Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 04, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | FRPT | |
Entity Registrant Name | FRESHPET, INC. | |
Entity Central Index Key | 1,611,647 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 35,200,800 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 3,039,341 | $ 2,184,259 |
Accounts receivable, net of allowance for doubtful accounts | 12,099,217 | 12,721,521 |
Inventories, net | 9,874,896 | 10,118,394 |
Prepaid expenses | 819,405 | 1,200,834 |
Other current assets | 829,446 | 732,960 |
Total Current Assets | 26,662,305 | 26,957,968 |
Property, plant and equipment, net | 101,663,419 | 100,598,639 |
Deposits on equipment | 4,902,977 | 4,370,922 |
Other assets | 1,997,595 | 1,972,805 |
Total Assets | 135,226,296 | 133,900,334 |
CURRENT LIABILITIES: | ||
Accounts payable | 8,466,384 | 9,173,169 |
Accrued expenses | 5,734,461 | 7,519,348 |
Borrowings under Credit Facilities | 6,000,000 | 0 |
Total Current Liabilities | 20,200,845 | 16,692,517 |
Other liabilities | 297,735 | 304,839 |
Total Liabilities | 20,498,580 | 16,997,356 |
STOCKHOLDERS' EQUITY: | ||
Common stock — voting, $0.001 par value, 200,000,000 shares authorized, 35,139,244 and 35,132,548 issued and outstanding on March 31, 2018 and December 31, 2017, respectively | 35,139 | 35,132 |
Additional paid-in capital | 313,929,310 | 312,783,195 |
Accumulated deficit | (199,512,416) | (195,991,478) |
Accumulated other comprehensive income | 275,683 | 76,129 |
Total Stockholders' Equity | 114,727,716 | 116,902,978 |
Total Liabilities and Stockholders' Equity | $ 135,226,296 | $ 133,900,334 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 35,139,244 | 35,132,548 |
Common stock, shares outstanding | 35,139,244 | 35,132,548 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
NET SALES | $ 43,169,601 | $ 33,677,572 |
COST OF GOODS SOLD | 23,041,583 | 17,874,295 |
GROSS PROFIT | 20,128,018 | 15,803,277 |
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES | 23,537,944 | 18,543,748 |
LOSS FROM OPERATIONS | (3,409,926) | (2,740,471) |
OTHER INCOME/(EXPENSES): | ||
Other Income/(Expenses), net | (22,977) | 57,677 |
Interest Expense | (69,002) | (175,977) |
Other Income/(Expenses), Total | (91,979) | (118,300) |
LOSS BEFORE INCOME TAXES | (3,501,905) | (2,858,771) |
INCOME TAX EXPENSE | 19,032 | 20,754 |
NET LOSS | (3,520,937) | (2,879,525) |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | (3,520,937) | (2,879,525) |
OTHER COMPREHENSIVE INCOME: | ||
Change in foreign currency translation | 199,554 | |
TOTAL OTHER COMPREHENSIVE INCOME | 199,554 | |
TOTAL COMPREHENSIVE LOSS | $ (3,321,383) | $ (2,879,525) |
NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS | ||
-BASIC | $ (0.10) | $ (0.09) |
-DILUTED | $ (0.10) | $ (0.09) |
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING USED IN COMPUTING NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS | ||
-BASIC | 35,137,502 | 33,563,133 |
-DILUTED | 35,137,502 | 33,563,133 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (3,520,937) | $ (2,879,525) |
Adjustments to reconcile net loss to net cash flows provided by operating activities: | ||
Provision for loss/(gains) on accounts receivable | 5,232 | 77,164 |
Loss on disposal of equipment and deposits on equipment | 27,879 | 6,005 |
Share-based compensation | 1,092,260 | 930,157 |
Fair value adjustment for outstanding warrants | (108,116) | |
Change in reserve for inventory obsolescence | 52,723 | 81,925 |
Depreciation and amortization | 3,334,348 | 3,049,127 |
Amortization of deferred financing costs and loan discount | 28,775 | 40,751 |
Changes in operating assets and liabilities | ||
Accounts receivable | 617,072 | 90,753 |
Inventories | 190,775 | (2,286,483) |
Prepaid expenses and other current assets | 284,943 | 275,711 |
Other assets | 281,914 | (265,272) |
Accounts payable | (829,072) | 3,801,808 |
Accrued expenses | (1,784,887) | (736,952) |
Other liabilities | (7,104) | |
Net cash flows provided by (used in) operating activities | (226,079) | 2,077,053 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Acquisitions of property, plant and equipment, software and deposits on equipment | (4,972,701) | (3,270,498) |
Proceeds from sale of equipment | 5,835 | |
Net cash flows used in investing activities | (4,972,701) | (3,264,663) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Exercise of options to purchase common stock | 53,862 | 553,221 |
Proceeds from borrowings under Credit Facilities | 6,000,000 | |
Repayment of borrowings under Credit Facilities | (1,250,000) | |
