Company Quick10K Filing
Blue Apron
Price8.60 EPS-3
Shares13 P/E-3
MCap113 P/FCF-21
Net Debt-3 EBIT-39
TEV110 TEV/EBIT-3
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-10-29
10-Q 2020-06-30 Filed 2020-07-29
10-Q 2020-03-31 Filed 2020-04-29
10-K 2019-12-31 Filed 2020-02-18
10-Q 2019-09-30 Filed 2019-10-31
10-Q 2019-06-30 Filed 2019-08-06
10-Q 2019-03-31 Filed 2019-04-30
10-K 2018-12-31 Filed 2019-02-25
10-Q 2018-09-30 Filed 2018-11-14
10-Q 2018-06-30 Filed 2018-08-02
10-Q 2018-03-31 Filed 2018-05-03
10-K 2017-12-31 Filed 2018-02-22
10-Q 2017-09-30 Filed 2017-11-03
10-Q 2017-06-30 Filed 2017-08-10
8-K 2020-11-23
8-K 2020-11-17
8-K 2020-10-29
8-K 2020-10-29
8-K 2020-10-16
8-K 2020-09-29
8-K 2020-08-05
8-K 2020-07-29
8-K 2020-07-29
8-K 2020-06-15
8-K 2020-05-14
8-K 2020-04-29
8-K 2020-04-29
8-K 2020-03-30
8-K 2020-03-19
8-K 2020-02-18
8-K 2020-02-18
8-K 2019-12-31
8-K 2019-10-31
8-K 2019-10-25
8-K 2019-08-06
8-K 2019-08-06
8-K 2019-06-14
8-K 2019-06-13
8-K 2019-05-17
8-K 2019-04-30
8-K 2019-04-30
8-K 2019-03-28
8-K 2019-02-27
8-K 2019-02-15
8-K 2019-01-31
8-K 2019-01-30
8-K 2019-01-30
8-K 2019-01-29
8-K 2018-12-19
8-K 2018-12-18
8-K 2018-11-14
8-K 2018-11-13
8-K 2018-11-13
8-K 2018-10-09
8-K 2018-08-02
8-K 2018-08-02
8-K 2018-06-14
8-K 2018-05-16
8-K 2018-05-03
8-K 2018-05-03
8-K 2018-02-25
8-K 2018-02-13

APRN 10Q Quarterly Report

Part I Financial Information
Item 1. Financial Statements
Item 2.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II Other Information
Item 1. Legal Proceedings
Item 1A.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 aprn-20200930xex31d1.htm
EX-31.2 aprn-20200930xex31d2.htm
EX-32.1 aprn-20200930xex32d1.htm
EX-32.2 aprn-20200930xex32d2.htm

Blue Apron Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
0.60.40.30.1-0.0-0.22017201820192020
Assets, Equity
0.30.20.10.1-0.0-0.12017201820192020
Rev, G Profit, Net Income
0.30.20.10.1-0.0-0.12017201820192020
Ops, Inv, Fin

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020.

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to

Commission file number 001-38134

Blue Apron Holdings, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

    

81-4777373

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

28 Liberty Street, New York, New York

10005

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code (347) 719-4312

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class

Trading Symbol

Name of Exchange on Which Registered

Class A Common Stock, $0.0001 par value per share

APRN

New York Stock Exchange LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer 

Accelerated filer 

Smaller reporting company 

Emerging growth company 

Non-accelerated filer  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   No 

Indicate the number of shares outstanding of each class of the issuer’s common stock as of the latest practicable date.

Class

Number of Shares Outstanding

Class A Common Stock, $0.0001 par value

14,031,986 shares outstanding as of September 30, 2020

Class B Common Stock, $0.0001 par value

3,653,820 shares outstanding as of September 30, 2020

Class C Capital Stock, $0.0001 par value

0 shares outstanding as of September 30, 2020

Table of Contents

BLUE APRON HOLDINGS, INC.

