2655111 Ontario Inc, (ii) 160,908 shares of common stock held by 1917478 Ontario Corp, and (iii) 67,751 shares of common stock held by Delano USA Capital Corp. 2655111 Ontario Inc., 1917478 Ontario Corp., and Delano USA Capital Corp are managed by Mr. Bharti, who may be deemed to have beneficial ownership. |
(20) | Includes 1,129,177 shares
of common stock held by Advantex Finance Inc. Advantex Finance Inc. is managed by Mr. Santori, who may be deemed to have beneficial ownership. |
(21) | Includes 1,125,000 shares of common stock held by Broader Media Holdings LLC. Broader Media Holdings LLC is controlled by iHeartMedia, Inc., a publicly traded entity on the NASDAQ. |
(22) | Includes 820,630 shares of common stock held by Zola Global Investors Ltd. Zola Global Investors Ltd. is managed by Andreas Muhlbauer, who may be deemed to have beneficial ownership. |
(23) | Includes
(i) 806,778 shares of common stock and (ii) 200,000 shares of common stock underlying options exercisable within 60 days of April 24, 2020. |
(24) | Includes 702,832 shares of common stock held by Reva Capital Markets LLC. Reva Capital Markets LLC is managed by Vageesh Naik, who may be deemed to have beneficial ownership. |
(25) | Includes (i) 699,999 shares of common stock, (ii) 349,250 shares of common stock underlying subordinated convertible notes exercisable within 60 days of April 24, 2020, and (iii) 366,666 shares of common
stock underlying warrants exercisable within 60 days of April 24, 2020. |
(26) | Includes 693,499 shares of common stock held by 0828397 BC LTD. 0828397 BC LTD. is managed by Dean Neuls, who may be deemed to have beneficial ownership. |
(27) | Includes 569,105 shares of common stock. |
(28) | Includes (i) 333,334 shares of common stock and (ii) 333,334 shares of common stock underlying warrants exercisable within 60 days of
April 24, 2020. |
(29) | Includes 308,642 shares of common stock held by Monoceros Growth LP. Monoceros Growth LP is managed by Ryan Wertman, who may be deemed to have beneficial ownership. |
(30) | Includes 505,874 shares of common stock held by Everplus F&B Fund LLC. Everplus F&B Fund LLC is managed by Xuesong Yu, who may be deemed to have beneficial ownership. |
(31) | Includes (i) 483,011 shares
of common stock held by CSPG TP Holdings LLC and (ii) 459,885 shares of common stock held by Cambridge SPG IRA Fund. CSPG TP Holdings LLC and Cambridge SPG IRA Fund are managed by Filipp Chebotarev, who may be deemed to have beneficial ownership. |
(32) | Includes 456,598 shares of common stock. |
(33) | Includes 375,000 shares of common stock held by The K2 Principal Fund LP, and (ii) 375,000 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by The K2 Principal Fund LP. The K2 Principal Fund LP is managed by Daniel Gosselin, who may be deemed to have beneficial
ownership. |
(34) | Includes (i) 350,000 shares of common stock held by Total Depth Rentals Inc, and (ii) 62,389 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Total Depth Rentals Inc. Total Depth Rentals Inc is managed by Dustin Bauste, who may be deemed to have beneficial ownership. |
(35) | Includes
(i) 333,333 shares of common stock held by DPB Capital, LLC, and (ii) 333,333 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by DPB Capital, LLC. DPB Capital, LLC is managed by David Bender, who may be deemed to have beneficial ownership. |
(36) | Includes (i) 327,201 shares of common stock held by Anamasam, Inc, (ii) 77,160 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Anamasam, Inc. and (iii) 150,557 shares of common stock held by Cambridge Capital Ltd, Anamasam, Inc and Cambridge Capital Ltd are managed by Craig Bridgman, who may be deemed to have beneficial ownership. |
(37) | Includes
304,878 shares of common stock. |
(38) | Includes (i) 287,666 shares of common stock and (ii) 56,666 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(39) | Includes (i) 269,231 shares of common stock held by Matterhorn Capital LTD, and (ii) 290,123 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Matterhorn Capital LTD. Matterhorn Capital LTD is managed by Simon Conway, who may be deemed to have beneficial ownership. |
(40) | Includes (i) 262,047 shares of common stock and (ii) 40,124 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(41) | Includes (i) 242,309 shares of common stock held by Infor Financial, Inc., and (ii) 111,728 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Infor Financial, Inc. Infor Financial, Inc. is managed by Neile Selfe, who may be deemed to have beneficial ownership. |
(42) | Includes
(i) 182,692 shares of common stock held by Roundtable Growth Fund, (ii) 191,049 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Roundtable Growth Fund, (iii) 25,000 shares of common stock held by Roundtable Growth Fund Ltd., and (iv) 25,000 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Roundtable Growth Fund Ltd. Roundtable Growth Fund and Roundtable Growth Fund Ltd. is managed by James Allan, who may be deemed to have beneficial ownership. |
(43) | Includes 160,908 shares of common stock held by 2437357 Ontario Inc. 2437357 Ontario Inc. is managed by Stan Bharti, who may be deemed to have beneficial
ownership. |
(44) | Includes 160,392 shares of common stock. |
(45) | Includes 160,392 shares of common stock. |
(46) | Includes 152,057 shares of common stock. |
(47) | Includes (i) 151,427 shares of common stock and (ii) 40,124 shares of common stock underlying options exercisable within 60 days of April 24,
2020. |
(48) | Includes 150,557 shares of common stock. |
(49) | Includes 146,287 shares of common stock held by AJKNJ Corp. AJKNJ Corp is managed by Marc Lustig, who may be deemed to have beneficial ownership. |
(50) | Includes (i) 145,681 shares of common stock held by HGC Merchant Partners LP, and (ii) 25,000 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by HGC Merchant
Partners LP. HGC Merchant Partners LP is managed by Brett Lindros, who may be deemed to have beneficial ownership. |
(51) | Includes 144,817 shares of common stock. |
(52) | Includes 143,852 shares of common stock. |
(53) | Includes 143,029 shares of common stock. |
(54) | Includes (i) 250,642 shares of common stock held by Investor Company,
(ii) 272,839 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Investor Company, (iii) 44,231 shares of common stock held by Mac & Co, and (iv) 48,147 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Mac & Co. Investor Company and Mac & Co is managed by Pender Enhanced Income Fund, which is managed by Felix Narhi, who may be deemed to have beneficial ownership. |
(55) | Includes (i) 138,500 shares of common stock held by Anavio Capital Master Fund Limited, and (ii) 65,000 shares of common stock underlying warrants exercisable within 60 days of April 24,
2020 held by Anavio Capital Master Fund Limited. Anavio Capital Master Fund Limited is managed by Jon Howard, who may be deemed to have beneficial ownership. |
(56) | Includes 135,501 shares of common stock. |
(57) | Includes 135,501 shares of common stock. |
(58) | Includes 135,501 shares of common stock. |
(59) | Includes (i) 125,641 shares
of common stock held by Crossroads Distribution LLC, and (ii) 130,865 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Crossroads Distribution LLC. Crossroads Distribution LLC is managed by Andrew Finkle, who may be deemed to have beneficial ownership. |
(60) | Includes 118,564 shares of common stock. |
(61) | Includes 117,846 shares of common stock held by TP Member LLC. TP Member LLC is managed by Lanny James Viegut, who may be deemed to have beneficial ownership. |
(62) | Includes
(i) 68,190 shares of common stock held by Pinz Capital Special Opportunities, and (ii) 50,000 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Pinz Capital Special Opportunities. Pinz Capital Special Opportunities is managed by Matthew Pinz, who may be deemed to have beneficial ownership. |
(63) | Includes (i) 108,333 shares of common stock held by Hudson Bay Master Fund Ltd, and (ii) 108,333 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Hudson Bay Master Fund Ltd. Hudson Bay Capital Management LP, the |
(64) | Includes (i) 98,521 shares of common
stock and (ii) 37,038 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 |
(65) | Includes 84,688 shares of common stock. |
(66) | Includes 84,688 shares of common stock. |
(67) | Includes (i) 83,333 shares of common stock and (ii) 83,333 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 |
(68) | Includes
(i) 20,512 shares of common stock, and (ii) 24,690 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(69) | Includes (i) 5,128 shares of common stock, and (ii) 6,173 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(70) | Includes 76,028 shares of common stock. |
(71) | Includes 75,528 shares
of common stock held by DRE Industries LLC. DRE Industries LLC is managed by Adria Hou, who may be deemed to have beneficial ownership. |
(72) | Includes (i) 75,000 shares of common stock held by Lynwood Opportunities Master Fund, and (ii) 75,000 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Lynwood Opportunities Master Fund. Lynwood Opportunities Master Fund is managed by Ben Shapiro, who may be deemed to have beneficial ownership. |
(73) | Includes (i) 70,000 shares of common stock and (ii) 70,000 shares of common stock underlying
warrants exercisable within 60 days of April 24, 2020. |
(74) | Includes (i) 70,000 shares of common stock held by Wilkins Heights Capital Management, LLC, and (ii) 70,000 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Wilkins Heights Capital Management, LLC. Wilkins Heights Capital Management, LLC is managed by Richard Feldman, who may be deemed to have beneficial ownership. |
(75) | Includes (i) 67,751 shares of common stock, (ii) 270,833 shares of common stock underlying options
exercisable within 60 days of April 24, 2020, (iii) 63,280 shares of common stock held by Apolo Capital Advisory Corp, and (iv) 30,865 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by Apolo Capital Advisory Corp. Apolo Capital Advisory Corp is managed by Michael Galego, who may be deemed to have beneficial ownership. |
(76) | Includes (i) 118,490 shares of common stock and (ii) 95,061 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(77) | Includes
(i) 12,821 shares of common stock, (ii) 15,431 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020, (iii) 66,667 shares of common stock held by E Squared Capital Fund, L.P., and (iv) 66,667 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by E Squared Capital Fund, L.P. E Squared Capital Fund, L.P. is managed by Edward Ilyadzhanov, who may be deemed to have beneficial ownership. |
(78) | Includes (i) 66,666 shares of common stock and (ii) 66,666 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(79) | Includes
(i) 102,096 shares of common stock and (ii) 61,728 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(80) | Includes (i) 50,000 shares of common stock and (ii) 50,000 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(81) | Includes (i) 50,000 shares of common stock and (ii) 50,000 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(82) | Includes
40,227 shares of common stock. |
(83) | Includes 40,227 shares of common stock. |
(84) | Includes (i) 38,462 shares of common stock and (ii) 46,297 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(85) | Includes 32,182 shares of common stock held by Hibiscus Drive Ltd. Hibiscus Drive Ltd. is managed by Winston Miles, who may be deemed to have beneficial ownership. |
(86) | Includes 25,642 shares of common stock. |
