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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): July 29, 2019

BEYOND MEAT, INC.
(Exact name of registrant as specified in its charter)  
Delaware
 
001-38879
 
26-4087597
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification Number)

119 Standard Street
El Segundo, California 90245
(Address of principal executive offices, including zip code)
(866) 756-4112
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:  
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 
 
☐
Pre-commencement communications pursuant to Rule 13-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.0001 par value
 
BYND
 
The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).                       Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐    
 



Item 2.02. Results of Operations and Financial Condition.

On July 29, 2019, Beyond Meat, Inc. issued a press release announcing its financial results for the second quarter ended June 29, 2019. The full text of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the information contained or incorporated herein, including the press release furnished herewith as Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such a filing.


Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit
Number
 
Description
 
 
 
99.1
 



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

BEYOND MEAT, INC.
 
 
By:
/s/ Mark J. Nelson
 
Mark J. Nelson
 
Chief Financial Officer and Treasurer
Date: July 29, 2019



Exhibit
Exhibit 99.1
https://cdn.kscope.io/535d1f29aaeba966a466bf52a217ad54-beyondmeat2crgb02.jpg

For immediate release
Beyond Meat® Reports Second Quarter 2019 Financial Results

Net Revenues Increase 287% Year-Over-Year to $67.3 Million
Company Raises Full Year 2019 Outlook

EL SEGUNDO, Calif.—July 29, 2019 (GLOBE NEWSWIRE)—Beyond Meat, Inc. (NASDAQ:BYND) (“Beyond Meat” or “the Company”), a leader in plant-based meat, today reported financial results for its second quarter and six months ended June 29, 2019.
Second Quarter 2019 Financial Highlights Compared to Prior Year Period
•
Net revenues were $67.3 million, an increase of 287%;
•
Gross profit was $22.7 million, or 33.8% as a percentage of net revenues, compared to gross profit of $2.6 million, or 15.0% as a percentage of net revenues, in the year-ago period;
•
Net loss was $9.4 million, or a loss of $0.24 per common share, compared to net loss of $7.4 million, or a loss of $1.22 per common share in the year-ago period; and
•
Adjusted EBITDA, which is a non-GAAP financial measure, was $6.9 million compared to an Adjusted EBITDA loss of $5.6 million in the year-ago period.
See “Non-GAAP Financial Measures” below for how Beyond Meat defines Adjusted EBITDA and the financial table that accompanies this release for a reconciliation of this measure to the closest comparable GAAP measure.
“We are very pleased with our second quarter results which reflect continued strength across our business as evidenced by new foodservice partnerships, expanded distribution in domestic retail channels, and accelerating expansion in our international markets. We believe our positive momentum continues to demonstrate mainstream consumers’ growing desire for plant-based meat products both domestically and abroad,” said Ethan Brown, Beyond Meat’s President and Chief Executive Officer. “Looking ahead, we will continue to prioritize efforts to increase our brand awareness, expand our distribution channels, launch new


innovative products, and invest in our infrastructure and internal capabilities in order to deliver against the robust demand we are seeing across our business.”
Second Quarter 2019
Net revenues increased 287% to $67.3 million in the second quarter of 2019 compared to $17.4 million in the second quarter of 2018. Growth in net revenues in the second quarter of 2019 was primarily due to an increase in sales volumes of products in our fresh platform across both our retail and restaurant and foodservice channels, driven by expansion in the number of retail and foodservice points of distribution, including new strategic customers, international customers, and greater demand from our existing customers.
 
 
Three Months Ended
 
Change
 
Six Months Ended
 
Change
(in thousands)
 
June 29,
2019
 
June 30,
2018
 
Amount
 
%
 
June 29,
2019
 
June 30,
2018
 
Amount
 
%
Net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Fresh Platform
 
$
67,722

 
$
15,119

 
$
52,603

 
347.9
%
 
$
106,528

 
$
24,715

 
$
81,813

 
331.0
%
Gross Frozen Platform
 
5,639

 
4,506

 
1,133

 
25.1
%
 
10,151

 
9,254

 
897

 
9.7
%
Less: Discounts
 
(6,110
)
 
(2,258
)
 
(3,852
)
 
170.6
%
 
(9,222
)
 
(3,826
)
 
(5,396
)
 
141.0
%
Net revenues
 
$
67,251

 
$
17,367

 
$
49,884

 
287.2
%
 
$
107,457

 
$
30,143

 
$
77,314

 
256.5
%
 
 
Three Months Ended
 
Change
 
Six Months Ended
 
Change
(in thousands)
 
