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Summary of Significant Accounting Policies (Policies) | 6 Months Ended
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Jun. 30, 2019
Accounting Policies [Abstract] |
Basis of Presentation | Basis of Presentation—The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial reporting and as required by Rule 10-01 of Regulation S-X. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of items of a normal and recurring nature) necessary to present fairly the financial position as of June 30, 2019, the results of operations for the three and six months ended June 30, 2018 and 2019 and cash flows for the six months ended June 30, 2018 and 2019. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet as of December 31, 2018 included herein was derived from the Company’s audited consolidated financial statements as of that date, but does not include all of the information and notes required by GAAP for complete financial statements. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2018, included in the Company’s final prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”), on June 13, 2019 (the “Prospectus”).
Use of Estimates | Use of Estimates—Preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period covered by the financial statements and accompanying notes. The most significant estimates relate to the determination of fair value of the Company’s common stock and stock-based compensation, prior to the Company’s IPO. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from those estimates.
Principles of Consolidation | Principles of Consolidation—The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation.
Revenue Recognition | Revenue Recognition—The Company accounts for revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The Company derives its revenue from the sale of consumer products. The Company sells its products directly to consumers through online retail channels and through wholesale channels. For direct to consumer sales, the Company considers customer order confirmations to be a contract with the customer. Customer confirmations are executed at the time an order is placed through third party online channels. For wholesale sales, the Company considers the customer purchase order to be the contract. For all of the Company’s sales and distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment date. As a result, the Company has a present and unconditional right to payment and record the amount due from the customer in accounts receivable. Revenue from consumer product sales is recorded at the net sales price (transaction price), which includes an estimate of future returns based on historical return rates. There is judgment in utilizing historical trends for estimating future returns. The Company’s refund liability for sales returns was $0.3 million and $0.5 million at December 31, 2018 and June 30, 2019, respectively, which is included in accrued liabilities and represents the expected value of the refunds that will be due to its customers. The Company evaluated principal versus agent considerations to determine whether it is appropriate to record platform fees paid to Amazon as an expense or as a reduction of revenue. Platform fees are recorded as sales and distribution expense and are not recorded as a reduction of revenue because the Company owns and controls all the goods before they are transferred to the customer. The Company can, at any time, direct Amazon and similarly with other third party logistics providers (“Logistics Providers”), to return the Company’s inventory to any location specified by the Company. Any returns made by customers directly to Logistics Providers are the responsibility of the Company to make customers whole and the Company retains the back-end inventory risk. Further, the Company is subject to credit risk (i.e., credit card chargebacks), establishes the prices of its products, can determine who fulfills the goods to the customer (Amazon (or any other Logistics Provider) or the Company) and can limit quantities or stop selling the goods at any time. Based on these considerations, the Company is the principal in this arrangement. Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good to the customer and is the unit of account in ASC Topic 606. A contract’s transaction price is recognized as revenue when the performance obligation is satisfied. Each of the Company’s contracts have a single distinct performance obligation, which is the promise to transfer individual goods. For consumer product sales, the Company has elected to treat shipping and handling as fulfillment activities, and not a separate performance obligation. Accordingly, the Company recognizes revenue for its single performance obligation related to product sales at the time control of the merchandise passes to the customer, which is generally at the time of shipment. The Company bills customers for charges for shipping and handling on certain sales and such charges are recorded as part of net revenue. Shipping and handling revenue for the three and six months ended June 30, 2018 and 2019 were less than $0.1 million and $0.1 million, respectively. For each contract, the Company considers the promise to transfer products to be the only identified performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. All of the Company’s revenues as reflected on the condensed consolidated statements of operations for the three and six months ended June 30, 2018 and 2019 are recognized at a point in time. Sales taxes. Consistent with prior periods, sales taxes collected from customers are presented on a net basis and as such are excluded from net revenue. Net Revenue by Category. The following table sets forth the Company’s net revenue disaggregated by sales channel and geographic region based on the billing addresses of its customers:
|  | Three Months Ended June 30, 2018 (in thousands) |
|  | Direct |  |  | Wholesale |  |  | Managed SaaS |  |  | Total |
North America |  | $ | 13,130 |  |  | $ | 1,420 |  |  | $ | 38 |  |  | $ | 14,588 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  | $ | — |
Total net revenue |  | $ | 13,130 |  |  | $ | 1,420 |  |  | $ | 38 |  |  | $ | 14,588 |
|  | Three Months Ended June 30, 2019 (in thousands) |
|  | Direct |  |  | Wholesale |  |  | Managed SaaS |  |  | Total |
North America |  | $ | 29,276 |  |  | $ | 662 |  |  | $ | 397 |  |  | $ | 30,335 |
Other |  |  | 33 |  |  |  | — |  |  |  | — |  |  |  | 33 |
Total net revenue |  | $ | 29,309 |  |  | $ | 662 |  |  | $ | 397 |  |  | $ | 30,368 |
|  | Six Months Ended June 30, 2018 (in thousands) |
|  | Direct |  |  | Wholesale |  |  | Managed SaaS |  |  | Total |
North America |  | $ | 25,241 |  |  | $ | 3,595 |  |  | $ | 68 |  |  | $ | 28,904 |
Other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total net revenue |  | $ | 25,241 |  |  | $ | 3,595 |  |  | $ | 68 |  |  | $ | 28,904 |
