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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2017	Nov. 08, 2017
Entity Registrant Name	PetIQ, Inc.
Entity Central Index Key	0001668673
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Filer Category	Non-accelerated Filer
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Class A
Entity Common Stock, Shares Outstanding		13,222,583
Class B
Entity Common Stock, Shares Outstanding		8,268,188

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalents	$ 46,536	$ 767
Accounts receivable, net of allowance for doubtful accounts	24,841	17,195
Inventories	34,654	34,232
Supplier prepayments	2,251	2,985
Other current assets	1,471	1,358
Total current assets	109,753	56,537
Property, plant and equipment, net	14,865	13,044
Restricted cash and deposits	200	250
Deferred tax assets	9,707
Other non-current assets	1,932	2,826
Intangible assets, net of accumulated amortization	3,522	4,054
Goodwill	5,063	4,619
Total assets	145,042	81,330
Current liabilities
Accounts payable	11,860	9,333
Accrued wages payable	1,691	1,100
Accrued interest payable	112	44
Other accrued expenses	2,266	277
Current portion of long-term debt and capital leases	145	2,321
Total current liabilities	16,074	13,075
Non-current liabilities
Long-term debt	19,928	25,158
Obligations under capital leases, less current installments	403	434
Deferred acquisition liability		1,303
Other non-current liabilities	336	378
Total non-current liabilities	20,667	27,273
Commitments and contingencies
Equity
Member's equity		42,941
Additional Paid-in capital	71,192
Accumlated deficit	(226)
Accumulated other comprehensive loss	(684)	(1,940)
Total member's equity	70,303	41,001
Non-controlling interest	37,998	(19)
Total equity	108,301	40,982
Total liabilities and equity	145,042	$ 81,330
Class A
Equity
Common stock value	13
Class B
Equity
Common stock value	$ 8

Condensed Consolidated Balance Sheets (Parenthetical)	Sep. 30, 2017 $ / shares shares
Common stock, shares outstanding	13,222,583
Class A
Common stock, par value \| $ / shares	$ 0.001
Common stock authorized	125,000,000
Common Stock, Shares, Issued	13,222,583
Common stock, shares outstanding	13,222,583
Class B
Common stock, par value \| $ / shares	$ 0.001
Common stock authorized	8,401,000
Common Stock, Shares, Issued	8,268,188
Common stock, shares outstanding	8,268,188

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Condensed Consolidated Statements of Operations
Net sales	$ 60,554	$ 41,671	$ 214,761	$ 155,249
Cost of sales	48,037	35,511	174,093	130,356
Gross profit	12,517	6,160	40,668	24,893
Operating expenses
General and administrative expenses	10,739	7,942	27,421	24,307
Operating income (loss)	1,778	(1,782)	13,247	586
Interest expense	(352)	(737)	(1,351)	(2,389)
Foreign currency gain/(loss), net	(31)	2	(152)	(83)
Loss on debt extinguishment				(993)
Other income, net	14	5	14	661
Total other expense, net	(369)	(730)	(1,489)	(2,804)
Pretax net income (loss)	1,409	(2,512)	11,758	(2,218)
Income tax expense	(550)		(550)
Net income (loss)	859	(2,512)	11,208	(2,218)
Net income/(loss) attributable to noncontrolling interest	1,085	(2,512)	11,434	(2,218)
Net income attributable to PetIQ, Inc. — basic	(226)		(226)
Comprehensive income/(loss)
Net income (loss)	859	(2,512)	11,208	(2,218)
Foreign currency translation adjustment	314	(351)	829	(1,407)
Comprehensive income/(loss)	1,173	(2,863)	12,037	(3,625)
Comprehensive income attributable to noncontrolling interest	1,206	$ (2,863)	12,070	$ (3,625)
Comprehensive loss attributable to member/PetIQ	$ (33)		$ (33)
Net loss per share attributable to PetIQ, Inc. Class A common stock
Basic	$ (0.02)		$ (0.02)
Diluted	$ (0.02)		$ (0.02)
Weighted Average shares of Class A common stock outstanding
Basic	13,222,583		13,222,583
Diluted	13,222,583		13,222,583