(87) | Includes (i) 25,641 shares of common stock held by F1 Advisory Group Ltd. and (ii) 30,865 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020 held by F1 Advisory Group Ltd. F1 Advisory Group Ltd. is managed by Justus Parmar, who may be deemed to have beneficial ownership. |
(88) | Includes (i) 25,641 shares of common stock and (ii) 30,865 shares of common
stock underlying warrants exercisable within 60 days of April 24, 2020. |
(89) | Includes (i) 25,641 shares of common stock and (ii) 30,865 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(90) | Includes (i) 25,641 shares of common stock and (ii) 30,865 shares of common stock underlying warrants exercisable within 60 days of April 24, 2020. |
(91) | Consists
of selling stockholders not otherwise listed in this table that collectively own less than 1% of common stock and common stock underlying warrants exercisable within 60 days of April 24. 2020. |
Participants | | | TruPet
Acquisition | | | Bona Vida Acquisition | | | May Private Placement | |||
| | Common
Stock | | | Common Stock | | | Common Stock | | | Warrants | |
5%
or Greater Shareholders(1) | | | | | | | | | ||||
Lori
R. Taylor | | | 5,632,027 | | | — | | | — | | | — |
| | 4,056,824 | | | | | 333,333 | | | 333,333 | ||
Officers
and Directors(2) | | | | | | | | | ||||
Damian
M. Dalla-Longa | | | — | | | 1,759,891 | | | — | | | — |
Andreas
Schulmeyer | | | — | | | — | | | — | | | — |
Anthony
Santarsiero | | | 957,209 | | | — | | | — | | | — |
Michael
Galego | | | — | | | 131,031 | | | — | | | — |
| | 17,504 | | | 724,286 | | | — | | | — | |
| | — | | | — | | | — | | | — |
(1) | Additional details regarding these shareholders and their equity holdings are provided in the section titled “Security Ownership of Principal Stockholders and Management.” |
(2) | Additional details regarding these shareholders and their equity holdings are provided in the section titled “Security Ownership of Principal Stockholders and Management.” |
• | for any breach of their duty of loyalty to us or our stockholders; |
• | for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; |
• | for unlawful payment of dividend or unlawful stock repurchase or redemption, as provided under Section 174 of the DGCL; or |
• | for
any transaction from which the director derived an improper personal benefit. |
• | any person who is, or at any time during the applicable period was, one of our executive officers, one of our directors, or a nominee to become one of our directors; |
• | any
person who is known by us to be the beneficial owner of more than 5.0% of any class of our voting securities; |
• | any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5.0% of any class of our voting securities, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5.0% of any class of our voting securities; and |
• | any firm, corporation or other entity
in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest in any class of the Company’s voting securities. |
• | for any breach of their duty of loyalty to us or our stockholders; |
• | for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; |
• | for unlawful payment of dividend or unlawful stock repurchase or redemption, as provided under Section 174
of the DGCL; or |
• | for any transaction from which the director derived an improper personal benefit. |
Plan category | | | Number
of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted average exercise price of outstanding options, warrants and rights(2) | | | Number
of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| | (a) | | | (b) | | | (c) | |
Equity
compensation plans approved by stockholders(1) | | | 7,753,371 | | | $
1.82 | | | 1,246,629 |
Total | | | 7,753,371 | | | $
1.82 | | | 1,246,629 |
(1) | On April 29, 2019, the Company adopted the 2019 Plan,
which was subsequently amended and restated on December 19, 2019. |
(2) | As of December 31, 2019, the weighted-average exercise price of outstanding options under Incentive Plan was $1.82 per share. |
• | U.S. expatriates and former citizens or long-term residents of the United States; |
• | persons
subject to the alternative minimum tax; |
• | persons holding our common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment; |
• | banks, insurance companies, and other financial institutions; |
• | brokers, dealers or traders in securities; |
• | “controlled foreign corporations,” “passive
foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax; |
• | partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein); |
• | tax-exempt organizations or governmental organizations; |
• | persons deemed to sell our common stock under the constructive sale provisions of the Code; |
• | persons
who hold or receive our common stock pursuant to the exercise of any employee stock option or otherwise as compensation; |
• | persons subject to special tax accounting rules as a result of any item of gross income with respect to our common stock being taken into account in an applicable financial statement; |
• | tax-qualified retirement plans; and |
• | “qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
• | a trust that (1) is subject to the primary supervision of a U.S. court and the control of
one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) or (2) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes. |
• | the
gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such gain is attributable); |
• | the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or |
• | our common stock constitutes a United States real property interest (“USRPI”) by reason of our status as a United States real property holding corporation (“USRPHC”) for U.S. federal
income tax purposes. |
• | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
• | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate
the transaction; |
• | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
• | an exchange distribution in accordance with the rules of the applicable exchange; |
• | privately negotiated transactions; |
• | settlement of short sales entered into after the effective date of the registration statement of which this prospectus
is a part; |
• | broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; |
• | a combination of any such methods of sale; |
• | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
• | any other method permitted pursuant
to applicable law; or |
• | under Rule 144, Rule 144A or Regulation S under the Securities Act, if available, rather than under this prospectus. |
Better Choice Company Inc. | | | |
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TruPet LLC | | | |
Annual
Financial Statements | | | |
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Bona Vida, Inc. | | | |
Annual
Financial Statements | | | |
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Interim Financial Statements (Unaudited) | | | |
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Halo,
Purely for Pets, Inc. | | | |
| | ||
Financial Statements | | | |
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Financial
Statements | | | |
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| |
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| | Chartered
Professional Accountants | |
| | Licensed Public Accountants |
| | 12/31/2019 | | | 12/31/2018 | |
Assets | | | | | ||
Current
Assets | | | | | ||
Cash and cash equivalents | | | $2,361 | | | $3,946 |
Restricted
cash | | | 173 | | | — |
Accounts
receivable, net | | | 5,824 | | | 116 |
Inventories,
net | | | 6,580 | | | 1,557 |
Prepaid
expenses and other current assets | | | 2,641 | | | 269 |
Total
Current Assets | | | 17,579 | | | 5,888 |
Property
and equipment, net | | | 417 | | | 71 |
Right-of-use
asset, operating lease | | | 951 | | | — |
Intangible
assets, net | | | 14,641 | | | — |
Goodwill | | | 18,614 | | | — |
Other
assets | | | 1,330 | | | 28 |
Total
Assets | | | $53,532 | | | $5,987 |
| | | | |||
Liabilities
& Stockholders’ Deficit | | | | | ||
Current Liabilities | | | | | ||
Short
term loan, net | | | $16,061 | | | $— |
Line
of credit, net | | | 4,819 | | | 4,600 |
Other
liabilities | | | 500 | | | 1,914 |
Accounts
payable | | | 4,049 | | | 765 |
Due
to related party | | | — | | | 1,600 |
Accrued
liabilities | | | 4,721 | | | 85 |
Deferred
revenue | | | 311 | | | 65 |
Operating
lease liability, current portion | | | 345 | | | — |
Warrant
derivative liability | | | 2,220 | | | — |
Total
Current Liabilities | | | 33,026 | | | 9,029 |
Noncurrent
Liabilities | | | | | ||
Notes payable, net | | | 16,370 | | | — |
Operating
lease liability | | | 641 | | | — |
Total
Noncurrent Liabilities | | | 17,011 | | | — |
Total
Liabilities | | | 50,037 | | | 9,029 |
Redeemable
Series E Convertible Preferred Stock | | | | | ||
Redeemable
Series E preferred stock, $0.001 par value, 2,900,000 & 0 shares authorized, 1,387,378 & 0 shares issued and outstanding at December 31, 2019 and 2018, respectively. | | | 10,566 | | | — |
| | | | |||
Stockholders’
Deficit | | | | | ||
Common stock, $0.001 par value, 88,000,000 and
16,303,928 shares authorized, 47,977,390 & 11,661,485 shares issued and outstanding at December 31, 2019 and 2018, respectively. | | | 48 | | | 12 |
Convertible
Series A Preferred Stock, $0.001 par value, 0 & 5,529,162 shares authorized, 0 & 2,391,403 shares issued and outstanding at December 31, 2019 and 2018, respectively. | | | — | | | 2 |
Additional
paid-in capital | | | 194,150 | | | 13,642 |
Accumulated
deficit | | | (201,269) | | | (16,698) |
Total
Stockholders’ Deficit | | | (7,071) | | | (3,042) |
Total
Liabilities, Redeemable Preferred Stock and Stockholders’ Deficit | | | $53,532 | | | $5,987 |
| | 2019 | | | 2018 | |
Net
sales | | | $15,577 | | | $14,785 |
Cost
of goods sold | | | 9,717 | | | 7,489 |
Gross
profit | | | 5,860 | | | 7,296 |
Operating
expenses: | | | | | ||
General and administrative | | | 19,782 | | | 6,055 |
Share-based
compensation | | | 10,280 | | | 431 |
Sales
and marketing | | | 10,138 | | | 4,981 |
Customer
service and warehousing | | | 1,097 | | | 987 |
Impairment
of intangible asset | | | 889 | | | — |
Total
operating expenses | | | 42,186 | | | 12,454 |
Loss
from operations | | | (36,326) | | | (5,158) |
Other
expense: | | | | | ||
Interest expense, net | | | (670) | | | (868) |
Loss
on acquisitions | | | (147,376) | | | — |
Change
in fair value of warrant derivative liability | | | (90) | | | — |
Total
other expense | | | (148,136) | | | (868) |
| | | | |||
Net
and comprehensive loss | | | (184,462) | | | (6,026) |
Preferred
dividends | | | 109 | | | — |
Net
and comprehensive loss available to common stockholders | | | $(184,571) | | | $(6,026) |
Weighted
average number of shares outstanding | | | 33,238,600 | | | 11,516,421 |
Loss
per share, basic and diluted | | | $(5.55) | | | $(0.52) |
| | Common
Stock | | | Convertible Series A Preferred Stock | | | Additional paid-in capital | | | Accumulated
deficit | | | Redeemable Series E Convertible Preferred Stock | |||||||||||||
| | Number | | | Amount | | | Number | | | Amount | | | Total
Stockholders’ Deficit | | | Number | | | Amount | |||||||
Balance
at January 1, 2019 | | | 11,661 | | | $12 | | | 2,391 | | | $2 | | | $13,642 | | | $(16,698) | | | $(3,042) | | | — | | | — |
Shares
issued pursuant to a private placement – net proceeds | | | — | | | — | | | 70 | | | — | | | 150 | | | — | | | 150 | | | — | | | — |
Shares
and warrants issued pursuant to private issuance of public equity (PIPE)- net proceeds | | | 5,745 | | | 6 | | | — | | | — | | | 15,670 | | | — | | | 15,676 | | | — | | | — |
Share-based
compensation | | | 1,119 | | | 1 | | | — | | | — | | | 10,280 | | | — | | | 10,281 | | | — | | | — |
