QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification Number) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Class A Common Stock, $0.0001 par value per share |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☒ | Smaller reporting company | |||||
Emerging growth company |
Page |
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PART I—FINANCIAL INFORMATION |
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Item 1. |
Financial Statements (unaudited) |
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3 |
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4 |
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5 |
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6 |
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7 |
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Item 2. |
25 |
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Item 3. |
33 |
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Item 4. |
33 |
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34 |
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Item 1. |
34 |
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Item 1A. |
34 |
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Item 2. |
34 |
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Item 3. |
34 |
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Item 4. |
34 |
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Item 5. |
34 |
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Item 6. |
35 |
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36 |
As of | ||||||||
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
ASSETS |
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Current assets: |
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Cash |
$ | $ | ||||||
Accounts receivable, net |
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Inventories |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use |
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Deferred loan costs |
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Goodwill |
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Restricted cash |
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Other non-current assets |
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Total assets |
$ | $ | ||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
Operating lease liabilities |
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Finance lease liabilities |
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Business acquisition liabilities, current portion |
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Accrued and other current liabilities |
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Current portion of long-term debt |
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Total current liabilities |
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Revolving line of credit/capex line |
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Lease line of credit |
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Long-term operating lease liabilities |
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Long-term finance lease liabilities |
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Long-term business acquisition liabilities |
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Total liabilities |
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Commitments and contingencies (Note 12) |
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Stockholders’ Equity: |
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Class A common stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
( |
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Total stockholders’ equity attributable to The Real Good Food Company, Inc. |
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Non-controlling interest |
( |
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Total stockholders’ equity attributable to The Real Good Food Company, Inc. |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
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THREE MONTHS ENDED JUNE 30, |
SIX MONTHS ENDED JUNE 30, |
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2022 | 2021 | 2022 | 2021 | |||||||||||||
Net sales |
$ | $ | $ | $ | ||||||||||||
Cost of sales |
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Gross profit |
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Operating expenses: |
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Selling and distribution |
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Marketing |
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Administrative |
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Total operating expenses |
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Loss from operations |
( |
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) | ( |
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Interest expense |
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Change in fair value of convertible debt |
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Loss before income taxes |
( |
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Income tax expense |
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Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Less: net loss attributable to non-controlling interest |
( |
) | ( |
) | ||||||||||||
Preferred return on Series A preferred units |
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Net loss attributable to The Real Good Food Company, Inc. |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Net loss per common unit (basic and diluted) |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Weighted-average common units outstanding (basic and diluted) |
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THE REAL GOOD FOOD COMPANY, INC. |
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Unaudited Consolidated Statements of Stockholders’ Equity/Members’ Deficit |
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(In thousands except for share data) |
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Class A Common Stock |
Class B Common Stock |
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Members’ Equity |
Members’ Accumulated Deficit |
Shares |
Amount |
Shares |
Amount |
Additional Paid-in Capital |
Accumulated Deficit |
Non-Controlling Interest |
Total Equity |
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Balance, March 31, 2022 |
$ | — | $ | — | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | ( |
) | ( |
) |
( |
) | |||||||||||||||||||||||||||
Equity-based compensation |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
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Balance, June 30, 2022 |
$ | — | $ | — | $ | $ | $ | $ | ( |
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Class A Common Stock |
Class B Common Stock |
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Members’ Equity |
Members’ Accumulated Deficit |
Shares |
Amount |
Shares |
Amount |
Additional Paid-in Capital |
Accumulated Deficit |
Non-Controlling Interest |
Total Equity |
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Balance, December 31, 2021 |
$ | — | $ | — | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | ( |
) | ( |
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( |
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Equity-based compensation |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
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Balance, June 30, 2022 |
$ |
— |
$ |
— |
$ |
$ |
$ |
$ |
( |
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$ |
( |
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$ |
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Class A Common Stock |
Class B Common Stock |
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Members’ Equity |
Members’ Accumulated Deficit |
Shares |
Amount |
Shares |
Amount |
Additional Paid-in Capital |
Accumulated Deficit |
Non-Controlling Interest |
Total Equity |
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Balance, December 31, 2020 |
$ | $ | ( |
) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | $ | ( |
) | |||||||||||||||||||||
Net loss |
— | ( |
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Balance, June 30, 2021 |
$ | $ | ( |
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Class A Common Stock |
Class B Common Stock |
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Members’ Equity |
Members’ Accumulated Deficit |
Shares |
Amount |
Shares |
Amount |
Additional Paid-in Capital |
Accumulated Deficit |
Non-Controlling Interest |
Total Equity |
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Balance, March 31, 2021 |
$ | $ | ( |
) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | $ | ( |
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Net loss |
— | ( |
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Balance, June 30, 2021 |
$ | $ | ( |
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Six Months Ended June 30, |
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2022 |
2021 |
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Cash flows from operating activities: |
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Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Amortization of loan costs |
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Non-cash interest and debt fees |
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Equity compensation expense |
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Remeasurement of contingent consideration in business combinations |
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Change in fair value of convertible debt |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
( |
) | ( |
) | ||||
Inventories |
( |
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Other current and noncurrent assets |
( |
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Accounts payable and accrued expenses |
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Operating and finance lease liabilities, current and long-term |
( |
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Net cash used in operating activities |
( |
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Cash flows from investing activities: |
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Acquisition of business, net of cash acquired |
( |
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Purchase of property and equipment |
( |
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Net cash used in investing activities |
( |
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Cash flows from financing activities: |
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Proceeds from line of credit borrowings |
— |
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Payment on line of credit borrowings |
( |
) | — |
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Payments on acquisition related contingent consideration |
( |
) | — |
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Payments on acquisition related term loan |
( |
) | — |
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Payments on finance lease liabilities |
( |
) | ( |
) | ||||
Proceeds from debt |
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Proceeds from convertible notes |
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Payments on debt |
( |
) | ||||||
Payments of deferred offering cost |
( |
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Net cash provided by financing activities |
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Net (decrease) increase in cash and restricted cash |
( |
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Beginning cash and restricted cash |
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Ending cash and restricted cash |
$ |
$ |
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Supplemental disclosures of cash flow information: |
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Cash paid for interest |
$ | $ | ||||||
Supplemental disclosures of noncash investing and financing activities: |
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Net liabilities assumed from business combination |
$ | $ | ||||||
Lease liabilities arising from obtaining right-of-use |
$ | $ | ||||||
Purchase of property and equipment in accounts payable and accrued liabilities |
$ | $ | ||||||
Deferred offering costs in accounts payable and accrued liabilities |
$ | $ | ||||||
Purchase of property and equipment in lease line of credit |
$ | $ |
• |
Project Clean, Inc. changed its name to The Real Good Food Company, Inc. on October 7, 2021; |
• |
The Real Good Food Company, Inc. adopted an amended and restated certificate of incorporation to, among other things, provide for Class A common stock and Class B common stock; |
• |
The Real Good Food Company, Inc. used all of the net proceeds it received from the IPO to acquire Class A units of RGF at a purchase price per Class A unit equal to the IPO price per share of Class A common stock, less underwriting discounts and commissions, collectively representing 24% of the economic interests and all of the voting interests in the Reorganization of RGF’s outstanding units, including both Class A units and Class B units, following the IPO. RGF in turn used all of the net proceeds it received from The Real Good Food Company, Inc. for its continuing operations; and |
• |
The Real Good Food Company, Inc. became a holding company and the sole managing member of RGF, which has continued to operate the Company’s business. |
(In thousands) | June 30, 2022 | |||
Cash |
$ | |||
Restricted cash |
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Total cash reported in statements of cash flows |
$ | |||
Estimated Useful Lives | ||
Computers |
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Office equipment |
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Machinery and equipment |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
(in 000s) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Entrees |
$ | $ | $ | $ | ||||||||||||
Breakfast |
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Pizza and snacks |
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Total net sales |
$ | $ | $ | $ | ||||||||||||
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(In thousands) |
AS OF MARCH 10, 2021 |
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Inventories |
$ | |||
Property and equipment |
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Operating leases right-of-use |
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Total identifiable assets |
$ | |||
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Operating lease labilities – current |
$ | |||
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(In thousands) |
AS OF MARCH 10, 2021 |
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Operating lease labilities – non-current |
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Total liabilities assumed |
$ | |||
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Net identifiable assets acquired |
$ | |||
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Goodwill |
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Total purchase price allocation |
$ |
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As of | ||||||||
(in thousands) | June 30, 2022 | December 31, 2021 | ||||||
Ingredients and supplies |
$ | $ | ||||||
Finished goods |
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Total inventories |
$ | $ | ||||||
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As of | ||||||||
(in thousands) | June 30, 2022 | December 31, 2021 | ||||||
Computer equipment |
$ | $ | ||||||
Vehicles |
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Machinery and equipment |
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Leasehold improvements and office equipment |
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Total property and equipment |
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Less: accumulated depreciation |
( |
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Subtotal |
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Construction in progress |
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Property and equipment, net |
$ |
$ |
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Three Months Ended June 30, |
Six Months Ended June 30, |
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(in thousands) |
2022 |
2021 |
2022 |
2021 |
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Operating lease costs |
$ | $ | $ | $ | ||||||||||||
Finance lease costs: |
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Amortization of ROU assets |
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Interest on lease liabilities |
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Short-term lease costs |
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Total lease costs |
$ | $ | $ | $ | ||||||||||||
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As of June 30, | As of December 31, |
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(in thousands) | 2022 | 2021 | ||||||||
Assets |
Balance Sheet Location |
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Operating lease right-of-use |
Operating lease right-of-use |
$ | $ | |||||||
Finance lease right-of-use |
Property and equipment, net | |||||||||
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Total lease assets |
$ |
$ |
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Liabilities |
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Current: |
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Operating lease liabilities |
Operating lease liabilities | $ | $ | |||||||
Finance lease liabilities |
Financing lease liabilities | |||||||||
Noncurrent: |
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Operating lease liabilities |
Long term operating lease liabilities | |||||||||