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities
Net income (loss)	$ 11,208	$ (2,218)
Adjustments to reconcile net income to net cash used for operating activities
Depreciation and amortization of intangible assets and loan fees	2,725	2,885
Loss on disposition of property	14	52
Foreign exchange loss on liabilities	204	52
Stock based compensation expense	246
Deferred tax adjustment	351
Warranty settlement gain		(645)
Changes in assets and liabilities
Accounts receivable	(7,257)	(882)
Inventories	(316)	(2,015)
Prepaid expenses and other assets	1,137	3,663
Accounts payable	1,797	(1,125)
Accrued wages payable	570	(940)
Other accrued expenses	287	(163)
Net cash provided by (used in) operating activities	10,966	(1,336)
Cash flows from investing activities
Purchase of property, plant, and equipment and intangibles	(3,558)	(1,604)
Net cash used in investing activities	(3,558)	(1,604)
Cash flows from financing activities:
Proceeds from issuance of long term debt	206,020	167,052
Principal payments on long term debt	(213,522)	(172,785)
Proceeds from Initial Public Offering (IPO) of Class A Shares	104,010
Repayment of Preference notes	(55,960)
Change in restricted cash and deposits	50	6,894
Purchase of LLC units from Continuing LLC Owners	(2,133)
Principal payments on capital lease obligations	(86)	(62)
Payment of deferred financing fees and debt discount	(42)	(248)
Net cash provided by financing activities	38,337	851
Net change in cash and cash equivalents	45,745	(2,089)
Effect of exchange rate changes on cash and cash equivalents	24	(206)
Cash and cash equivalents, beginning of period	767	3,250
Cash and cash equivalents, end of period	46,536	955
Supplemental cash flow
Interest paid	1,116	2,150
Property, plant, and equipment acquired through accounts payable	(53)	(46)
Capital lease additions	17	$ 127
Issuance of preference notes for LLC Interests	55,960
Establishment of deferred tax asset from step-up in basis	9,814
Accrued tax distribution	$ 709

Condensed Consolidated Statements of Members/Stockholders Equity - USD ($)	Class A Common Stock [Member]	Class B Common Stock [Member]	Member Equity [Member]	Retained Earnings (Accumulated Deficit) [Member]	Accumulated Distributions In Excess Of Net Income [Member]	Additional Paid In Capital [Member]	Noncontrolling Interest [Member]	Total
Beginning Balance at Dec. 31, 2015			$ 46,339,000		$ (42,000)		$ (22,000)	$ 46,275,000
Increase (Decrease) in Stockholders' Equity
Net income (loss)			(3,398,000)				3,000	(3,395,000)
Other comprehensive income					(1,898,000)			(1,898,000)
Ending Balance at Dec. 31, 2016			42,941,000		(1,940,000)		(19,000)	40,982,000
Increase (Decrease) in Stockholders' Equity
Net income (loss)								11,208,000
Accrued tax distribution prior to recapitalization			(511,000)					(511,000)
Issuance of common stock for merger	$ 6,000							6,000
Issunce of common stock for merger (in shares)	6,035,083
Issuance of Class B Shares		$ 8,000						8,000
Issuance of Class B Shares (in shares)		8,401,522
Exhange of LLC Interests held by Continuing LLC owners and certain employees for Class A common stock			$ (53,591,000)		668,000	$ 28,497,000	24,426,000
Stock based compensation expense						151,000	95,000	246,000
Issuance of Class A Shares for IPO net of under writing discounts and offering costs	$ 7,000					104,003,000		104,010,000
Issuance of Class A Shares for IPO net of under writing discounts and offering costs (in shares)	7,187,500
Payment of preference notes to affiliates						(55,960,000)		(55,960,000)
Increase in deferred tax asset from step-up in tax basis						9,814,000		9,814,000
Purchase of noncontrolling interests					(120,000)	(15,313,000)	13,300,000	(2,133,000)
Common unit issued in exchange of shares value		$ 0
Common unit issued in exchange of shares (in shares)		(133,334)
Accrued Tax Distributions							(198,000)	(198,000)
Ending Balance at Sep. 30, 2017	$ 13,000	$ 8,000		$ (226,000)	$ (684,000)	$ 71,192,000	$ 37,998,000	$ 108,301,000
Ending Balance (in shares) at Sep. 30, 2017	13,222,583	8,268,188

Principal Business Activity and Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Principal Business Activity and Significant Accounting Policies

Principal Business Activity and Significant Accounting Policies

Note 1 - Principal Business Activity and Significant Accounting Policies

Principal Business Activity and Principles of Consolidation

PetIQ, Inc. (the “Company”, or “PetIQ”) was formed as a Delaware corporation on February 29, 2016. The Company was formed for the purpose of completing a public offering and related transactions in order to carry on the business of PetIQ, LLC, an Idaho limited liability company. The Company is the sole managing member of PetIQ Holdings, LLC (“Holdco”), a Delaware limited liability company, which is the sole member of PetIQ, LLC (“Opco”) and, through Holdco, will operate and control all of the business and affairs of Opco and continue to conduct the business now conducted by Opco and its subsidiaries. The Company’s fiscal year end is December 31.