Stock
issued to third parties for services | | | 1,009 | | | 1 | | | — | | | — | | | 3,476 | | | — | | | 3,477 | | | — | | | — |
Warrants
issued to third parties for services | | | — | | | — | | | — | | | — | | | 2,968 | | | — | | | 2,968 | | | — | | | — |
Conversion
of Series A shares to common stock | | | 2,461 | | | 2 | | | (2,461) | | | (2) | | | — | | | — | | | — | | | — | | | — |
Acquisition
of treasury shares | | | (1,012) | | | (1) | | | — | | | — | | | (6,070) | | | — | | | (6,071) | | | — | | | — |
Acquisition
of Better Choice | | | 3,915 | | | 4 | | | — | | | — | | | 23,560 | | | — | | | 23,564 | | | 2,634 | | | $20,058 |
Acquisition
of Bona Vida | | | 18,103 | | | 18 | | | — | | | — | | | 108,602 | | | — | | | 108,620 | | | — | | | — |
Guarantor
warrants | | | — | | | — | | | — | | | — | | | 4,180 | | | — | | | 4,180 | | | | | ||
Warrants
issued in connection with the Notes | | | — | | | — | | | — | | | — | | | 313 | | | — | | | 313 | | | — | | | — |
Acquisition
of Halo | | | 2,134 | | | 2 | | | — | | | — | | | 3,883 | | | — | | | 3,885 | | | — | | | — |
Conversion
of Series E Preferred Stock | | | 1,582 | | | 2 | | | — | | | — | | | 9,490 | | | — | | | 9,492 | | | (1,247) | | | (9,492) |
Warrant
exercise | | | 1,260 | | | 1 | | | — | | | — | | | 4,006 | | | — | | | 4,007 | | | — | | | — |
Net
and comprehensive loss available to common stockholders | | | — | | | — | | | — | | | — | | | (184,571) | | | (184,571) | | | — | | | — | | | |
Balance
at December 31, 2019 | | | 47,977 | | | $48 | | | — | | | $— | | | $194,150 | | | $(201,269) | | | $(7,071) | | | 1,387 | | | $10,566 |
| | Common
Stock | | | Convertible Series A Preferred Stock | | | | | | | |||||||||||||
| | Units | | | Number | | | Amount | | | Number | | | Amount | | | Additional
paid-in capital | | | Accumulated deficit | | | Total Stockholders’ Deficit | |
Reported
balance at January 1, 2018 | | | 10,397 | | | — | | | $— | | | — | | | $— | | | $8,545 | | | $(10,672) | | | $(2,127) |
Recapitalization
adjustment (1) | | | (10,397) | | | 11,497 | | | 11 | | | | | | | — | | | — | | | 11 | ||
Recast
balance at January 1, 2018 | | | — | | | 11,497 | | | 11 | | | | | | | 8,545 | | | (10,672) | | | (2,116) | ||
Share-based
compensation | | | 164 | | | 1 | | | | | | | | | 431 | | | | | 432 | ||||
Shares
issued pursuant to a private placement – net proceeds | | | | | | | | | 2,391 | | | 2 | | | 4,666 | | | — | | | 4,668 | |||
Net
and comprehensive loss available to common stockholders | | | | | — | | | — | | | — | | | — | | | — | | | (6,026) | | | (6,026) | |
Balance
at December 31, 2018 | | | | | 11,661 | | | $12 | | | 2,391 | | | $2 | | | $13,642 | | | $(16,698) | | | $(3,042) |
(1) | Certain prior year amounts were adjusted to retroactively reflect the legal capital of the Company from LLC units to common stock due to the May Acquisitions described in “Note 2 - Acquisitions” |
| | |||||
| | 2019 | | | 2018 | |
Cash
Flow from Operating Activities: | | | | | ||
Net
and comprehensive loss | | | $(184,462) | | | $(6,026) |
Adjustments
to reconcile net and comprehensive loss to net cash used in operating activities : | | | | | ||
Non-cash
expenses | | | — | | | — |
Stock
and warrants issued to third parties for services | | | 3,548 | | | — |
Impairment
of intangible asset | | | 889 | | | — |
Depreciation
and amortization | | | 171 | | | 14 |
Amortization
of debt issuance costs and discounts | | | 346 | | | — |
Share-based
compensation | | | 10,280 | | | 431 |
Lease
expenses | | | 41 | | | — |
Change
in fair value of warrant derivative liability | | | 90 | | | — |
Loss
on acquisitions | | | 146,980 | | | — |
Changes
in operating assets and liabilities, net of effects of business acquisition: | | | | | ||
Accounts
receivable, net | | | (99) | | | (196) |
Inventories,
net | | | 232 | | | (400) |
Prepaid
expenses and other current assets | | | (101) | | | (208) |
Other
assets | | | (140) | | | — |
Accounts
payable | | | (1,695) | | | 55 |
Accrued
liabilities | | | 2,738 | | | (645) |
Deferred
revenue | | | 245 | | | 66 |
Deferred
rent | | | (15) | | | 6 |
Other | | | (17) | | | — |
Cash
Used in Operating Activities | | | $(20,969) | | | $(6,903) |
| | | | |||
Cash
Flow from Investing Activities | | | | | ||
Acquisition
of property and equipment | | | $(110) | | | $(31) |
Cash
acquired in the May Acquisitions | | | 416 | | | — |
Acquisition
of Halo | | | (20,513) | | | — |
Cash
Used in Investing Activities | | | $(20,207) | | | $(31) |
| | | | |||
Cash
Flow from Financing Activities | | | | | ||
Cash
advance, net | | | $(1,899) | | | $1,840 |
Proceeds
from shares issued pursuant to private placement, net | | | 15,826 | | | 4,668 |
Proceeds
from investor prepayment | | | 500 | | | — |
Proceeds
from revolving line of credit | | | 5,000 | | | 2,615 |
Proceeds
from line of credit | | | 6,200 | | | — |
Payment
of line of credit | | | (6,200) | | | — |
Payment
of TruPet line of credit | | | (4,600) | | | — |
Proceeds
from related party note | | | — | | | 1,600 |
Payments
on related party note | | | (1,600) | | | — |
Proceeds
from short term loan | | | 20,500 | | | — |
Proceeds
from November 2019 Notes | | | 2,750 | | | — |
Proceeds
from warrant exercise | | | 4,007 | | | — |
Debt
issuance costs | | | (720) | | | — |
Cash
Provided by Financing Activities | | | $39,764 | | | $10,723 |
| | | | |||
Net
Increase in Cash and cash equivalents and Restricted cash | | | $(1,412) | | | $3,789 |
Total
Cash and cash equivalents, Beginning of Period | | | 3,946 | | | 157 |
Total
Cash and cash equivalents and Restricted cash, End of Period | | | $2,534 | | | $3,946 |
Right-of-use asset and operating lease liability acquired under operating leases | | | |
Right-of-use
asset recorded upon adoption of ASC 842 | | | $421 |
Operating lease liability recorded upon adoption of ASC 842 | | | (429) |
Noncash
acquisition of right-of-use asset for leases entered into during period | | | 607 |
Noncash acquisition of operating lease liability for leases entered into during the period | | | (594) |
Furniture
and Fixtures | | | 5 to 7 years |
Equipment | | | 3
to 7 years |
Computer equipment | | | 2 to 3 years |
Computer software | | | 3 years |
• | Identify a customer along with a corresponding contract; |
• | Identify
the performance obligation(s) in the contract to transfer goods to a customer; |
• | Determine the transaction price the Company expects to be entitled to in exchange for transferring promised goods to a customer; |
• | Allocate the transaction price to the performance obligation(s) in the contract; and |
• | Recognize
revenue when or as the Company satisfies the performance obligation(s). |
Dollars in thousands | | | |
Total purchase
price | | | $38,244 |
Assets and liabilities acquired: | | | |
Assets | | | |
Property
and equipment | | | 260 |
Accounts receivable | | | 5,540 |
Inventories | | | 5,160 |
Intangible
assets | | | 14,690 |
Other assets | | | 329 |
Total
assets | | | 25,979 |
Dollars in thousands | | | |
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 | | | Twelve
Months ended December 31, | |||
| | 2019 | | | 2018 | |
Net
revenues | | | $48,152 | | | $51,388 |
Net
loss per share attributable to common stockholders | | | $192,592 | | | $25,958 |
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) |
Dollars in thousands | | | | | ||
Food, treats and supplements | | | $6,425 | | | $1,301 |
Inventory
packaging and supplies | | | 504 | | | 133 |
Other
products and accessories | | | 73 | | | 191 |
| | 7,002 | | | 1,625 | |
Inventory
reserve | | | (422) | | | (68) |
| | $6,580 | | | $1,557 |
Dollars
in thousands | | | | | ||
Prepaid advertising & marketing | | | $1,776 | | | $— |
Prepaid
slotting fees | | | 425 | | | — |
Prepaid
insurance | | | 164 | | | 15 |
Deposits | | | 115 | | | — |
Prepaid
state registration fees | | | 81 | | | — |
Other | | | 80 | | | 254 |
Total
prepaid expenses and other current assets | | | $2,641 | | | $269 |
Dollars in thousands | | | | | ||
Equipment | | | $222 | | | $49 |
Furniture
and fixtures | | | 138 | | | 46 |
Computer
software | | | 115 | | | — |
Computer
equipment | | | 4 | | | 14 |
Total
property and equipment | | | 479 | | | 109 |
Accumulated
depreciation | | | (62) | | | (38) |
Net
property and equipment | | | $417 | | | $71 |
Dollars
in thousands | | | | | ||
Accrued professional fees | | | $1,695 | | | $— |
Accrued
sales tax | | | 1,233 | | | — |
Accrued
payroll and benefits | | | 994 | | | 85 |
Accrued
trade promotions | | | 357 | | | — |
Accrued
dividends | | | 256 | | | — |
Accrued
interest | | | 109 | | | — |
Other | | | 77 | | | — |
Total
accrued liabilities | | | $4,721 | | | $85 |
Dollars in thousands | | | Classification
on the balance sheet 2019 | | | |
Assets | | | | | ||
Operating
lease right-of-use assets | | | Operating lease right-of-use assets | | | 421 |
| | | | |||
Liabilities | | | | | ||
Current
- operating | | | Operating lease liability short term | | | 87 |
Noncurrent
- operating | | | Operating lease liability long term | | | 342 |
Total
lease liabilities | | | | | $429 |
| | Year ended December 31, | ||||
Dollars
in thousands | | | 2019 | | | 2018 |
Operating
lease costs | | | 369 | | | 189 |
Variable
lease costs | | | 31 | | | 42 |
Total
operating lease costs | | | $400 | | | 231 |
Operating Leases | | | |
2020 | | | 444 |
2021 | | | 459 |
2022 | | | 240 |
2023 | | | 5 |
Total
minimum lease payments | | | 1,148 |
Less: amount of lease payments representing interest | | | 162 |
Present
value of future minimum lease payments | | | $986 |
Less: current obligations under leases | | | 345 |
Long-term
lease obligations | | | $641 |
2019 | | | 257 |
2020 | | | 296 |
2021 | | | 296 |
2022 | | | 123 |
2023 | | | — |
| | $972 |
| | | | | | ||||||||||||||||
| | Weighted-
Average Remaining Useful Lives (in years) | | | Gross Carrying Amount | | | Additions | | | Adjustments | | | Gross
Carrying Amount | | | Accumulated Amortization | | | Net Carrying Amount | |
License | | | — | | | $— | | | $986 | | | $(986) | | | $— | | | $— | | | $— |
Customer
relationships | | | 7 | | | — | | | 7,500 | | | — | | | 7,500 | | | (35) | | | 7,465 |
Trade
name | | | 15 | | | — | | | 7,190 | | | — | | | 7,190 | | | (14) | | | 7,176 |
Total
intangible assets | | | | | $— | | | $15,676 | | | $(986) | | | $14,690 | | | $(49) | | | $14,641 |
Dollars in thousands | | | |
Years
ended December 31, | | | |
2020 | | | $1,551 |
2021 | | | 1,551 |
2022 | | | 1,551 |
2023 | | | 1,551 |
2024 | | | 1,551 |
Thereafter | | | 6,886 |
| | $14,641 |
| | | | |||||||||||||||
| | Amount | | | Rate | | | Maturity
Date | | | Amount | | | Rate | | | Maturity
Date | |
Note payable (due to related parties) | | | $— | | | | | | | $1,600 | | | 26.6% | | | |||
Short term loan, net | | | 16,061(2) | | | | | | | | | | | |||||
Lines
of credit, net | | | 4,819(2) | | | | | | | 4,600(1) | | | | | ||||
| | | | | | | | | | | | |||||||
November
2019 notes payable, net (November 2019 Notes) | | | 2,769 | | | 10.0% | | | | | | | | | ||||
December
2019 senior notes payable, net (Seller Notes) | | | 9,191 | | | 10.0% | | | | | — | | | | | |||
December
2019 junior notes payable, net (Seller Notes) | | | 4,410 | | | 10.0% | | | | | | | | | ||||
Total
debt | | | 37,250 | | | | | | | 6,200 | | | | |
(1) | Interest at LIBOR plus 3% |
(2) | Interest at Bank of Montreal Prime plus 8.05% |
Dollars
in thousands | | | Warrant liability |
Assumption of warrants in May Acquisitions | | | $2,130 |
Change
in fair value of warrant derivative liability | | | 90 |
Balance as of December 31, 2019 | | | $2,220 |
| | | | |||
Warrant liability | | | | | ||