TABLE OF CONTENTS

    

 

PART I

FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements (unaudited)

4

Consolidated Balance Sheets

4

Consolidated Statements of Operations

5

Consolidated Statements of Stockholders’ Equity (Deficit)

6

Consolidated Statements of Cash Flows

7

Notes to Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

44

Item 4.

Controls and Procedures

44

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

45

Item 1A.

Risk Factors

47

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

80

Item 3.

Defaults Upon Senior Securities

81

Item 4.

Mine Safety Disclosures

81

Item 5.

Other Information

81

Item 6.

Exhibits

82

SIGNATURES

83

1

Table of Contents

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans, and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the “Risk Factors” section and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:

our expectations regarding our expenses and net revenue, our ability to grow adjusted EBITDA and to achieve or maintain profitability, the continued sufficiency of our cash resources, our needs for additional financing, our ability to effectively manage expenses and cash flows, and our ability to remain in compliance with financial and other covenants under our indebtedness;
our ability, including the timing and extent, to sufficiently manage costs and to fund investments in our operations from cash from operations or additional financings in amounts necessary to continue to support the execution of our growth strategy;
our ability, including the timing and extent, to successfully execute our growth strategy, cost-effectively attract new customers and retain existing customers, to continue to expand our direct-to-consumer product offerings, and to continue to benefit from the implementation of operational efficiency practices;
our ability to sustain the increased demand resulting from the COVID-19 (coronavirus) pandemic and to retain new customers;
any material and adverse impact of the COVID-19 pandemic on our operations and results, including as a result of our inability to meet demand due to loss of adequate labor, whether as a result of heightened absenteeism or challenges in recruiting and retention or otherwise, prolonged closures, or series of temporary closures, of one or more fulfillment centers, and supply chain or carrier interruptions or delays;
changes in consumer behaviors that could lead to declines in demand, both as COVID-19 related restrictions continue to be lifted to varying degrees across the United States and/or consumer fears dissipate and/or as a result of the COVID-19 pandemic’s impact on financial markets and economic conditions, including on consumer spending habits;
our expectations regarding the benefits and costs and charges associated with the closure of our Arlington, Texas fulfillment center;
our ability to maintain and grow the value of our brand and reputation;

2

Table of Contents

our expectations regarding, and the stability of, our supply chain, including potential shortages or interruptions in the supply or delivery of ingredients, as a result of COVID-19 or otherwise;
our ability to maintain food safety and prevent food-borne illness incidents and our susceptibility to supplier-initiated recalls;
general changes in consumer tastes and preferences or in consumer spending;
our ability to effectively compete;
our ability to attract and retain qualified employees and key personnel in sufficient numbers;
our ability to comply with modified or new laws and regulations applying to our business;
our vulnerability to adverse weather conditions, natural disasters, and public health crises, including pandemics; and
our ability to obtain and maintain intellectual property protection.

While we may elect to update these forward-looking statements at some point in the future, whether as a result of any new information, future events, or otherwise, we have no current intention of doing so except to the extent required by applicable law.

3

Table of Contents

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

BLUE APRON HOLDINGS, INC.

Consolidated Balance Sheets

(In thousands, except share and per-share data)

(Unaudited)

September 30, 

December 31, 

2020

2019

ASSETS

  

 

  

CURRENT ASSETS:

  

 

  

Cash and cash equivalents

$

58,722

$

43,531

Accounts receivable, net

 

112

 

248

Inventories, net

 

19,468

 

25,106

Prepaid expenses and other current assets

 

22,951

 

8,864

Total current assets

 

101,253

 

77,749

Property and equipment, net

 

129,163

 

181,806

Other noncurrent assets

 

4,472

 

6,510

TOTAL ASSETS

$

234,888

$

266,065

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

  

 

  

CURRENT LIABILITIES:

 

  

 

  