The Company’s principal asset is the Holdco LLC Interests that it holds. As the sole managing member of Holdco, the Company operates and controls all of the business and affairs of Holdco and, through Holdco and its subsidiaries, conducts the Company’s business. In addition, the Company controls the management of, and has a controlling interest in, Holdco and, therefore, is the primary beneficiary of Holdco. As a result, the Company consolidates the financial results of Holdco pursuant to the variable-interest entity (“VIE”) accounting model, and a portion of the Company’s net income (loss) will be allocated to the non-controlling interest to reflect the entitlement of Continuing LLC Owners (as defined in Note 7) to a portion of Holdco’s net income (loss). Holdco’s assets may be used only to settle Holdco’s obligations and Holdco’s beneficial interest holders have no recourse to the general credit to the Company. Through Holdco and its subsidiaries, the Company is a manufacturer and wholesale distributor of over-the-counter and prescription pet medications and pet wellness products to various retail customers and distributors throughout the United States and Europe. The Company is headquartered in Eagle, Idaho and manufactures and distributes products from facilities in Florida, Texas, Utah, and Europe.

As discussed in Note 7, as a result of the recapitalization transactions, PetIQ, Inc. consolidates Holdco and Opco; Opco is considered to be the predecessor to PetIQ, Inc. for accounting and reporting purposes. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. All intercompany transactions and balances have been eliminated in consolidation.

The condensed consolidated financial statements as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016 are unaudited. The condensed consolidated balance sheet as of December 31, 2016 has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2016 and related notes thereto included in the final prospectus for PetIQ, Inc. dated July 20, 2017 and filed with the Securities and Exchange Commission (“SEC”) on July 21, 2017. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property, plant, and equipment; allowance for doubtful accounts; the valuation of property, plant, and equipment, intangible assets and goodwill, inventories, and notes receivable; and reserves for legal contingencies.

Foreign Currencies

The Company operates subsidiaries in foreign countries who use the local currency as the functional currency. The Company translates its foreign subsidiaries’ assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded in the cumulative translation account, a component of accumulated other comprehensive income. The Company records gains and losses from changes in exchange rates on transactions denominated in currencies other than each reporting location's functional currency in net income for each period.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the date of acquisition, excluding amounts restricted for various state licensing regulations. Restricted deposits are not considered cash and cash equivalents. The Company maintains its cash accounts in various deposit accounts, the balances of which at times exceeded federal deposit insurance limits during the periods presented.

Receivables and Credit Policy

Trade receivables due from customers are uncollateralized customer obligations due under normal trade terms generally requiring payment within 30 days from the invoice date. Accounts receivable are stated at the amount billed to the customer, net of discounts and estimated deductions. The Company does not have a policy for charging interest on overdue customer account balances. The Company provides an allowance for doubtful accounts equal to estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. Payments of trade receivables are allocated to the specific invoices identified on the customer's remittance advice.

The Company also has notes receivable due from various suppliers included in accounts receivable. The notes typically bear interest at 4% and are repaid based on amortization schedules. Non-current portions of these notes receivable are included in other non-current assets on the consolidated balance sheets.

Accounts receivable consists of the following as of:


	September 30, 2017		December 31, 2016

Trade receivables	$	25,981	$	18,086
Notes receivable		324		440
		26,305		18,526
Less: Allowance for doubtful accounts		(911)		(498)
Non-current portion of receivables		(553)		(833)
Total accounts receivable, net	$	24,841	$	17,195

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is typically determined using the first-in first-out (“FIFO”) method The Company maintains reserves for estimated obsolete or unmarketable inventory based on the difference between the cost of inventory and its estimated net realizable value. In estimating the reserves, management considers factors such as excess or slow-moving inventories, product expiration dating, and market conditions. Changes in these conditions may result in additional reserves. Major components of inventories consist of the following as of:


	September 30, 2017		December 31, 2016
Raw materials and work in progress	$	5,227	$	5,924
Finished goods		29,427		28,308
Total inventories	$	34,654	$	34,232

Property, Plant, and Equipment

Property, plant, and equipment are recorded at cost. Expenditures for improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

Depreciation and amortization is provided using the straight-line method, based on useful lives of the assets, except for leasehold improvements and capital leased assets which are depreciated over the shorter of the expected useful life or the lease term. Depreciation and amortization expense is recorded in cost of sales and general and administrative expenses in the consolidated statements of operations, depending on the use of the asset. The estimated useful lives of property, plant, and equipment are as follows:


Computer equipment and software		3 years
Buildings		33 years
Equipment		3-15 years
Leasehold improvements		3-9 years
Furniture and fixtures		8-10 years

Depreciation expense was $684 and $375 for the three months ended September 30, 2017, and 2016, respectively, and $1,795 and $1,350 for the nine months ended September 30, 2017 and 2016, respectively.