Stock
price | | | $6.00 | | | $2.70 |
Exercise
price | | | $3.90 | | | $1.62 |
Expected
remaining term (in years) | | | 1.60 – 1.68 | | | 0.95 – 1.02 |
Volatility | | | 64% | | | 69% |
Risk-free
interest rate | | | 2.39% | | | 1.60% |
Dollars
in thousands | | | | | ||
Cash
advance | | | $— | | | $1,899 |
Investor
prepayment | | | 500 | | | — |
Deferred
rent | | | — | | | 15 |
Total
other liabilities | | | $500 | | | $1,914 |
| | ||
Conversion
of Series E | | | 1,760,903 |
Exercise of options to purchase common stock | | | 7,791,833 |
Warrants
to purchase common stock | | | 16,981,854 |
Notes payable | | | 4,437,500 |
Total | | | 30,972,090 |
| | | | | | Vested
options | | | Non-vested options | ||||||
| | Total
number of options | | | Weighted average exercise price | | | Number | | | Number | | | Weighted
average grant date fair value | |
Legacy options | | | 38,462 | | | $6.76 | | | 38,462 | | | — | | | $8.06 |
Acquired
on May 6, 2019 | | | 5,250,000 | | | 1.82 | | | — | | | 5,250,000 | | | 0.92 |
Granted | | | 2,503,371 | | | 1.83 | | | — | | | 2,503,371 | | | 0.97 |
Vested
during period | | | — | | | 1.89 | | | 2,678,329 | | | (2,678,329) | | | 1.02 |
Options
outstanding at December 31, 2019 | | | 7,791,833 | | | $1.85 | | | 2,716,791 | | | 5,075,042 | | | $0.97 |
Options
expected to vest | | | | | | | | | 5,075,042 | | | ||||
Weighted
average exercise price | | | | | | | $1.89 | | | $1.82 | | | |||
Weighted
average remaining contractual term (years) | | | | | | | 9.3 | | | 9.6 | | | |||
Aggregate
intrinsic value at December 31, 2019 (in thousands) | | | | | | | $2,357 | | | $4,448 | | |
• | Term: For executives and
directors, the estimated term is equal to the mid-point between the average vesting date and the contractual term. For all others, the estimated term is equal to the average vesting date plus three years. |
• | Dividend yield: 0% |
• | Exercise Price: $1.82 to $2.70 |
• | Risk-free rate: 1.41% to 2.39% |
• | Volatility: 55.0% to 62.1 |
| | Warrants | | | Exercise
Price | |
Warrants acquired on May 6, 2019 | | | 712,823 | | | $3.90 |
Issued | | | 17,414,030 | | | 3.27 |
Exercised | | | (1,144,999)(1) | | | 3.50 |
Warrants
outstanding at December 31, 2019 | | | 16,981,854 | | | $3.23 |
(1) | Exercised warrants were converted at 1.1 shares per warrant for a total of 1,259,498 shares. |
| | Year Ended December 31, 2019 | ||||
Statutory
U.S. Federal income tax | | | $(38,760) | | | 21.0% |
State
income taxes, net | | | (818) | | | 0.4% |
LLC
income not taxed | | | 2,376 | | | (1.3%) |
Loss
on acquisitions | | | 29,051 | | | (15.7%) |
Change
in valuation allowance | | | 7,892 | | | (4.3%) |
Other | | | 259 | | | 0.1% |
Total
provision | | | $— | | | 0% |
| | Year
Ended December 31, | |
| | 2019 | |
Deferred income tax assets: | | | |
Net
operating loss carryforwards | | | 8,503 |
Stock options | | | 2,493 |
Other
assets | | | 301 |
Gross deferred tax assets | | | 11,297 |
Valuation
allowance | | | (7,913) |
Net deferred tax asset | | | 3,384 |
Deferred
income liabilities: | | | |
Inventory | | | (137) |
Intangibles | | | (3,247) |
Deferred
tax assets, net of valuation allowance | | | — |
| | Year
Ended December 31, | |
| | 2019 | |
Valuation allowance, at beginning of year | | | $— |
Increase
in valuation allowance | | | 7,892 |
Halo Acquisition | | | 21 |
Valuation
allowance, at end of year | | | $7,913 |
Dollars
in thousands except per share amounts | | | Years Ended December 31, | |||
| | 2019 | | | 2018 | |
Common
stockholders | | | | | ||
Numerator: | | | | | ||
Net
and comprehensive loss | | | $(184,462) | | | $(6,026) |
Less:
Preferred stock dividends | | | 109 | | | — |
Net
and comprehensive loss available to common stockholders | | | $(184,571) | | | $(6,026) |
Denominator: | | | | | ||
Weighted
average shares used in computing net loss per share attributable to common stockholders, basic and diluted | | | 33,238,600 | | | 11,516,421 |
Net
loss per share attributable to common stockholders, basic and diluted | | | $(5.55) | | | $(0.52) |
| | ||
| | Chartered Professional Accountants |
| | 2018 | | | 2017 | |
Assets | | | | | ||
Current
Assets | | | | | ||
Cash and cash equivalents | | | $3,946,261 | | | $157,138 |
Accounts
receivable, net (Note 2) | | | 275,560 | | | 79,270 |
Inventories,
net (Note 3) | | | 1,556,946 | | | 1,156,830 |
Prepaid
expenses and other current assets | | | 269,073 | | | 60,898 |
Total
Current Assets | | | 6,047,840 | | | 1,454,136 |
Property
and equipment, net (Note 4) | | | 71,295 | | | 54,481 |
Other
assets | | | 27,559 | | | 27,559 |
Total
Assets | | | $6,146,694 | | | $1,536,176 |
Liabilities
and Members’ Deficit | | | | | ||
Current
Liabilities | | | | | ||
Line of credit (Note 5) | | | $4,600,000 | | | $1,985,000 |
Other
liabilities (Note 7) | | | 1,898,759 | | | 58,407 |
Long-term
debt, current portion (Note 8) | | | 1,600,000 | | | — |
Accounts
payable | | | 764,715 | | | 676,884 |
Due
from related parties | | | — | | | 32,706 |
Accrued
liabilities | | | 244,593 | | | 889,069 |
Deferred
revenue (Note 6) | | | 65,965 | | | — |
Total
Current Liabilities | | | 9,174,032 | | | 3,642,066 |
Deferred
rent | | | 15,016 | | | 9,258 |
Total
Liabilities | | | 9,189,048 | | | 3,651,324 |
Members’
Deficit (Note 9) | | | | | ||
Common
units, no par value, 13,651,461 and 10,396,808 units authorized 10,545,435 and 10,396,808 units issued and outstanding at December 31, 2018 and 2017, respectively | | | 8,913,647 | | | 8,556,943 |
Series
A Preferred Units, no par value, 5,000,000 units authorized, 2,162,536 units issued and outstanding December 31, 2018. | | | 4,668,000 | | | — |
Units
to be issued | | | 74,107 | | | — |
Accumulated
deficit | | | (16,698,108) | | | (10,672,091) |
Total
Members’ Deficit | | | (3,042,354) | | | (2,115,148) |
Total
Liabilities and Members’ Deficit | | | $6,146,694 | | | $1,536,176 |
| | 2018 | | | 2017 | |
Net
Sales | | | $14,784,831 | | | $7,931,780 |
Cost
of Goods Sold | | | 7,488,641 | | | 4,309,602 |
Gross
Profit | | | 7,296,190 | | | 3,622,178 |
Selling,
General, and Administrative Expenses | | | 12,454,023 | | | 8,964,329 |
Loss
from Operations | | | (5,157,833) | | | (5,342,151) |
Other
Income (Expense) | | | | | ||
Interest expense | | | (868,184) | | | (42,109) |
Other
income | | | — | | | 12,421 |
Net
Loss and Comprehensive Loss | | | $(6,026,017) | | | $(5,371,839) |
Weighted
average number of units outstanding | | | 10,474,541 | | | 10,205,688 |
Loss
per unit, basic and diluted | | | (0.58) | | | (0.53) |
| | Common
Units | | | Series A Preferred Units | | | Units to be Issued | | | | | |||||||||
| | Number | | | Amount | | | Number | | | Amount | | | Deficit | | | Total | ||||
Balance
at January 1, 2017 | | | 5,208,354 | | | $1,471,000 | | | — | | | $— | | | $— | | | $(5,300,252) | | | $(3,829,252) |
Units
issued pursuant to private placement | | | 4,796,457 | | | 6,169,650 | | | — | | | — | | | — | | | — | | | 6,169,650 |
Units
issued pursuant to services provided | | | 391,997 | | | 916,293 | | | — | | | — | | | — | | | — | | | 916,293 |
Net
loss for the period | | | — | | | — | | | — | | | — | | | — | | | (5,371,839) | | | (5,371,839) |
Balance
at December 31, 2017 | | | 10,396,808 | | | 8,556,943 | | | — | | | — | | | — | | | (10,672,091) | | | (2,115,148) |
Units
issued pursuant to private placement | | | — | | | — | | | 2,162,536 | | | 4,668,000 | | | — | | | — | | | 4,668,000 |
Units
issued pursuant to services provided | | | 148,627 | | | 356,704 | | | — | | | — | | | 74,107 | | | — | | | 430,811 |
Net
loss | | | — | | | — | | | — | | | — | | | — | | | (6,026,017) | | | (6,026,017) |
Balance
at December 31, 2018 | | | 10,545,435 | | | $8,913,647 | | | 2,162,536 | | | $4,668,000 | | | $74,107 | | | $(16,698,108) | | | $(3,042,354) |
| | 2018 | | | 2017 | |
Cash
Flows from Operating Activities: | | | | | ||
Net
loss | | | $(6,026,017) | | | $(5,371,839) |
Adjustments
to reconcile net loss to net cash used in operating activities: | | | | | ||
Depreciation
and amortization | | | 14,123 | | | 11,883 |
Unit-based
compensation expense | | | 430,811 | | | 916,293 |
Change
in operating assets and liabilities: | | | | | ||
Accounts receivable | | | (196,290) | | | (50,447) |
Inventories | | | (400,116) | | | (373,323) |
Prepaid
expenses and other assets | | | (208,175) | | | (31,418) |
Accounts
payable | | | 55,125 | | | 479,946 |
Accrued
liabilities | | | (644,476) | | | 442,389 |
Deferred
revenue | | | 65,965 | | | — |
Deferred
rent | | | 5,758 | | | 9,258 |
Net
cash used in operating activities | | | (6,903,292) | | | (3,967,258) |
Cash
Flows from Investing Activities: | | | | | ||
Purchases
of property and equipment | | | (30,937) | | | (8,686) |
Cash
Flows from Financing Activities: | | | | | ||
Other
liabilities | | | 1,840,352 | | | 19,720 |
Net
borrowings on line of credit | | | 2,615,000 | | | 1,985,000 |
Borrowings
on long-term debt | | | 1,600,000 | | | — |
Proceeds
from shares issued pursuant to private placement, net | | | 4,668,000 | | | 1,836,450 |
Net
cash provided by financing activities | | | 10,723,352 | | | 3,841,170 |
Net
Increase (Decrease) in Cash | | | 3,789,123 | | | (134,774) |
Cash,
Beginning of Year | | | 157,138 | | | 291,912 |
Cash,
End of Year | | | $3,946,261 | | | $157,138 |
Supplemental
Cash Flow Disclosures: | | | | | ||
Interest paid | | | $868,184 | | | $42,109 |
Non-Cash
Financing Activities: | | | | | ||
Conversion of debt for equity | | | $0 | | | $4,333,200 |
• | The Company’s financial position for the year ended December 31, 2018; |
• | Significant events and transactions the Company has entered into, including and through the date the financial statements were available to be issued; |
• | Sales
and profitability forecasts for the Company for the next financial year; and |
• | The continued support of the Company’s members and lenders. |
• | The refinancing of the line of credit with the same bank under similar terms. |
• | To
continue to monitor the Company’s ongoing working capital requirements and minimum expenditure commitments; |
• | Continue their focus on maintaining an appropriate level of corporate overhead in line with the Company’s available cash resources; and |
• | The Company currently has an offer to sell its interest to Sport Endurance, Inc. (“SENZ”) in return for stock in the combined entity. |
Furniture and Fixtures | | | 5
to 7 years |
Equipment | | | 7 years |
• | Identify a customer along with a corresponding contract; |
• | Identify the performance obligation(s) in the contract to transfer goods to a customer; |
• | Determine
the transaction price the Company expects to be entitled to in exchange for transferring promised goods to a customer; |
• | Allocate the transaction price to the performance obligation(s) in the contract; |
• | Recognize revenue when or as the Company satisfies the performance obligation(s). |
• | Level 1 – valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. Cash is measured based on Level 1 inputs. |
• | Level
2 – valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or corroborated by observable market data by correlation or other means. |
• | Level 3 – valuation techniques with significant unobservable market inputs. |
| | 2018 | | | 2017 | |
Food,
treats and supplements | | | $1,301,274 | | | $709,561 |
Other
products and accessories | | | 191,292 | | | 283,132 |
Inventory
packaging and supplies | | | 132,681 | | | 164,137 |
| | 1,625,247 | | | 1,156,830 | |
Inventory
reserve | | | (68,301) | | | — |
| | $1,556,946 | | | $1,156,830 |
| | 2018 | | | 2017 | |
Warehouse
equipment | | | 49,431 | | | 49,431 |
Computer
equipment | | | 13,913 | | | 13,913 |