Accounts payable

$

27,159

$

23,972

Accrued expenses and other current liabilities

 

36,398

 

30,366

Current portion of long-term debt

9,136

Deferred revenue

 

5,773

 

6,120

Total current liabilities

 

78,466

 

60,458

Long-term debt

34,028

53,464

Facility financing obligation

35,971

71,689

Other noncurrent liabilities

 

12,775

 

12,455

TOTAL LIABILITIES

 

161,240

 

198,066

Commitments and contingencies (Note 10)

 

  

 

  

STOCKHOLDERS’ EQUITY (DEFICIT):

 

  

 

  

Class A common stock, par value of $0.0001 per share — 1,500,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 14,031,986 and 7,799,093 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

1

1

Class B common stock, par value of $0.0001 per share — 175,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 3,653,820 and 5,464,196 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

 

1

 

1

Class C common stock, par value of $0.0001 per share — 500,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 0 shares issued and outstanding as of September 30, 2020 and December 31, 2019

Additional paid-in capital

 

639,918

 

599,976

Accumulated deficit

 

(566,272)

 

(531,979)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

 

73,648

 

67,999

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

$

234,888

$

266,065

The accompanying notes are an integral part of these Consolidated Financial Statements.

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BLUE APRON HOLDINGS, INC.

Consolidated Statements of Operations

(In thousands, except share and per-share data)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2020

    

2019

    

2020

    

2019

Net revenue

$

112,253

$

99,490

$

345,150

$

360,546

Operating expenses:

Cost of goods sold, excluding depreciation and amortization

 

74,499

 

67,393

 

213,005

 

221,570

Marketing

 

10,862

 

12,127

 

37,455

 

36,074

Product, technology, general and administrative

 

33,687

 

35,333

 

100,397

 

109,599

Depreciation and amortization

5,871

7,303

18,799

24,279

Other operating expense

1,100

1,261

4,567

1,491

Total operating expenses

 

126,019

 

123,417

 

374,223

 

393,013

Income (loss) from operations

 

(13,766)

 

(23,927)

 

(29,073)

 

(32,467)

Interest income (expense), net

(1,482)

(2,260)

(5,178)

(6,718)

Income (loss) before income taxes

 

(15,248)

 

(26,187)

 

(34,251)

 

(39,185)

Benefit (provision) for income taxes

 

(14)

 

(9)

 

(42)

 

(34)

Net income (loss)

$

(15,262)

$

(26,196)

$

(34,293)

$

(39,219)

Net income (loss) per share attributable to Class A, Class B, and Class C common stockholders:

Basic

$

(0.96)

$

(1.99)

$

(2.41)

$

(3.01)

Diluted

$

(0.96)

$

(1.99)

$

(2.41)

$

(3.01)

Weighted-average shares used to compute net income (loss) per share attributable to Class A, Class B, and Class C common stockholders:

Basic

15,861,948

13,133,056

14,206,273

13,049,851

Diluted

15,861,948

13,133,056

14,206,273

13,049,851

The accompanying notes are an integral part of these Consolidated Financial Statements.

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BLUE APRON HOLDINGS, INC.

Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands, except share data)

(Unaudited)

Class A

Class B

Class C

Additional

Total

Common Stock *

Common Stock *

Common Stock *

Paid-In

Accumulated

Stockholders'

 

Shares

 

Amount

Shares

 

Amount

 

Shares

 

Amount

Capital

 

Deficit

 

Equity (Deficit)

2020

Balance — December 31, 2019

 

7,799,093

$

1

5,464,196

$

1

$

$

599,976

$

(531,979)

$

67,999

Conversion from Class B to Class A common stock

1,835,947

0

(1,835,947)

0

Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings

92,243

0

25,999

0

486

486

Share-based compensation

2,321

2,321

Net income (loss)

(20,145)

(20,145)

Balance — March 31, 2020

 

9,727,283

$

1

3,654,248

$

1

$

$

602,783

$

(552,124)