Restricted Deposits

Restricted deposits are amounts required to be held by the Company in segregated accounts for various state licensing regulations in relation to the sale of regulated prescription pet medications. Restricted deposits as of September 30, 2017, and December 31, 2016 were $200 and $250, respectively. Interest earned on restricted deposits is included in other income when earned.

Deferred Acquisition Liability

The Company has a deferred acquisition liability related to an acquisition that occurred in 2013. The liability is denominated in Euros and requires annual payments based on a percentage of gross profit from the sales of certain products, and any amounts not repaid by the annual payments will be due in June 2018. The current balance recorded as of September 30, 2017, and December 31, 2016 was $1,745 and $250, respectively, and is included in other accrued expenses. The non-current portion recorded as of December 31, 2016 was $1,303, and is included in deferred acquisition liability.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, product has been delivered, the price is fixed or determinable and collectability is reasonably assured. The Company generally records revenues from product sales when the goods are shipped to the customer. For customers with Free on Board ("FOB") destination terms, a provision is recorded to exclude shipments determined to be in-transit to these customers at the end of the reporting period. A sales return allowance is recorded and accounts receivable are reduced as revenues are recognized for estimated losses on credit sales due to customer claims for discounts, returned goods and other items.

The Company offers a variety of trade promotions and incentives to our customers, such as cooperative advertising programs and store placement. Sales are recorded net of trade promotion spending, which is recognized at the later of the date on which the Company recognizes the related revenue or the date on which the Company offers the incentive. The Company’s net sales are periodically influenced by the timing, extent and amount of such trade promotions and incentives. Accruals for expected payouts under these programs are included in other accrued expenses.

Shipping and Handling Costs

Shipping and handling costs are recorded as cost of sales, and are not billed to customers.

Research and Development and Advertising Costs

Research and development and advertising costs are expensed as incurred and are included in general and administrative expenses. Research and development costs amounted to $114 and $82 for the three months ended September 30, 2017 and 2016, respectively and $427 and $248 for the nine months ended September 30, 2017 and 2016, respectively. Advertising costs were $436 and $273 for the three months ended September 30, 2017 and 2016, respectively and $2,028 and $883 for the nine months ended September 30, 2017 and 2016, respectively.

Income taxes

The Company records a tax provision for the anticipated tax consequences of the reported results of operations. The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. The Company may record a valuation allowance, if conditions are applicable, to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Non-controlling interest

The non-controlling interests on the condensed consolidated statements of income represents the portion of earnings or loss attributable to the economic interest in the Company’s subsidiary, PetIQ Holdings, LLC, held by the non-controlling Continuing LLC Owners. Non-controlling interests on the condensed consolidated balance sheet represents the portion of net assets of the Company attributable to the non-controlling Continuing LLC Owners, based on the portion of the LLC Interests owned by such LLC interest holders. There was no significant non-controlling interest for the nine months ended September 30, 2016 as well as the period prior to the IPO on July 20, 2017 because the Company operated as Opco during those periods. As of September 30, 2017 the non-controlling interest was approximately 38.5%.