Furniture
and fixtures | | | 45,944 | | | 14,556 |
| | 109,288 | | | 77,900 | |
Accumulated
depreciation | | | (37,993) | | | (23,419) |
| | $71,295 | | | $54,481 |
| | Advance
#1 | | | Advance #2 | | | Advance #3 | | | Total | |
Opening
balance - January 1, 2018 | | | | | | | | | ||||
Initial
cash advance | | | $— | | | $— | | | $— | | | $— |
Advance
of outstanding amounts | | | 398,909 | | | 965,308 | | | 1,050,000 | | | 2,414,217 |
Total
initial advances | | | — | | | — | | | 824,486 | | | 824,486 |
Payments | | | (429,432) | | | (1,080,180) | | | (101,727) | | | (1,611,339) |
Advance
fixed fee | | | 30,523 | | | 114,872 | | | 126,000 | | | 271,395 |
Closing
balance - December 31, 2018 | | | $— | | | $— | | | $1,898,759 | | | $1,898,759 |
• | The
Company issued 148,627 shares of the Company’s common units to employees and consultants of the Company as compensation under the Equity Incentive Plan. The value of the units amounted to $430,811 and has been recorded as a component of selling, general and administrative expenses for the year ended December 31, 2017. |
• | The Company issued an aggregate of 4,796,457 shares of the
Company’s common units at a purchase price of $1.29 per share. The proceeds were approximately $6,170,000. |
• | The Company issued 391,997 shares of the Company’s common units to an employee and a service provider of the Company as compensation. The value of the units amounted to $916,293 and has been recorded as a component of selling, general and administrative expenses for the year ended December 31, 2017. |
• | The Company issued an aggregate of 2,162,536 shares of the Company’s Series A Preferred Units at a purchase price of $2.29 per unit. The proceeds were approximately $4,668,000, net of $532,000 of share issuance costs. |
Year Ending December 31, | | | |
2019 | | | $257,296 |
2020 | | | 295,740 |
2021 | | | 295,740 |
2022 | | | 123,075 |
2023 | | | — |
| | $971,850 |
• | 6% of any deal completed with a person or entity that was referred by the third parties up to $10,000,000. |
• | 3% of $10,000,001 – $20,000,000. |
• | 1.5% above $20,000,001 |
• | Anthony Santarsiero – 397,862 units |
• | Michelle Ruble, supply chain and inventory control management (see Note 10) – 137,194 units |
• | Will Mullis – 137,194 units |
| | ||
| | Chartered
Professional Accountants | |
| | Licensed Public Accountants |
| | Note | | | ||
Assets | | | | | ||
Cash
and cash equivalents | | | | | $1,123,968 | |
Prepaid
expenses and deposits | | | 3 | | | 540,686 |
Total
current assets | | | | | 1,664,654 | |
| | | | |||
Intangible
assets | | | | | 9,270 | |
Total
assets | | | | | $1,673,924 | |
| | | | |||
Liabilities | | | | | ||
Accrued
liabilities | | | 6 | | | $115,946 |
Warrants | | | 4 | | | 1,125,861 |
Total
liabilities | | | | | 1,241,807 | |
| | | | |||
Shareholders’
equity | | | | | ||
Capital Stock | | | 4 | | | 2,889 |
Preferred
shares, 10,000,000 authorized, nil issued and outstanding; | | | | | ||
Common stock,
75,000,000 authorized, par value $0.0001, 46,687,200 issued and outstanding | | | | | ||
Additional
paid in capital | | | 4 | | | 3,594,915 |
Shares
to be issued | | | 5 | | | 9,546 |
Contributed
surplus | | | 5 | | | 94,172 |
Deficit | | | | | (3,269,405) | |
Total
shareholders’ equity | | | | | 432,117 | |
| | | | |||
Total
liabilities and shareholders’ equity | | | | | $1,673,924 |
| | Note | | | 2018 | |
For
the period ended December 31, | | | | | ||
Expenses | | | | | ||
Finance
placement fees | | | 4 | | | $12,526 |
Salary
and benefits | | | | | 153,241 | |
Selling,
general and administrative | | | | | 277,028 | |
Loss
on advanced royalties | | | 7 | | | 500,000 |
Stock
based compensation | | | 5 | | | 1,390,718 |
Fair
value adjustment on warrants | | | 4 | | | 935,892 |
| | | | 3,269,405 | ||
| | | | |||
Net
loss and comprehensive loss | | | | | $3,269,405 | |
| | | | |||
Weighted
average number of shares outstanding | | | | | 32,597,423 | |
Loss
per share basic and diluted | | | | | $0.10 |
| | Note | | | Equity
Interest | | | Shares to be issued | | | Contributed Surplus | | | Deficit | | | Total
Equity | |||||||
| | Number | | | Amount | | | APIC | | |||||||||||||||
Balance
as at March 29, 2018 | | | | | — | | | $— | | | $— | | | $— | | | — | | | — | | | — | |
Shares
issued to founders | | | 4 | | | 17,800,000 | | | — | | | — | | | — | | | — | | | — | | | — |
Shares
issued pursuant to private placement | | | 4 | | | 10,600,000 | | | 1,060 | | | 316,940 | | | — | | | — | | | — | | | 318,000 |
Shares
issued pursuant to units offering | | | 4 | | | 12,287,200 | | | 1,229 | | | 1,991,575 | | | — | | | — | | | — | | | 1,992,804 |
Shares
issued pursuant to services provided | | | 5 | | | 6,000,000 | | | 600 | | | 1,286,400 | | | 9,546 | | | — | | | — | | | 1,296,546 |
Share-Based
payments | | | | | — | | | — | | | — | | | — | | | 94,172 | | | — | | | 94,172 | |
Net
loss for the period | | | | | — | | | — | | | — | | | — | | | — | | | (3,269,405) | | | (3,269,405) | |
| | | | | | | | | | | | | | | | |||||||||
Balance
as at December 31, 2018 | | | | | 46,687,200 | | | 2,889 | | | 3,594,915 | | | 9,546 | | | 94,172 | | | (3,269,405) | | | 432,117 |
| | Note | | | ||
Cash
flows from (used in) operating activities | | | | | ||
Net
loss and comprehensive loss | | | | | $(3,269,405) | |
Adjustments
for non-cash items and others | | | | | ||
Stock
based compensation | | | 5 | | | 1,390,718 |
Change
in FV of Warrants | | | 4 | | | 935,892 |
| | | | (942,795) | ||
Adjustments
for net changes in non-cash operating assets and liabilities | | | | | ||
Prepaid
expenses and deposits | | | 3 | | | (540,686) |
Accrued
liabilities | | | | | 115,946 | |
Net
cash used in operating activities | | | | | (1,367,535) | |
Cash
flows from investing activities | | | | | ||
Purchase
of intangible assets | | | | | (9,270) | |
Net
cash used in investing activities | | | | | (9,270) | |
Cash
flows from financing activities | | | | | ||
Shares/warrants
issued pursuant to units offering, net of transaction costs | | | | | 2,182,773 | |
Shares
issued pursuant to private placement | | | | | 318,000 | |
Net
cash from financing activities | | | | | 2,500,773 | |
Net
change in cash during the period | | | | | 1,123,968 | |
Cash
and cash equivalents at beginning of period | | | | | — | |
Cash,
end of period | | | | | $1,123,968 |
• | Level 1 – valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities. |
• | Level 2 – valuation techniques based on inputs that are quoted prices of similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived from or corroborated by observable market data by correlation or other means. |
• | Level
3 – valuation techniques with significant unobservable market inputs. |
| | 2018 | |
Other deposits | | | $34,436 |
Inventory
deposit | | | 506,250 |
| | $540,686 |
| | Number
of Common Shares | | | Amount, $ | | | APIC, $ | |
Opening
balance - March 29, 2018 | | | — | | | — | | | — |
Shares
issued during the period | | | 28,400,000 | | | 1,060 | | | 316,940 |
Shares
issued pursuant to services | | | 6,000,000 | | | 600 | | | 1,286,400 |
Units
private placement on October 5, 2018 | | | 12,287,200 | | | 1,229 | | | 1,991,575 |
Balance-
December 31, 2018 | | | 46,687,200 | | | 2,889 | | | 3,594,915 |
Share price | | | $0.178 - $0.45 |
Stock
price volatility | | | 107% - 108% |
Expected life of the warrants | | | 1.25
- 1.5 years |
Risk free rate | | | 1.86% - 2.32% |
Grant date | | | Warrants | | | Exercise
Price ($) | | | Expiry |
| | 6,143,600 | | | 0.57 | | |
| | Date of grant | | | Vesting
period (years) | | | Number | | | Exercise price ($) | | | Share- based payment expense ($) | | | Share price ($) | | | Risk-free rate | | | Volatility | | | Dividend
yield | | | Expiry (years) | |
Option grant | | | 10/05/18 | | | 1 | | | 1,000,000 | | | 1.00 | | | 35,141 | | | 0.178 | | | 2.32 | | | 108% | | | Nil | | | 10 |
Option
grant | | | 10/05/18 | | | 2 | | | 700,000 | | | 1.00 | | | 12,299 | | | 0.178 | | | 2.32 | | | 108% | | | Nil | | | 10 |
Option
grant | | | 10/29/18 | | | 1 | | | 600,000 | | | 0.45 | | | 16,197 | | | 0.178 | | | 2.32 | | | 108% | | | Nil | | | 10 |
Option
grant | | | 11/21/18 | | | 1 | | | 600,000 | | | 1.00 | | | 26,008 | | | 0.45 | | | 1.86 | | | 107% | | | Nil | | | 10 |
Option
grant | | | 12/21/18 | | | 1 | | | 400,000 | | | 0.45 | | | 4,527 | | | 0.45 | | | 1.86 | | | 107% | | | Nil | | | 10 |
Total
options grant | | | | | | | 3,300,000 | | | | | 94,172 | | | | | | | | | | |
Net Loss before recovery of income taxes | | | $(3,269,405) |
| | ||
Expected
income tax (recovery) | | | $(914,897) |
Other non-deductible expenses | | | 4,716 |
Fair
value adjustment on warrants | | | 261,896 |
Change in tax benefits not recognized | | | 648,285 |
Income
tax (recovery) expense | | | $— |
| | ||
The
Company’s income tax (recovery) is allocated as follows: | | | |
Current tax (recovery) expense | | | $— |
Deferred
tax (recovery) expense | | | — |
| | $— |
Stock Based Compensation | | | $1,390,718 |
Capitalized
start-up cost | | | 925,943 |
| | Note | | | Unaudited
As of March 31, 2019 | | | Audited As of December 31, 2018 | |
Assets | | | | | | | |||
Cash
and cash equivalents | | | | | $1,488,794 | | | $1,123,968 | |
Inventories | | | 3 | | | 351,402 | | | — |
Prepaid
expenses and deposits | | | 4 | | | 471,709 | | | 540,686 |
Total
current assets | | | | | 2,311,905 | | | 1,664,654 | |
| | | | | | ||||
Intangible
assets | | | | | 8,575 | | | 9,270 | |
Total
assets | | | | | $2,320,480 | | | $1,673,924 | |
| | | | | | ||||
Liabilities | | | | | | | |||
Accounts
Payable | | | | | $105,287 | | | $— | |
Accrued
liabilities | | | | | 33,707 | | | 115,946 | |
Other
Liabilities | | | | | 19,298 | | | — | |
Warrants | | | 5 | | | 927,926 | | | 1,125,861 |
Total
liabilities | | | | | 1,086,218 | | | 1,241,807 | |
| | | | | | ||||
Shareholders’
equity | | | | | | | |||
Capital
Stock | | | 5 | | | 4,172 | | | 2,889 |
Preferred
shares, 10,000,000 authorized, nil issued and outstanding as at March 31, 2019 and December 31, 2018; | | | | | | | |||
Common
stock, 75,000,000 authorized, par value $0.0001, 47,724,440 and 46,687,200 issued and outstanding as at March 31, 2019 and December 31,2018 accordingly | | | | | | | |||
Additional
paid in capital | | | 5 | | | 9,784,220 | | | 3,594,915 |
Shares
to be issued | | | 6 | | | 19,531 | | | 9,546 |
Contributed
surplus | | | | | 267,552 | | | 94,172 | |
Accumulated
Deficit | | | | | (8,841,213) | | | (3,269,405) | |
Total
shareholders’ equity | | | | | 1,234,262 | | | 432,117 | |
| | | | | | ||||
Total
liabilities and shareholders’ equity | | | | | $2,320,480 | | | $1,673,924 |
| | Note | | | ||
Net
Sales | | | | | $17,547 | |
Cost
of Goods Sold | | | | | 17,763 | |
Gross
Loss | | | | | (216) | |
Selling,
general and administrative | | | | | 5,159,654 | |
Other
Income (Expense) | | | | | ||
Fair
Value Adjustments | | | 5 | | | (144,782) |
Share
Based Compensation | | | 6 | | | 183,365 |
Net
Loss and Comprehensive Loss | | | | | $(5,198,453) | |
Weighted
average number of shares outstanding | | | | | 48,215,560 | |
Loss
per share basic and diluted | | | | | (0.11) |
| | Note | | | Equity
Interest | | | Shares to be issued | | | Contributed Surplus | | | Deficit | | | Total
Equity | |||||||
| | Number | | | Amount | | | APIC | | |||||||||||||||
Balance
as at March 29, 2018 | | | | | | | | | | | | | | | | | ||||||||
Shares
issued to founders | | | | | 17,800,000 | | | $— | | | $— | | | — | | | $— | | | $— | | | $— | |
Shares
issued pursuant to private placement | | | | | 10,600,000 | | | 1,060 | | | 316,940 | | | | | | | | | 318,000 | ||||