June 29,
2019
 
June 30,
2018
 
Amount
 
%
 
June 29,
2019
 
June 30,
2018
 
Amount
 
%
Net revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail
 
$
34,120

 
$
11,684

 
$
22,436

 
192.0
%
 
$
53,699

 
$
20,972

 
$
32,727

 
156.1
%
Restaurant and Foodservice
 
33,131

 
5,683

 
27,448

 
483.0
%
 
53,758

 
9,171

 
44,587

 
486.2
%
Net revenues
 
$
67,251

 
$
17,367

 
$
49,884

 
287.2
%
 
$
107,457

 
$
30,143

 
$
77,314

 
256.5
%

Gross profit was $22.7 million, or 33.8% as a percentage of net revenues, in the second quarter of 2019, compared to $2.6 million, or 15.0% as a percentage of net revenues, in the prior-year period. The increase in gross profit and gross margin was primarily due to an increase in the amount of products sold, resulting in operating leverage and production efficiency improvements. A greater proportion of gross revenues from the Company's fresh platform also contributed to the improvement in gross margin.
Income from operations in the second quarter of 2019 was $2.2 million compared to loss from operations of $7.3 million in the second quarter of the prior year. This improvement was driven entirely by the year-over-year increase in net revenues and the resulting increase in gross profit, partially offset by higher operating expenses primarily due to higher absolute costs to support the Company’s expanded manufacturing and


supply chain operations, higher administrative costs associated with being a public company, and continued investment in innovation and marketing capabilities.
Net loss was $9.4 million in the second quarter of 2019 compared to a net loss of $7.4 million in the prior-year period. The expanded net loss was primarily the result of $11.7 million in noncash expense associated with the remeasurement of warrant liability in connection with our initial public offering in May 2019.
Adjusted EBITDA was $6.9 million, or 10.2% as a percentage of net revenues, in the second quarter of 2019 compared to an Adjusted EBITDA loss of $5.6 million in the second quarter of 2018. Adjusted EBITDA is a non-GAAP financial measure defined under “Non-GAAP Financial Measures,” and is reconciled to net loss, its closest comparable GAAP measure, at the end of this release.
Chief Financial Officer and Treasurer, Mark Nelson commented, “We are pleased with the positive level of Adjusted EBITDA we achieved in the second quarter. The early benefits we are seeing on cost productivity across our supply chain and manufacturing network, in conjunction with solid demand through our customer partnerships, have helped deliver these strong gross margin and operating margin results.”
Balance Sheet and Cash Flow Highlights
The Company’s cash and cash equivalents balance was $277.0 million as of June 29, 2019 and total outstanding debt was $30.5 million. Net cash used in operating activities was $22.4 million for the six months ended June 29, 2019, compared to $12.7 million for the prior-year period. Capital expenditures totaled $7.5 million for the six months ended June 29, 2019 compared to $10.0 million for the prior-year period.
2019 Outlook
For the full year 2019, the Company is raising its guidance and now expects the following:
•
Net revenues to exceed $240 million, an increase of greater than 170% compared to 2018, updated from its prior expectation of net revenues to exceed $210 million; and
•
Adjusted EBITDA to be positive compared to prior expectations of break-even Adjusted EBITDA.
The Company does not provide guidance for net loss, the most directly comparable GAAP measure, and similarly cannot provide a reconciliation between its forecasted Adjusted EBITDA and net loss metrics without unreasonable effort due to the unavailability of reliable estimates for certain items. These items are not within the Company’s control and may vary greatly between periods and could significantly impact future financial results.


Conference Call and Webcast
The Company will host a conference call and webcast with the executive management team to discuss these results with additional comments and details today at 4:30 p.m. Eastern, 1:30 p.m. Pacific. The conference call webcast will be available live over the Internet through the “Investors” section of the Company’s website at www.beyondmeat.com. To participate on the live call, dial 866-221-1171 from the U.S. and 270-215-9602 internationally. A telephone replay will be available approximately two hours after the call concludes through Monday, August 12, 2019, by dialing 855-859-2056 from the U.S., or 404-537-3406 from international locations, and entering confirmation code 6866428.
About Beyond Meat
Beyond Meat is one of the fastest growing food companies in the United States, offering a portfolio of revolutionary plant-based meats. Founded in 2009, Beyond Meat has a mission of building meat directly from plants, an innovation that enables consumers to experience the taste, texture and other sensory attributes of popular animal-based meat products while enjoying the nutritional and environmental benefits of eating its plant-based meat products. Beyond Meat’s brand commitment, “Eat What You Love,” represents a strong belief that by eating its portfolio of plant-based meats, consumers can enjoy more, not less, of their favorite meals, and by doing so, help address concerns related to human health, climate change, resource conservation and animal welfare. Beyond Meat’s portfolio of fresh and frozen plant-based proteins are currently sold at approximately 53,000 retail and foodservice outlets worldwide.