Net cash flows provided by (used in) financing activities | 6,053,862 | (696,779) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 855,082 | (1,884,389) |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 2,184,259 | 3,908,177 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 3,039,341 | 2,023,788 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Interest paid | 37,293 | 154,165 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Property, plant and equipment purchases in accounts payable | $ 1,046,377 | $ 1,447,039 |
Nature of the Business and Summ
Nature of the Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Nature of the Business and Summary of Significant Accounting Policies | Note 1 – Nature of the Business and Summary of Significant Accounting Policies: Nature of the Business – Freshpet, Inc. (hereafter referred to as “Freshpet” or the “Company”), a Delaware corporation, manufactures and markets natural fresh meals and treats for dogs and cats. The Company’s products are distributed throughout the United States and other international markets into major retail classes including Grocery and Mass (which includes online and club) as well as Pet Specialty and Natural retail. Principles of Consolidation – The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). The financial statements include the accounts of the Company as well as the Company’s wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Basis of Presentation – The accompanying consolidated balance sheet as of March 31, 2018, statements of operations and comprehensive (loss) income for the three months ended March 31, 2018 and 2017, and statements of cash flows for the three months ended March 31, 2018 and 2017 are unaudited. The interim unaudited financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with the rules and regulations of the United States Securities and Exchange Commission. In the opinion of management, the interim unaudited financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2018, the results of its operations for the three months ended March 31, 2018 and 2017, and its cash flows for the three months ended March 31, 2018 and 2017. The financial data and other information disclosed in these notes related to the three months ended March 31, 2018 and 2017 are unaudited. The results for three months ended March 31, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018, or any other interim periods, or any future year or period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended December 31, 2017. Estimates and Uncertainties – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results, as determined at a later date, could differ from those estimates. Foreign Currency Contracts – The Company may enter into forward exchange contracts to reduce the Company’s exposure to foreign currency fluctuations of certain assets and liabilities denominated in foreign currencies. The foreign currency forward contracts have not been designated as hedges and, accordingly, any changes in their fair value are recognized on the Consolidated Statements of Operations and Comprehensive Loss in Other income/(expenses), net, and carried at their fair value in the Consolidated Balance Sheet with assets reported in Prepaid expenses and other current assets and liabilities reported in Accrued expenses. As of March 31, 2018, the notional value of foreign currency forward contracts outstanding was 0.3 million pounds sterling. The fair value of the foreign currency forward contracts are measured using Level 2 inputs in the fair value hierarchy because they are determined based on a market approach utilizing externally quoted forward rates for similar contracts. For the three months ended March 31, 2018 the net loss recognized on forward contracts was immaterial. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Standards | Note 2 – Recently Issued Accounting Standards: Recently Adopted Standards: Revenue Recognition: In May 2014, the Financial Accounting Standard Board (“FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers,” (Topic 606). Under the ASU and subsequent issued amendments, revenue is recognized at the time a good or service is transferred to a customer for the amount of consideration received. Topic 606 permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or modified retrospectively with the cumulative effect of applying the guidance as of the date of initial application (the cumulative catch-up transition method). The Company adopted Topic 606 in the first quarter of 2018 using the full retrospective method approach and recast prior year results as shown below. The adoption didn’t have any material impact on our financial statements and is limited to classification differences within the statement of operating income from cost of goods sold to a reduction to net sales. The new accounting standard will not impact Net