Quarterly report pursuant to Section 13 or 15(d)

Note 6 - Balance Sheet Components

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Note 6 - Balance Sheet Components
6 Months Ended
Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Balance Sheet Components

Inventory

 

Inventory consisted of the following as of June 30, 2017 and December 31, 2016 (in thousands):

 

   

As of

June 30,

2017

   

As of

December 31,

2016

 
Finished goods   $ 6,133     $ 8,568  
Inventory   $ 6,133     $ 8,568  

 

The Company records charges for obsolete and slow moving inventory based on the age of the product as determined by the expiration date and when conditions indicate by specific identification. Products within one year of their expiration dates are considered for write-off purposes. Historically, the Company has had minimal returns with established customers. Other than write-off of inventory during restructuring activities, the Company incurred insignificant inventory write-offs during the three and six months ended June 30, 2017 and 2016. Inventory write-downs, once established, are not reversed as they establish a new cost basis for the inventory.

 

As disclosed further in Note 5, the Company executed a restructuring plan in August 2015 and wrote off inventory related to discontinued products. For the three and six months ended June 30, 2016, discontinued inventory of $0.5 million and $2.2 million, respectively, was written off and included as a component of “Cost of revenue” in the accompanying Condensed Consolidated Statements of Operations. Additionally, $0.4 million of inventory related to the Arnold Schwarzenegger product line was considered impaired, and included as a component of “Impairment of assets” in the accompanying Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016.

 

Property and Equipment

 

Property and equipment consisted of the following as of June 30, 2017 and December 31, 2016 (in thousands):

 

   

As of

June 30,

 2017

   

As of

December 31,

2016

 
Furniture, fixtures and equipment   $ 3,598     $ 3,521  
Leasehold improvements     2,504       2,504  
Manufacturing and lab equipment     3       3  
Vehicles     86       334  
Displays     484       483  
Website     462       462  
Construction in process           55  
Property and equipment, gross     7,137       7,362  
Less: accumulated depreciation and amortization     (4,639 )     (4,119 )
Property and equipment, net   $ 2,498     $ 3,243  

 

Depreciation and amortization expense related to property and equipment was $0.3 million and $0.4 million for the three months ended June 30, 2017 and 2016, respectively, and $0.6 million and $0.8 million for the six months ended June 30, 2017 and 2016, respectively, which is included in “Selling, general and administrative” expense in the accompanying Condensed Consolidated Statements of Operations.

 

Intangible Assets

 

Intangible assets consisted of the following (in thousands):

 

    As of June 30, 2017  
    Gross Value     Accumulated Amortization     Net Carrying Value     Remaining Weighted-Average Useful Lives(years)  
Amortized Intangible Assets                        
Brand   $ 2,244     $ (766 )   $ 1,478       4.6  
Total intangible assets   $ 2,244     $ (766 )   $ 1,478          

 

    As of December 31, 2016  
    Gross Value     Accumulated Amortization     Net Carrying Value     Remaining Weighted-Average Useful Lives(years)  
Amortized Intangible Assets                        
Brand   $ 2,244     $ (606 )   $ 1,638       5.1  
Total intangible assets   $ 2,244     $ (606 )   $ 1,638          

 

For the three months ended June 30, 2017 and 2016 intangible assets amortization expense was $0.1 million and $0.2 million, respectively, and for the six months ended June 30, 2017 and 2016 intangible asset amortization was $0.2 million and $0.4 million, respectively, which is included in the “Selling, general and administrative” expense in the accompanying Condensed Consolidated Statements of Operations. Additionally, $1.2 million of trademarks with a net carrying value of $0.8 million related to the Arnold Schwarzenegger product line were considered impaired, and included as a component of “Impairment of assets” in the accompanying Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016.

 

As of June 30, 2017, the estimated future amortization expense of intangible assets is as follows (in thousands):

 

For the Year Ending December 31,      
Remainder of 2017   $ 161  
2018     321  
2019     321  
2020     321  
2021     321  
Thereafter     33  
Total amortization expense   $ 1,478