Summary of Significant Accounting Policies	6 Months Ended
Jun. 30, 2022
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The unaudited interim Consolidated Financial Statements (the “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 June 30, 2022 and December 31, 2021, results of operations for the three and six months ended June 30, 2022 and 2021, and cash flows for the six months ended June 30, 2022 and 2021. 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, 2021 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2022 (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, except those additional significant policies as described within the accompanying notes to the Consolidated Financial Statements. 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 Under Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company is required to evaluate whether there is substantial doubt regarding its ability to continue as a going concern each reporting period, including interim periods. In this evaluation, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within twelve months of the issuance date of this Quarterly Report on Form 10-Q, and considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and the Company’s conditional and unconditional obligations before such date. The Company has a history of significant net losses, including $61.6 million and $34.3 million for the six months ended June 30, 2022, and 2021, respectively, and operating cash flows of $(47.1) million and $(10.9) million for the six months ended June 30, 2022, and 2021, respectively. The Company's current operating plan indicates it will continue to incur net losses and generate negative cash flows from operating activities. On May 5, 2022, the Company entered into a Note Purchase and Guarantee Agreement (the “note purchase agreement”), the proceeds of which were used, together with cash on hand, to repay in full and terminate its previous financing agreement. The note purchase agreement contains two financial maintenance covenants: (i) a minimum liquidity covenant that is set between $15.0 million and $25.0 million, depending on the results of the most recently performed Asset Valuation (as defined in the note purchase agreement), for any date subsequent to June 30, 2022, including within required cash flow forecasts provided to the noteholders, and (ii) a covenant requiring a minimum Asset Coverage Ratio (as defined in the note purchase agreement) of at least 1.25 to 1.00. As of the date of this Quarterly Report on Form 10-Q, the Company’s initial Asset Valuation has not been completed, with the minimum liquidity covenant therefore currently set at $25.0 million. As of June 30, 2022, the Company had cash and cash equivalents of $54.0 million and total outstanding debt of $27.2 million, net of unamortized debt issuance costs, all of which was classified as long-term debt. The Company was in compliance with all of the covenants under the note purchase agreement as of June 30, 2022. On April 29, 2022, the Company entered into a purchase agreement with RJB Partners LLC (“RJB”)(the “RJB April 2022 Purchase Agreement”), an affiliate of Joseph N. Sanberg, an existing stockholder of the Company. Under the RJB April 2022 Purchase Agreement, the Company agreed to issue and sell 3,333,333 shares of Class A common stock for an aggregate purchase price of $40.0 million (or $12.00 per share), of which 1,666,667 shares of Class A common stock were issued and sold to an affiliate of Joseph N. Sanberg for an aggregate purchase price of $20.0 million concurrently with the execution of the agreement, and with the remainder to be issued and sold under a second closing, initially expected to close by May 30, 2022 or such other date as agreed to by the parties. On August 7, 2022, the Company amended the RJB April 2022 Purchase Agreement, pursuant to which RJB agreed to purchase from the Company (i) the 1,666,667 shares of Class A common stock under the initial RJB April 2022 Purchase Agreement at a price of $5.00 per share, instead of $12.00 per share, and (ii) an additional 8,333,333 shares of Class A common stock at a price of $5.00 per share, for an aggregate purchase price of $50.0 million and 10,000,000 shares of Class A common stock in total, as well as agreeing to extend the date of the second closing to on or before August 31, 2022. The Company expects to invest these proceeds in its long-term growth plan, or for general corporate purposes. The Company may use up to $25.0 million for strategic purposes aimed at enhancing shareholder value, including exploring share buybacks. RJB’s obligation to complete the second closing is not subject to closing conditions, and, pursuant to such amendment, Joseph N. Sanberg has agreed to personally guarantee the payment of the aggregate purchase price of $50.0 million. In addition, on May 5, 2022, the Company entered into a gift card sponsorship agreement with an affiliate of Joseph N. Sanberg (the “May Sponsorship Gift Cards Agreement”), pursuant to which such affiliate agreed to pay the Company a $20.0 million net sponsorship fee to support a marketing program through which the Company will distribute gift cards, at the Company’s sole discretion, in order to support its growth strategy. On August 7, 2022, the Company amended the May Sponsorship Gift Cards Agreement to extend the funding date to on or before August 31 2022, and pursuant to which, Joseph N. Sanberg personally guaranteed his affiliate’s obligation. Without the liquidity provided by the second closing of the RJB April 2022 Purchase Agreement and the funding of the May Sponsorship Gift Cards Agreement (collectively, the “liquidity transactions”), the Company's forecast of future cash flows indicates that such cash flows would not be sufficient for the Company to maintain compliance under its minimum liquidity covenant for a period of twelve months following the issuance date of this Quarterly Report on Form 10-Q, which would result in an event of default under the note purchase agreement. Upon such event of default, the noteholders could declare all outstanding principal and interest be due and payable immediately and foreclose against the assets securing the borrowings. If the Company would be unable to obtain a waiver or successfully renegotiate the terms of its note purchase agreement, and the noteholders enforced one or more of their rights upon default, the Company would be unable to meet its current obligations. While management was able to obtain personal guarantees from Joseph N. Sanberg relating to his affiliates’ obligations to fund the liquidity transactions via the executed amendments above, which upon receipt of such proceeds would alleviate substantial doubt, there is no assurance that the liquidity transactions will be consummated in a timely manner, in amounts that are sufficient to maintain the Company's compliance under its minimum liquidity covenant, or on terms acceptable to the Company, or at all. Although the Company has been reviewing a number of potential alternatives regarding maintaining compliance with its minimum liquidity covenant, including cost reduction initiatives, renegotiating the terms of its note purchase agreement, and/or alternative sources for additional financing, such alternatives may not be achievable on favorable conditions, or at all, and these conditions and events in the aggregate raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s Consolidated Financial Statements do not include any adjustments that may result from the outcome of this uncertainty and have been prepared assuming the Company will 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, the fair value of share-based awards, the fair value of the Blue Torch warrant obligation, 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. This classification has allowed the Company to elect to take advantage of the extended transition period afforded for the implementation of new or revised accounting standards. The Company expects to lose its emerging growth company status on December 31, 2022, and as a result, will adopt all accounting pronouncements currently deferred under the emerging growth company election according to public company standards beginning with its Annual Report on Form 10-K for the year ending December 31, 2022, including interim period disclosures within that filing. The adoption dates for the new accounting pronouncements disclosed below have been presented accordingly. 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 standard on lease accounting, Accounting Standards Update No. 2016-02, Leases (Topic 842), which supersedes Topic 840, Leases. Subsequent to February 2016, 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, ASU No. 2018-10, Codification Improvements to Topic 842, Leases, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, ASU No. 2019-01, Leases (Topic 842): Codification Improvements, ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, to improve and clarify certain aspects of ASU No. 2016-02, as well as to defer its effective date for certain entities, and ASU No. 2021-05, Leases (Topic 842): Lessors – Certain Leases with Variable Lease Payments. For the Company, the new standard is effective for annual periods beginning January 1, 2022, and interim periods beginning January 1, 2023. 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 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, and interim periods beginning January 1, 2023. The Company is evaluating the impact this new guidance may have on its Consolidated Financial Statements.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The unaudited interim Consolidated Financial Statements (the “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 June 30, 2022 and December 31, 2021, results of operations for the three and six months ended June 30, 2022 and 2021, and cash flows for the six months ended June 30, 2022 and 2021. 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, 2021 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2022 (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, except those additional significant policies as described within the accompanying notes to the Consolidated Financial Statements.