Loss. The Company recast certain prior period amounts to conform with the adoption of the revenue recognition standard, as shown in the table below: Three Months Ended March 31, 2017 As Previously Reported Adjustments Current Presentation Net Revenues $ 34,513,935 $ (836,363 ) $ 33,677,572 Cost of Goods Sold 18,710,658 (836,363 ) 17,874,295 Gross Profit $ 15,803,277 $ — $ 15,803,277 Revenue from product sales is recognized when obligations under the terms of the contract with the customer are satisfied, which occurs once control is transferred upon shipment to the customer. R evenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. The amount of consideration the Company receives and revenue the Company recognizes varies with changes in trade incentives the Company offers to its customers and their consumers. S Information about the Company’s net sales by class of retailer is as follows: Three Months Ended March 31, 2018 2017 Grocery (including Online), Mass and Club $ 34,898,677 $ 27,138,689 Pet Specialty and Natural 8,270,924 6,538,883 Net Sales $ 43,169,601 $ 33,677,572 Standards Effective in Future Years: Leases: In February 2016, the FASB issued ASU No. 2016-02, "Leases,” which requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is assessing the impact of ASU No. 2016-02 on its corporate office lease, and upon adoption of this guidance, expects to record the lease on its consolidated balance sheet in accordance with ASU No. 2016-02. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 3 – Inventories: March 31, December 31, 2018 2017 Raw Materials and Work in Process $ 2,426,287 $ 2,471,498 Packaging Components Material 855,677 804,616 Finished Goods 6,690,399 7,105,425 9,972,363 10,381,539 Reserve for Obsolete Inventory (97,467 ) (263,145 ) $ 9,874,896 $ 10,118,394 |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2018 | |
Property Plant And Equipment [Abstract] | |
Property, Plant and Equipment | Note 4 – Property, Plant and Equipment: Property, plant and equipment, net are summarized as follows: March 31, December 31, 2018 2017 Refrigeration Equipment $ 73,064,348 $ 70,489,454 Machinery and Equipment 47,567,572 47,558,838 Building, Land, and Improvements 25,543,570 25,543,568 Furniture and Office Equipment 4,471,919 4,404,735 Automotive Equipment 319,495 319,496 Leasehold Improvements 385,089 375,661 Construction in Progress 5,358,832 3,763,894 156,710,825 152,455,646 Less: Accumulated Depreciation and Amortization (55,047,406 ) (51,857,007 ) $ 101,663,419 $ 100,598,639 Depreciation expense related to property, plant and equipment totaled $ 3,268,899 for the three months ended March 31, 2018 of which $1,490,995 was recorded to cost of goods sold for the three months ended March 31, 2018, with the remainder of depreciation and amortization expense recorded to selling, general and administrative expense. Depreciation expense related to property, plant and equipment totaled $2,996,170 for the three ended March 31, 2017, of which $1,433,617 was recorded to cost of goods sold for the three months ended March 31,2017, with the remainder of depreciation and amortization expense recorded to selling, general and administrative expense. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2018 | |
Payables And Accruals [Abstract] | |
Accrued Expenses | Note 5 – Accrued Expenses: March 31, December 31, 2018 2017 Accrued Compensation $ 1,906,517 $ 3,877,133 Accrued Chiller Cost 1,184,311 1,371,940 Accrued Marketing 503,605 795,407 Accrued Freight 646,944 354,959 Accrued Utility 213,669 198,000 Accrued VAT 527,179 172,711 Other Accrued Expenses 752,236 749,198 $ 5,734,461 $ 7,519,348 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Note 6 – Debt: On November 13, 2014, the Company entered into a three-year $10.0 million revolving facility (the “Revolver Facility”) and a $12.0 million additional term loan commitment earmarked primarily for capital expenditures (the “Capex Commitments” and together with the Revolving Facility, the “Credit Facilities”). On December 23, 2014, the Company modified the terms of the Credit Facilities. The three-year $10.0 million Revolving Facility remained unchanged and the $12.0 million term loan commitment earmarked for capital expenditures was increased to $30.0 million. During the third quarter of 2017, we amended our Credit Facilities to replace our Term Facility and Capex Commitments of $30.0 million and $10.0 million Revolving Facility with a straight $30.0 million revolver (the “New Revolving Facility”) and the ability to increase the New Revolving Facility by an additional $10.0 million. The New Revolving Facility will mature in September 2020 and borrowings thereunder will bear interest at variable rates depending on the Company’s