|  | Six Months Ended June 30, 2019 (in thousands) |
|  | Direct |  |  | Wholesale |  |  | Managed SaaS |  |  | Total |
North America |  | $ | 46,292 |  |  | $ | 912 |  |  | $ | 930 |  |  | $ | 48,134 |
Other |  |  | 79 |  |  |  | — |  |  |  | — |  |  |  | 79 |
Total net revenue |  | $ | 46,371 |  |  | $ | 912 |  |  | $ | 930 |  |  | $ | 48,213 |
Net Revenue by Product Categories. The following table sets forth the Company’s net revenue disaggregated by product categories:
|  | Three Months Ended June 30, |
|  | 2018 |  |  | 2019 |
|  | (in thousands) |
Environmental appliances (i.e., dehumidifiers and air conditioners) |  | $ | 6,077 |  |  | $ | 19,111 |
Small home appliances |  |  | 3,882 |  |  |  | 5,096 |
Cosmetics, skincare, and heath supplements |  |  | 2 |  |  |  | 2,610 |
Cookware, kitchen tools and gadgets |  |  | 2,787 |  |  |  | 1,920 |
Hair appliances and accessories |  |  | 927 |  |  |  | 784 |
Portable projectors, speakers and headphones |  |  | 189 |  |  |  | 54 |
All others |  |  | 686 |  |  |  | 396 |
Total net product revenue |  |  | 14,550 |  |  |  | 29,971 |
Managed SaaS |  |  | 38 |  |  |  | 397 |
Total net revenue |  | $ | 14,588 |  |  | $ | 30,368 |
|  | Six Months Ended June 30, |
|  | 2018 |  |  | 2019 |
|  | (in thousands) |
Environmental appliances (i.e., dehumidifiers and air conditioners) |  | $ | 11,272 |  |  | $ | 25,674 |
Small home appliances |  |  | 7,107 |  |  |  | 9,326 |
Cosmetics, skincare, and heath supplements |  |  | 4 |  |  |  | 5,777 |
Cookware, kitchen tools and gadgets |  |  | 6,509 |  |  |  | 3,959 |
Hair appliances and accessories |  |  | 2,056 |  |  |  | 1,858 |
Portable projectors, speakers and headphones |  |  | 505 |  |  |  | 130 |
All others |  |  | 1,383 |  |  |  | 559 |
Total net product revenue |  |  | 28,836 |  |  |  | 47,283 |
Managed SaaS |  |  | 68 |  |  |  | 930 |
Total net revenue |  | $ | 28,904 |  |  | $ | 48,213 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments—The Company’s financial instruments, including net accounts receivable, accounts payable, and accrued and other current liabilities are carried at historical cost. At June 30, 2019, the carrying amounts of these instruments approximated their fair values because of their short-term nature. The credit facility is carried at amortized cost and at December 31, 2018 and June 30, 2019, respectively, the carrying amount approximates fair value as the stated interest rate approximates market rates currently available to the Company. The Company estimates the fair value of the borrowings under our Horizon Term Loan to be approximately $14.7 million and $14.7 million at December 31, 2018 and June 30, 2019, respectively. The Company considers the inputs utilized to determine the fair value of the borrowings to be Level 2 inputs. The Company’s financial instruments of cash and restricted cash consist of Level 1 assets at June 30, 2019. The Company’s cash and restricted cash was approximately $40.0 million and included savings deposits and overnight investments at June 30, 2019. Assets and liabilities recorded at fair value on a recurring basis in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level 3—Unobservable inputs that are supported by little or no market data for the related assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Recently Adopted and Issued Accounting Pronouncements | Recent Accounting Pronouncements The Jumpstart Our Business Startups Act of 2012 permits an emerging growth company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. The Company has elected to use this extended transition period until it is no longer an emerging growth company or until it affirmatively and irrevocably opts out of the extended transition period. As a result, the Company’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Adopted Accounting Standards In November 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows: Restricted Cash (Topic 230) (“ASU 2016-18”). ASU 2016-18 requires that the statement of cash flows explains the change during the period in the total cash and restricted cash. Therefore, amounts generally described as restricted cash should be included with cash when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. ASU 2016-18 requires retrospective application for all periods presented and as a result the Company has recasted its condensed statement of cash flows for the six months ended June 30, 2018 to reflect the adoption of ASU 2016-18, which was implemented on January 1, 2019. In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718) Scope of Modification Accounting, which provides guidance on the various types of changes which would trigger modification accounting for share-based payment awards. In summary, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The guidance is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. The amendments are applied prospectively to awards modified on or after the adoption date. The new guidance was adopted on January 1, 2019 with no material impact on the condensed consolidated financial statements. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires lessees to record most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. This ASU is effective for all annual reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the effect that the updated standard will have on its consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). ASU 2018-02 addresses the effect of the change in the U.S. federal corporate tax rate due to the enactment of the December 22, 2017 Tax Act on items within accumulated other comprehensive income (loss). The guidance will be effective for all annual reporting periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the effect that the updated standard will have on its consolidated financial statements. On August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which changes the fair value measurement disclosure requirements of ASC Topic 820. The amendments in this ASU are the result of a broader disclosure project called FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements. This ASU is effective for all annual reporting periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted for any eliminated or modified disclosures upon issuance of this ASU. The Company is currently evaluating the effect that the updated standard will have on its consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting, which expands the scope of ASC Topic 718, Compensation—Stock Compensation, which currently only includes share-based payments issued to employees, to also include share-based payments issued to nonemployees for goods and services. This ASU is effective for all annual reporting periods beginning after December 15, 2019, including interim periods therein. The Company is currently evaluating the effect that the updated standard will have on its consolidated financial statements.

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