PROJECT SAGE OLDCO, INC.

CIK:0001551693|SEC Filings

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Net sales	$ 19,544,000	$ 22,570,000	$ 65,231,000	$ 65,481,000
Cost of goods sold	9,515,000	9,794,000	30,440,000	27,118,000
Gross profit	10,029,000	12,776,000	34,791,000	38,363,000
Operating expenses:
Sales and marketing	9,330,000	12,290,000	29,487,000	41,542,000
Research and development	2,476,000	3,720,000	7,571,000	9,823,000
General and administrative	7,620,000	9,324,000	24,805,000	31,589,000
Total operating expenses	19,426,000	25,334,000	61,863,000	82,954,000
Loss from operations	(9,397,000)	(12,558,000)	(27,072,000)	(44,591,000)
Other (expense) income, net:
Interest income	168,000	41,000	458,000	58,000
Interest expense	(2,367,000)	(2,364,000)	(7,250,000)	(6,584,000)
Change in fair value of derivative liability	(3,153,000)	0	(3,153,000)	0
Other (expense) income, net	(24,000)	(6,000)	(125,000)	(1,000)
Total other (expense) income, net	(5,376,000)	(2,329,000)	(10,070,000)	(6,527,000)
Loss from continuing operations before income taxes	(14,773,000)	(14,887,000)	(37,142,000)	(51,118,000)
Income tax expense	0	0	0	0
Loss from continuing operations	(14,773,000)	(14,887,000)	(37,142,000)	(51,118,000)
Loss from discontinued operations, net of income taxes	0	(94,000)	0	(208,000)
Net loss	$ (14,773,000)	$ (14,981,000)	$ (37,142,000)	$ (51,326,000)
Basic net loss per common share
Continuing operations	$ (1.31)	$ (2.37)	$ (3.23)	$ (8.16)
Discontinued operations	0	(0.01)	0	(0.03)
Basic net loss per share	(1.31)	(2.38)	(3.23)	(8.19)
Diluted net loss per common share
Continuing operations	(1.31)	(2.37)	(3.23)	(8.16)
Discontinued operations	0	(0.01)	0	(0.03)
Diluted net loss per share	$ (1.31)	$ (2.38)	$ (3.23)	$ (8.19)
Weighted average outstanding common shares used for net loss per common share:
Basic	11,290,699	6,284,817	11,488,310	6,261,350
Diluted	11,290,699	6,284,817	11,488,310	6,261,350

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net loss	$ (37,142)	$ (51,326)
Loss from discontinued operations, net of income taxes	0	(208)
Loss from continuing operations, net of income taxes	(37,142)	(51,118)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	5,546	4,947
Provision for doubtful accounts	448	1,086
Provision for warranties	1,510	583
Provision for inventories	68	607
Fair value adjustments to derivative liability	3,153	0
Fair value adjustments of other liabilities held at fair value	350	(88)
Amortization of debt discount and issuance costs	3,621	3,029
Employee stock-based compensation expense	4,293	6,113
Other non-cash adjustments	0	135
Changes in operating assets and liabilities:
Accounts receivable	6,610	(2,341)
Inventories	3,357	667
Prepaid expenses, other current assets and other assets	741	1,997
Accounts payable, accrued and other liabilities	(9,122)	(5,514)
Customer deposits	8,437	7,830
Sales return liability	(2,029)	(1,383)
Net cash flow used in operating activities - continuing operations	(10,159)	(33,450)
Net cash flow used in operating activities - discontinued operations	0	(208)
Net cash used in operating activities	(10,159)	(33,658)
Cash flows from investing activities:
Purchases of property and equipment	(1,056)	(1,856)
Net cash flow used in investing activities - continuing operations	(1,056)	(1,856)
Net cash used in investing activities	(1,056)	(1,856)
Cash flows from financing activities:
Proceeds from issuance of common stock for employee stock-based plans	428	475
Shares repurchased for tax withholding on vesting RSUs	(96)	(448)
Gross borrowings under the Term Loan	0	5,000
Gross borrowings under the Revolving Loan	0	5,440
Repayments of the Revolving Loan	0	(7,678)
Deferred financing costs	(162)	(73)
Net cash provided by financing activities - continuing operations	170	2,716
Net cash provided by financing activities	170	2,716
Net decrease in cash, cash equivalents and restricted cash	(11,045)	(32,798)
Cash, cash equivalents and restricted cash at:
Beginning of period	26,677	52,068
End of period	15,632	19,270
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents	15,026	18,975
Restricted cash included in other assets	606	295
Total cash, cash equivalents and restricted cash	15,632	19,270
Supplemental disclosure of cash flow information:
Interest paid	3,218	3,385
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment in accounts payable and accrued liabilities	76	1,242
Asset acquisition, deferred and contingent consideration obligations at fair value	1,767	0
Deferred financing costs in accounts payable and accrued liabilities	0	250
Derivative liability reclassified to equity	$ 880	$ 0

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 15,026	$ 26,071
Accounts receivable, net of allowances for doubtful accounts of $2,776 and $3,132 at September 30, 2023 and December 31, 2022, respectively	29,610	36,892
Inventories	39,268	42,692
Prepaid expenses and other current assets	2,604	2,094
Total current assets	86,508	107,749
Property and equipment, net	13,289	14,941
Goodwill	9,202	9,202
Other intangible assets, net	24,332	25,676
Right of use assets, net	5,753	7,004
Other assets	849	849
Total assets	139,933	165,421
Current liabilities:
Current portion of long-term debt	58,810	0
Accounts payable	5,284	6,818
Accrued and other current liabilities	20,655	22,599
Customer deposits	53,598	45,161
Sales return liability	13,745	15,773
Total current liabilities	152,092	90,351
Long-term debt	0	55,406
Derivative liability	3,153	880
Deferred and contingent consideration	1,794	2,791
Warranty reserve	8,758	8,186
Lease liabilities	4,129	5,518
Other liabilities	2,052	2,698
Total liabilities	171,978	165,830
Commitments and contingencies (Note 11)
Stockholders deficit:
Preferred stock, $0.01 par value - Authorized 10,000,000 shares: none issued or outstanding	0	0
Common stock, $0.01 par value - Authorized 200,000,000 shares; issued 11,375,478 and 10,709,716 and outstanding 11,368,205 and 10,702,444 shares at September 30, 2023 and December 31, 2022, respectively	114	107
Additional paid-in capital	699,894	694,395
Treasury stock, at cost (7,273 shares at September 30, 2023 and December 31, 2022)	(260)	(260)
Accumulated deficit	(731,793)	(694,651)
Total stockholders' deficit	(32,045)	(409)
Total liabilities and stockholders' deficit	$ 139,933	$ 165,421