election, either at a base rate or at the London Interbank Offered Rate (“LIBOR”), in each case, plus an applicable margin. Subject to the Company’s leverage ratio, the applicable margin will vary between 0.75% and 1.25% for base rate loans and 1.75% and 2.25% for LIBOR loans. The amendment resulted in a reduction in the unused rate of between 25 and 75 basis points and a reduction in the total rate of between 200 and 250 basis points. At closing, we had total borrowings of $5.5 million under the $30.0 million New Revolving Facility, with $24.5 million available. All borrowings were fully repaid by December 31, 2017. Borrowings under our Revolving Credit Facilities totaled $6.0 million for the three months ended March 31, 2018 which also represents the debt outstanding under the Credit Facilities. Interest expense and fees totaled $0.1 million and $0.2 for the three months ended March 31, 2018 and 2017 respectively. There was less than $0.1 million of accrued interest on the Credit Facilities as of March 31, 2018. |
Equity Incentive Plans
Equity Incentive Plans | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity Incentive Plans | Note 7 – Equity Incentive Plans: Total compensation cost for share-based payments recognized for the three months ended March 31, 2018 and 2017 is $1,092,260 and $ 930,157 2006 Stock Plan— The options in this plan are time-based (vest over five years). Certain option awards provide for accelerated vesting if there is a change in control (as defined in the 2006 Plan). At March 31, 2018, there were zero shares available for grant as the 2006 Plan is frozen. The total number of unexercised options for the 2006 Plan is 20,619. 2010 Stock Plan — The outstanding options are time-based (vest between two and four years). At March 31, 2018, there were zero shares available for grant as the 2006 Plan is frozen no further grants may be issued under the 2010 Plan. The total number of unexercised options for the 2010 Plan is 696,901. 2014 Omnibus Incentive Plan —In November 2014, the Company approved the 2014 Omnibus Incentive Plan (the “2014 Plan”). Under the 2014 Plan 3,979,200 shares of common stock may be issued or used for reference purposes as awards granted. These awards may be in the form of stock options, stock appreciation rights, restricted stock, as well as other stock-based and cash-based awards. At March 31, 2018, the awards granted were either time-based, performance-based (vest when performance targets are met, as defined in the stock option grant agreement), or restricted stock units (employee RSUs vest over three years and non-employee director RSUs vest over one year).The total number of unexercised options and RSU’s for the 2014 Plan is 1,849,387. At March 31, 2018, there were 1,949,637 shares of common stock available to be issued or used for reference purposes under the 2014 Plan. NASDAQ Marketplace Rules Inducement Award —During fiscal year 2016, share-based awards were granted to the Company’s Chief Executive Officer as an inducement under the NASDAQ Marketplace Rules, and therefore outside of any Plan. Under the terms of the agreement, the grant is governed as if issued under the 2014 Omnibus Plan. As of March 31, 2018, the awards granted were time-based (cliff vest over four years) and performance-based (vest when performance targets are met, as defined in the stock option grant agreement). Service Period Stock Options The following table includes activity related to outstanding service period stock options during the three months ended March 31, 2018. Service Period Stock Options Shares Weighted Average Exercise Price Outstanding at December 31, 2017 2,030,266 $ 9.47 Granted 95,364 16.45 Exercised (6,696 ) 8.04 Outstanding at March 31, 2018 2,118,934 $ 9.79 Performance-Vested Stock Options The following table includes activity related to outstanding performance-vested stock options during the three months ended March 31, 2018. Performance Based Options Shares Weighted Average Exercise Price Outstanding at December 31, 2017 1,154,393 $ 10.50 Granted 21,455 16.45 Outstanding at March 31, 2018 1,175,848 $ 10.61 As of March 31, 2018, 499,079 performance-vested stock options at a weighted average exercise price of $10.14 have performance metrics that are probable of achievement. These shares are included in share-based compensation costs for the three months ended March 31, 2018. Restricted Stock Units The following table includes activity related to outstanding restricted stock units during the three months ended March 31, 2018. Restricted Stock Units Shares Weighted-Average Grant-Date Fair Value Per Unit Outstanding at December 31, 2017 165,240 $ 10.99 Granted 106,887 16.45 Outstanding at March 31, 2018 272,127 $ 13.13 