Shares
issued pursuant to units offering | | | | | 12,287,200 | | | 1,229 | | | 1,991,575 | | | | | | | | | 1,992,804 | ||||
Shares
issued pursuant to services provided | | | | | 6,000,000 | | | 600 | | | 1,286,400 | | | 9,546 | | | | | | | 1,296,546 | |||
Share-Based
payments | | | | | — | | | — | | | — | | | — | | | 94,172 | | | — | | | 94,172 | |
Net
loss for the period | | | | | — | | | — | | | — | | | — | | | — | | | (3,269,405) | | | (3,269,405) | |
Balance
as at December 31, 2018 (Audited) | | | | | 46,687,200 | | | 2,889 | | | 3,594,915 | | | 9,546 | | | 94,172 | | | (3,269,405) | | | 432,117 | |
| | | | | | | | | | | | | | | | |||||||||
Shares
issued pursuant to investment | | | 5 | | | 10,000,000 | | | 1,000 | | | 4,499,000 | | | — | | | — | | | — | | | 4,500,000 |
Share
Buy-Back | | | 5 | | | (13,407,200) | | | (141) | | | (198,351) | | | — | | | — | | | (373,355) | | | (571,847) |
Shares
issued pursuant to private placement, net of transaction cost | | | 5 | | | 4,444,440 | | | 424 | | | 1,888,656 | | | — | | | — | | | — | | | 1,889,080 |
Shares
issued pursuant to services provided | | | 6 | | | — | | | — | | | | | 9,985 | | | — | | | — | | | 9,985 | |
Share-Based
payments | | | 6 | | | — | | | — | | | — | | | — | | | 173,380 | | | — | | | 173,380 |
Net
loss for the period | | | | | — | | | — | | | — | | | — | | | — | | | (5,198,453) | | | (5,198,453) | |
Balance
as at March 31, 2019 | | | | | 47,724,440 | | | $4,172 | | | $9,784,220 | | | 19,531 | | | $267,552 | | | $(8,841,213) | | | $1,234,262 |
| | Note | | | ||
Cash
flows from (used in) operating activities | | | | | ||
Net
loss and comprehensive loss | | | | | $(5,198,453) | |
Adjustments
for non-cash items and others | | | | | ||
Depreciation
and amortization | | | | | 696 | |
Stock
based compensation | | | 6 | | | 183,365 |
Change
in FV of Warrants | | | 5 | | | (144,782) |
Adjustments
for net changes in non-cash operating assets and liabilities | | | | | ||
Inventory | | | 3 | | | (351,402) |
Prepaid
expenses and deposits | | | 4 | | | 68,977 |
Other
Liabilities | | | | | 19,298 | |
Accrued
liabilities | | | | | (82,239) | |
Accounts
Payable | | | | | 105,286 | |
Net
cash used in operating activities | | | | | (5,399,254) | |
| | | | |||
Cash
flows from financing activities | | | | | ||
Shares
issued pursuant to investments | | | 5 | | | 4,500,000 |
Shares
issued pursuant to private placement, net of transaction cost | | | 5 | | | 1,889,080 |
Share
buyback | | | 5 | | | (625,000) |
Net
cash from financing activities | | | | | 5,764,080 | |
| | | | |||
Net
change in cash during the period | | | | | 364,826 | |
| | | | |||
Cash
and cash equivalents at beginning of period | | | | | 1,123,968 | |
Cash,
end of period | | | | | $1,488,794 |
• | Identify a customer along with a corresponding contract; |
• | Identify
the performance obligation(s) in the contract to transfer goods to a customer; |
• | Determine the transaction price the Company expects to be entitled to in exchange for transferring promised goods to a customer; |
• | Allocate the transaction price to the performance obligation(s) in the contract; |
• | Recognize
revenue when or as the Company satisfies the performance obligation(s). |
| | | | |||
Treats & Supplements | | | $351,402 | | | $— |
| | | | |||
Other deposits | | | $101,755 | | | $34,436 |
Inventory
deposit | | | 369,954 | | | 506,250 |
| | $471,709 | | | $540,686 |
| | Number
of Common Shares | | | Amount, $ | | | APIC, $ | |
Opening
balance- March 29, 2018 | | | — | | | — | | | — |
Shares
issued during the period | | | 28,400,000 | | | 1,060 | | | 316,940 |
Shares
issued pursuant to services | | | 6,000,000 | | | 600 | | | 1,286,400 |
Units
private placement on October 5, 2018 | | | 12,287,200 | | | 1,229 | | | 1,991,575 |
Balance-
December 31, 2018 | | | 46,687,200 | | | 2,889 | | | 3,594,915 |
GBX
Acquisition | | | 10,000,000 | | | 1,000 | | | 4,499,000 |
Share
Buy-Back | | | (13,407,200) | | | (141) | | | (198,351) |
Shares
issued during the period | | | 4,444,440 | | | 424 | | | 1,888,656 |
Balance
– March 31, 2019 | | | 47,724,440 | | | 4,172 | | | 9,784,220 |
Share price | | | $0.45 |
Stock
price volatility | | | 107% |
Remaining life of the warrants | | | 1.01-
1.19 years |
Risk free rate | | | 2.41% |
Grant
date | | | Warrants | | | Exercise Price ($) | | | Expiry |
| | 5,840,000 | | | 0.60 | | |
| | Date of grant | | | Vesting
period (years) | | | Number | | | Exercise price ($) | | | Share-based
payment expense ($) | | | Share price ($) | | | Risk-free rate | | | Volatility | | | Dividend
yield | | | Expiry (years) | |
Option grant | | | 10/05/18 | | | 1 | | | 1,000,000 | | | 1.00 | | | 35,141 | | | 0.178 | | | 2.32 | | | 108% | | | Nil | | | 10 |
Option
grant | | | 10/05/18 | | | 2 | | | 700,000 | | | 1.00 | | | 12,299 | | | 0.178 | | | 2.32 | | | 108% | | | Nil | | | 10 |
Option
grant | | | 10/29/18 | | | 1 | | | 600,000 | | | 0.45 | | | 16,197 | | | 0.178 | | | 2.32 | | | 108% | | | Nil | | | 10 |
Option
grant | | | 11/21/18 | | | 1 | | | 600,000 | | | 1.00 | | | 26,008 | | | 0.45 | | | 1.86 | | | 107% | | | Nil | | | 10 |
Option
grant | | | 12/21/18 | | | 1 | | | 400,000 | | | 0.45 | | | 4,527 | | | 0.45 | | | 1.86 | | | 107% | | | Nil | | | 10 |
| | 2019 | | | 2018 | |
ASSETS | | | | | ||
CURRENT
ASSETS | | | | | ||
Cash | | | $2,364,436 | | | $1,226,489 |
Accounts
receivable, net of allowances of approximately $100,000 and $141,000 as of June 30, 2019 and 2018, respectively | | | 4,152,779 | | | 4,440,387 |
Inventories | | | 3,194,880 | | | 7,065,994 |
Prepaids
and other current assets | | | 349,491 | | | 487,791 |
Total
current assets | | | 10,061,586 | | | 13,220,661 |
PROPERTY
AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION | | | 372,962 | | | 650,660 |
OTHER
ASSETS | | | | | ||
Goodwill | | | 4,730,655 | | | 4,730,655 |
Other | | | 14,650 | | | 13,200 |
Total
other assets | | | 4,745,305 | | | 4,743,855 |
| | $15,179,853 | | | $18,615,176 | |
LIABILITIES
AND STOCKHOLDERS' EQUITY | | | | | ||
CURRENT LIABILITIES | | | | | ||
Accounts
payable | | | $2,529,480 | | | $3,757,667 |
Accrued
expenses | | | 417,199 | | | 618,611 |
Accrued
payroll liabilities | | | 520,125 | | | 196,025 |
Total
current liabilities | | | 3,466,804 | | | 4,572,303 |
LONG-TERM
LIABILITIES | | | | | ||
Due to related party | | | 60,391 | | | 146,898 |
Loan
payable, net of issuance costs | | | 3,829,521 | | | 5,247,316 |
Total
long-term liabilities | | | 3,889,912 | | | 5,394,214 |
| | | ||||
STOCKHOLDERS'
EQUITY | | | | | ||
Preferred
Stock; no par value; 110 shares authorized: | | | | | ||
Series A-1; 36.67 shares issued and outstanding
at June 30, 2019 | | | — | | | — |
Series
A; 73.33 shares issued and outstanding at June 30, 2019 and 2018 | | | — | | | — |
Common
Stock; no par value; 10,000 shares authorized; | | | | | ||
890
and 100 shares issued and outstanding at June 30, 2019 and 2018, respectively | | | — | | | — |
Additional
paid-in capital - Series A-1 Preferred Stock, net of issuance costs | | | 2,403,125 | | | — |
Additional
paid-in capital - Series A Preferred Stock | | | 5,000,000 | | | 5,000,000 |
Additional
paid-in capital - Common Stock | | | 57,141,157 | | | 57,141,157 |
Accumulated
deficit | | | (56,721,145) | | | (53,492,498) |
Total
stockholders' equity | | | 7,823,137 | | | 8,648,659 |
| | $15,179,853 | | | $18,615,176 |
| | 2019 | | | 2018 | |
SALES | | | $31,106,144 | | | $38,359,679 |
COST
OF SALES | | | 20,532,995 | | | 24,322,252 |
GROSS
PROFIT | | | 10,573,149 | | | 14,037,427 |
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES | | | 13,378,974 | | | 20,297,838 |
LOSS
ON DISPOSAL OF EQUIPMENT | | | 73,975 | | | 25,929 |
LOSS
FROM OPERATIONS | | | (2,879,800) | | | (6,286,341) |
OTHER
(EXPENSE) INCOME | | | | | ||
Interest
expense, related party | | | — | | | (2,106,059) |
Interest
expense, other | | | (348,997) | | | (278,406) |
Interest
income | | | 150 | | | 1,167 |
Total
other expense | | | (348,847) | | | (2,383,298) |
NET
LOSS | | | $(3,228,647) | | | $(8,669,639) |
| | | | | | | | | | | | | | Additional
Paid-In Capital | | | |||||||||||||||||
| | Common
Stock | | | Series A-1 Preferred Stock | | | Series A Preferred Stock | | | Series
A-1 | | | Series A | | | Common Stock | | | Accumulated
Deficit | | | Total | ||||||||||
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Preferred
Stock | | | Preferred Stock | | |||||||||
BALANCE, JUNE 30, 2017 | | | 100 | | | $— | | | — | | | $— | | | — | | | $— | | | $— | | | $— | | | $13,511,905 | | | $(44,822,859) | | | $(31,310,954) |
Issuance
of preferred stock | | | | | | | | | | | 73.33 | | | | | | | 5,000,000 | | | | | | | 5,000,000 | ||||||||
Conversion
of debt to common stock | | | 790 | | | | | | | | | | | | | | | | | 43,629,252 | | | | | 43,629,252 | ||||||||
Net
loss | | | | | | | | | | | | | | | | | | | | | (8,669,639) | | | (8,669,639) | |||||||||
BALANCE,
JUNE 30, 2018 | | | 890 | | | — | | | — | | | — | | | 73.33 | | | — | | | — | | | 5,000,000 | | | 57,141,157 | | | (53,492,498) | | | 8,648,659 |
Issuance
of preferred stock, net of stock issuance costs | | | | | | | 36.67 | | | | | | | | | 2,403,125 | | | | | | | | | 2,403,125 | ||||||||
Net
loss | | | | | | | | | | | | | | | | | | | | | (3,228,647) | | | (3,228,647) | |||||||||
BALANCE,
JUNE 30, 2019 | | | 890 | | | $ — | | | 36.67 | | | $ — | | | 73.33 | | | $ — | | | $2,403,125 | | | $5,000,000 | | | $57,141,157 | | | $(56,721,145) | | | $7,823,137 |
CASH
FLOWS FROM OPERATING ACTIVITIES | | | 2019 | | | 2018 |
Net
loss | | | $(3,228,647) | | | $(8,669,639) |
Adjustments
to reconcile net loss to net cash provided by (used in) operating activities: | | | | | ||
Depreciation
and amortization | | | 391,557 | | | 250,351 |
Loss
on disposal of equipment | | | 73,975 | | | 25,929 |
(Increase)
decrease in: | | | | | ||
Accounts
receivable | | | 287,608 | | | (2,278,355) |
Inventories | | | 3,871,114 | | | (4,995,647) |
Prepaids
and other assets | | | 136,848 | | | (60,070) |
Increase
(decrease) in: | | | | | ||
Accounts
payable | | | (1,228,365) | | | 1,044,126 |
Accrued
expenses | | | 122,688 | | | 1,319,214 |
Total
adjustments | | | 3,655,425 | | | (4,694,452) |
Net
cash provided by (used in) operating activities | | | 426,778 | | | (13,364,091) |
| | | | |||
CASH
FLOWS FROM INVESTING ACTIVITIES | | | | | ||
Purchases
of property and equipment | | | (147,654) | | | (421,886) |
Net
cash used in investing activities | | | (147,654) | | | (421,886) |
| | | | |||
CASH
FLOWS FROM FINANCING ACTIVITIES | | | | | ||
Due
to related party | | | (86,507) | | | — |
Proceeds
from loan | | | 9,178,065 | | | 7,863,165 |
Loan
payments | | | (10,635,860) | | | (3,503,349) |
Stock
issuance costs | | | (96,875) | | | (112,500) |
Proceeds
from issuance of Series A-1 Preferred Stock | | | 2,500,000 | | | 5,000,000 |
Net
cash provided by financing activities | | | 858,823 | | | 9,247,316 |
NET
INCREASE (DECREASE) IN CASH | | | 1,137,947 | | | (4,538,661) |
CASH
AT BEGINNING OF YEAR | | | 1,226,489 | | | 5,765,150 |
CASH
AT END OF YEAR | | | $2,364,436 | | | $1,226,489 |
| | 2019 | | | 2018 | |
Finished
goods | | | $3,501,829 | | | $6,689,275 |
Raw
materials | | | 285,574 | | | 825,220 |
| | 3,787,403 | | | 7,514,495 | |
Less
inventory reserve | | | (592,523) | | | (448,501) |
| | $3,194,880 | | | $7,065,994 |
| | 2019 | | | 2018 | |
Furniture
and fixtures | | | $94,771 | | | $94,771 |
Computer
equipment | | | 80,666 | | | 78,898 |
Computer
software | | | 430,563 | | | 430,563 |
Equipment | | | 380,650 | | | 483,980 |
Assets
not in service: | | | | | ||
Computer
software | | | — | | | 80,123 |
Equipment | | | — | | | 1,768 |