Finance lease liabilities |
Long term finance lease liabilities | |||||||||
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Total lease liabilities |
$ |
$ |
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Six Months Ended June 30, |
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2022 |
2021 |
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(in thousands) | ||||||||
Supplemental cash flow information: |
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Cash paid for amounts included in the measurement of lease liabilities |
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Operating cash flows from operating leases |
$ |
$ |
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Operating cash flows from finance leases |
$ |
$ |
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Financing cash flows from finance lease |
$ |
$ |
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Supplemental noncash information on lease liabilities arising from obtaining right-of-use |
$ |
$ |
(in thousands) |
Operating Leases |
Finance Leases | ||||||||
Remaining of 2022 |
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$ | |
$ | ||||||
2023 |
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2024 |
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2025 |
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2026 |
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Thereafter |
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Total future lease payments |
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Less: imputed interest |
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( |
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( |
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Present value of lease obligations |
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(in thousands) |
Maturity Date |
Interest Rate |
As of June 30, 2022 |
As of December 31, 2021 |
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PMC Revolver |
November 2025 | Prime rate plus |
$ | $ | ||||||||
PMC CapEx Line |
November 2025 | Prime rate plus |
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PMC Lease Line of Credit |
November 2025 | Prime rate plus |
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Less: current maturities of long-term debt | ||||||||||||
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Long-term debt |
$ | $ | ||||||||||
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PMC Revolver |
% | |||
PMC CapEx Line |
% | |||
PMC Lease Line of Credit |
% |
Remainder of 2022 |
$ | |||
2023 |
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2024 |
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2025 |
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Total payments outstanding |
$ | |||
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(in thousands) |
Dollar Value |
Effect of Reorganization |
Post Reorganization |
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Common units |
$ | $ | ( |
) | $ | — | ||||||
Series A preferred units |
( |
) | — | |||||||||
Series Seed preferred units |
( |
) | — | |||||||||
Members equity November 9, 2021 |
— | — | ||||||||||
Total |
$ | $ | ( |
) | $ | |||||||
(in thousands) |
FOR THE THREE MONTHS ENDED JUNE 30, |
FOR THE SIX MONTHS ENDED JUNE 30, |
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2022 |
2021 |
2022 |
2021 |
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Numerator: |
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Net Loss (1) |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Less: net loss attributable to non-controlling interest |
( |
) | ( |
) | ||||||||||||
Less: Series A preferred dividends |
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Net loss attributable to common share/unitholders |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Denominator: |
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Weighted-average shares/units outstanding (2) |
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Loss per common share/unit |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
(1) |
Net loss per this table represents net loss attributable to the Real Good Food Company, Inc., for the three and six months ended June 30, 2022, and net loss attributable to RGF, the predecessor company, for the three and six months ended June 30, 2021. |
(2) |
Amounts for the 2022 represent shares of Class A common stock outstanding. Amounts for 2021 represent Common Units outstanding. |
Restricted Stock Units | Grant Date Fair Value | |||||||
Outstanding/Unvested as of December 31, 2021 |
$ | |||||||
Granted |
$ | |||||||
Outstanding/Unvested as of June 30, 2022 |
— |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended June 30, | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Net sales |
$ | 30,809 | $ | 18,685 | $ | 12,124 | 64.9 | % | ||||||||
Cost of sales |
28,458 | 16,023 | 12,435 | 77.6 | % | |||||||||||
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Gross profit |
2,351 | 2,662 | (311 | ) | (11.7 | )% | ||||||||||
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Operating expenses |
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Selling and distribution |
4,909 | 3,049 | 1,860 | 61.0 | % | |||||||||||
Marketing |
1,172 | 755 | 417 | 55.2 | % | |||||||||||
Administrative |
6,089 | 2,982 | 3,107 | 104.2 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
12,170 | 6,786 | 5,384 | 79.3 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations |
(9,819 | ) | (4,124 | ) | (5,695 | ) | 138.1 | % | ||||||||
Interest expense |
1,291 | 1,440 | (149 | ) | (10.3 | )% | ||||||||||
Change in fair value of convertible debt |
— | 370 | (370 | ) | (100.0 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes |
(11,110 | ) | (5,934 | ) | (5,176 | ) | 87.2 | % | ||||||||
Income tax expense |
— | — | — | — | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (11,087 | ) | $ | (5,934 | ) | $ | (5,176 | ) | 87.2 | % | |||||
Less: net loss attributable to non-controlling interest |
(8,449 | ) | — | |||||||||||||
Preferred return on Series A preferred units |
— | 146 | ||||||||||||||
|
|
|
|
|||||||||||||
Net loss attributable to The Real Good Food Company, Inc. |
$ | (2,661 | ) | $ | (6,080 | ) | ||||||||||
|
|
|
|
Three Months Ended June 30, |
||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Selling and distribution |
$ | 4,909 | $ | 3,049 | $ | 1,860 | 61.0 | % | ||||||||
Percentage of net sales |
15.9 | % | 16.3 | % | (0.4 | )% |
Three Months Ended June 30, |
||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Marketing |
$ | 1,172 | $ | 755 | $ | 417 | 55.2 | % | ||||||||
Percentage of net sales |
3.8 | % | 4.0 | % | (0.2 | )% |
Three Months Ended June 30, |
||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Administrative |
$ | 6,089 | $ | 2,982 | $ | 3,107 | 104.2 | % | ||||||||
Percentage of net sales |
19.8 | % | 16.0 | % | 3.8 | % |
Six Months Ended June 30, | ||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Net sales |
$ | 68,385 | $ | 35,463 | $ | 32,922 | 92.8 | % | ||||||||
Cost of sales |
61,787 | 28,788 | 32,999 | 114.6 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
6,598 | 6,675 | (77 | ) | (1.2 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses |
||||||||||||||||
Selling and distribution |
10,236 | 5,968 | 4,268 | 71.5 | % | |||||||||||
Marketing |
2,958 | 1,387 | 1,571 | 113.3 | % | |||||||||||
Administrative |
11,867 | 5,802 | 6,065 | 104.5 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
25,061 | 13,157 | 11,904 | 90.5 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations |
(18,463 | ) | (6,482 | ) | (11,981 | ) | 184.8 | % | ||||||||
Interest expense |
2,181 | 3,483 | (1,302 | ) | (37.4 | )% | ||||||||||
Change in fair value of convertible debt |
— | 370 | (370 | ) | (100.0 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes |
(20,644 | ) | (10,335 | ) | (10,309 | ) | 99.7 | % | ||||||||
Income tax expense |
— | — | — | — | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (20,644 | ) | $ | (10,335 | ) | $ | (10,309 | ) | 99.7 | % | |||||
Less: net loss attributable to non-controlling interest |
(15,689 | ) | — | |||||||||||||
Preferred return on Series A preferred units |
— | 292 | ||||||||||||||
|
|
|
|
|||||||||||||
Net loss attributable to The Real Good Food Company, Inc. |
$ | (4,955 | ) | $ | (10,627 | ) | ||||||||||
|
|
|
|
Six Months Ended June 30, |
||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Selling and distribution |
$ | 10,236 | $ | 5,968 | $ | 4,268 | 71.5 | % | ||||||||
Percentage of net sales |
15.0 | % | 16.8 | % | (1.9 | )% |
Six Months Ended June 30, |
||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Marketing |
$ | 2,958 | $ | 1,387 | $ | 1,571 | 113.3 | % | ||||||||
Percentage of net sales |
4.3 | % | 3.9 | % | 0.4 | % |
Six Months Ended June 30, |
||||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||||
Administrative |
$ | 11,867 | $ | 5,802 | $ | 6,065 | 104.5 | % | ||||||||
Percentage of net sales |
17.4 | % | 16.4 | % | 1.0 | % |
June 30, | ||||||||
(in 000s) | 2022 | 2021 | ||||||
Net cash used in operating activities |
$ | (30,097 | ) | $ | (1,236 | ) | ||
Net cash used in investing activities |
(3,630 | ) | (2,528 | ) | ||||
Net cash provided by financing activities |
16,631 | 4,390 | ||||||
|
|
|
|
|||||
Net (decrease) increase in cash and restricted cash |
(17,096 | ) | 626 | |||||
Cash and restricted cash at beginning of period |
29,745 | 28 | ||||||
|
|
|
|
|||||
Cash and restricted cash at end of period |
$ | 12,649 | $ | 654 | ||||
|
|
|
|
Item 1. |
Legal Proceedings |
Item 1A. |
Risk Factors |
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 |
Exhibit No. |
||
31.1* | Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32 | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | |
101.INS* | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* | Filed herewith. |
August 15, 2022 | By: | /s/ Gerard Law | ||||
Gerard Law | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
August 15, 2022 | By: | /s/ Akshay Jagdale | ||||
Akshay Jagdale | ||||||
Chief Financial Officer | ||||||
(Principal Financial and Accounting Officer) |
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gerard Law, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of The Real Good Food Company, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c) | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
August 15, 2022 |
|
/s/ Gerard Law | ||
(Date) | Gerard Law | |||
Chief Executive Officer | ||||
(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Akshay Jagdale, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of The Real Good Food Company, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
c) | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
August 15, 2022 |
/s/ Akshay Jagdale | |||
(Date) | Akshay Jagdale | |||
Chief Financial Officer | ||||
(Principal Financial and Accounting Officer) |
Exhibit 32
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of The Real Good Food Company, Inc. (the Company) for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Gerard Law, Chief Executive Officer, and Akshay Jagdale, Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the dates presented. |
August 15, 2022 | /s/ Gerard Law | |||
(Date) | Gerard Law | |||
Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
August 15, 2022 | /s/ Akshay Jagdale | |||
(Date) | Akshay Jagdale | |||
Chief Financial Officer | ||||
(Principal Financial and Accounting Officer) |
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Common Class A [Member] | ||
Common stock, Par or stated value per share | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 6,169,885 | 6,169,885 |
Common Stock, Shares, Outstanding | 6,169,885 | 6,169,885 |
Common Class B [Member] | ||
Common stock, Par or stated value per share | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common Stock, Shares, Issued | 19,577,681 | 19,577,681 |
Common Stock, Shares, Outstanding | 19,577,681 | 19,577,681 |
Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Income Statement [Abstract] | ||||
Net sales | $ 30,809 | $ 18,685 | $ 68,385 | $ 35,463 |
Cost of sales | 28,458 | 16,023 | 61,787 | 28,788 |
Gross profit | 2,351 | 2,662 | 6,598 | 6,675 |
Operating expenses: | ||||
Selling and distribution | 4,909 | 3,049 | 10,236 | 5,968 |
Marketing | 1,172 | 755 | 2,958 | 1,387 |
Administrative | 6,089 | 2,982 | 11,867 | 5,802 |
Total operating expenses | 12,170 | 6,786 | 25,061 | 13,157 |
Loss from operations | (9,819) | (4,124) | (18,463) | (6,482) |
Interest expense | 1,291 | 1,440 | 2,181 | 3,483 |
Change in fair value of convertible debt | 0 | 370 | 0 | 370 |
Loss before income taxes | (11,110) | (5,934) | (20,644) | (10,335) |
Income tax expense | 0 | 0 | 0 | 0 |
Net loss | (11,110) | (5,934) | (20,644) | (10,335) |
Less: net loss attributable to non-controlling interest | (8,449) | 0 | (15,689) | 0 |
Preferred return on Series A preferred units | 0 | 146 | 0 | 292 |
Net loss attributable to The Real Good Food Company, Inc. | $ (2,661) | $ (6,080) | $ (4,955) | $ (10,627) |
Earnings per share, basic | $ (0.43) | $ (0.69) | $ (0.8) | $ (1.21) |
Earnings per share, diluted | $ (0.43) | $ (0.69) | $ (0.8) | $ (1.21) |
Weighted average number of shares outstanding, basic | 6,169,885 | 8,800,132 | 6,169,885 | 8,800,132 |
Weighted average number of shares outstanding, diluted | 6,169,885 | 8,800,132 | 6,169,885 | 8,800,132 |
Consolidated Statements of Stockholders' Equity/Members' Deficit - USD ($) $ in Thousands |
Total |
Members' Equity |
Members' Accumulated Deficit |
Common Stock [Member]
Common Class A [Member]
|
Common Stock [Member]
Common Class B [Member]
|
Additional Paid-in Capital [Member] |
Accumulated Deficit |
Non- Controlling Interest |
---|---|---|---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2020 | $ 9,065 | $ (39,232) | ||||||
Beginning balance at Dec. 31, 2020 | $ (30,167) | |||||||
Net loss | (10,335) | (10,335) | ||||||
Net loss | (10,335) | |||||||
Ending Balance at Jun. 30, 2021 | 9,065 | (49,567) | ||||||
Ending balance at Jun. 30, 2021 | (40,502) | |||||||
Beginning Balance at Mar. 31, 2021 | 9,065 | (43,633) | ||||||
Beginning balance at Mar. 31, 2021 | (34,568) | |||||||
Net loss | (5,934) | (5,934) | ||||||
Net loss | (5,934) | |||||||
Ending Balance at Jun. 30, 2021 | $ 9,065 | $ (49,567) | ||||||
Ending balance at Jun. 30, 2021 | (40,502) | |||||||
Beginning Balance Unit at Dec. 31, 2021 | 6,169,885 | 19,577,681 | ||||||
Beginning balance at Dec. 31, 2021 | 30,985 | $ 1 | $ 2 | $ 49,693 | $ (10,143) | $ (8,568) | ||
Net loss | (20,644) | (4,955) | (15,689) | |||||
Equity-based compensation | 3,432 | 3,432 | ||||||
Ending Balance, Units at Jun. 30, 2022 | 6,169,885 | 19,577,681 | ||||||
Ending Balance at Jun. 30, 2022 | 9,065 | |||||||
Ending balance at Jun. 30, 2022 | 13,773 | $ 1 | $ 2 | 53,125 | (15,098) | (24,257) | ||
Beginning Balance Unit at Mar. 31, 2022 | 6,169,885 | 19,577,681 | ||||||
Beginning balance at Mar. 31, 2022 | 23,150 | $ 1 | $ 2 | 51,392 | (12,437) | (15,808) | ||
Net loss | (11,110) | (2,661) | (8,449) | |||||
Equity-based compensation | 1,733 | 1,733 | ||||||
Ending Balance, Units at Jun. 30, 2022 | 6,169,885 | 19,577,681 | ||||||
Ending Balance at Jun. 30, 2022 | 9,065 | |||||||
Ending balance at Jun. 30, 2022 | $ 13,773 | $ 1 | $ 2 | $ 53,125 | $ (15,098) | $ (24,257) |
ORGANIZATION AND DESCRIPTION OF BUSINESS |
6 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||
Description Of Business And Basis Of Presentation [Abstract] | |||||||||||||||||
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Organization The Real Good Food Company, Inc. was formed as a Delaware corporation on June 2, 2021 under the name “Project Clean, Inc.” for the purpose of completing an initial public offering (the “IPO”) and related organizational transactions in order to carry on the business of Real Good Foods, LLC (“RGF”), a Delaware limited liability company and the sole subsidiary of The Real Good Food Company, Inc. (RGF, together with The Real Good Food Company, Inc., the “Company”). On November 9, 2021, the Company completed an initial public offering (“IPO”) of 5,333,333 shares of The Real Good Food Company, Inc.’s Class A common stock at an offering price at $12.00 per share. The Company received approximately $59.5 million of proceeds, net of underwriting discounts and commissions and before offering expenses of $3.9 million. In connection with the IPO, the Company completed a reorganization (the Reorganization”) among The Real Good Food Company, Inc., RGF, and the members of RGF immediately prior to the IPO (the “Members”). As part of the Reorganization, the Members became holders of Class B units of RGF and were issued shares of Class B common stock of The Real Good Food Company, Inc., which convey voting rights in The Real Good Food Company, Inc. on a one-to-one basis Prior to the consummation of the IPO and Reorganization, RGF was owned entirely by the Members and operated its business through itself and no other entities. The following transactions occurred in connection with the Reorganization and IPO:
Description of Business The Company is a frozen food company that develops, markets, and manufactures foods that are designed to be high in protein, low in sugar, and gluten- and grain-free. The Company, along with its co-manufacturers, produce breakfast sandwiches, entrées, and other products, which are primarily sold in the U.S. frozen food category, excluding frozen and refrigerated meat. The Company’s customers include retailers, which primarily sell its products through natural and conventional grocery, drug, club, and mass merchandise stores throughout the United States. The Company also sells its products through its e-commerce channel, which includes direct-to-consumer sales through its website, as well as sales through its retail customers’ online platforms. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS Basis of Presentation The unaudited consolidated financial information for the three and six months ended June 30, 2022 and 2021, is presented on the same basis as the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Annual Report”), filed with the Securities and Exchange Commission on March 30, 2022. In the opinion of management, these financial statements include all adjustments necessary for a fair statement of the financial position, results of operations and cash flows of the Company for the interim periods, and the adjustments are of a normal and recurring nature. The financial results for any interim period are not necessarily indicative of the results for the full year. The consolidated balance sheet information as of December 31, 2021, was derived from the audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report. The consolidated financial statements have been prepared in accordance with GAAP and include the accounts of The Real Good Food Company, Inc. and its wholly owned or controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Real Good Food Company, Inc. has no operations other than those of RGF. Prior to the IPO, the Company’s results were reported under RGF as the predecessor company. Subsequent to the IPO, all results reported upon contain the consolidated financial statements of The Real Good Food Company, Inc. and RGF. In accordance with the reverse acquisition guidance in as set forth by the Financial Accounting Standards Board (“FASB”), the financial statements of The Real Good Food Company, Inc. (the accounting acquiree) for the three and six months ended June 30, 2021, are a continuation of the financial statements of RGF (the accounting acquirer), adjusted to retroactively change RGF’s legal capital to reflect the legal capital of The Real Good Food Company, Inc. This adjustment was calculated based upon the partnership unit to share exchange ratio of 139.78 new shares of Company common stock for every unit of RGF’s previously issued and outstanding equity. Comparative information preserved in these consolidated financial statements is also retroactively adjusted to reflect the legal capital of The Real Good Food Company, Inc. The legal capital as of June 30, 2022 reflects the legal capital of The Real Good Food Company, Inc. after the acquisition date and therefore requires no adjustment. Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of net sales and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include, but are not limited to, the allowance for credit losses, the write down of obsolete or excess inventory, and revenue recognition, including variable consideration for estimated reserves for discounts, incentives, and other allowances. Management bases its estimates on historical experience and on assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Due to the inherent uncertainty involved in making assumptions and estimates, changes in circumstances could result in actual results differing from those estimates, and such differences could be material to the Company’s balance sheet and statements of operations. Segment Reporting and Geographical Information For the three and six months ended June 30, 2022 and 2021, the Company was managed as a single operating segment. The Chief Executive Officer, who is the Company’s Chief Operating Decision Maker, reviews financial information on an aggregate basis for purposes of allocating resources and assessing financial performance, as well as for making strategic operational decisions and managing the organization. As such, the Company does not have reportable segments. Additionally, all of the Company’s assets are maintained in the United States. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity period of three months or less, when acquired, to be cash equivalents. Cash and cash equivalents held at financial institutions may at times exceed insured amounts. The Company believes it mitigates such risk by investing in or through, as well as maintaining cash balances, with major financial institutions. There were no cash equivalents as of June 30, 2022, and December 31, 2021. Restricted Cash The Company considers cash which is not freely available for immediate use, and that is held for a specific purpose, to be restricted cash. If the terms dictating the restriction require the restricted cash to be considered as such beyond twelve months, the Company classifies that restricted cash as a noncurrent asset due to its inability to provide liquidity within one year. As of June 30, 2022, the Company had approximately $2.3 million of restricted cash, all of which was classified as noncurrent. The entirety of the million of restricted cash relates to a letter of credit opened in connection with the Company’s new manufacturing facility in Bolingbrook, IL. Amounts will be released for the Company’s use proportionately over a three-year period beginning in January 2023. The below table reconciles cash and restricted cash to amounts shown in the Consolidated Statements of Cash Flows:
Accounts Receivable Accounts receivable are recorded at the invoiced amount, net of allowances for estimated variable consideration and amounts payable to customers for slotting, which are fees assessed by customers for the cost of accepting new products into their store. Estimated product returns are immaterial. Management assesses the collectability of outstanding customer invoices, and if it deems necessary, maintains an allowance for credit losses resulting from the non-collection of customer receivables. In estimating this reserve, management considers factors such as historical collection experience, customer creditworthiness, specific customer risk, trends specific to the customer, and current and expected general economic conditions that may affect a customer’s ability to pay. Customer balances are written off after all collection efforts are exhausted. The amounts recorded for reserves for credit losses for the three months ended June 30, 2022 and 2021 were de minimis. Inventories Inventories are stated at the lower of cost or net realizable value. The Company records sales and other reductions in inventory through cost of sales using the first-in, first-out method. The cost of finished goods inventories includes ingredients, direct labor, freight-in for ingredients, and indirect production and overhead costs. The Company monitors its inventory to identify excess or obsolete items on hand. The Company writes down its inventories for estimated excess and obsolescence in an amount equal to the difference between the cost of inventories and estimated net realizable value. These estimates are based on management’s judgment about future demand and market conditions. Once established, these adjustments are considered permanent and are not revised until the related inventory is sold or disposed of. The Company did not have a write-down of inventory during the three and six months ended June 30, 2022. Amounts related to the write-down of inventory during the three and six months ended June 30, 2021 were $0 and $0.6 million, respectively. Property and Equipment Property and equipment are stated at acquisition cost, net of accumulated depreciation and amortization. Depreciation is calculated using the straight- line method typically over the following range of estimated useful lives of the assets as follows:
Leasehold improvements are capitalized and amortized over the shorter of the estimated useful life or the remaining term of the lease. The Company reviews the recoverability of property and equipment when circumstances indicate that the carrying value of an asset or asset class may not be recoverable. Indicators of impairment could include, among other factors, significant changes in the business environment, the planned closure of a facility, or deteriorations in operating cash flows. Considerable management judgment is necessary to evaluate the impact of operating changes and to estimate future cash flows. Expenditures for repairs and maintenance which do not substantially improve or extend the useful life of an asset are expensed as incurred. Leases The Company’s leases consist of corporate office space, warehouse, and equipment. The Company determines whether a contract is or contains a lease at the time of the contract’s inception based on the presence of identified assets and the Company’s right to obtain substantially all the economic benefit from or to direct the use of such assets. When the Company determines a lease exists, it records a right-of-use (“ROU”) The Company does not record lease contracts with a term of 12 months or less on its balance sheet. Payments for these short-term leases are expensed when incurred. The Company recognizes fixed-lease expense for operating leases on a straight-line basis over the lease term. For finance leases, the Company recognizes amortization expense over the shorter of the estimated useful life of the underlying assets, or the lease term. Interest expense on a finance lease is recognized using the effective interest method over the lease term. Interest expense on a finance lease is recognized using the effective interest method over the lease term. The Company has lease agreements with non-lease components, such as maintenance- and utility-related charges. The Company accounts for each lease and any non-lease components associated with that lease as a single-lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease costs. Certain leasing arrangements require variable payments that are dependent on usage or output or may vary for other reasons, such as insurance and tax payments. Variable lease payments that do not depend on an index or rate are excluded from lease payments in the measurement of the ROU asset and lease liability and are recognized as expense in the period in which the payment occurs. Variable payments are determined based on a percentage allocation determined by the landlord and are immaterial for the three and six months ended June 30, 2022 and 2021. The Company’s lease agreements do not include significant restrictions or covenants, and residual value guarantees are generally not included within its leases. Fair Value of Financial Instruments Fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The carrying value of the Company’s short-term financial instruments, such as cash, accounts receivable, notes payable, and accounts payable, approximate fair value due to the immediate or short-term maturity of these instruments. The interest rate on the Company’s secured credit facility and certain other debt has a variable component, and which is reflective of the market for such instruments at any given date, and as such the carrying value this debt value approximates its fair value. Product Placement Agreement In February 2018, the Company entered into a product placement agreement (“PPA”) with Divario Ventures, LLC (“Divario”), a subsidiary of Albertsons Companies, Inc. (“Albertsons Companies”), pursuant to which the Company agreed to issue Divario common units of RGF (the “Divario Initial Equity”) in exchange for achievement and maintenance of specified distribution thresholds in retail locations operated by Albertsons Companies through October 31, 2020. Additionally, Divario was entitled to additional common units (the “Divario Incentive Equity”) as incentive awards upon achievement of specified annual sales targets with Albertsons Companies through October 31, 2021. A total of 5,240 common units of RGF were authorized and issued in connection with the Divario PPA. In connection with the Company’s IPO all 5,240 units issued to Divario were converted into 999,082 of the Company’s Class B common stock. As the shares/units issued to Divario represented consideration due to a customer under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), the grant date fair value of the awards, measured in accordance with ASC Topic 718, Stock Compensation, was recognized in earnings as reduction of net sales over the relevant term and based upon the relative volume of gross sales to Albertsons Companies during that term. In connection with the PPA, the Company recognized a reduction in net sales of $0 and $0.1 million during the three and six months ended June 30, 2021 Revenue Recognition The Company’s revenue is principally derived from selling goods to retailers. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied and promised goods have been transferred to the customer. Control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms. For each contract, the Company considers the transfer of products, each of which is distinct, to be the identified performance obligation. Although some payment terms may be more extended, generally the majority of the Company’s payment terms range from payment due immediately upon invoice to up to 90 days. Accordingly, there are no significant financing components to consider when determining the transaction price. Variable consideration is included in revenue for trade promotions, off-invoice discounts, shrinkages and shortages, and other discounts and sales incentives. The Company uses a reserve to constrain revenue for the expected variable consideration at each period end. See Note 3, Revenue Recognition, for additional information. Any taxes collected on behalf of government authorities, such as sales tax, are excluded from net sales, and recorded as a liability due to the particular authority. The Company applies the practical expedient that allows it to exclude disclosure of performance obligations that are part of a contract that has an expected duration of one year or less. The Company’s contracts are all short term in nature, therefore there are no unsatisfied performance obligations requiring disclosure as of June 30, 2022. Contract Assets The Company has elected the practical expedient which allows costs incurred in connection with obtaining a contract to be expensed as incurred for those contracts with a duration of one year or less. For those contracts which have a duration of greater than one year, the Company capitalizes those costs and amortized them over the duration of the agreement. As of June 30, 2022 and December 31, 2021, there were no contract assets recognized. Shipping and Handling Costs The Company’s shipping and handling costs are included in both cost of sales and selling and distribution expense, depending on the nature of such costs. Cost of sales reflects cost incurred for inbound freight on ingredients to be used in production. Internal freight costs included in selling and distribution expenses consist primarily of those costs associated with moving products from production facilities through the Company’s distribution network. Total internal freight costs recorded within selling and distribution expenses were $1.2 million and $0.5 million during the three months ended June 30, 2022 and 2021, respectively, and $2.2 million and $1.0 million during the six months ended June, 2022 and 2021, respectively. Shipping and handling costs associated with outbound freight are included within selling and distribution expenses and are accounted for as a fulfillment cost as incurred. Total of these costs recorded within selling and distribution expenses were $2.6 million and $1.6 million during the three months ended June 30, 2022 and 2021, respectively, and $5.3 million and $3.2 million during the six months ended June 30, 2022 and 2021, respectively. Marketing Expenses Marketing costs are expensed as incurred. The Company incurred $1.2 million and $0.8 million during the three months ended June 30, 2022 and 2021, respectively, and $3.0 million and $1.4 million during the six months ended June 30, 2022 and 2021, respectively. Marketing costs are recorded in Operating expenses in the Company’s consolidated statements of operations. Research and Development Expenses Research and development expenses are recorded in administrative expense in the statements of operations as incurred. During the three months ended June 30, 2022 and 2021, the Company incurred $1.6 million and $0.8 million of research and development expenses, respectively. During the six months ended June 30, 2022 and 2021, the Company incurred $1.8 million and $1.5 million of research and development expenses, respectively. Business Combination The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, which requires the Company to recognize separately from goodwill the assets acquired, and the liabilities assumed at their acquisition date fair values. The amount by which the fair value of consideration transferred exceeds the fair value of the identifiable net assets acquired is recorded as goodwill. While the Company uses its best estimates and assumptions to accurately value assets acquired, and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, the estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the identifiable assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the statements of operations. Acquisition-Related Contingent Consideration Contingent consideration in a business combination is included as part of the purchase consideration and is recognized at fair value as of the acquisition date. For contingent consideration, management is responsible for determining the appropriate valuation model and estimated fair value, and in doing so, considers a number of factors, including information provided by valuation advisors. Contingent consideration liabilities are reported at their estimated fair values based on probability-adjusted present values of the consideration expected to be paid, using significant inputs and estimates. Key assumptions used in these estimates include probability assessments with respect to the likelihood of achieving certain milestones and discount rates consistent with the level of risk of achievement. The fair value of these contingent consideration liabilities are remeasured each reporting period, with changes in the fair value included in current operations. The remeasured liability amount could be significantly different from the amount at the acquisition date, resulting