Litigation

The Company is subject to various legal proceedings, claims, litigation, investigations and contingencies arising out of the ordinary course of business. If the likelihood of an adverse legal outcome is determined to be probable and the amount of loss is estimable, then a liability is accrued in accordance with accounting guidance for contingencies. The company consults with both internal and external legal counsel related to litigation.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases. This ASU is a comprehensive new leases standard that was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. This standard requires adoption based upon a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with optional practical expedients. Based on a preliminary assessment, the Company expects that most of its operating lease commitments will be subject to the new guidance and recognized as operating lease liabilities and right-of-use assets upon adoption, resulting in an increase in the assets and liabilities on our consolidated balance sheet. The Company is continuing its assessment, which may identify additional impacts this standard will have on its consolidated financial statements and related disclosures.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, and subsequently issued several related Accounting Standards Updates (“ASUs”) (“Topic 606”), which provide guidance for recognizing revenue from contracts with customers. The core principle of Topic 606 is that revenue will be recognized when promised goods or services are transferred to customers in an amount that reflects consideration for which entitlement is expected in exchange for those goods or services. Topic 606 will be effective commencing with our quarter ending March 31, 2018. We currently anticipate adopting Topic 606 using the modified retrospective transition approach that may result in a cumulative adjustment to beginning retained earnings as of January 1, 2018. Based on the analysis to date, the Company expects the new standard will require accelerated recognition of trade promotions and customer incentives. These transactions are currently recognized at the later of the sale of goods or agreement, however under the new standard the Company will estimate incentives to be offered to customers as part of the sales price. The Company does not expect the change to be material. The Company is continuing its assessment, which may identify additional impacts this standard will have on its consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU clarify and provide specific guidance on eight cash flow classification issues that are not currently addressed by current U.S. GAAP. This ASU will be effective commencing with our quarter ending March 31, 2018. The Company does not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This ASU requires entities to measure most inventory "at the lower of cost or net realizable value," thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The new standard is effective for annual and interim reporting periods beginning after December 15, 2016. The adoption of this standard in first quarter of 2017 did not have a material effect on our financial statements.

In March 2016, the FASB issued ASU” No. 2016-09, “Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting (Topic 718).” ASU No. 2016-09 simplifies the accounting for share-based payment transactions, including accounting for income taxes, forfeitures, statutory tax withholding requirements, and classification in the statement of cash flows. The amendments in this update are effective for fiscal years beginning after December 31, 2016, and interim periods beginning in the first interim period within the year of adoption. Any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company adopted the provisions of this standard effective January 1, 2017. The Company elected to continue to recognize estimated forfeitures over the term of the awards. The adoption of the standard did not have a material impact on the Company’s financial condition, results of operations, cash flows and disclosures.

Debt

9 Months Ended

Sep. 30, 2017

Debt

Debt

Note 2 - Debt

The Company entered into a new credit agreement (“New Credit Agreement”) on December 21, 2016. This agreement fully repaid and terminated the A&R Credit Agreement described below. The New Credit Agreement provides for secured financing of $50,000 in aggregate at either LIBOR or Base (prime) interest rates plus an applicable margin, consisting of:

(i) $45,000 revolving credit facility (“Revolver”) maturing on December 16, 2019; and

(ii) $5,000 term loan (“Term Loans”), requiring equal amortizing payments for 24 months.

As of December 31, 2016, the Company had $5,000 outstanding as Term Loans and $22,473 outstanding under the Revolver. The interest rate on the Term Loans was 4.25% and the interest rate on the Revolver was also 4.25%, both were Base Rate loans.

As of September 30, 2017, the Company had fully repaid the Term Loans and had $18,059 outstanding under the Revolver. The interest rate on the Revolver was 4.75% as a Base Rate loan. The Revolver contains a lockbox mechanism.

The New Credit Agreement contains certain covenants and restrictions including a fixed charge coverage ratio and a minimum EBITDA target and is secured by collateral consisting of a percentage of eligible accounts receivable, inventories, and machinery and equipment. As of September 30, 2017, the Company was in compliance with these covenants.

The Company entered into a mortgage with a local bank to finance $1,920 of the purchase price of a commercial building in Eagle, ID, in July 2017. The mortgage bears interest at a fixed rate of 4.35% and utilizes a 25 year amortization schedule with a 10 year balloon payment of the balance due at that time.

On March 16, 2015, the Company entered into a $40,000 credit facility (“Credit Agreement”), comprised of a $33,000 in aggregate principal amount of term loans and $7,000 revolving credit facility. Borrowings under the agreement were subject to certain covenants and restrictions including a fixed charge coverage ratio and a minimum EBITDA target, both measured on a quarterly basis beginning in the first quarter of 2016. The Company remained in compliance with these covenants for the duration of the agreement.

The Company refinanced its credit facility in March 2016 with an amended and restated credit agreement (“A&R Credit Agreement”). The A&R Credit Agreement provided for secured financing of $48,000 in the aggregate, consisting of:

(i) $3,000 in aggregate principal amount of term loans maturing on December 31, 2016;

(ii) $20,000 in aggregate principal amount of term loans maturing on March 16, 2018; and

(iii) a $25,000 revolving credit facility maturing on March 16, 2018.