$

50,661

Conversion from Class B to Class A common stock

101

0

(101)

0

Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings

159,260

0

(3)

(3)

Share-based compensation

2,097

2,097

Net income (loss)

1,114

1,114

Balance — June 30, 2020

 

9,886,644

$

1

3,654,147

$

1

$

$

604,877

$

(551,010)

$

53,869

Conversion from Class B to Class A common stock

327

0

(327)

0

Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings

145,015

0

(7)

(7)

Issuance of common stock, net of offering costs

4,000,000

0

32,867

32,867

Share-based compensation

2,181

2,181

Net income (loss)

(15,262)

(15,262)

Balance — September 30, 2020

 

14,031,986

$

1

3,653,820

$

1

$

$

639,918

$

(566,272)

$

73,648

2019

Balance — December 31, 2018

 

5,240,073

$

1

7,714,036

$

1

$

$

590,538

$

(471,238)

$

119,302

Conversion from Class B to Class A common stock

1,104,091

0

(1,104,091)

(0)

Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings

23,911

0

27,444

0

103

103

Share-based compensation

2,974

2,974

Impact of adoption of accounting standard update

340

340

Net income (loss)

(5,275)

(5,275)

Balance — March 31, 2019

 

6,368,075

$

1

6,637,389

$

1

$

$

593,615

$

(476,173)

$

117,444

Conversion from Class B to Class A common stock

210,664

0

(210,664)

(0)

Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings

80,391

0

139

0

(9)

(9)

Share-based compensation

1,724

1,724

Other

(64)

(0)

(35)

(0)

Net income (loss)

(7,748)

(7,748)

Balance — June 30, 2019

 

6,659,066

$

1

6,426,829

$

1

$

$

595,330

$

(483,921)

$

111,411

Conversion from Class B to Class A common stock

862,633

0

(862,633)

(0)

Issuance of common stock upon exercise of stock options and vesting of restricted stock, net of tax withholdings

86,346

0

(38)

(38)

Share-based compensation

2,311

2,311

Net income (loss)

(26,196)

(26,196)

Balance — September 30, 2019

 

7,608,045

$

1

5,564,196

$

1

$

$

597,603

$

(510,117)

$

87,488

* Reflects the 1-for-15 reverse stock split that became effective on June 14, 2019.

The accompanying notes are an integral part of these Consolidated Financial Statements.

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BLUE APRON HOLDINGS, INC.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended

September 30, 

2020

    

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

(34,293)

$

(39,219)

Adjustments to reconcile net income (loss) to net cash from (used in) operating activities:

Depreciation and amortization of property and equipment

 

18,799

 

24,279

Loss (gain) on disposal of property and equipment

 

 

273

Loss (gain) on build-to-suit accounting derecognition

(4,936)

Loss on impairment

7,662

1,261

Changes in reserves and allowances

 

(235)

 

(1,102)

Share-based compensation

 

6,338

 

6,669

Non-cash interest expense

546

372

Changes in operating assets and liabilities:

Accounts receivable

 

136

 

(81)

Inventories

 

6,326

 

3,340

Prepaid expenses and other current assets

 

(13,966)

 

2,843

Accounts payable

 

3,388

 

5,967

Accrued expenses and other current liabilities

 

4,249

 

(2,997)

Deferred revenue

 

(347)

 

(4,361)

Other noncurrent assets and liabilities

 

2,281

 

(2,816)

Net cash from (used in) operating activities

 

(4,052)

 

(5,572)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

 

(4,777)

 

(3,900)

Proceeds from sale of property and equipment

165

378

Net cash from (used in) investing activities

 

(4,612)

 

(3,522)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock, net of offering costs

32,867

Repayments of debt

(10,846)

Payments of debt issuance costs

(24)

Proceeds from exercise of stock options

 

477

 

54

Principal payments on capital lease obligations

 

(166)

 

(185)