| | 986,650 | | | 1,170,102 | |
Less
accumulated depreciation | | | (613,688) | | | (519,443) |
| | $372,962 | | | $650,660 |
Year Ending June 30, | | | |
2020 | | | $62,916 |
2021 | | | $55,882 |
2022 | | | $55,882 |
2023 | | | $32,958 |
| | 2019 | | | 2018 | |
Deferred | | | $(799,800) | | | $3,656,900 |
Change
in valuation allowance | | | 799,800 | | | (3,656,900) |
Total
provision for income taxes | | | $— | | | $— |
| | 2019 | | | 2018 | |
Deferred
tax assets (liabilities): | | | | | ||
Net
operating loss carryforward | | | $14,513,986 | | | $13,673,348 |
Goodwill | | | (1,003,396) | | | (925,749) |
Property
and equipment | | | (73,366) | | | (100,655) |
Charitable
contributions | | | 64,793 | | | 114,854 |
Other | | | 245,419 | | | 185,879 |
| | 13,747,437 | | | 12,947,677 | |
Less
valuation allowance | | | (13,747,437) | | | (12,947,677) |
Total
provision for income taxes | | | $— | | | $— |
| | | | |||
CURRENT ASSETS | | | | | ||
Cash | | | $1,611,147 | | | $2,364,436 |
Accounts
receivable, net of allowances of approximately $100,000 and $100,000 as of September 30, 2019 and June 30, 2019, respectively | | | 4,640,257 | | | 4,152,779 |
Inventories | | | 3,433,099 | | | 3,194,880 |
Prepaids
and other current assets | | | 461,008 | | | 349,491 |
Total
current assets | | | 10,145,511 | | | 10,061,586 |
Property
and equipment, net of accumulated depreciation | | | 314,071 | | | 372,962 |
Goodwill | | | 4,730,655 | | | 4,730,655 |
Other | | | 14,650 | | | 14,650 |
Total
assets | | | $15,204,887 | | | $15,179,853 |
CURRENT
LIABILITIES | | | | | ||
Accounts
payable | | | $1,900,140 | | | $2,529,480 |
Accrued
expenses | | | 691,710 | | | 417,199 |
Accrued
payroll liabilities | | | 197,247 | | | 520,125 |
Total
current liabilities | | | 2,789,097 | | | 3,466,804 |
LONG-TERM
LIABILITIES | | | | | ||
Due to related party | | | 60,391 | | | 60,391 |
Loan
payable, net of issuance costs | | | 4,043,255 | | | 3,829,521 |
Total
liabilities | | | 6,892,743 | | | 7,356,716 |
STOCKHOLDERS'
EQUITY | | | | | ||
Preferred Stock; no par value; 110 shares authorized: | | | | | ||
Series
A-1; 36.67 shares issued and outstanding | | | — | | | — |
Series
A; 73.33 shares issued and outstanding Common stock; no par value; 10,000 shares authorized; 890 issued and outstanding | | | — | | | — |
Additional
paid-in capital - Series A-1 Preferred Stock, net of issuance costs | | | 2,403,125 | | | 2,403,125 |
Additional
paid-in capital - Series A Preferred Stock | | | 5,000,000 | | | 5,000,000 |
Additional
paid-in capital - Common Stock | | | 57,141,157 | | | 57,141,157 |
Accumulated
deficit | | | (56,232,138) | | | (56,721,145) |
Total
stockholders' equity | | | 8,312,144 | | | 7,823,137 |
Total
liabilities and stockholders' equity | | | $15,204,887 | | | $15,179,853 |
| | For
the three months ended September 30, | ||||
| | 2019 | | | 2018 | |
| | | | |||
SALES | | | $8,442,822 | | | $7,607,605 |
COST
OF SALES | | | 5,128,392 | | | 4,686,922 |
GROSS
PROFIT | | | 3,314,430 | | | 2,920,683 |
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES | | | 2,751,162 | | | 3,594,401 |
LOSS
ON DISPOSAL OF EQUIPMENT | | | — | | | 10,290 |
INCOME
(LOSS) FROM OPERATIONS | | | 563,268 | | | (684,008) |
OTHER
(EXPENSE) INCOME | | | | | ||
Interest expense, other | | | (74,299) | | | (101,554) |
Interest
income | | | 38 | | | 38 |
Total
other expense | | | (74,261) | | | (101,516) |
NET
INCOME (LOSS) | | | $489,007 | | | $(785,524) |
| | | | | | | | | | | | | | Additional
Paid-In Capital | | | | | |||||||||||||||
| | Common
Stock | | | Series A-1 Preferred Stock | | | Series A Preferred Stock | | | Series
A-1 Preferred Stock | | | Series A Preferred Stock | | ||||||||||||||||||
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Common Stock | | | Accumulated Deficit | | | Total | |||||||
| | | | | | | | | | | | | | | | | | | | | | ||||||||||||
Balance,
June 30, 2017 | | | 100 | | | $— | | | — | | | $— | | | — | | | $— | | | $— | | | $— | | | $13,511,905 | | | $(44,822,859) | | | $(31,310,954) |
Issuance
of preferred stock | | | — | | | — | | | — | | | — | | | 73.33 | | | — | | | — | | | 5,000,000 | | | — | | | — | | | 5,000,000 |
Conversion
of debt to common stock | | | 790 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 43,629,252 | | | — | | | 43,629,252 |
Net
Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (8,669,639) | | | (8,669,639) |
Balance,
June 30, 2018 | | | 890 | | | — | | | — | | | — | | | 73.33 | | | — | | | — | | | $5,000,000 | | | $57,141,157 | | | $(53,492,498) | | | $8,648,659 |
Net
Loss (Unaudited) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | $(785,524) | | | $(785,524) |
Balance,
September 30, 2018 (Unaudited) | | | 890 | | | — | | | — | | | — | | | 73.33 | | | — | | | — | | | $5,000,000 | | | $57,141,157 | | | $(54,278,022) | | | 7,863,135 |
Issuance
of preferred stock, | | | | | | | | | | | | | | | | | | | | | | | |||||||||||
net
of stock issuance costs | | | — | | | — | | | 36.67 | | | — | | | — | | | — | | | 2,403,125 | | | — | | | — | | | — | | | 2,403,125 |
Net
Loss | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (2,443,123) | | | (2,443,123) |
Balance,
June 30, 2019 | | | 890 | | | — | | | 36.67 | | | — | | | 73.33 | | | — | | | $2,403,125 | | | $5,000,000 | | | $57,141,157 | | | $(56,721,145) | | | $7,823,137 |
Net
Income (Unaudited) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 489,007 | | | 489,007 |
Balance,
September 30, 2019 (Unaudited) | | | 890 | | | — | | | 36.67 | | | — | | | 73.33 | | | — | | | $2,403,125 | | | $5,000,000 | | | $57,141,157 | | | $(56,232,138) | | | $8,312,144 |
| | | | |||
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | ||
Net
Income (loss) | | | $489,007 | | | $(785,524) |
Adjustments
to reconcile net loss to net cash (used) provided by operating activities: | | | | | ||
Depreciation
& Amortization | | | 61,386 | | | 84,266 |
Loss
on disposal of equipment | | | — | | | 10,290 |
(Increase)
decrease in: | | | | | ||
Accounts receivable | | | (487,478) | | | (107,096) |
Inventories | | | (238,220) | | | 771,641 |
Prepaids
and other assets | | | (101,517) | | | (31,364) |
Increase
(decrease) in: | | | | | ||
Accounts payable | | | (629,342) | | | (679,703) |
Accrued
expenses | | | (48,366) | | | (146,588) |
Total
adjustments | | | (1,443,537) | | | (98,554) |
Net
cash provided (used) by operating activities | | | (954,530) | | | (884,078) |
| | | | |||
CASH
FLOWS FROM INVESTING ACTIVITIES | | | | | ||
Purchases of property and equipment | | | (2,495) | | | (37,947) |
Net
cash used by investing activities | | | (2,495) | | | (37,947) |
| | | | |||
CASH
FLOWS FROM FINANCING ACTIVITIES | | | | | ||
Proceeds from loan | | | — | | | 384,958 |
Loan
payments | | | 203,736 | | | — |
Net
cash provided by financing activities | | | 203,736 | | | 384,958 |
| | | | |||
NET
INCREASE (DECREASE) IN CASH | | | (753,289) | | | (537,067) |
| | | | |||
CASH
AT BEGINNING OF PERIOD | | | 2,364,436 | | | 1,226,489 |
| | | | |||
CASH
AT END OF PERIOD | | | $1,611,147 | | | $689,422 |
| | (Unaudited)
| ||||
| | | | |||
Finished goods | | | $3,555,653 | | | $3,501,829 |
Raw
materials | | | 434,304 | | | 285,574 |
| | 3,989,957 | | | 3,787,403 | |
Less
inventory reserve | | | (556,858) | | | (592,523) |
| | $3,433,099 | | | $3,194,880 |
| | (Unaudited) | ||||
| | | | |||
Furniture and fixtures | | | $78,195 | | | $94,771 |
Computer
equipment | | | 80,666 | | | 80,666 |
Computer
software | | | 430,563 | | | 430,563 |
Equipment | | | 397,226 | | | 380,650 |
Assets
not in service: | | | | | ||
Equipment | | | 2,495 | | | — |
| | 989,145 | | | 986,650 | |
Less
accumulated depreciation | | | (675,074) | | | (613,688) |
| | $314,071 | | | $372,962 |
ITEM 13. | OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. |
Item | | | Amount |
SEC
registration fee | | | $ (1) |
Exchange listing fee | | | $(1) |
Legal
fees and expenses | | | $(1) |
Accounting fees and expenses | | | $(1) |
Printing
expenses | | | $(1) |
Transfer agent and registrar fees | | | $(1) |
Blue
sky fees and expenses | | | $(1) |
FINRA filing fees | | | $(1) |
Miscellaneous | | | $ (1) |
Total | | | $ |
(1) | To be filed by amendment. |
ITEM 14. | INDEMNIFICATION OF DIRECTORS AND OFFICERS |
• | for any breach of their duty of loyalty to the corporation or its stockholders; |
• | for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; |
• | for
unlawful payment of dividend or unlawful stock repurchase or redemption, as provided under Section 174 of the DGCL; or |
• | for any transaction from which the director derived an improper personal benefit. |
ITEM 15. | RECENT SALES OF UNREGISTERED SECURITIES |
(1) | On
May 11, 2016, the registrant issued 200,000 shares of common stock, valued at $360,000 as commitment shares to convertible note holders of the registrant. These shares were issued at fair value based on the market price at issuance of $1.80 per share. |
(2) | On May 11, 2016, the registrant issued senior secured convertible promissory notes to an investor in the principal amount of $440,000 with an original issue discount of 3.5% (the “3.5%
OID Convertible Notes”). |
(3) | On December 28, 2016, the registrant issued an investor of the registrant 35,000 shares of common stock as partial consideration for entering into a forbearance agreement with respect to debt held by such investor. |
(4) | In January 2017 and February 2017, the registrant entered
into restructuring agreements with holders of its 3.5% OID Convertible Notes. Pursuant to these agreements, the registrant agreed to issue new notes (the “January and February 2017 Convertible Notes”) for the amounts due under the 3.5% OID Convertible Notes; penalties, fees, and accrued interest in the aggregate amount of $212,702 would be added to the principal amount due under the January and February 2017 Convertible Notes; 35,000 shares of common stock were issued as a commitment fee. |
(5) | On May 2, 2017, the registrant issued 208,333 shares of common stock, for
the conversion of $15,000 of principal and $10,000 of accrued interest of convertible notes payable. |
(6) | On June 2, 2017, the registrant issued 208,333 shares of common stock as consideration for the conversion of $25,000 of principal of convertible notes. |
(7) | On November 17, 2017, the registrant issued a senior secured convertible note to an investor
in the principal amount of $250,000 with an original issue discount of 3.5% and received gross proceeds of $241,250. |
(8) | On January 29, 2018, the registrant issued 998,540 shares of common stock in exchange for the conversion of $28,148 of principal and $1,808 of accrued interest of convertible notes payable. |
(9) | On February 15, 2018, the registrant
issued (i) senior secured convertible promissory notes to an investor in the amount of $250,000 with an original issue discount of 3.5% and (ii) 500,000 five-year warrants to purchase the registrant’s common stock, exercisable at $0.01 per share, and received gross proceeds of $241,250. |
(10) | On March 14, 2018, a subsidiary of the registrant issued (i) a 10% original issue discount senior secured convertible note in the principal amount of $5,500,000 and (ii) 25,000,000 five-year warrants to purchase the
registrant’s common stock, exercisable at $0.01 per share, and received $5,000,000 of bitcoin valued as of such date. |
(11) | On March 19, 2018, the registrant issued (i) a senior secured convertible note to an investor in the principal amount of $777,202 with an original issue discount of 3.5% and (ii) 1,554,405 five-year warrants to purchase the registrant’s common stock, exercisable at $0.01 per share, and received gross proceeds of $750,000. |