in material charges or credits in future reporting periods. Goodwill Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the fair value of the identifiable net assets acquired, net of liabilities assumed. The Company performs its annual goodwill impairment test as of the first day of the fourth quarter or more frequently if events or changes in circumstances indicate that the goodwill may be impaired. The Company’s goodwill is accounted for in a single reporting unit representing the company as a whole. As part of its annual impairment testing of goodwill, the Company may elect to assess qualitative factors as a basis for determining whether it is necessary to perform the traditional quantitative impairment testing. If the Company’s assessment of these qualitative factors (“Step zero”) indicates that it is more likely than not that the fair value of the reporting unit exceeds its carrying value, then no further testing is required. Otherwise, the goodwill reporting unit, must be quantitatively tested for impairment (“Step one”). The Step one impairment test for goodwill involves a comparison of the fair value of the reporting unit with its carrying amount, including goodwill. The Company determines the fair value of its reporting unit by using a market approach and a discounted cash flow (“DCF”) analysis. Determining fair value using a DCF analysis requires the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. There were no goodwill impairment charges recorded during the periods presented. Income Taxes For periods prior to the Company’ IPO, the Company was solely a pass-through entity for federal income tax purposes, being a partnership, and as such income taxes related to the Company’s operations were the responsibility of those who held partnership interests in the Company. Accordingly, the Company did not have any expense related to federal income taxes during the three and six months ended June 30, 2021. Additionally, there were no deferred income taxes related to state and local level income taxes for that same period. For periods subsequent to the IPO, as described above in Note 1, Organization and Description of Business, the Company’s structure became one commonly referred to as of 24%. an “Up-C” structure, which is often used by partnerships and limited liability companies when they undertake an initial public offering of their business. The Up-C structure allows the members of the operating company, in this instance the Members of RGF, to continue to realize tax benefits in a similar fashion as was realized prior to the IPO, proportionate to their Membership interest, and the Company will be subject to both Federal and State taxes on the portion of earnings applicable to its controlling interest in RGFGiven the foregoing, the Company is subject to income tax on operating results related to the period November 4, 2021, through June 30, 2022, limited to its controlling interest in RGF of 24%. During this time the Company accounted for income taxes pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. The Company records valuation allowances against deferred tax assets when it is more likely than not that all or a portion of a deferred tax asset will not be realized. The Company routinely evaluates the realizability of deferred tax assets by assessing the likelihood that deferred tax assets will be recovered based on all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, estimates of future taxable income, tax planning strategies and results of operations. Estimating future taxable income is inherently uncertain and requires judgment. In projecting future taxable income, historical results are considered along with certain assumptions related to future earnings. As of June 30, 2022, the Company applied a full valuation allowance against all recognized deferred tax assets, resulting in a zero balance on the Consolidated Balance Sheets. If it is later determined that in the future that it is more likely than not that certain deferred tax assets may be fully utilized, the valuation allowance applicable to that particular deferred tax asset would be reversed and recognized through earnings in the period the determination was made. Any reversal of a valuation allowance would result in the reduction of the Company’s provision for income taxes in the period of reversal. During the three and six months ended June 30, 2022 and 2021, amounts provided for state income taxes were de minimis. Loss per Share/Unit Loss per share/unit is computed by dividing the Company’s net loss, after deducting any dividends on preferred units or accumulated returns on cumulative preferred units, by the weighted-average number of common shares or units outstanding during the period, adjusted for the dilutive effect of any outstanding dilutive securities. For periods prior to the Company’s IPO on November 9, 2021, the Company utilized the two-class method in computing loss per unit as Series Seed preferred units were participating. Preferred unit holders participated in income but were not obligated to participate in losses, thus the two-class method did not impact the loss per unit calculation for the period ended June 30, 2021, due to the net losses incurred in the period. Subsequent to the IPO, equity interests in the Company consisted of Class A common stock and Class B common stock. As shares of Class B common stock do not share in the earnings or losses of the Company they are not considered participating securities. As such, a separate presentation of basic and diluted net loss per share for each of Class B common stock under thetwo-class method has not been presented. See Note 10, Loss Per Share/Unit. NEW ACCOUNTING STANDARDS During March 2022 the FASB issued ASU No. 2022-02, Financial Instruments—Credit Losses (Topic 326). This ASU is updates certain guidance as set forth is ASU No. 2016-03, to provide additional guidance on the treatment of credit losses, with regards to troubled debt restructuring and gross write-offs related to financing receivables and net investments in leases. The amendments in this update eliminate the previous troubled debt restructuring guidance and instead, require that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan, with the intent to enhance existing disclosure requirements as well as introduce new requirements related to certain modifications for borrowers experiencing financial difficulty. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The provisions of this ASU and must be applied prospectively, and early adoption is permitted. The Company does not expect the adoption of this guidance to have an impact on its financial statements. During October 2021 the FASB issued
ASU No. 2021-08, Business Combinations (Topic 805), which provides guidance for the accounting of revenue contracts acquired in a business combination. The provisions of this ASU are intended to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. Further, the provisions provide additional recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The amendments in this Update should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption of the amendments is permitted, including adoption in an interim period. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements, nor does it intend to early adopt the provisions of this guidance. |
REVENUE RECOGNITION |
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REVENUE RECOGNITION | NOTE 3. REVENUE RECOGNITION Disaggregation of Net Sales The following table presents a disaggregation of the Company’s net sales by revenue source. The Company believes that these revenue streams most appropriately depict the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with its customers.
Revenue Recognition, Sales Incentives, and Accounts Receivable Revenue is recognized when the performance obligation is satisfied, as evidenced by the transfer of control of the promised good to the customer. This transfer occurs upon shipment of goods, as the customer can direct the use and obtain substantially all of the remaining benefits from the asset at that point in time. Revenue is recognized in an amount that reflects the consideration that the Company expects to ultimately receive in exchange for those promised goods, net of expected discounts for sales promotions and customary allowances. The Company offers sales promotions through various regional and national programs to its customers. These programs include in-store discounts as well as product coupons offered direct to consumers which may be redeemed at the point of sale. Customary allowances for early invoice payment and shrinkage are also applied by customers. The costs associated with these programs are accounted for as variable consideration as defined under ASC 606 and are reductions to the transaction price. Depending on the specific type of sales incentive and other promotional program, the expected value method is used to determine the variable consideration. The Company reviews and updates its estimates and related accruals of variable consideration each period based on the terms of the agreements, historical experience, and expected levels of performance of the trade promotion or other programs. Any uncertainties in the ultimate resolution of variable consideration due to factors outside the Company’s influence are typically resolved within a short timeframe therefore not requiring any additional constraint on the variable consideration. Additionally, the Company also offers compensation to customers for access to shelf space in stores; associated payments are recognized as reductions to the transaction price received from the customer on sale of associated products. Payment terms and conditions are generally consistent amongst customers, including credit terms to customers ranging from seven days to 90 days, and as such the Company’s contracts do not include significant financing components. The Company performs credit evaluations of customers and evaluates the need for allowances for potential credit losses based on historical experience, as well as current and expected general economic conditions. These allowances reduce the accounts receivable balance and are charged to operating expense. For the periods presented, amounts recorded in connection with credit losses were de minimis. The Company applies the practical expedient that allows for companies to exclude disclosing performance obligations that are unsatisfied as of the period end, that are expected to be satisfied in a duration of one year or less of that date. Given that the Company’s contracts are generally short term in nature, there are no unsatisfied performance obligations requiring disclosure at June 30, 2022. Contract Assets and Liabilities Contract assets are rights to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditional on something other than the passage of time. Contract liabilities are obligations to transfer goods or services to a customer for which the Company has received consideration, or for which an amount of consideration is due from the customer. The Company continually evaluates whether its contractual arrangements with customers result in the recognition of contract assets or liabilities. For the periods ending June 30, 2022 and December 31, 2021, there were no contract assets or liabilities recognized. |
BUSINESS COMBINATIONS |
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BUSINESS COMBINATIONS | NOTE 4. BUSINESS COMBINATIONS During the year ended December 31, 2020, SSRE Holdings, LLC (“SSRE”), the previous lessee of the City of Industry Facility, and one of the Company’s largest co-manufacturers, experienced financial hardship as a result of the impacts of the COVID-19 pandemic, which resulted in SSRE defaulting on their facility lease, as well as a defaulting on their credit agreement with PMC Financial Services, LLC (“PMC”), under which SSRE had secured its borrowings with certain assets, including food manufacturing equipment, raw materials, and finished goods inventory. The lease was subsequently reassigned by the landlord to LO Entertainment, LLC (“LO Entertainment”), and on January 4, 2021, the Company entered into a transfer agreement with LO Entertainment to sublease the premises and take possession of equipment and inventory on the premises in exchange for deferred payments totaling $12.5 million. Of this amount, the $10.0 million was considered contingent consideration, and the remaining $2.5 million being deferred payments to be paid in instalments through June 2022. At December 31, 2021, the balance of this contingent consideration was $7.0 million, of which the entire balance was paid during the six months ended June 30, 2022. At June 30, 2022, no deferred payments were remaining. These agreements (collectively the “Transaction”) represent the acquisition of the co-manufacturing business belonging to SSRE. The Transaction closed on March 10, 2021. To fund a portion of the Transaction, the Company entered into an agreement with PMC in February 2021 to obtain a term loan of $4.5 million with payments due over 54 months commencing on September 30, 2021, and interest-only payments commencing at the close of the Transaction. The term loan shall bear interest at an annual rate equal to the greater of the prime rate announced by Wells Fargo Bank, N.A., or 3.3%, plus 8.6% per annum. Related interest expense was $0.1 million and $0.1 million for the three months ended June 30, 2022 and 2021, respectively, and $0.2 million and $0.2 million for the six months ended June 30, 2022 and 2021 and is included as a component of total interest expense. The balance of this term loan at June 30, 2022 was $4.0 million, and is included as a component of business acquisition liabilities, of which $0.9 million represents the current portion and $3.1 represents the long-term portion. The Transaction was accounted for under the acquisition method of accounting. Accordingly, the fair value of the purchase consideration was measured and subsequently allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the date of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill. In determining the fair value of the purchase consideration as of March 10, 2021, the Company determined the term loan from PMC to be at market terms, and therefore the fair value to be equal to the stated contractual value of $4.5 million. With respect to the agreement with LO Entertainment, the $2.5 million in deferred payments and $10.0 million in contingent consideration was estimated to have a total fair value of $12.3 million, comprising $9.8 million of contingent consideration and $2.5 million of deferred payments to LO Entertainment as of the transaction date. The following table details the purchase price allocation of the total consideration of $16.8 million:
The goodwill recorded in this transaction is deductible for income tax purposes. The results of operations of the acquired co-manufacturing business from March 11, 2021 through June 30, 2022 have been reflected within the Company’s consolidated financial statements. As of June 30, 2022 there has been no change to the $12.5 million balance of goodwill. For the six months ended June 30, 2021, the Company recorded acquisition-related expenses associated with the Transaction of $34 thousand, as a component of administrative expense in the consolidated statements of operations. Disclosure of supplemental pro forma information for revenue and earnings related to the acquisition, assuming the acquisition was made at the beginning of the earliest period presented, has not been disclosed as the effects of the acquisition would not have been material to the results of operation for the periods presented given the intercompany nature of a substantial portion of the acquired business. |
INVENTORIES |
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INVENTORIES | NOTE 5. INVENTORIES Inventories as of June 30, 2022 and December 31, 2021, consisted of the following:
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PROPERTY AND EQUIPMENT |
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PROPERTY AND EQUIPMENT | NOTE 6. PROPERTY AND EQUIPMENT Property and equipment as of June 30, 2022 and December 31, 2021 consisted of the following:
Depreciation and amortization expense was $0.4 million and $0.1 million for the three months ended June 30, 2022 and 2021, respectively. Depreciation and amortization expense was $0.8 million and $0.4 million for the six months ended June 30, 2022 and 2021, respectively. |
LEASES |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | NOTE 7. LEASES The Company has various finance leases for equipment and operating leases for office and warehouse space, as well as equipment. The Company’s lease agreements do not contain any material residual value guarantees, bargain purchase options, or restrictive covenants. Variable lease costs were not significant for the periods presented. Operating lease liabilities and their corresponding ROU ass e ts are recorded at the present value of fixed lease payments over the expected lease term. The interest rate implicit in lease contracts was not readily determinable. As such, the Company used an incremental borrowing rate based on the information available at inception date. In the development of the discount rate, the Company considered its internal borrowing rate, treasury security rates, collateral, and credit risk specific to it, and its lease portfolio characteristics. As of June 30, 2022 and 2021, the weighted-average discount rate of the Company’s operating and finance leases was 9% and 7%, respectively. The components of lease expense were as follows:
Supplemental balance sheet information related to leases is as follows:
The maturities of the Company’s operating and finance lease liabilities as of June 30, 2022 were as follows:
As of June 30, 2022, the weighted-average remaining term of our operating and finance leases were approximately 6.50 years and 6.75 years, respectively.