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 8 – Earnings Per Share: Basic net loss per share of common stock is calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per share of common stock is computed by giving effect to all potentially dilutive securities. For the three months ended March 31, 2018 and 2017, there were no adjustments between net loss and net loss attributable to common stockholders. The potentially dilutive securities are as follows: March 31, 2018 2017 Service Period Stock Options 2,026,372 2,762,092 Restricted Stock Units 166,428 97,515 Warrants — 61,117 Total 2,192,799 2,920,724 For the three months ended March 31, 2018 and March 31, 2017, diluted net loss per share of common stock is the same as basic net loss per share of common stock, due to the fact that potentially dilutive securities would have an antidilutive effect as the Company incurred a net loss during such periods. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 9 – Related Party Transactions: Payments of $2,657,358 for the three months ended March 31, 2018, and $2,016,862 for the three months ended March 31, 2017, were made to one stockholder for the purchase of raw materials. The Company believes that all payments made to the shareholder are at market value and thus at arms-length. |
Concentrations
Concentrations | 3 Months Ended |
Mar. 31, 2018 | |
Risks And Uncertainties [Abstract] | |
Concentrations | Note 10 – Concentrations: Concentration of Credit Risk —The Company maintains its cash balances in financial institutions which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 each. At times, such balances may be in excess of the FDIC insurance limit. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 – Subsequent Events: The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or unrecognized subsequent events that have required adjustment or disclosure in the financial statements. |
Nature of the Business and Su17
Nature of the Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Nature of the Business | Nature of the Business – Freshpet, Inc. (hereafter referred to as “Freshpet” or the “Company”), a Delaware corporation, manufactures and markets natural fresh meals and treats for dogs and cats. The Company’s products are distributed throughout the United States and other international markets into major retail classes including Grocery and Mass (which includes online and club) as well as Pet Specialty and Natural retail. |
Principles of Consolidation | Principles of Consolidation – The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). The financial statements include the accounts of the Company as well as the Company’s wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. |
Basis of Presentation | Basis of Presentation – The accompanying consolidated balance sheet as of March 31, 2018, statements of operations and comprehensive (loss) income for the three months ended March 31, 2018 and 2017, and statements of cash flows for the three months ended March 31, 2018 and 2017 are unaudited. The interim unaudited financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with the rules and regulations of the United States Securities and Exchange Commission. In the opinion of management, the interim unaudited financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2018, the results of its operations for the three months ended March 31, 2018 and 2017, and its cash flows for the three months ended March 31, 2018 and 2017. The financial data and other information disclosed in these notes related to the three months ended March 31, 2018 and 2017 are unaudited. The results for three months ended March 31, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018, or any other interim periods, or any future year or period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended December 31, 2017. |
Estimates and Uncertainties | Estimates and Uncertainties – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results, as determined at a later date, could differ from those estimates. |
Foreign Currency Contracts | Foreign Currency Contracts – The Company may enter into forward exchange contracts to reduce the Company’s exposure to foreign currency fluctuations of certain assets and liabilities denominated in foreign currencies. The foreign currency forward contracts have not been designated as hedges and, accordingly, any changes in their fair value are recognized on the Consolidated Statements of Operations and Comprehensive Loss in Other income/(expenses), net, and carried at their fair value in the Consolidated Balance Sheet with assets reported in Prepaid expenses and other current assets and liabilities reported in Accrued expenses. As of March 31, 2018, the notional value of foreign currency forward contracts outstanding was 0.3 million pounds sterling. The fair value of the foreign currency forward contracts are measured using Level 2 inputs in the fair value hierarchy because they are determined based on a market approach utilizing externally quoted forward rates for similar contracts. For the three months ended March 31, 2018 the net loss recognized on forward contracts was immaterial. |