(12) | On
October 22, 2018, the registrant issued 2,846,356 shares of Series E Convertible Preferred Stock to existing holders of the registrant’s securities in exchange for the cancellation of all outstanding secured promissory notes, 803,969.73 shares of Series B Convertible Preferred Stock and 12,054,405 of the registrant’s outstanding warrants. The shares of Series E Convertible Preferred Stock were issued and sold in reliance upon the exemption from registration contained in Section 3(a)(9) of the Securities Act. |
(13) | On December 12, 2018, the registrant issued 1,425,641 units to new investors, with each unit consisting of (i) one share of our 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 approximately $2.7 million. |
(14) | On
December 21, 2018, the registrant issued certain directors and employees stock options to purchase 38,462 shares of the registrant’s common stock. The stock options have an exercise price of $6.76 per share. |
(15) | In connection with the acquisition of Bona Vida, Inc., on May 6, 2019, the registrant issued an aggregate of 18,003,273 shares of common stock to new investors and certain of our directors and executive officers in exchange for
all outstanding shares of common stock of Bona Vida, Inc. |
(16) | In connection with the acquisition of TruPet LLC, on May 6, 2019, the registrant issued an aggregate of 15,027,533 shares of common stock to new investors and certain of our directors and executive officers in exchange for all remaining outstanding membership interests of TruPet LLC. |
(17) | On May 6, 2019, the
registrant issued an aggregate of 5,744,991 shares of common stock and 5,744,991 warrants at an offering price of $3.00 per share to new investors and certain of our directors. The warrants have an exercise price of $4.25 per share. |
(18) | On May 6, 2019, the registrant issued certain directors and employees stock options to purchase 5,520,000 shares of the registrant’s common stock. The stock options have an exercise price of $5.00 per share. |
(19) | On
August 28, 2019, the registrant issued an aggregate of 1,000,000 shares of common stock at a price per share of $5.00 to an affiliate of iHeartMedia + Entertainment, Inc. (“iHeart”) as consideration for iHeart’s provision of advertising inventory with an aggregate value of $5.0 million. |
(20) | On September 17, 2019, the registrant issued Bruce Linton (i) 2,500,000 share purchase warrants, with each warrant entitling Mr. Linton to acquire one share of common stock at a price of $0.10 per share and (ii) an additional 1,500,000
share purchase warrants entitling Mr. Linton to acquire one share of common stock at a price of $10.00 per share as consideration for Mr. Linton’s services as a special advisor to our Chief Executive Officer, other senior executives and our board of directors. |
(21) | On November 11, 2019, the registrant issued subordinated convertible notes and warrants to one of our directors and an investor in an aggregate principal amount of $2,750,000. |
(22) | On December
19, 2019, the registrant issued a total of 2,134,390 shares of common stock, 937,500 warrants and an aggregate amount of $15,000,000 of convertible subordinated notes as consideration to the former stockholders of Halo as part of the Halo Acquisition. |
(23) | On December 19, 2019, the registrant issued a total of 6,500,000 warrants to certain of our directors as consideration for the shareholder guaranty in connection with the Halo Acquisition. |
ITEM 16. | EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES |
(a) | Exhibits |
Exhibit No. | | | Description
of Exhibit |
| | Agreement and Plan
of Merger, dated February 28, 2019, by and among Better Choice Company Inc. (the “Company”), BBC Merger Sub, Inc. and Bona Vida, Inc. | |
| | ||
| | 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 | |
| | ||
| | Securities
Exchange Agreement, dated February 2, 2019, by and among the Company, Trupet LLC and the members of TruPet LLC | |
| | ||
| | 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 | |
| | ||
| | ||
| | ||
| | Certificate
of Amendment of Certificate of Incorporation, dated February 1, 2019 | |
| | ||
| | Certificate
of Amendment of Certificate of Incorporation, dated March 13, 2019 | |
| | ||
| | Amended
and Restated Certificate of Designations, Preferences and Rights of the Series E Convertible Preferred Stock of the Company | |
| | ||
| | ||
| | ||
5.1* | | | Opinion
of Latham & Watkins LLP |
| | ||
| | Registration
Rights Agreement, dated December 12, 2019, by and among the Company and the persons listed on the signature pages thereto in connection with the December 2018 private placement | |
| | ||
| | 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 | |
| | ||
| | First
Amendment to Registration Rights Agreement, dated June 10, 2019, by and among the Company and the stockholders party thereto | |
| | ||
| | 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 acquisition of Bona Vida, Inc. | |
| | ||
| | 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 acquisition of TruPet LLC | |
| | ||
| | Better
Choice Company Inc. 2019 Incentive Award Plan | |
| | ||
| | Form
of Option Agreement | |
| | ||
| | Form
of Indemnification Agreement by and among the Company and its officers and directors | |
| | ||
| | ||
| |
Exhibit No. | | | Description
of Exhibit |
| | ||
| | ||
| | Employment
Agreement, dated May 6, 2019, by and among the Company and Anthony Santarsiero | |
| | ||
| | Employment
Agreement, dated June 29, 2019, by and among the Company and Andreas Schulmeyer | |
| | ||
| | Loan
Agreement, dated May 6, 2019, by and between the Company and Franklin Synergy Bank | |
| | ||
| | Security
Agreement, dated May 6, 2019, by and between the Company and Franklin Synergy Bank | |
| | ||
| | Form
of Revolving Line of Credit Promissory Note | |
| | ||
| | Guaranty
Agreement, dated May 8, 2019, by Bona Vida, Inc. in favor of and Franklin Synergy Bank | |
| | ||
| | Guaranty
Agreement, dated May 8, 2019, by TruPet LLC in favor of and Franklin Synergy Bank | |
| | ||
| | ||
| | ||
| | Consent
of Ernst & Young LLP, Independent Registered Public Accounting Firm, relating to the Financial Statements of the Company | |
| | ||
| | Consent
of MNP LLP, Independent Registered Public Accounting Firm, relating to the Financial Statements of Bona Vida, Inc. and TruPet LLC | |
| | ||
| | Consent
of Warren Averett, LLC, Independent Registered Public Accounting Firm, relating to the Financial Statements of Halo, Purely for Pets, Inc. | |
| | ||
23.4* | | | Consent
of Latham & Watkins (included in Exhibit 5.1) |
| | ||
| | Power
of Attorney (included on signature page) |
* | To be filed by amendment |
** |
+ | Management Compensation Plan |
(b) | Financial
Statement Schedules |
ITEM 17. | UNDERTAKINGS |
(a) | The undersigned registrant hereby undertakes: |
(1) | To file,
during any period in which offers or issuances are being made, a post-effective amendment to this registration statement: |
(i) | To include any prospectus required by Section 10(a)(3) of the Securities Act; |
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof. |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and |
(4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
(b) | Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Better Choice Company Inc. pursuant to the foregoing provisions, or otherwise, Better Choice Company Inc. has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Better Choice Company Inc. of expenses incurred or paid by a director, officer or controlling person of Better Choice Company Inc. in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Better Choice Company Inc. will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
(c) | The undersigned hereby further undertakes that: |
(1) | For purposes of determining any liability under the Securities Act the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by Better Choice Company Inc. pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared
effective. |
(2) | For the purpose of determining any liability under the Securities Act each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| | BETTER CHOICE COMPANY INC. | ||||
| | | | |||
| | By: | | | /s/
Werner von Pein | |
| | | | |||
| | | | Chief Executive Officer |
Signature | | | Title | | | Date |
| | | | |||
/s/
Werner von Pein | | | Chief Executive Officer (Principal Executive Officer) | | | |
| ||||||
| | | | |||
/s/
Sharla Cook | | | Vice President, Finance & Accounting (Principal Financial and Accounting Officer) | | | |
| ||||||
| | | | |||
/s/
Michael Close | | | Director | | | |
| ||||||
| | | | |||
| | Director | | | ||
| ||||||
| | | | |||
/s/
Jeff D. Davis | | | Director | | | |
| ||||||
| | | | |||
/s/
Clinton Gee | | | Director | | | |
| ||||||
| | | | |||
/s/
Lori Taylor | | | Director | | | |
| ||||||
| | | | |||
/s/
John M. Word III | | | Director | | | |
| ||||||
| | | | |||
/s/
Michael Young | | | Director | | | |
|
This ‘S-1/A’ Filing | Date | Other Filings | ||
---|---|---|---|---|
5/2/29 | ||||
1/1/29 | ||||
6/30/23 | ||||
1/1/23 | ||||
10/31/22 | ||||
4/30/22 | ||||
4/6/22 | ||||
11/4/21 | ||||
8/28/21 | ||||
5/5/21 | ||||
4/30/21 | ||||
12/31/20 | ||||
12/19/20 | ||||
12/15/20 | ||||
11/6/20 | ||||
10/31/20 | ||||
10/22/20 | ||||
8/28/20 | ||||
7/31/20 | ||||
6/30/20 | 10-Q, D | |||
5/22/20 | ||||
Filed on: | 5/13/20 | CORRESP | ||
5/12/20 | 10-K/A, 8-K | |||
5/8/20 | 8-K | |||
5/1/20 | 10-K | |||
4/24/20 | ||||
4/10/20 | ||||
4/6/20 | ||||
4/4/20 | ||||
3/31/20 | 10-Q | |||
3/27/20 | 8-K | |||
3/17/20 | ||||
3/5/20 | ||||
3/4/20 | ||||
2/18/20 | 8-K/A | |||
2/15/20 | ||||
2/5/20 | 8-K | |||
1/13/20 | 8-K | |||
1/6/20 | 8-K | |||
1/3/20 | ||||
1/1/20 | ||||
12/31/19 | 10-K, 10-K/A | |||
12/20/19 | ||||
12/19/19 | ||||
12/18/19 | 8-K, 8-K/A | |||
12/15/19 | ||||
12/12/19 | ||||
12/11/19 | ||||
11/21/19 | ||||
11/12/19 | ||||
11/11/19 | 8-K | |||
11/4/19 | ||||
10/31/19 | ||||
10/15/19 | 8-K | |||
10/1/19 | ||||
9/30/19 | 10-Q, NT 10-Q | |||
9/17/19 | 8-K | |||
9/13/19 | 8-K | |||
9/1/19 | ||||
8/30/19 | ||||
8/28/19 | 8-K | |||
8/21/19 | CORRESP | |||
8/16/19 | ||||
8/9/19 | ||||
7/29/19 | 8-K | |||
6/30/19 | 10-Q, NT 10-Q | |||
6/29/19 | ||||
6/10/19 | 8-K | |||
5/31/19 | ||||
5/28/19 | 8-K | |||
5/21/19 | D | |||
5/14/19 | ||||
5/13/19 | ||||
5/10/19 | 8-K | |||
5/8/19 | 8-K | |||
5/6/19 | 8-K, 8-K/A | |||
5/5/19 | ||||
5/3/19 | 8-K | |||
5/2/19 | 8-K | |||
4/29/19 | 8-K | |||
4/26/19 | ||||
4/22/19 | ||||
4/9/19 | ||||
3/31/19 | ||||
3/15/19 | 8-K | |||
3/14/19 | 8-K | |||
3/13/19 | ||||
3/11/19 | 8-K | |||
3/4/19 | 8-K | |||
2/28/19 | 10-Q | |||
2/12/19 | 8-K | |||
2/6/19 | ||||
2/2/19 | 8-K | |||
2/1/19 | ||||
1/29/19 | ||||
1/9/19 | ||||
1/8/19 | ||||
1/1/19 | ||||
12/31/18 | 10-KT | |||
12/30/18 | ||||
12/21/18 | 10-K, 10-Q/A | |||
12/20/18 | D | |||
12/17/18 | ||||
12/15/18 | ||||
12/12/18 | 8-K | |||
11/21/18 | ||||
11/1/18 | ||||
10/29/18 | 8-K | |||
10/22/18 | 8-K | |||
10/5/18 | ||||
10/4/18 | ||||
9/30/18 | ||||
8/31/18 | 10-K, NT 10-K | |||
7/6/18 | ||||
6/30/18 | ||||
6/21/18 | 8-K | |||
3/31/18 | ||||
3/29/18 | D | |||
3/19/18 | ||||
3/14/18 | 8-K | |||
2/15/18 | 8-K | |||
1/29/18 | ||||
1/1/18 | ||||
12/31/17 | ||||
12/30/17 | ||||
12/22/17 | ||||
12/15/17 | ||||
11/17/17 | 8-K | |||
10/31/17 | ||||
8/31/17 | 10-K | |||
7/6/17 | ||||
6/30/17 | ||||
6/2/17 | ||||
5/5/17 | ||||
5/2/17 | ||||
1/1/17 | ||||
12/28/16 | 8-K | |||
12/15/16 | ||||
5/11/16 | 8-K | |||
2/25/16 | ||||
1/1/16 | ||||
7/9/15 | ||||
8/2/13 | ||||
List all Filings |