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DEBT |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | NOTE 8. DEBT Long-term debt consisted of the following as of June 30, 2022 and December 31, 2021:
PMC Credit Facility On June 30, 2016, the Company entered into a loan an d security agreement (the “Credit Facility”) with PMC Financial Services Group, LLC (“PMC”). As of December 31, 2021, the Credit Facility, as amended, provided the Companywith a $50.0 million line of credit repayable on November 30, 2025 (the “Revolver”), and permits the Company to make repayments without penalty. As amended, the Credit Facility also provides for a $4.0 million capital expenditure line of credit, which matures on November 30, 2025 (the “CapEx Line”). The Credit Facility was further amended to allow for additional borrowings related to equipment to be covered under certain lease agreements (the “Lease Line of Credit”). Outstanding balances under the Revolver bear interest at an annual rate equal to the prime rate announced by Wells Fargo Bank, N.A. plus 3.5% per annum. Outstanding balances under the CapEx Line and Lease Line of Credit bear interest at an annual rate equal to the prime rate announced by Wells Fargo Bank, N.A., plus 8.5% per annum. The Credit Facility contains no financial covenants and is collateralized by the Company’s accounts receivable, inventory, equipment, deposit accounts, and general intangibles. The intent of the Lease Line of Credit is to provide funds necessary to begin production on equipment which will aggregate and be converted into a lease liability upon the equipment being fully assembled and operational. At June 30, 2022, a portion of the Credit Facility equipment was placed in service and therefore the related line of credit balance was converted to a finance lease (see Note 7). The Company incurred an aggregate of $2.0 million in “success fees” in connection with the Credit Facility, which it paid to PMC during 2021. These success fees were recorded as deferred loan costs, a component of non-current assets, on the Company’s balance sheet. The unamortized balance of these fees as of June 30, 2022 was $0.7 million, which will be charged to interest expense ratably over the remainder of the borrowing term. The amortization expense related to these deferred loan costs was $0.1 million and $0.5 million for the three months ended June 30, 2022 and 2021, respectively. The amortization expense related to these deferred loan costs was $0.2 million and $1.3 million for the six months ended June 30, 2022 and 2021, respectively. The Credit Facility, as amended, also provides for $4.0 million in borrowing capacity under the CapEx Line, which borrowing capacity is supplemented by the Lease Line of Credit. The Company is required to make monthly payments of $38,300, which include both principal and interest, on the PMC CapEx Line through its maturity date. The weighted average interest rates for the Company’s debt, by loan type, applicable for the six months ended June 30, 2022, is as follows:
Contractual future payments for all borrowings as of June 30, 2022 are as follows (in thousands):
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EQUITY |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | NOTE 9. EQUITY Subsequent to the Company’s IPO on November 9, 2021, equity interests in the Company consist of Class A common stock and Class B common stock. Shares of Class A and B common stock have e qual voting rights, however, shares of Class B common stock do not share in the earnings or losses of the Company and are therefore not participating securities. As such, a separate presentation of basic and diluted net income (loss) per share for each of Class B common stock under the two-class method has not been presented. For purposes of calculating earnings per share, the prior period unit amounts have been retroactively adjusted to give effect to the aforementioned Reorganization in Note 1, Organization and Description of Business. The computations of earnings per share for the three months ended June 30, 2021 reflect a 139.78 -for-one exchange Common Units used in the earnings per share calculation for the prior year. The entirety of outstanding units prior to the Reorganization, including Series A preferred units and Series Seed preferred units, were converted to Class B units which aggregated. Prior to the Company’s IPO, equity interests in the Company consisted of common units of, Series A preferred units, and Series Seed preferred units. All units had equal voting rights. Upon consummation of the Company’s IPO all units were converted into 14,422,924 Class B common stock. Class B commons shares convey no economic interest in the Company; however, they represent % of the voting rights of the Company. The following table details the components of member equity as of June 30, 2021, and the impact of the reorganization at the time of the IPO:
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LOSS PER SHARE/UNIT |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOSS PER SHARE/UNIT | NOTE 10. LOSS PER SHARE/UNIT The following table sets forth the computation of loss per share/ unit:
As of June 30, 2022, the Company’s issued and outstanding RSUs, which were the Company’s only potentially dilutive securities, have been excluded from the computation of diluted net loss per unit as they would have been anti-dilutive. Therefore, for all periods presented, there is no difference in the number of units used to compute basic and diluted units outstanding due to the Company’s net loss position. |
RELATED-PARTY TRANSACTIONS |
6 Months Ended |
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Jun. 30, 2022 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | NOTE 11. RELATED-PARTY TRANSACTIONS The Company entered into multiple related-party loan arrangements prior to 2020 with a member of the Company who holds shares of Class B common stock and is a holder of more than 20% of the Company’s equity interests. The outstanding balance of the debt from this related party of $1.2 million was paid in full during 2021. Interest expense related to this debt was $54 thousand for the three and six months ending June 30, 2021, respectively. Additionally, the Company’s Executive Chairman of its board of directors holds more than 20% beneficial ownership interest in the Company’s common stock. In connection with the completion of the IPO, the Company entered into a tax receivable agreement (“TRA”) with the continuing Members of RGF. This agreement grants the Members the right to receive 85% of the net cash savings, if any, in U.S. federal, state and local income tax that the Company actually realizes or is deemed to realize as a result of an increase in the tax basis of the net assets of the Company resulting from any redemptions or exchanges of interests in RGF, and certain other tax benefits related to payments made under the TRA. As a result of the Company’s net loss position, there were no amounts due under the TRA as of June 30, 2022. |
COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 12. COMMITMENTS AND CONTINGENCIES Purchase Commitments The Company has entered into various contracts, in the normal course of business, obligating it to purchase minimum quantities of ingredients used in its production and distribution processes, including cheese, chicken, and other ingredients that are inputs into its finished products. The Company entered into these contracts from time to time to ensure a sufficient supply of raw ingredients. None of these commitments are for durations greater than a year. Accordingly, as of June 30, 2022, the Company had no outstanding long-term commitments. Legal Matters The Company is party to certain claims, litigation, audits, and investigations in the ordinary course of business. Although the results of these ordinary course matters cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not, individually or in the aggregate, have a material adverse effect on our business, results of operations, financial condition, or cash flows. However, regardless of the outcome, these ordinary course matters can have an adverse impact on us because of legal costs, diversion of management’s time and resources, and other factors. The Company records an accrual for a loss contingency when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. As of June 30, 2022 and December 31, 2021, the Company’s management has concluded that it was not necessary to accrue amounts related to any pending litigation. |
RISKS OF UNCERTAINTIES AND CONCENTRATION OF CREDIT RISK |
6 Months Ended |
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Jun. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
RISKS OF UNCERTAINTIES AND CONCENTRATION OF CREDIT RISK | NOTE 13. RISKS OF UNCERTAINTIES AND CONCENTRATION OF CREDIT RISK Significant Risks and Uncertainties The Company is subject to those risks common to brand s within the frozen food category within the health and wellness industry. Various factors could negatively impact its business, including the Company’s need to increase its net sales from existing customers and acquire new customers in order to execute its growth strategy; ability to introduce or market new or successfully improve existing products; ability to compete successfully within its highly competitive market; dependence on key personnel, suppliers, and co-manufacturers; customer concentration risk, or the loss of a single significant customer; compliance with government regulations; and indebtedness, including the financial restrictions and operating covenants included in the agreements governing such indebtedness, as well as a possibility of being unable to obtain additional financing at terms satisfactory to the Company when needed. Further, changes in any of the following areas could have a significant negative effect on the Company’s financial position, results of operations, and cash flows: rates of revenue growth; its ability to manage inventory or pricing; engagement and usage of its products; effectiveness of its investment of resources to pursue strategies; competition in its market; the stability of food prices; impact of interest rate changes on demand and its costs; and addition or loss of significant customers. During the six months ended June 30, 2022, the Company had two customers which each individually comprised greater than 10% of net sales. These customers represented 51% and 22% of net sales, respectively. During theConcentration of Credit Risk Accounts receivable potentially subject the Company to concentrations of credit risk. As of June 30, 2022, four customers accounted for a total of 68% of the Company’s accounts receivable balance, or 21%, 19%, 15% and 15%, respectively. As of December 31, 2021, three customers accounted for a total of 50% of the Company’s accounts receivable balance, or 25%, 13%, and 13%, respectively. No other customers accounted for more than 10% of total accounts receivable. The Company’s customers are predominantly retailers who sell the Company’s products to end consumers. Given that, along with the Company’s customers being major U.S. retailers, the Company does not consider the concentration of its trade account receivables to be a significant risk. |
EQUITY BASED COMPENSATION |
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
EQUITY BASED COMPENSATION | NOTE 14. EQUITY-BASED COMPENSATION On October 11, 2021, the Company’s board of directors approved the Company’s 2021 Stock Incentive Plan (the “Plan”). The Plan provides for the issuance of equity compensation grants to employees, as well as members of its board of directors, in the form of stock options, restricted stock, restricted stock units (“RSUs”), and stock appreciation rights (“SARS”), for up to 3,700,000 shares of the Company’s Class A common stock. In addition, the Plan provides for an employee stock purchase program (“ESPP”), which is included as part of the 3,700,000 shares authorized under the Plan. During the six months ended June 30, 2022, 123,397 additional shares were authorized to be granted under the Plan pursuant to an evergreen provision. Subsequent to the IPO the Company issued RSUs to certain directors, officers and employees. Each RSU granted constitutes a right to receive one share of the Company’s Class A common stock, subject to the vesting terms specific to each agreement. The shares of the Company’s common stock underlying the number of vested RSUs are intended to be delivered as soon as practicable after vesting occurs. During the period between the grant date and vesting, the RSUs may not be transferred, and the grantee has no rights as a stockholder until vesting has occurred. If the grantee’s employment is terminated for any reason (other than following a change in control of the Company or a termination of an officer other than for cause), then any unvested RSUs under the award will automatically terminate and be forfeited. If a grantee’s employment is terminated by the Company without cause or by the grantee for good reason, then, provided that the RSUs have not been previously forfeited, the remaining unvested portion of the RSUs will immediately vest as of the grantee’s termination date. In the event of a change in control, the Company’s obligations regarding outstanding RSUs shall, on such terms as may be approved by the Company’s Compensation Committee prior to such event, immediately vest, be assumed by the surviving or continuing company or cancelled in exchange for property (including cash). As of June 30, 2022, there were shares available under the Plan for future equity grants. Restricted Stock Units I ssued to Officers and Employees The following table details the activity related toe equity grants during the six months ended June 30, 2022:
The grant date fair value of grants issues was based on the closing price of the Company’s Class A common stock as of the date of the grant is issued. Of the total RSUs issued during the six months ended June 30, 2022, were issued to officers of the Company and 87,072were issued to the Company’s directors. The remaining shares were issued to various employees of the Company. All vesting related to RSUs is subject to continued service, with the exception of involuntary terminations for reasons other than cause. With the exception of the 87,072 RSUs granted to directors, which vest 50% on each of the two anniversary dates of the grants, the RSUs granted during the quarter vest 1/3 on each of the three anniversary dates of the grants. Equity Compensation Expense The Company values RSUs (the grant date fair value) based on the closing price of the Company’s Class A common stock on the date the grant is issued, and recognizes the expense related to this value on a straight-line basis over the vesting term. During the three and six months ended June 30, 2022 , the Company recorded approximately $1.7 million and$ 3.4million, respectively in expense related to outstanding RSU grants. There were no benefits related to income taxes during the period. Unrecognized compensation expense as of June 30, 2022, was $million and is to be recognized over a weighted average period of approximately years. |
INCOME TAXES |
6 Months Ended |