Net cash from (used in) financing activities

 

22,332

 

(155)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

13,668

 

(9,249)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — Beginning of period

 

46,443

 

97,307

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH — End of period

$

60,111

$

88,058

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid for income taxes, net of refunds

$

60

$

60

Cash paid for interest

$

4,991

$

7,388

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:

Acquisition (disposal) of property and equipment financed under capital lease obligations

$

(565)

$

Non-cash additions to property and equipment

$

261

$

339

Purchases of property and equipment in Accounts payable and Accrued expenses and other current liabilities

$

119

$

221

The accompanying notes are an integral part of these Consolidated Financial Statements.

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BLUE APRON HOLDINGS, INC.

Notes to Consolidated Financial Statements

(Unaudited)

1. Organization and Description of Business

When used in these notes, Blue Apron Holdings, Inc. and its subsidiaries are collectively referred to as the “Company.”

The Company creates original recipes, which are sent along with fresh, high-quality, seasonally inspired ingredients, directly to customers for them to prepare, cook, and enjoy. The Company creates meal experiences around original recipes every week based on what’s in-season with farming partners and other suppliers. Customers can choose which recipes they would like to receive in a given week, and the Company delivers those recipes to their doorsteps along with the pre-portioned ingredients required to cook those recipes.

In addition to meals, the Company sells wine through Blue Apron Wine, a direct-to-consumer wine delivery service launched in September 2015. The Company also sells a curated selection of cooking tools, utensils, pantry items, and add-on products for different culinary occasions through Blue Apron Market, an e-commerce market launched in November 2014.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The unaudited interim Consolidated Financial Statements have been prepared on the same basis as the audited Consolidated Financial Statements, and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of September 30, 2020 and December 31, 2019, results of operations for the three months and nine months ended September 30, 2020 and 2019, and cash flows for the nine months ended September 30, 2020 and 2019. These unaudited Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 18, 2020 (the “Annual Report”). There have been no material changes in the Company's significant accounting policies from those that were disclosed in Note 2, Summary of Significant Accounting Policies, included in the Annual Report.

The accompanying Consolidated Financial Statements include the accounts of Blue Apron Holdings, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company prepares its Consolidated Financial Statements and related disclosures in conformity with accounting principles generally accepted in the United States (“GAAP”).

Liquidity and Going Concern Evaluation

The Company has a history of net losses and negative operating cash flows. In addition, the Company has experienced significant negative trends in its net revenue. While the year-over-year declines in net revenue have narrowed in more recent periods, and trends in net losses and operating cash flows have improved during the three and nine months ended September 30, 2020, that narrowing and improvement is, in part, due to heightened demand driven by the various COVID-19 related restrictions on consumers that have been enacted, and remain in effect to varying degrees, throughout much of the United States in response to the COVID-19 pandemic. These positive trends on the Company’s operating results may not continue at current levels, if at all, depending on the duration and severity of the COVID-19 pandemic, and trends in future periods may return to levels experienced in periods prior to the COVID-19 pandemic.

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As of September 30, 2020, the Company had Cash and cash equivalents of $58.7 million and total outstanding debt of $43.2 million, net of unamortized debt issuance costs. As of that date, total outstanding debt consisted of a revolving credit facility entered into by the Company in August 2016 under a revolving credit and guaranty agreement (the “revolving credit facility”) that was subsequently amended, most recently in October 2019 with a maturity date of August 2021. As of September 30, 2020, the Company had $43.8 million in outstanding borrowings and $0.3 million in issued letters of credit under the revolving credit facility. The remaining borrowing capacity on the revolving credit facility was $0.0 million.

The revolving credit facility contained certain restrictive covenants, financial covenants, and affirmative and financial reporting covenants restricting the Company’s and the Company’s subsidiaries’ activities. As of September 30, 2020 and December 31, 2019, the Company was in compliance with all of the covenants under the revolving credit facility. See Note 9 for further discussion on the revolving credit facility. As discussed further below, in October 2020, the Company fully repaid and terminated the revolving credit facility with the proceeds of the Company’s senior secured term loan and cash on hand.