Forward-Looking Statements
Certain statements in this release constitute “forward-looking statements." These statements are based on management's current opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results. These forward-looking statements are only predictions, not historical fact, and involve certain risks and uncertainties, as well as assumptions. Actual results, levels of activity, performance, achievements and events could differ materially from those stated, anticipated or implied by such forward-looking statements. While Beyond Meat believes that its assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect actual results. There are many risks and uncertainties that could cause actual results to differ materially from forward-looking statements made herein including, most prominently, the risks discussed under the heading “Risk Factors” in the Company’s Form 10-Q for the quarter ended June 29, 2019 filed with the Securities and Exchange Commission ("SEC") on July 29, 2019, as well as other factors described from time to time in the Company's filings with the SEC. Such forward-looking statements are made only as of the date of this release. Beyond Meat undertakes no obligation to publicly update or revise any forward-looking statement because of new information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements.

Contacts
Media:
Allison Aronoff
858-735-7344
aaronoff@beyondmeat.com

Investors:
Katie Turner
646-277-1228
Katie.turner@icrinc.com


BEYOND MEAT, INC.
Condensed Statements of Operations
(In thousands, except share and per share data)
(unaudited)

 
 
Three Months Ended
 
Six Months Ended
 
 
June 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Net revenues
 
$
67,251

 
$
17,367

 
$
107,457

 
$
30,143

Cost of goods sold
 
44,510

 
14,755

 
73,945

 
25,474

Gross profit
 
22,741

 
2,612

 
33,512

 
4,669

 
 
 
 
 
 
 
 
 
Research and development expenses
 
4,212

 
2,497

 
8,710

 
4,102

Selling, general and administrative expenses
 
15,515

 
7,043

 
26,692

 
12,780

Restructuring expenses
 
847

 
348

 
1,241

 
642

Total operating expenses
 
20,574

 
9,888

 
36,643

 
17,524

Income (loss) from operations
 
2,167

 
(7,276
)
 
(3,131
)
 
(12,855
)
 
 
 
 
 
 
 
 
 
Other expense, net:
 
 
 
 
 
 
 
 
Interest expense
 
(741
)
 
(28
)
 
(1,474
)
 
(75
)
Remeasurement of warrant liability
 
(11,744
)
 
(130
)
 
(12,503
)
 
(259
)
Other income, net
 
898

 
38

 
1,039

 
97

Total other expense, net
 
(11,587
)
 
(120
)
 
(12,938
)
 
(237
)
 
 
 
 
 
 
 
 
 
Loss before taxes
 
(9,420
)
 
(7,396
)
 
(16,069
)
 
(13,092
)
Income tax expense
 
21

 
—

 
21

 
—

Net loss
 
$
(9,441
)
 
$
(7,396
)
 
$
(16,090
)
 
$
(13,092
)
Net loss per common share—basic and diluted
 
$
(0.24
)
 
$
(1.22
)
 
$
(0.69
)
 
$
(2.21
)
Weighted average common shares outstanding—basic and diluted
 
39,081,359

 
6,072,319

 
23,206,203

 
5,933,806

 
 
 
 
 
 
 
 
 




BEYOND MEAT, INC.
Condensed Balance Sheets
(In thousands, except share and per share data)
(unaudited)
 
June 29,
2019
 
December 31,
2018
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
276,987

 
$
54,271

Accounts receivable
34,388

 
12,626

Inventory
42,695

 
30,257

Prepaid expenses and other current assets
7,726

 
5,672

Total current assets
361,796

 
102,826

Property, plant, and equipment, net
34,473

 
30,527

Other non-current assets, net
792

 
396

Total assets
$
397,061

 
$
133,749

Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit):
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
27,383