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Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 15. INCOME TAXES During the three and six months ended June 30, 2022 the Company provided amounts related to current income taxes as a result of the net losses incurred. As such only deferred taxes were applicable for the three and six months, and as a result of the full valuation allowance applied to the deferred tax assets, there were amounts related to income taxes recognized in the consolidated statement of operations. The Company’s effective tax rate includes a rate benefit attributable to approximately 24% of the Company’s earnings which are not subject to corporate level taxes, due to the applicable income taxes that are the obligation of
the non-controlling members of RGF. Thus, the effective tax rate on the portion of loss attributable to the Company is 27.9%, before taking into effect the valuation allowance, for the quarter June 30, 2022. There were no deferred taxes related to the three or six months ended June 30, 2021 as the Company was a pass through for all periods prior to the IPO. |
NON-CONTROLLING INTEREST |
6 Months Ended |
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Jun. 30, 2022 | |
Noncontrolling Interest [Abstract] | |
NON-CONTROLLING INTEREST | NOTE 16. NON-CONTROLLING INTEREST In connection with the Reorganization described in Note 1, The R
e al Good Food Company, Inc. became the sole managing member of RGF and, as a result, consolidates the financial results of RGF. The Real Good Food Company, Inc. reports a non-controlling interest representing continuing Member interests in RGF. Any future changes in The Real Good Food Company, Inc.’s ownership interest in RGF, while retaining its controlling interest in RGF, will be accounted for as an equity transaction. As such, future redemptions or direct exchanges of RGF interests by the continuing Members will result in a change in ownership and reduce the amount of earnings or loss recorded as a non-controlling interest, and increase or decrease the balance of additional paid-in capital concurrently. |
SUBSEQUENT EVENTS |
6 Months Ended |
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Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17. SUBSEQUENT EVENTS On August 14, 2022, RGF entered into an amendment to the Credit Facility with PMC (the “PMC Amendment”) to, among other things, (a) increase the maximum borrowing capacity under the Revolver from $50.0 million to $75.0 million, (b) create a new term loan in the principal amount of $10.0 million (the “2022 Term Loan”), and ( c ) amend the interest rates of the Revolver and CapEx Line. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The unaudited consolidated financial information for the three and six months ended June 30, 2022 and 2021, is presented on the same basis as the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Annual Report”), filed with the Securities and Exchange Commission on March 30, 2022. In the opinion of management, these financial statements include all adjustments necessary for a fair statement of the financial position, results of operations and cash flows of the Company for the interim periods, and the adjustments are of a normal and recurring nature. The financial results for any interim period are not necessarily indicative of the results for the full year. The consolidated balance sheet information as of December 31, 2021, was derived from the audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report. The consolidated financial statements have been prepared in accordance with GAAP and include the accounts of The Real Good Food Company, Inc. and its wholly owned or controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Real Good Food Company, Inc. has no operations other than those of RGF. Prior to the IPO, the Company’s results were reported under RGF as the predecessor company. Subsequent to the IPO, all results reported upon contain the consolidated financial statements of The Real Good Food Company, Inc. and RGF. In accordance with the reverse acquisition guidance in as set forth by the Financial Accounting Standards Board (“FASB”), the financial statements of The Real Good Food Company, Inc. (the accounting acquiree) for the three and six months ended June 30, 2021, are a continuation of the financial statements of RGF (the accounting acquirer), adjusted to retroactively change RGF’s legal capital to reflect the legal capital of The Real Good Food Company, Inc. This adjustment was calculated based upon the partnership unit to share exchange ratio of 139.78 new shares of Company common stock for every unit of RGF’s previously issued and outstanding equity. Comparative information preserved in these consolidated financial statements is also retroactively adjusted to reflect the legal capital of The Real Good Food Company, Inc. The legal capital as of June 30, 2022 reflects the legal capital of The Real Good Food Company, Inc. after the acquisition date and therefore requires no adjustment. |
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Use of Estimates | Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to use its judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of net sales and expenses during the reporting period. Significant estimates and assumptions reflected in the financial statements include, but are not limited to, the allowance for credit losses, the write down of obsolete or excess inventory, and revenue recognition, including variable consideration for estimated reserves for discounts, incentives, and other allowances. Management bases its estimates on historical experience and on assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Due to the inherent uncertainty involved in making assumptions and estimates, changes in circumstances could result in actual results differing from those estimates, and such differences could be material to the Company’s balance sheet and statements of operations. |
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Segment Reporting and Geographical Information | Segment Reporting and Geographical Information For the three and six months ended June 30, 2022 and 2021, the Company was managed as a single operating segment. The Chief Executive Officer, who is the Company’s Chief Operating Decision Maker, reviews financial information on an aggregate basis for purposes of allocating resources and assessing financial performance, as well as for making strategic operational decisions and managing the organization. As such, the Company does not have reportable segments. Additionally, all of the Company’s assets are maintained in the United States. |
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Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity period of three months or less, when acquired, to be cash equivalents. Cash and cash equivalents held at financial institutions may at times exceed insured amounts. The Company believes it mitigates such risk by investing in or through, as well as maintaining cash balances, with major financial institutions. There were no cash equivalents as of June 30, 2022, and December 31, 2021. |
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Restricted Cash | Restricted Cash The Company considers cash which is not freely available for immediate use, and that is held for a specific purpose, to be restricted cash. If the terms dictating the restriction require the restricted cash to be considered as such beyond twelve months, the Company classifies that restricted cash as a noncurrent asset due to its inability to provide liquidity within one year. As of June 30, 2022, the Company had approximately $2.3 million of restricted cash, all of which was classified as noncurrent. The entirety of the million of restricted cash relates to a letter of credit opened in connection with the Company’s new manufacturing facility in Bolingbrook, IL. Amounts will be released for the Company’s use proportionately over a three-year period beginning in January 2023. The below table reconciles cash and restricted cash to amounts shown in the Consolidated Statements of Cash Flows:
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Accounts Receivable | Accounts Receivable Accounts receivable are recorded at the invoiced amount, net of allowances for estimated variable consideration and amounts payable to customers for slotting, which are fees assessed by customers for the cost of accepting new products into their store. Estimated product returns are immaterial. Management assesses the collectability of outstanding customer invoices, and if it deems necessary, maintains an allowance for credit losses resulting from the non-collection of customer receivables. In estimating this reserve, management considers factors such as historical collection experience, customer creditworthiness, specific customer risk, trends specific to the customer, and current and expected general economic conditions that may affect a customer’s ability to pay. Customer balances are written off after all collection efforts are exhausted. The amounts recorded for reserves for credit losses for the three months ended June 30, 2022 and 2021 were de minimis. |
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Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. The Company records sales and other reductions in inventory through cost of sales using
the first-in, first-out method. The cost of finished goods inventories includes ingredients, direct labor, freight-in for ingredients, and indirect production and overhead costs. The Company monitors its inventory to identify excess or obsolete items on hand. The Company writes down its inventories for estimated excess and obsolescence in an amount equal to the difference between the cost of inventories and estimated net realizable value. These estimates are based on management’s judgment about future demand and market conditions. Once established, these adjustments are considered permanent and are not revised until the related inventory is sold or disposed of. The Company did not have a write-down of inventory during the three and six months ended June 30, 2022. Amounts related to the write-down of inventory during the three and six months ended June 30, 2021 were $0 and $0.6 million, respectively. |
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Property and Equipment | Property and Equipment Property and equipment are stated at acquisition cost, net of accumulated depreciation and amortization. Depreciation is calculated using the straight- line method typically over the following range of estimated useful lives of the assets as follows:
Leasehold improvements are capitalized and amortized over the shorter of the estimated useful life or the remaining term of the lease. The Company reviews the recoverability of property and equipment when circumstances indicate that the carrying value of an asset or asset class may not be recoverable. Indicators of impairment could include, among other factors, significant changes in the business environment, the planned closure of a facility, or deteriorations in operating cash flows. Considerable management judgment is necessary to evaluate the impact of operating changes and to estimate future cash flows. Expenditures for repairs and maintenance which do not substantially improve or extend the useful life of an asset are expensed as incurred. |
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Leases | Leases The Company’s leases consist of corporate office space, warehouse, and equipment. The Company determines whether a contract is or contains a lease at the time of the contract’s inception based on the presence of identified assets and the Company’s right to obtain substantially all the economic benefit from or to direct the use of such assets. When the Company determines a lease exists, it records a right-of-use (“ROU”) The Company does not record lease contracts with a term of 12 months or less on its balance sheet. Payments for these short-term leases are expensed when incurred. The Company recognizes fixed-lease expense for operating leases on a straight-line basis over the lease term. For finance leases, the Company recognizes amortization expense over the shorter of the estimated useful life of the underlying assets, or the lease term. Interest expense on a finance lease is recognized using the effective interest method over the lease term. Interest expense on a finance lease is recognized using the effective interest method over the lease term. The Company has lease agreements with non-lease components, such as maintenance- and utility-related charges. The Company accounts for each lease and any non-lease components associated with that lease as a single-lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease costs. Certain leasing arrangements require variable payments that are dependent on usage or output or may vary for other reasons, such as insurance and tax payments. Variable lease payments that do not depend on an index or rate are excluded from lease payments in the measurement of the ROU asset and lease liability and are recognized as expense in the period in which the payment occurs. Variable payments are determined based on a percentage allocation determined by the landlord and are immaterial for the three and six months ended June 30, 2022 and 2021. The Company’s lease agreements do not include significant restrictions or covenants, and residual value guarantees are generally not included within its leases. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The carrying value of the Company’s short-term financial instruments, such as cash, accounts receivable, notes payable, and accounts payable, approximate fair value due to the immediate or short-term maturity of these instruments. The interest rate on the Company’s secured credit facility and certain other debt has a variable component, and which is reflective of the market for such instruments at any given date, and as such the carrying value this debt value approximates its fair value. |
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Product Placement Agreement | Product Placement Agreement In February 2018, the Company entered into a product placement agreement (“PPA”) with Divario Ventures, LLC (“Divario”), a subsidiary of Albertsons Companies, Inc. (“Albertsons Companies”), pursuant to which the Company agreed to issue Divario common units of RGF (the “Divario Initial Equity”) in exchange for achievement and maintenance of specified distribution thresholds in retail locations operated by Albertsons Companies through October 31, 2020. Additionally, Divario was entitled to additional common units (the “Divario Incentive Equity”) as incentive awards upon achievement of specified annual sales targets with Albertsons Companies through October 31, 2021. A total of 5,240 common units of RGF were authorized and issued in connection with the Divario PPA. In connection with the Company’s IPO all 5,240 units issued to Divario were converted into 999,082 of the Company’s Class B common stock. As the shares/units issued to Divario represented consideration due to a customer under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), the grant date fair value of the awards, measured in accordance with ASC Topic 718, Stock Compensation, was recognized in earnings as reduction of net sales over the relevant term and based upon the relative volume of gross sales to Albertsons Companies during that term. In connection with the PPA, the Company recognized a reduction in net sales of $0 and $0.1 million during the three and six months ended June 30, 2021 |