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

Under Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company is required to evaluate whether there is substantial doubt regarding its ability to continue as a going concern each reporting period, including interim periods.

In this evaluation, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within twelve months of the issuance date of this Quarterly Report on Form 10-Q, and considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and the Company’s conditional and unconditional obligations before such date.

The Company has a history of significant net losses, including $61.6 million and $34.3 million for the six months ended June 30, 2022, and 2021, respectively, and operating cash flows of $(47.1) million and $(10.9) million for the six months ended June 30, 2022, and 2021, respectively. The Company's current operating plan indicates it will continue to incur net losses and generate negative cash flows from operating activities.

On May 5, 2022, the Company entered into a Note Purchase and Guarantee Agreement (the “note purchase agreement”), the proceeds of which were used, together with cash on hand, to repay in full and terminate its previous financing agreement. The note purchase agreement contains two financial maintenance covenants: (i) a minimum liquidity covenant that is set between $15.0 million and $25.0 million, depending on the results of the most recently performed Asset Valuation (as defined in the note purchase agreement), for any date subsequent to June 30, 2022, including within required cash flow forecasts provided to the noteholders, and (ii) a covenant requiring a minimum Asset Coverage Ratio (as defined in the note purchase agreement) of at least 1.25 to 1.00.

As of the date of this Quarterly Report on Form 10-Q, the Company’s initial Asset Valuation has not been completed, with the minimum liquidity covenant therefore currently set at $25.0 million. As of June 30, 2022, the Company had cash and cash equivalents of $54.0 million and total outstanding debt of $27.2 million, net of unamortized debt issuance costs, all of which was classified as long-term debt. The Company was in compliance with all of the covenants under the note purchase agreement as of June 30, 2022.