 
$
17,247

Wages payable
1,208

 
1,255

Accrued bonus
2,157

 
2,312

Accrued expenses and other current liabilities
3,622

 
2,391

Short-term borrowings under revolving credit line
6,000

 
—

Short-term capital lease liabilities
33

 
44

Stock warrant liability
—

 
1,918

Total current liabilities
$
40,403

 
$
25,167

Long-term liabilities:
 
 
 
Revolving credit line
$
—

 
$
6,000

Long-term portion of bank term loan, net
19,543

 
19,388

Equipment loan, net
4,924

 
5,000

Capital lease obligations and other long-term liabilities
406

 
404

Total long-term liabilities
$
24,873

 
$
30,792

Commitments and Contingencies


 


Convertible preferred stock
$
—

 
$
199,540

Stockholders’ equity (deficit):
 
 
 
Preferred stock, par value $0.0001 per share—500,000 shares authorized, none issued and outstanding
—

 
—

Common stock, par value $0.0001 per share—500,000,000 shares and 58,669,600 shares authorized at June 29, 2019 and December 31, 2018, respectively; 60,167,521 and 6,951,350 shares issued and outstanding at June 29, 2019 and December 31, 2018, respectively
6

 
1

Additional paid-in capital
477,541

 
7,921

Accumulated deficit
(145,762
)
 
(129,672
)
Total stockholders’ equity (deficit)
$
331,785

 
$
(121,750
)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)
$
397,061

 
$
133,749

 
 
 
 




BEYOND MEAT, INC.
Condensed Statements of Cash Flows
(In thousands)
(unaudited)
 
 
Six Months Ended
 
 
June 29,
2019
 
June 30,
2018
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(16,090
)
 
$
(13,092
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
3,957

 
1,620

Share-based compensation expense
 
2,678

 
710

Amortization of debt issuance costs
 
78

 
35

Change in preferred and common stock warrant liabilities
 
12,503

 
259

Net change in operating assets and liabilities:
 
 
 
 
Accounts receivables
 
(21,762
)
 
(2,788
)
Inventories
 
(12,438
)
 
(6,178
)
Prepaid expenses and other assets
 
(2,131
)
 
(154
)
Accounts payable
 
9,799

 
6,623

Accrued expenses and other current liabilities
 
1,028

 
259

Long-term liabilities
 
12

 
39

Net cash used in operating activities
 
$
(22,366
)
 
$
(12,667
)
Cash flows used in investing activities:
 
 
 
 
Purchases of property, plant and equipment
 
$
(7,502
)
 
$
(9,973
)
Proceeds from sale of fixed assets
 
232

 
—

Purchases of property, plant and equipment held for sale
 
(3,121
)
 
—

Payment of security deposits
 
(487
)
 
(60
)
Net cash used in investing activities
 
$
(10,878
)
 
$
(10,033
)
Cash flows from financing activities:
 
 
 
 
Proceeds from issuance of common stock pursuant to the initial public offering, net of issuance costs
 
$
255,448

 
$
—

Proceeds from Series G preferred stock offering, net of offering costs
 
—

 
1,350

Proceeds from bank term loan borrowing
 
—

 
10,000

Repayments on revolving credit line
 
—

 
(2,500
)
Repayment on term loan
 
—

 
(1,000
)
Repayment of Missouri Note
 
—

 
(1,450
)
Payments of capital lease obligations
 
(21
)
 
(117
)
Proceeds from exercise of stock options
 
533

 
871

Net cash provided by financing activities
 
$
255,960

 
$
7,154

Net increase (decrease) in cash and cash equivalents
 
$
222,716

 
$
(15,546
)
Cash and cash equivalents at the beginning of the period
 
54,271

 
39,035

Cash and cash equivalents at the end of the period
 
$
276,987

 
$
23,489

(continued on next page)


 
 
Six Months Ended
 
 
June 29,
2019
 
June 30,
2018
Supplemental disclosures of cash flow information:
 
 
 
 
Cash paid during the period for:
 
 
 
 
Interest
 
$
1,445

 
$
63

Taxes
 
$
21

 
$
3

Non-cash investing and financing activities:
 
 
 
 
Capital lease obligations for the purchase of property, plant and equipment
 
$
—

 
$
85

Issuance of convertible preferred stock warrants in connection with debt
 
$
—

 
$
248

Non-cash additions to property, plant and equipment
 
$
1,003

 
$
1,656

Deferred offering costs, accrued not yet paid
 
$
578

 
$
64

   Non-cash additions to property, plant and equipment held for sale
 
$
646

 
$
—

    Reclassification of warrant liability to additional paid-in capital in connection with the initial public offering
 