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Revenue Recognition | Revenue Recognition The Company’s revenue is principally derived from selling goods to retailers. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied and promised goods have been transferred to the customer. Control transfers to the customer when the product is shipped or delivered to the customer based upon applicable shipping terms. For each contract, the Company considers the transfer of products, each of which is distinct, to be the identified performance obligation. Although some payment terms may be more extended, generally the majority of the Company’s payment terms range from payment due immediately upon invoice to up to 90 days. Accordingly, there are no significant financing components to consider when determining the transaction price. Variable consideration is included in revenue for trade promotions, off-invoice discounts, shrinkages and shortages, and other discounts and sales incentives. The Company uses a reserve to constrain revenue for the expected variable consideration at each period end. See Note 3, Revenue Recognition, for additional information. Any taxes collected on behalf of government authorities, such as sales tax, are excluded from net sales, and recorded as a liability due to the particular authority. The Company applies the practical expedient that allows it to exclude disclosure of performance obligations that are part of a contract that has an expected duration of one year or less. The Company’s contracts are all short term in nature, therefore there are no unsatisfied performance obligations requiring disclosure as of June 30, 2022. |
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Contract Assets | Contract Assets The Company has elected the practical expedient which allows costs incurred in connection with obtaining a contract to be expensed as incurred for those contracts with a duration of one year or less. For those contracts which have a duration of greater than one year, the Company capitalizes those costs and amortized them over the duration of the agreement. As of June 30, 2022 and December 31, 2021, there were no contract assets recognized. |
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Shipping and Handling Costs | Shipping and Handling Costs The Company’s shipping and handling costs are included in both cost of sales and selling and distribution expense, depending on the nature of such costs. Cost of sales reflects cost incurred for inbound freight on ingredients to be used in production. Internal freight costs included in selling and distribution expenses consist primarily of those costs associated with moving products from production facilities through the Company’s distribution network. Total internal freight costs recorded within selling and distribution expenses were $1.2 million and $0.5 million during the three months ended June 30, 2022 and 2021, respectively, and $2.2 million and $1.0 million during the six months ended June, 2022 and 2021, respectively. Shipping and handling costs associated with outbound freight are included within selling and distribution expenses and are accounted for as a fulfillment cost as incurred. Total of these costs recorded within selling and distribution expenses were $2.6 million and $1.6 million during the three months ended June 30, 2022 and 2021, respectively, and $5.3 million and $3.2 million during the six months ended June 30, 2022 and 2021, respectively. |
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Marketing Expenses | Marketing Expenses Marketing costs are expensed as incurred. The Company incurred $1.2 million and $0.8 million during the three months ended June 30, 2022 and 2021, respectively, and $3.0 million and $1.4 million during the six months ended June 30, 2022 and 2021, respectively. Marketing costs are recorded in Operating expenses in the Company’s consolidated statements of operations. |
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Research and Development Expense | Research and Development Expenses Research and development expenses are recorded in administrative expense in the statements of operations as incurred. During the three months ended June 30, 2022 and 2021, the Company incurred $1.6 million and $0.8 million of research and development expenses, respectively. During the six months ended June 30, 2022 and 2021, the Company incurred $1.8 million and $1.5 million of research and development expenses, respectively. |
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Business Combination | Business Combination The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, which requires the Company to recognize separately from goodwill the assets acquired, and the liabilities assumed at their acquisition date fair values. The amount by which the fair value of consideration transferred exceeds the fair value of the identifiable net assets acquired is recorded as goodwill. While the Company uses its best estimates and assumptions to accurately value assets acquired, and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, the estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the identifiable assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the statements of operations. |
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Acquisition-Related Contingent Consideration | Acquisition-Related Contingent Consideration Contingent consideration in a business combination is included as part of the purchase consideration and is recognized at fair value as of the acquisition date. For contingent consideration, management is responsible for determining the appropriate valuation model and estimated fair value, and in doing so, considers a number of factors, including information provided by valuation advisors. Contingent consideration liabilities are reported at their estimated fair values based on probability-adjusted present values of the consideration expected to be paid, using significant inputs and estimates. Key assumptions used in these estimates include probability assessments with respect to the likelihood of achieving certain milestones and discount rates consistent with the level of risk of achievement. The fair value of these contingent consideration liabilities are remeasured each reporting period, with changes in the fair value included in current operations. The remeasured liability amount could be significantly different from the amount at the acquisition date, resulting in material charges or credits in future reporting periods. |
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Goodwill | Goodwill Goodwill represents the excess of the aggregate fair value of the consideration transferred in a business combination over the fair value of the identifiable net assets acquired, net of liabilities assumed. The Company performs its annual goodwill impairment test as of the first day of the fourth quarter or more frequently if events or changes in circumstances indicate that the goodwill may be impaired. The Company’s goodwill is accounted for in a single reporting unit representing the company as a whole. As part of its annual impairment testing of goodwill, the Company may elect to assess qualitative factors as a basis for determining whether it is necessary to perform the traditional quantitative impairment testing. If the Company’s assessment of these qualitative factors (“Step zero”) indicates that it is more likely than not that the fair value of the reporting unit exceeds its carrying value, then no further testing is required. Otherwise, the goodwill reporting unit, must be quantitatively tested for impairment (“Step one”). The Step one impairment test for goodwill involves a comparison of the fair value of the reporting unit with its carrying amount, including goodwill. The Company determines the fair value of its reporting unit by using a market approach and a discounted cash flow (“DCF”) analysis. Determining fair value using a DCF analysis requires the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. There were no goodwill impairment charges recorded during the periods presented. |
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Income Taxes | Income Taxes For periods prior to the Company’ IPO, the Company was solely a pass-through entity for federal income tax purposes, being a partnership, and as such income taxes related to the Company’s operations were the responsibility of those who held partnership interests in the Company. Accordingly, the Company did not have any expense related to federal income taxes during the three and six months ended June 30, 2021. Additionally, there were no deferred income taxes related to state and local level income taxes for that same period. For periods subsequent to the IPO, as described above in Note 1, Organization and Description of Business, the Company’s structure became one commonly referred to as of 24%. an “Up-C” structure, which is often used by partnerships and limited liability companies when they undertake an initial public offering of their business. The Up-C structure allows the members of the operating company, in this instance the Members of RGF, to continue to realize tax benefits in a similar fashion as was realized prior to the IPO, proportionate to their Membership interest, and the Company will be subject to both Federal and State taxes on the portion of earnings applicable to its controlling interest in RGFGiven the foregoing, the Company is subject to income tax on operating results related to the period November 4, 2021, through June 30, 2022, limited to its controlling interest in RGF of 24%. During this time the Company accounted for income taxes pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. The Company records valuation allowances against deferred tax assets when it is more likely than not that all or a portion of a deferred tax asset will not be realized. The Company routinely evaluates the realizability of deferred tax assets by assessing the likelihood that deferred tax assets will be recovered based on all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, estimates of future taxable income, tax planning strategies and results of operations. Estimating future taxable income is inherently uncertain and requires judgment. In projecting future taxable income, historical results are considered along with certain assumptions related to future earnings. As of June 30, 2022, the Company applied a full valuation allowance against all recognized deferred tax assets, resulting in a zero balance on the Consolidated Balance Sheets. If it is later determined that in the future that it is more likely than not that certain deferred tax assets may be fully utilized, the valuation allowance applicable to that particular deferred tax asset would be reversed and recognized through earnings in the period the determination was made. Any reversal of a valuation allowance would result in the reduction of the Company’s provision for income taxes in the period of reversal. During the three and six months ended June 30, 2022 and 2021, amounts provided for state income taxes were de minimis. |
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Loss per Share/Unit | Loss per Share/Unit Loss per share/unit is computed by dividing the Company’s net loss, after deducting any dividends on preferred units or accumulated returns on cumulative preferred units, by the weighted-average number of common shares or units outstanding during the period, adjusted for the dilutive effect of any outstanding dilutive securities. For periods prior to the Company’s IPO on November 9, 2021, the Company utilized the two-class method in computing loss per unit as Series Seed preferred units were participating. Preferred unit holders participated in income but were not obligated to participate in losses, thus the two-class method did not impact the loss per unit calculation for the period ended June 30, 2021, due to the net losses incurred in the period. Subsequent to the IPO, equity interests in the Company consisted of Class A common stock and Class B common stock. As shares of Class B common stock do not share in the earnings or losses of the Company they are not considered participating securities. As such, a separate presentation of basic and diluted net loss per share for each of Class B common stock under thetwo-class method has not been presented. See Note 10, Loss Per Share/Unit. |
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NEW ACCOUNTING STANDARDS | NEW ACCOUNTING STANDARDS During March 2022 the FASB issued ASU No. 2022-02, Financial Instruments—Credit Losses (Topic 326). This ASU is updates certain guidance as set forth is ASU No. 2016-03, to provide additional guidance on the treatment of credit losses, with regards to troubled debt restructuring and gross write-offs related to financing receivables and net investments in leases. The amendments in this update eliminate the previous troubled debt restructuring guidance and instead, require that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan, with the intent to enhance existing disclosure requirements as well as introduce new requirements related to certain modifications for borrowers experiencing financial difficulty. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The provisions of this ASU and must be applied prospectively, and early adoption is permitted. The Company does not expect the adoption of this guidance to have an impact on its financial statements. During October 2021 the FASB issued
ASU No. 2021-08, Business Combinations (Topic 805), which provides guidance for the accounting of revenue contracts acquired in a business combination. The provisions of this ASU are intended to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. Further, the provisions provide additional recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The amendments in this Update should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption of the amendments is permitted, including adoption in an interim period. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements, nor does it intend to early adopt the provisions of this guidance. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||
Schedule Of Cash and Restricted Cash To Amounts | The below table reconciles cash and restricted cash to amounts shown in the Consolidated Statements of Cash Flows:
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Schedule Of Estimated Useful Lives Of Property Plant And Equipment | Property and equipment are stated at acquisition cost, net of accumulated depreciation and amortization. Depreciation is calculated using the straight- line method typically over the following range of estimated useful lives of the assets as follows:
Leasehold improvements are capitalized and amortized over the shorter of the estimated useful life or the remaining term of the lease. |
REVENUE RECOGNITION (Tables) |
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Schedule Of Disaggregation Of Revenue | The following table presents a disaggregation of the Company’s net sales by revenue source. The Company believes that these revenue streams most appropriately depict the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with its customers.