Recently Issued Accounting St18
Recently Issued Accounting Standards (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | |
Information About Company's Nets By Class of Retailer | Information about the Company’s net sales by class of retailer is as follows: Three Months Ended March 31, 2018 2017 Grocery (including Online), Mass and Club $ 34,898,677 $ 27,138,689 Pet Specialty and Natural 8,270,924 6,538,883 Net Sales $ 43,169,601 $ 33,677,572 |
ASU 2014-09 | |
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | |
Schedule of Certain Prior Period Amounts To Confirm With Adoption of Revenue Recognition | The Company recast certain prior period amounts to conform with the adoption of the revenue recognition standard, as shown in the table below: Three Months Ended March 31, 2017 As Previously Reported Adjustments Current Presentation Net Revenues $ 34,513,935 $ (836,363 ) $ 33,677,572 Cost of Goods Sold 18,710,658 (836,363 ) 17,874,295 Gross Profit $ 15,803,277 $ — $ 15,803,277 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | March 31, December 31, 2018 2017 Raw Materials and Work in Process $ 2,426,287 $ 2,471,498 Packaging Components Material 855,677 804,616 Finished Goods 6,690,399 7,105,425 9,972,363 10,381,539 Reserve for Obsolete Inventory (97,467 ) (263,145 ) $ 9,874,896 $ 10,118,394 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property Plant And Equipment [Abstract] | |
Summary of Property, Plant and Equipment, Net | Property, plant and equipment, net are summarized as follows: March 31, December 31, 2018 2017 Refrigeration Equipment $ 73,064,348 $ 70,489,454 Machinery and Equipment 47,567,572 47,558,838 Building, Land, and Improvements 25,543,570 25,543,568 Furniture and Office Equipment 4,471,919 4,404,735 Automotive Equipment 319,495 319,496 Leasehold Improvements 385,089 375,661 Construction in Progress 5,358,832 3,763,894 156,710,825 152,455,646 Less: Accumulated Depreciation and Amortization (55,047,406 ) (51,857,007 ) $ 101,663,419 $ 100,598,639 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables And Accruals [Abstract] | |
Summary of Accrued Expenses | March 31, December 31, 2018 2017 Accrued Compensation $ 1,906,517 $ 3,877,133 Accrued Chiller Cost 1,184,311 1,371,940 Accrued Marketing 503,605 795,407 Accrued Freight 646,944 354,959 Accrued Utility 213,669 198,000 Accrued VAT 527,179 172,711 Other Accrued Expenses 752,236 749,198 $ 5,734,461 $ 7,519,348 |
Equity Incentive Plans (Tables)
Equity Incentive Plans (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Service Period Stock Options | |
Summary of Activity Related to Outstanding Stock Options | The following table includes activity related to outstanding service period stock options during the three months ended March 31, 2018. Service Period Stock Options Shares Weighted Average Exercise Price Outstanding at December 31, 2017 2,030,266 $ 9.47 Granted 95,364 16.45 Exercised (6,696 ) 8.04 Outstanding at March 31, 2018 2,118,934 $ 9.79 |
Performance-Vested Stock Options | |
Summary of Activity Related to Outstanding Stock Options | The following table includes activity related to outstanding performance-vested stock options during the three months ended March 31, 2018. Performance Based Options Shares Weighted Average Exercise Price Outstanding at December 31, 2017 1,154,393 $ 10.50 Granted 21,455 16.45 Outstanding at March 31, 2018 1,175,848 $ 10.61 |
Restricted Stock Units | |
Summary of Activity Related to Outstanding Stock Options | The following table includes activity related to outstanding restricted stock units during the three months ended March 31, 2018. Restricted Stock Units Shares Weighted-Average Grant-Date Fair Value Per Unit Outstanding at December 31, 2017 165,240 $ 10.99 Granted 106,887 16.45 Outstanding at March 31, 2018 272,127 $ 13.13 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Potentially Dilutive Securities | The potentially dilutive securities are as follows: March 31, 2018 2017 Service Period Stock Options 2,026,372 2,762,092 Restricted Stock Units 166,428 97,515 Warrants — 61,117 Total 2,192,799 2,920,724 |
Nature of the Business and Su24
Nature of the Business and Summary of Significant Accounting Policies - Additional Information (Details) | Mar. 31, 2018GBP (£) |
Foreign Currency Forward Contracts | |