On April 29, 2022, the Company entered into a purchase agreement with RJB Partners LLC (“RJB”)(the “RJB April 2022 Purchase Agreement”), an affiliate of Joseph N. Sanberg, an existing stockholder of the Company. Under the RJB April 2022 Purchase Agreement, the Company agreed to issue and sell 3,333,333 shares of Class A common stock for an aggregate purchase price of $40.0 million (or $12.00 per share), of which 1,666,667 shares of Class A common stock were issued and sold to an affiliate of Joseph N. Sanberg for an aggregate purchase price of $20.0 million concurrently with the execution of the agreement, and with the remainder to be issued and sold under a second closing, initially expected to close by May 30, 2022 or such other date as agreed to by the parties.

On August 7, 2022, the Company amended the RJB April 2022 Purchase Agreement, pursuant to which RJB agreed to purchase from the Company (i) the 1,666,667 shares of Class A common stock under the initial RJB April 2022 Purchase Agreement at a price of $5.00 per share, instead of $12.00 per share, and (ii) an additional 8,333,333 shares of Class A common stock at a price of $5.00 per share, for an aggregate purchase price of $50.0 million and 10,000,000 shares of Class A common stock in total, as well as agreeing to extend the date of the second closing to on or before August 31, 2022. The Company expects to invest these proceeds in its long-term growth plan, or for general corporate purposes. The Company may use up to $25.0 million for strategic purposes aimed at enhancing shareholder value, including exploring share buybacks. RJB’s obligation to complete the second closing is not subject to closing conditions, and, pursuant to such amendment, Joseph N. Sanberg has agreed to personally guarantee the payment of the aggregate purchase price of $50.0 million.

In addition, on May 5, 2022, the Company entered into a gift card sponsorship agreement with an affiliate of Joseph N. Sanberg (the “May Sponsorship Gift Cards Agreement”), pursuant to which such affiliate agreed to pay the Company a $20.0 million net sponsorship fee to support a marketing program through which the Company will distribute gift cards, at the Company’s sole discretion, in order to support its growth strategy. On August 7, 2022, the Company amended the May Sponsorship Gift Cards Agreement to extend the funding date to on or before August 31 2022, and pursuant to which, Joseph N. Sanberg personally guaranteed his affiliate’s obligation.

Without the liquidity provided by the second closing of the RJB April 2022 Purchase Agreement and the funding of the May Sponsorship Gift Cards Agreement (collectively, the “liquidity transactions”), the Company's forecast of future cash flows indicates that such cash flows would not be sufficient for the Company to maintain compliance under its minimum liquidity covenant for a period of twelve months following the issuance date of this Quarterly Report on Form 10-Q, which would result in an event of default under the note purchase agreement. Upon such event of default, the noteholders could declare all outstanding principal and interest be due and payable immediately and foreclose against the assets securing the borrowings. If the Company would be unable to obtain a waiver or successfully renegotiate the terms of its note purchase agreement, and the noteholders enforced one or more of their rights upon default, the Company would be unable to meet its current obligations.

While management was able to obtain personal guarantees from Joseph N. Sanberg relating to his affiliates’ obligations to fund the liquidity transactions via the executed amendments above, which upon receipt of such proceeds would alleviate substantial doubt, there is no assurance that the liquidity transactions will be consummated in a timely manner, in amounts that are sufficient to maintain the Company's compliance under its minimum liquidity covenant, or on terms acceptable to the Company, or at all. Although the Company has been reviewing a number of potential alternatives regarding maintaining compliance with its minimum liquidity covenant, including cost reduction initiatives, renegotiating the terms of its note purchase agreement, and/or alternative sources for additional financing, such alternatives may not be achievable on favorable conditions, or at all, and these conditions and events in the aggregate raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s Consolidated Financial Statements do not include any adjustments that may result from the outcome of this uncertainty and have been prepared assuming the Company will 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, the fair value of share-based awards, the fair value of the Blue Torch warrant obligation, 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. This classification has allowed the Company to elect to take advantage of the extended transition period afforded for the implementation of new or revised accounting standards. The Company expects to lose its emerging growth company status on December 31, 2022, and as a result, will adopt all accounting pronouncements currently deferred under the emerging growth company election according to public company standards beginning with its Annual Report on Form 10-K for the year ending December 31, 2022, including interim period disclosures within that filing. The adoption dates for the new accounting pronouncements disclosed below have been presented accordingly.

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 standard on lease accounting, Accounting Standards Update No. 2016-02, Leases (Topic 842), which supersedes Topic 840, Leases. Subsequent to February 2016, 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, ASU No. 2018-10, Codification Improvements to Topic 842, Leases, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, ASU No. 2019-01, Leases (Topic 842): Codification Improvements, ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, to improve and clarify certain aspects of ASU No. 2016-02, as well as to defer its effective date for certain entities, and ASU No. 2021-05, Leases (Topic 842): Lessors – Certain Leases with Variable Lease Payments. For the Company, the new standard is effective for annual periods beginning January 1, 2022, and interim periods beginning January 1, 2023. 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 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, and interim periods beginning January 1, 2023. The Company is evaluating the impact this new guidance may have on its Consolidated Financial Statements.