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BUSINESS COMBINATIONS (Tables) |
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Business Combination And Asset Acquisitions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Consideration To The Assets Acquired And Liabilities | The following table details the purchase price allocation of the total consideration of $16.8 million:
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INVENTORIES (Tables) |
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Schedule Of Inventories | Inventories as of June 30, 2022 and December 31, 2021, consisted of the following:
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PROPERTY AND EQUIPMENT (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Property Plant And Equipment | Property and equipment as of June 30, 2022 and December 31, 2021 consisted of the following:
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LEASES (Tables) |
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Lease Cost | The components of lease expense were as
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Schedule of Lease liabilities | Supplemental balance sheet information related to leases is as follows:
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Schedule of cash flow information related to leases |
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Schedule of Operating And Finance Lease Liabilities Payments Due | The maturities of the Company’s operating and finance lease liabilities as of June 30, 2022 were as follows:
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DEBT (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of long-term debt | Long-term debt consisted of the following as of June 30, 2022 and December 31, 2021:
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Summary of weighted average interest rate based on the type of loan | The weighted average interest rates for the Company’s debt, by loan type, applicable for the six months ended June 30, 2022, is as follows:
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Summary of contractual future payments for all borrowings | Contractual future payments for all borrowings as of June 30, 2022 are as follows (in thousands):
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EQUITY (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Stock By Class | The following table details the components of member equity as of June 30, 2021, and the impact of the reorganization at the time of the IPO:
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LOSS PER SHARE/UNIT (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earning Per Share Basic and Diluted | The following table sets forth the computation of loss per share/ unit:
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EQUITY BASED COMPENSATION (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Summary of Share-based Compensation Arrangements by Share-based Payment Award | The following table details the activity related toe equity grants during the six months ended June 30, 2022:
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ORGANIZATION AND DESCRIPTION OF BUSINESS - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Nov. 09, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Payments Of Stock Issuance Costs | $ 0 | $ 478 | |
Equity Method Investment, Ownership Percentage | 20.00% | ||
Common Class B [Member] | |||
Common Stock Voting Rights | one-to-one | ||
IPO [Member] | |||
Equity Method Investment, Ownership Percentage | 76.00% | ||
IPO [Member] | Common Class A [Member] | |||
Stock issued during period, Shares | 5,333,333 | ||
Shares issued price per share | $ 12 | ||
Proceeds from issuance, Initial Public Offering | $ 59,500 | ||
Payments Of Stock Issuance Costs | $ 3,900 | ||
IPO [Member] | Common Class B [Member] | |||
Common Stock Voting Rights | 76 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS - Schedule Of Cash And Restricted Cash To Amounts (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|
Cash and Cash Equivalents [Abstract] | ||||
Cash | $ 10,339 | $ 27,435 | ||
Restricted cash | 2,310 | 2,310 | ||
Total cash reported in statements of cash flows | $ 12,649 | $ 29,745 | $ 654 | $ 28 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS (Details) |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
Computer Equipment [Member] | |
Estimated Useful Lives | 3 years |
Office Equipment [Member] | |
Estimated Useful Lives | 5 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Estimated Useful Lives | 10 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Estimated Useful Lives | 5 years |
REVENUE RECOGNITION - Schedule Of Disaggregation Of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | $ 30,809 | $ 18,685 | $ 68,385 | $ 35,463 |
Entrees [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 26,733 | 14,522 | 59,978 | 26,907 |
Breakfast [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | 2,932 | 1,576 | 5,839 | 3,212 |
Pizza And Snacks [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer | $ 1,144 | $ 2,587 | $ 2,568 | $ 5,344 |
REVENUE RECOGNITION - Additional Information (Details) - USD ($) |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|
Revenue from Contract with Customer [Abstract] | |||
Contract assets | $ 0 | $ 0 | $ 0 |
Contract liabilities | $ 0 | $ 0 |
BUSINESS COMBINATIONS - Summary Of Consideration To The Assets Acquired And Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
Mar. 10, 2021 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 12,486 | $ 12,486 | |
SSRE [Member] | |||
Business Acquisition [Line Items] | |||
Inventories | $ 500 | ||
Property and equipment | 3,577 | ||
Operating leases right-of-use assets | 3,157 | ||
Total identifiable assets | 7,234 | ||
Operating lease labilities – current | 174 | ||
Operating lease labilities – non-current | 2,777 | ||
Total liabilities assumed | 2,951 | ||
Net identifiable assets acquired | 4,283 | ||
Goodwill | 12,486 | ||
Total purchase price allocation | $ 16,769 |
INVENTORIES - Summary Of Inventories (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Ingredients and supplies | $ 15,886 | $ 6,646 |
Finished goods | 16,833 | 9,976 |
Total inventories | $ 32,719 | $ 16,622 |
PROPERTY AND EQUIPMENT - Summary Of Property Plant And Equipment (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 28,008 | $ 9,520 |
Less: accumulated depreciation | (2,722) | (2,571) |
Subtotal | 25,286 | 6,949 |
Construction in progress | 7,177 | 3,340 |
Property and equipment, net | 32,463 | 10,289 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 122 | 106 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 164 | 69 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | 27,027 | 8,829 |
Leasehold Improvements And Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 695 | $ 519 |
PROPERTY AND EQUIPMENT - Summary Of Property Plant And Equipment (Parenthetical) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation Expense | $ 0.4 | $ 0.1 | $ 0.8 | $ 0.4 |
LEASES - Summary of Lease Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Lease, Cost [Abstract] | ||||
Operating lease costs | $ 432 | $ 218 | $ 1,024 | $ 299 |
Finance lease costs: | ||||
Amortization of ROU assets | 65 | 44 | 133 | 94 |
Interest on lease liabilities | 8 | 4 | 18 | 8 |
Short-term lease costs | 0 | 0 | 146 | 214 |
Total lease costs | $ 505 | $ 266 | $ 1,321 | $ 615 |
LEASES - Schedule of Lease liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
ASSETS | ||
Operating lease right-of-use assets | $ 11,576 | $ 12,127 |
Property and equipment, net | 17,563 | 822 |
Total lease assets | 29,139 | 12,949 |
Current : | ||
Operating lease liabilities | 1,555 | 1,040 |
Financing lease liabilities | 2,167 | 198 |
Noncurrent : | ||
Long term operating lease liabilities | 10,778 | 11,249 |
Long term finance lease liabilities | 14,773 | 154 |
Total lease liabilities | $ 29,273 | $ 12,641 |
LEASES - Schedule of Cash Flow information Related to Leases (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 581 | $ 212 |
Operating cash flows from finance leases | 18 | 8 |
Financing cash flows from finance lease | 106 | 76 |
Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets | $ 18,370 | $ 4,250 |
LEASES - Additional Information (Details) |
Jun. 30, 2022 |
Jun. 30, 2021 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Operating leases | 9.00% | 7.00% |
Operating Lease, Weighted Average Remaining Lease Term | 6 years 6 months | |
Finance Lease, Weighted Average Remaining Lease Term | 6 years 9 months |
LEASES - Schedule of Operating And Finance Lease Liabilities Payments Due (Details) $ in Thousands |
Jun. 30, 2022
USD ($)
|
---|---|
Operating Leases | |
Remaining of 2022 | $ 1,142 |
2023 | 2,341 |
2024 | 2,402 |
2025 | 2,456 |
2026 | 2,291 |
Thereafter | 5,161 |
Total future lease payments | 15,793 |
Less: imputed interest | (3,460) |
Present value of lease obligations | 12,333 |
Finance Leases | |
2022 | 1,893 |
2023 | 3,221 |
2024 | 3,058 |
2025 | 3,058 |
2026 | 3,058 |
Thereafter | 7,390 |
Total future lease payments | 21,678 |
Less: imputed interest | (4,738) |
Present value of lease obligations | $ 16,940 |
DEBT - Summary of Long-Term Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Instrument [Line Items] | ||
Debt instrument carrying amount | $ 50,614 | $ 25,087 |
Less: Current maturities of long-term debt | 348 | 328 |
Long-term debt | 50,266 | 24,759 |
Revolving Credit Facility [Member] | November Two Thousand And Twenty Five [Member] | ||
Debt Instrument [Line Items] | ||
Long-term line of credit | 39,920 | 14,227 |
Capital Expenditure Line Of Credit [Member] | November Two Thousand And Twenty Five | ||
Debt Instrument [Line Items] | ||
Long-term line of credit | 5,107 | 3,602 |
Lease Line of Credit [Member] | November Two Thousand And Twenty Five | ||
Debt Instrument [Line Items] | ||
Long-term line of credit | $ 5,587 | $ 7,258 |
DEBT - Summary of Long-Term Debt (Parenthetical) (Details) - Prime Rate [Member] |
6 Months Ended |
---|---|
Jun. 30, 2022 | |
Revolving Credit Facility [Member] | November Two Thousand And Twenty Five [Member] | |
Debt Instrument [Line Items] | |
Debt instrument variable interest rate spread percentage | 3.50% |
Capital Expenditure Line Of Credit [Member] | November Two Thousand And Twenty Five | |
Debt Instrument [Line Items] | |
Debt instrument variable interest rate spread percentage | 8.50% |
Lease Line of Credit [Member] | November Two Thousand And Twenty Five | |
Debt Instrument [Line Items] | |
Debt instrument variable interest rate spread percentage | 8.50% |
DEBT - Summary of Weighted Average Interest Rate Based on the Type of Loan (Details) |
Jun. 30, 2022 |
---|---|
Revolving Credit Facility [Member] | |
Disclosure Of Weighted Average Interest Rates Based On The Type Of Loan [Line Items] | |
Debt, weighted average interest rate | 7.40% |
Capital Expenditure Line Of Credit [Member] | |
Disclosure Of Weighted Average Interest Rates Based On The Type Of Loan [Line Items] | |
Debt, weighted average interest rate | 12.40% |
Lease Line of Credit [Member] | |
Disclosure Of Weighted Average Interest Rates Based On The Type Of Loan [Line Items] | |
Debt, weighted average interest rate | 12.40% |
DEBT - Summary of Contractual Future Payments for All Borrowings (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Disclosure [Abstract] | ||
Remainder of 2022 | $ 600 | |
2023 | 370 | |
2024 | 417 | |
2025 | 49,227 | |
Total payments outstanding | $ 50,614 | $ 25,087 |
EQUITY - Additional Information (Details) - shares |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Nov. 09, 2021 |
Jun. 30, 2021 |
Jun. 30, 2022 |
|
Class of Stock [Line Items] | |||
Stockholders' Equity Note, Stock Split | 139.78 | ||
IPO [Member] | |||
Class of Stock [Line Items] | |||
Stockholders' Equity Note, Stock Split | 139.78 | ||
Common units issued | 8,800,132 | ||
Common Class B [Member] | |||
Class of Stock [Line Items] | |||
Common Stock, Voting Rights | one-to-one | ||
Common Class B [Member] | IPO [Member] | |||
Class of Stock [Line Items] | |||
Stock Issued During Period, Shares, Conversion of Units | 14,422,924 | ||
Common Stock, Voting Rights | 76 |
LOSS PER SHARE/UNIT - Schedule of Earning Per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Numerator: | ||||
Net loss (1) | $ (11,110) | $ (5,934) | $ (20,644) | $ (10,335) |
Less: net loss attributable to non-controlling interest | (8,449) | 0 | (15,689) | 0 |
Less: Series A preferred dividends | 0 | 146 | 0 | 292 |
Net loss attributable to common share/unitholders | $ (2,661) | $ (6,080) | $ (4,955) | $ (10,627) |
Denominator: | ||||
Weighted average number of shares outstanding, basic | 6,169,885 | 8,800,132 | 6,169,885 | 8,800,132 |
Weighted average number of shares outstanding, diluted | 6,169,885 | 8,800,132 | 6,169,885 | 8,800,132 |
Loss per common share/unit | $ (0.43) | $ (0.69) | $ (0.8) | $ (1.21) |
RELATED-PARTY TRANSACTIONS - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Related Party Transaction [Line Items] | |||
Company's membership interest rate | 20.00% | 20.00% | |
Interest expense, related party | $ 54 | $ 54 | |
Outstanding balance of the debt from related party | $ 1,200 | ||
Board of Directors [Member] | |||
Related Party Transaction [Line Items] | |||
Company's membership interest rate | 20.00% | 20.00% |
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2022
USD ($)
| |
Loss Contingencies [Line Items] | |
Long-term purchase commitment, amount | $ 0 |
EQUITY BASED COMPENSATION - Summary of Share-based Compensation Arrangements by Share-based Payment Award (Detail) |
6 Months Ended |
---|---|
Jun. 30, 2022
$ / shares
shares
| |
Weighted Average Grant Date Fair Value | $ / shares | $ 9.5 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 6.26 |
Restricted Stock Units (RSUs) [Member] | |
Outstanding/Unvested as of December 31, 2021 | 1,113,410 |
Granted | 1,373,395 |
Outstanding/Unvested as of June 30, 2022 | 2,486,805 |
INCOME TAXES - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Income Tax Expense (Benefit) | $ 0 | $ 0 | $ 0 | $ 0 |
Current Income Tax Expense (Benefit) | $ 0 | $ 0 | ||
Deferred income tax | $ 0 | $ 0 | ||
Noncontrolling Interest [Member] | ||||
Effective Income Tax Rate Reconciliation, Percent | 24.00% | |||
Maximum [Member] | ||||
Effective Income Tax Rate Reconciliation, Percent | 27.90% |
SUBSEQUENT EVENTS - Additional Information (Details) - USD ($) $ in Millions |
Aug. 14, 2022 |
Jun. 30, 2022 |
---|---|---|
Line of credit maximum borrowing capacity | $ 4.0 | |
Revolving Credit Facility [Member] | PMC Financial Services [Member] | ||
Line of credit maximum borrowing capacity | $ 75.0 | |
Line of credit principal amount | 10.0 | |
Amended Loan And Security Agreement One [Member] | Revolving Credit Facility [Member] | PMC Financial Services [Member] | ||
Line of credit maximum borrowing capacity | $ 50.0 |
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