Derivatives Fair Value [Line Items] | |
Notional value outstanding | £ 300,000 |
Recently Issued Accounting St25
Recently Issued Accounting Standards - Schedule of Certain Prior Period Amounts To Confirm With Adoption of Revenue Recognition (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net Revenues | $ 33,677,572 | |
Cost of Goods Sold | $ 23,041,583 | 17,874,295 |
GROSS PROFIT | $ 20,128,018 | 15,803,277 |
ASU 2014-09 | As Previously Reported | ||
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net Revenues | 34,513,935 | |
Cost of Goods Sold | 18,710,658 | |
GROSS PROFIT | 15,803,277 | |
ASU 2014-09 | Adjustments | ||
Revenue Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net Revenues | (836,363) | |
Cost of Goods Sold | $ (836,363) |
Recently Issued Accounting St26
Recently Issued Accounting Standards - Information About Company's Nets By Class of Retailer (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Concentration Risk [Line Items] | ||
Net Sales | $ 43,169,601 | $ 33,677,572 |
Grocery (including Online), Mass and Club | ||
Concentration Risk [Line Items] | ||
Net Sales | 34,898,677 | 27,138,689 |
Pet Specialty and Natural | ||
Concentration Risk [Line Items] | ||
Net Sales | $ 8,270,924 | $ 6,538,883 |
Inventories - Summary of Invent
Inventories - Summary of Inventories (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw Materials and Work in Process | $ 2,426,287 | $ 2,471,498 |
Packaging Components Material | 855,677 | 804,616 |
Finished Goods | 6,690,399 | 7,105,425 |
Inventory gross | 9,972,363 | 10,381,539 |
Reserve for Obsolete Inventory | (97,467) | (263,145) |
Inventory net | $ 9,874,896 | $ 10,118,394 |
Property, Plant and Equipment -
Property, Plant and Equipment - Summary of Property, Plant and Equipment, Net (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 156,710,825 | $ 152,455,646 |
Less: Accumulated Depreciation and Amortization | (55,047,406) | (51,857,007) |
Property, plant and equipment, net | 101,663,419 | 100,598,639 |
Refrigeration Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 73,064,348 | 70,489,454 |
Machinery and Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 47,567,572 | 47,558,838 |
Building, Land, and Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 25,543,570 | 25,543,568 |
Furniture and Office Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 4,471,919 | 4,404,735 |
Automotive Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 319,495 | 319,496 |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 385,089 | 375,661 |
Construction in Progress | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 5,358,832 | $ 3,763,894 |
Property, Plant and Equipment29
Property, Plant and Equipment - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Property Plant And Equipment [Abstract] | ||
Depreciation expense | $ 3,268,899 | $ 2,996,170 |
Cost of goods sold, depreciation | $ 1,490,995 | $ 1,433,617 |
Accrued Expenses - Summary of A
Accrued Expenses - Summary of Accrued Expenses (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Payables And Accruals [Abstract] | ||
Accrued Compensation | $ 1,906,517 | $ 3,877,133 |
Accrued Chiller Cost | 1,184,311 | 1,371,940 |
Accrued Marketing | 503,605 | 795,407 |
Accrued Freight | 646,944 | 354,959 |
Accrued Utility | 213,669 | 198,000 |
Accrued VAT | 527,179 | 172,711 |
Other Accrued Expenses | 752,236 | 749,198 |
Accrued expenses | $ 5,734,461 | $ 7,519,348 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | Nov. 13, 2014 | Mar. 31, 2018 | Sep. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 23, 2014 |
Debt Instrument [Line Items] | ||||||
Debt outstanding | $ 6,000,000 | $ 0 | ||||
Borrowings under credit facilities | 6,000,000 | |||||
Interest expense and fees | 100,000 | $ 200,000 | ||||
Capex Commitments | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 12,000,000 | $ 30,000,000 | ||||
Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Accrued interest | 100,000 | |||||
New Revolving Facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 30,000,000 | |||||
Increase in credit facility | $ 10,000,000 | |||||
Line of credit facility, maturity month and year | 2020-09 | |||||
Debt outstanding | 5,500,000 | |||||
Availability under credit facility | $ 24,500,000 | |||||
New Revolving Facility | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument reduction in unused rate | 0.25% | |||||
Debt instrument reduction in total rate | 2.00% | |||||
New Revolving Facility | Minimum | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, applicable margin | 0.75% | |||||
New Revolving Facility | Minimum | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, applicable margin | 1.75% | |||||