On August 10, 2020, the Company completed an underwritten public offering (the “offering”), pursuant to its universal shelf registration statement filed with the SEC on April 29, 2020, of 4,000,000 shares of the Company’s Class A common stock, resulting in $32.9 million of proceeds, net of underwriting discounts and commissions and offering costs. The net proceeds from the Offering were subject to the mandatory prepayment provisions of the revolving credit facility, and a portion of the proceeds was consequently used to make a repayment of $10.8 million of the borrowings outstanding under the Company’s revolving credit facility.

Subsequent to the end of the third quarter, on October 16, 2020, the Company entered into a financing agreement which provides for a senior secured term loan in the aggregate principal amount of $35.0 million that matures in March 2023. The proceeds of the senior secured term loan were used, together with cash on hand, to repay in full the outstanding indebtedness under the revolving credit facility and to pay fees and expenses in connection with the transactions contemplated by the senior secured term loan. The Company terminated the revolving credit facility effective as of the same date. The senior secured term loan bears interest at a rate equal to LIBOR (subject to a 1.50% floor) plus 8.00% per annum. The principal amount of the senior secured term loan will be repayable in equal quarterly installments of $875,000 through December 31, 2022, with the remaining unpaid principal amount of the senior secured term loan repayable on March 31, 2023.

The senior secured term loan contains restrictive covenants, financial covenants, and affirmative and financial reporting covenants restricting the Company and the Company’s subsidiaries’ activities. The financial covenants include a requirement to maintain a minimum aggregate liquidity balance of $20.0 million at all times and a minimum subscription count (defined in the senior secured term loan as the number of all active customers on the Company’s account list) of 300,000 on any determination date occurring between the effective date of the senior secured term loan and December 31, 2021, and 320,000 on any determination date occurring thereafter.

The Company is currently continuing to pursue its previously announced strategy to drive customer and revenue growth alongside managing heightened demand resulting from the COVID-19 pandemic. In light of the recent Offering and the senior secured term loan subsequent to the third quarter, as well as improvements in the Company’s business from the Company’s growth strategy, the Company’s board of directors has concluded its review of a broad range of strategic alternatives that was announced earlier this year. The board of directors and the Company will continue to evaluate and look for opportunities to maximize stockholder value as part of regular strategic reviews. The Company’s ability, including the timing and extent, to successfully execute its growth strategy is inherently uncertain and is dependent on continued sufficiency of cash resources, and its ability to implement the initiatives and deliver the results as forecasted, among other factors. Due to this uncertainty, if the Company is unable to sufficiently deliver results from its strategy, effectively manage liquidity and/or to cost effectively attract new customers and retain existing customers, the Company may not be able to maintain compliance with its financial covenants in future periods. Failure to comply with those covenants, including the minimum liquidity and minimum subscription count, may result in an event of default under the Company’s senior secured term loan. In the event the Company does not have sufficient cash resources upon an event of default, if the Company were unable to obtain a waiver or successfully renegotiate the terms

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of its senior secured term loan with its lenders, and the lenders enforced one or more of their rights upon default, the Company could be unable to meet its current obligations.

If the Company is unable to sufficiently execute its growth strategy, it believes it has plans to effectively manage liquidity and customer acquisition and retention in order to maintain compliance with its debt covenants. This includes potential significant expense reductions in areas identified by the Company in product, technology, general and administrative costs to achieve savings and reinvest in the business and to reaccelerate marketing investments to maintain the minimum subscription count. In addition, the Company has the ability to adjust its marketing strategies and further increase customer acquisition through promotional discounts, as needed, in order to maintain compliance with the minimum subscription count covenant.