$
14,421

 
$
—

Conversion of convertible preferred stock to common stock upon initial public offering
 
$
199,540

 
$
—





Non-GAAP Financial Measures
Beyond Meat uses the following non-GAAP financial measures in assessing its operating performance and in its financial communications:
“Adjusted EBITDA” is defined as net loss adjusted to exclude, when applicable, income tax expense, interest expense, depreciation and amortization expense, restructuring expenses, share-based compensation expense, inventory losses from termination of an exclusive supply agreement with a co-manufacturer, costs of termination of an exclusive supply agreement with the same co-manufacturer, and expenses primarily associated with the conversion of our convertible notes and remeasurement of our preferred stock warrant liability and common stock warrant liability.
“Adjusted EBITDA as a % of net revenues” is defined as Adjusted EBITDA divided by net revenues.
We use Adjusted EBITDA and Adjusted EBITDA as a % of net revenues because they are important measures upon which our management assesses our operating performance. We use Adjusted EBITDA and Adjusted EBITDA as a % of net revenues as key performance measures because we believe these measures facilitate operating performance comparison from period-to-period by excluding potential differences primarily caused by the impact of restructuring, asset depreciation and amortization, non-cash share-based compensation and non-operational charges including the impact to cost of goods sold and selling, general and administrative expenses related to the termination of an exclusive co-manufacturing agreement, early extinguishment of convertible notes and remeasurement of warrant liability. Because Adjusted EBITDA and Adjusted EBITDA as a % of net revenues facilitate internal comparisons of our historical operating performance on a more consistent basis, we also use these measures for our business planning purposes. In addition, we believe Adjusted EBITDA and Adjusted EBITDA as a % of net revenues are widely used by investors, securities analysts, ratings agencies and other parties in evaluating companies in our industry as a measure of our operational performance.
There are a number of limitations related to the use of Adjusted EBITDA rather than net loss, which is the most directly comparable GAAP measure. Some of these limitations are:
•
Adjusted EBITDA excludes depreciation and amortization expense and, although these are non-cash expenses, the assets being depreciated may have to be replaced in the future increasing our cash requirements;


•
Adjusted EBITDA does not reflect interest expense, or the cash required to service our debt, which reduces cash available to us;
•
Adjusted EBITDA does not reflect income tax payments that reduce cash available to us;
•
Adjusted EBITDA does not reflect restructuring expenses that reduce cash available to us;
•
Adjusted EBITDA does not reflect share-based compensation expenses and therefore does not include all of our compensation costs;
•
Adjusted EBITDA does not reflect other income (expense) that may increase or decrease cash available to us; and
•
other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
These non-GAAP financial measures should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. These non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies.

The following table presents the reconciliation of Adjusted EBITDA to its most comparable GAAP measure, net loss, as reported (unaudited):
 
 
Three Months Ended
 
Six Months Ended
(in thousands)
 
June 29,
2019
 
June 30,
2018
 
June 29,
2019
 
June 30,
2018
Net loss, as reported
 
$
(9,441
)
 
$
(7,396
)
 
(16,090
)
 
(13,092
)
Income tax expense
 
21

 
—

 
21

 
—

Interest expense
 
741

 
28

 
1,474

 
75

Depreciation and amortization expense
 
2,052

 
887

 
3,957

 
1,620

Restructuring expenses(1)
 
847

 
348

 
1,241

 
642

Share-based compensation expense
 
1,823

 
450

 
2,678

 
710

Remeasurement of warrant liability
 
11,744

 
130

 
12,503

 
259

Other income, net
 
(898
)
 
(38
)
 
(1,039
)
 
(97
)
Adjusted EBITDA
 
$
6,889

 
$
(5,591
)
 
$
4,745

 
$
(9,883
)
 
 
 
 
 
 
 
 
 
Net loss as a % of net revenues
 
(14.0
)%
 
(42.6
)%
 
(15.0
)%
 
(43.4
)%
Adjusted EBITDA as a % of net revenues
 
10.2
 %
 
(32.2
)%
 
4.4
 %
 
(32.8
)%
_____________
(1)
Primarily comprised of legal and other expenses associated with the dispute with a co-manufacturer with whom an exclusive supply agreement was terminated in May 2017.