New Revolving Facility | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument reduction in unused rate | 0.75% | |||||
Debt instrument reduction in total rate | 2.50% | |||||
New Revolving Facility | Maximum | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, applicable margin | 1.25% | |||||
New Revolving Facility | Maximum | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, applicable margin | 2.25% | |||||
Revolving Facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 10,000,000 | |||||
Credit facility term | 3 years |
Equity Incentive Plans - Additi
Equity Incentive Plans - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Nov. 30, 2014 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Share-based compensation | $ 1,092,260 | $ 930,157 | |
Service Period Stock Options | Chief Executive Officer | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Performance-Vested Stock Options | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Performance-vested stock options | 499,079 | ||
Performance-vested stock options, weighted average exercise price | $ 10.14 | ||
2006 Stock Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 5 years | ||
Stock options, available for grant | 0 | ||
Total number of unexercised options | 20,619 | ||
2010 Stock Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock options, available for grant | 0 | ||
Total number of unexercised options | 696,901 | ||
2010 Stock Plan | Minimum | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 2 years | ||
2010 Stock Plan | Maximum | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
2014 Omnibus Incentive Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock options, available for grant | 1,949,637 | 3,979,200 | |
2014 Omnibus Incentive Plan | Restricted Stock Units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Total number of unexercised options | 1,849,387 | ||
2014 Omnibus Incentive Plan | Restricted Stock Units | Employee | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
2014 Omnibus Incentive Plan | Restricted Stock Units | Non-employee Director | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 1 year |
Equity Incentive Plans - Summar
Equity Incentive Plans - Summary of Activity Related to Outstanding Stock Options (Details) | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Service Period Stock Options | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares, Outstanding Beginning Balance | shares | 2,030,266 |
Shares, Granted | shares | 95,364 |
Shares, Exercised | shares | (6,696) |
Shares, Outstanding Ending Balance | shares | 2,118,934 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 9.47 |
Weighted Average Exercise Price, Granted | $ / shares | 16.45 |
Weighted Average Exercise Price, Exercised | $ / shares | 8.04 |
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares | $ 9.79 |
Performance-Vested Stock Options | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares, Outstanding Beginning Balance | shares | 1,154,393 |
Shares, Granted | shares | 21,455 |
Shares, Outstanding Ending Balance | shares | 1,175,848 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 10.50 |
Weighted Average Exercise Price, Granted | $ / shares | 16.45 |
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares | $ 10.61 |
Restricted Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Shares, Outstanding Beginning Balance | shares | 165,240 |
Shares, Granted | shares | 106,887 |
Shares, Outstanding Ending Balance | shares | 272,127 |
Weighted-Average Grant-Date Fair Value Per Unit, Outstanding Beginning Balance | $ / shares | $ 10.99 |
Weighted-Average Grant-Date Fair Value Per Unit, Granted | $ / shares | 16.45 |
Weighted-Average Grant-Date Fair Value Per Unit, Outstanding Ending Balance | $ / shares | $ 13.13 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Adjustments between net loss and net loss attributable to common stockholders | $ 0 | $ 0 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Potentially Dilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | 2,192,799 | 2,920,724 |
Service Period Stock Options | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | 2,026,372 | 2,762,092 |
Restricted Stock Units | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | 166,428 | 97,515 |
Warrants | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Potentially dilutive securities | 61,117 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Purchases of Raw Materials | ||
Related Party Transaction [Line Items] | ||
Payments made to a stockholder for distribution services | $ 2,657,358 | $ 2,016,862 |
Concentrations - Additional Inf
Concentrations - Additional Information (Details) | Mar. 31, 2018USD ($) |
Maximum | |
Concentration Risk [Line Items] | |
Cash, FDIC insured amount | $ 250,000 |