A significant portion of the Company’s costs is discretionary in nature and, if needed, the Company has the ability to reduce or delay spending in order to reduce expenses and improve liquidity. The Company has previously demonstrated an ability to implement various cost reduction initiatives, including through workforce reductions and other cost optimizing initiatives. For example, in February 2020, the Company announced the closure of its Arlington, Texas fulfillment center and the consolidation of production volume from its Arlington, Texas fulfillment center into its Linden, New Jersey and Richmond, California fulfillment centers, which is estimated to generate annual savings of approximately $8.0 million.

Based on the current facts and circumstances, the improved financial flexibility provided through the financing transactions discussed above, the Company’s financial planning process and its historical ability to implement cost reductions and adjust marketing strategies, the Company believes it is probable it can effectively manage liquidity and subscription count in order to maintain compliance with the financial covenants under its senior secured term loan for at least the next 12 months. As a result, the Company has concluded that, after consideration of management’s plans, it has sufficient liquidity to meet its obligations within one year after the issuance date of the Consolidated Financial Statements, and it does not have substantial doubt about its ability to continue as a going concern.

Use of Estimates

In preparing its Consolidated Financial Statements in accordance with GAAP, the Company is required to make estimates and assumptions that affect the amounts of assets, liabilities, revenue, costs, and expenses, and disclosure of contingent assets and liabilities which are reported in the Consolidated Financial Statements and accompanying disclosures. The accounting estimates that require the most difficult and subjective judgments include revenue recognition, inventory valuation, leases, recoverability of long-lived assets, and the recognition and measurement of contingencies. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from the Company’s estimates and assumptions.

Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. The Company may take advantage of these exemptions until the Company is no longer an emerging growth company. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. The Company has elected to use the extended transition period for complying with new or revised accounting standards, and as a result of this election, its financial statements may not be comparable to companies that comply with public company effective dates. The Company may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of its initial public offering (the “IPO”) on July 5, 2017, or such earlier time that it is no longer an emerging growth company. The Company would cease to be an emerging growth company if it has more than $1.07 billion in annual revenue, has more than $700.0 million in market value of its stock held by non-affiliates, or it issues more than $1.0 billion of non-convertible debt securities over a three-year period.

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Smaller Reporting Company Status

The Company is a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, and therefore qualifies for reduced disclosure requirements for smaller reporting companies.

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued its final standard on lease accounting, Accounting Standards Update No. 2016-02, Leases (Topic 842), which supersedes Topic 840, Leases. The new accounting standard requires the recognition of right-of-use assets and lease liabilities for all long-term leases, including operating leases, on the balance sheet. The new standard also provides additional guidance on the measurement of the right-of-use assets and lease liabilities and will require enhanced disclosures about the Company’s leasing arrangements. In September 2017, the FASB issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments, to add SEC paragraphs pursuant to an SEC Staff Announcement made at the July 20, 2017 Emerging Issues Task Force meeting. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, to improve and clarify certain aspects of ASU No. 2016-02. In January 2019, the FASB issued ASU No. 2019-01, Leases (Topic 842): Codification Improvements, to improve and clarify aspects of ASU No. 2016-02. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, and in June 2020, the FASB issued ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, to defer the effective date of ASU No. 2016-02 for certain entities. For the Company, the new standard is effective for annual periods beginning January 1, 2022. Upon adoption of this standard, the Company expects to recognize, on a discounted basis, its minimum commitments under non-cancelable operating leases on the Consolidated Balance Sheets resulting in the recording of right-of-use assets and lease obligations. The Company is currently evaluating any additional impacts this guidance will have on its Consolidated Financial Statements.

In August 2018, the FASB issued Accounting Standards Update No. 2018-15 (“ASU 2018-15”), Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The standard is intended to clarify the accounting for implementation costs of a hosting arrangement that is a service contract. For the Company, the amendments in ASU 2018-15 are effective for annual periods beginning January 1, 2021. The Company is evaluating the impact this new guidance may have on its Consolidated Financial Statements.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The standard is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, as well as improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. For the Company, the amendments in ASU 2019-12 are effective for annual periods beginning January 1, 2022. The Company is evaluating the impact this new guidance may have on its Consolidated Financial Statements.

