Non-Controlling Interests

9 Months Ended

Sep. 30, 2017

Non-controlling interest

Non-controlling interest

Note 8 - Non-Controlling Interests

In connection with the Reorganization Transactions described in Note 7 — Stockholders’ Equity, PetIQ became the sole managing member of Holdco and, as a result, consolidates the financial results of Holdco.

The Company reports a non-controlling interest representing the LLC interests of Holdco held by Continuing LLC Owners. Changes in PetIQ’s ownership interest in Holdco while PetIQ retains its controlling interest in Holdco will be accounted for as equity transactions. As such, future redemptions or direct exchanges of LLC interests of Holdco by the Continuing LLC Owners will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in capital when Holdco has positive or negative net assets, respectively.  The Company is also required to make tax distributions based on the LLC Agreement to Continuing LLC Members on a regular basis, these distributions will reduce the noncontrolling interest.

The Company used the net proceeds from its IPO to purchase 3,556,666 newly-issued LLC Interests of Holdco and 133,334 LLC Interests from Continuing LLC Owners. Additionally, in connection with the Reorganization Transactions, the Company acquired 9,532,583 LLC Interests of Holdco.

As of September 30, 2017, there were 21,490,771 LLC Interests outstanding, of which PetIQ owned 13,222,583, representing a 61.5% ownership interest in Holdco.

-0
	LLC Interests held					% of Total
		Continuing LLC				Continuing LLC
	Owners		PetIQ, Inc.		Total	Owners	PetIQ, Inc.
As of September 30, 2017		8,268,188		13,222,583	21,490,771	38.5%	61.5%