Recently Adopted Accounting Pronouncements

In November 2016, the FASB issued Accounting Standards Update No. 2016-18 (“ASU 2016-18”), Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force). The standard is intended to eliminate diversity in practice in the treatment of restricted cash in the statement of cash flows, and requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents, by including restricted cash in the beginning and ending cash, cash equivalents, and restricted cash balances. The Company adopted ASU 2016-18 for the annual period beginning January 1, 2019 using a retrospective approach. As a result of this guidance, net cash from (used in) operating activities decreased $0.3 million in the Consolidated Statements of Cash Flows for the nine months ended September 30, 2019. See Note 5 for a reconciliation of the cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts reported in the Consolidated Statements of Cash Flows.

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In March 2020, the FASB issued Accounting Standards Update No. 2020-04 (“ASU 2020-04”), Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard is intended to provide optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The guidance was effective upon issuance, and may be applied prospectively through December 31, 2022. The application of the guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

3. Inventories, Net

Inventories, net consist of the following:

September 30, 

December 31, 

2020

    

2019

(In thousands)

Fulfillment

$

3,097

$

2,741

Product

 

16,371

 

22,365

Inventories, net

$

19,468

$

25,106

Product inventory primarily consists of bulk and prepped food, containers, products available for resale, and wine products. Fulfillment inventory consists of packaging used for shipping and handling. Product and fulfillment inventories are recognized as components of Cost of goods sold, excluding depreciation and amortization in the accompanying Consolidated Statements of Operations when sold.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

September 30, 

December 31, 

2020

    

2019

(In thousands)

Insurance proceeds receivable

$

11,250

$

Prepaid insurance

7,964

5,755

Other current assets

 

3,737

 

3,109

Prepaid expenses and other current assets

$

22,951

$

8,864

Estimated insurance proceeds recoveries related to accrued legal settlements in Accrued expenses and other current liabilities are reflected as assets in the Company’s Consolidated Balance Sheets when it is determined that the recovery of such amounts is probable, and the amount can be reasonably determined. See Note 10 for further discussion of the insurance proceeds receivable.

5. Restricted Cash

Restricted cash reflects pledged cash deposited into savings accounts that is used as security primarily for fulfillment centers and office space leases, as well as cash held in escrow related to a pending legal judgment that was returned to the Company in the second quarter of 2020 following final resolution of the case.

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Table of Contents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts reported in the Consolidated Statements of Cash Flows:

September 30, 

December 31, 

2020

    

2019

(in thousands)

Cash and cash equivalents

$

58,722

$

43,531

Restricted cash included in Prepaid expenses and other current assets

279

Restricted cash included in Other noncurrent assets

1,110

2,912

Total cash, cash equivalents and restricted cash

$

60,111

$

46,443

September 30, 

December 31, 

2019

    

2018

(in thousands)

Cash and cash equivalents

$

85,866

$

95,615

Restricted cash included in Prepaid expenses and other current assets

Restricted cash included in Other noncurrent assets

2,192

1,692

Total cash, cash equivalents and restricted cash

$

88,058

$

97,307

6. Property and Equipment, Net

Property and equipment, net consists of the following:

September 30, 

December 31, 

2020

    

2019

(In thousands)

Computer equipment

$

10,933

 

$

11,453

Capitalized software

20,212

 

18,516

Fulfillment equipment

50,746

 

54,059

Furniture and fixtures

3,384

 

3,725

Leasehold improvements

32,639

 

41,735

Buildings(1)

114,877

148,507

Construction in process

1,526

 

1,803

Property and equipment, gross

234,317

 

279,798

Less: accumulated depreciation and amortization

(