The following represents the Company’s long term debt as of:


	September 30, 2017		December 31, 2016
Term Loans	$	—	$	5,000
Revolving credit facility		18,059		22,473
Mortgage		1,913		—
Net discount on debt and deferred financing fees		—		(92)
	$	19,972	$	27,381
Less current maturities of long-term debt		(44)		(2,223)
Total long-term debt	$	19,928	$	25,158

Future maturities of long term debt, excluding the net discount on debt and deferred financing fees, as of September 30, 2017, are as follows:


Remainder of 2017	$	15
2018		44
2019		18,105
2020		48
2021		50
Thereafter		1,710

The Company incurred debt issuance costs of $248 related to the A&R Credit Agreement during the first nine months of 2016. The debt transaction resulted in a loss on debt extinguishment of $993, which included the write off of unamortized debt issuance costs and debt discount, early termination fees, and legal costs.

Leases

9 Months Ended

Sep. 30, 2017

Leases

Leases

Note 3 - Leases

The Company leases certain real estate, both office and production facilities, as well as equipment from third parties. Lease expiration dates are between 2018 and 2025. A portion of capital leases are denominated in foreign currencies. Many of these leases include renewal options and in some cases options to purchase.

Annual future commitments under non-cancelable leases as of September 30, 2017, consist of the following:


	Lease Obligation
	Operating Leases		Capital Leases
Reminder of 2017	$	436	$	27
2018		1,716		108
2019		597		104
2020		46		90
2021		29		88
Thereafter		85		103
Total minimum future obligations	$	2,909	$	520
Less Interest				(16)
Present value of net future minimum obligations				504
Less current capital lease obligations				(101)
Long-term capital lease obligations			$	403

The net book value of assets under capital lease was $883 and $775 as of September 30, 2017 and December 31, 2016, respectively. Total operating lease expense for the three and nine months ended September 30, 2017 and 2016 totaled $449 and $472, and $1,357 and $1,250, respectively.

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2017
Income Taxes
Income Taxes	Note 4 - Income Taxes As a result of the IPO and related reorganization transactions completed in July 2017, the Company holds an economic interest of approximately 62% in Holdco and consolidates the financial position and results of Holdco. The approximate 38% of Holdco not held by the Company is considered noncontrolling interest. Holdco is treated as a partnership for income tax reporting. Holdco’s members, including the Company, are liable for federal, state, and local income taxes based on their share of Holdco’s taxable income. The Company’s effective tax rate is significantly less than the statutory rate of 35%, primarily because no taxes are payable by the Company for the noncontrolling interests’ share of Holdco’s taxable income due to the pass through structure. The effective tax rate for the nine months ended September 30, 2017 is also lower than statutory rates because income for the period prior to the IPO was not taxable to the Company as it did not yet hold an equity interest in Holdco. As a result of the IPO and reorganization transactions, the Company has recorded deferred tax assets and liabilities based on the differences between the book value of assets and liabilities for financial reporting purposes and those amounts applicable for income tax purposes. Deferred tax assets have been recorded for the basis differences resulting from the purchase of LLC Interests from existing members and newly issued LLC Interests acquired directly from Holdco. Prior to the IPO, the Company’s predecessor for financial reporting purposes was Opco, which is a limited liability company, and the majority of Opco’s businesses and assets are held and operated by limited liability companies, which are not subject to entity-level federal or state income taxation. Opco makes cash distributions to permit the member to pay these taxes as needed by the member’s tax situation. In the three and nine months ended September 30, 2017 and 2016, the Company did not make any cash distributions. In the three and nine months ended September 30, 2017 Opco accrued $709 for anticipated tax distributions to Continuing LLC Owners. This liability is included in accounts payable on the condensed consolidated balance sheet. Opco’s income tax provision prior to the IPO generally consisted of income taxes payable by our separate subsidiaries that are taxed as corporations. As of December 31, 2016, the taxable foreign subsidiaries had $482 of deferred tax assets. The deferred tax assets resulted primarily from net operating losses and were fully offset by a valuation allowance.

Earnings per share

9 Months Ended

Sep. 30, 2017

Earnings per share

Earnings per share

Note 5 – Earnings per Share

Basic and Diluted Earnings per Share

Basic earnings per share of Class A common stock is computed by dividing net income (loss) available to PetIQ, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income available to PetIQ, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities.

As described in Note 7 — Stockholders’ Equity, on July 20, 2017, the PetIQ Holdings, LLC Agreement (“LLC Agreement”) was amended and restated to, among other things, (i) provide for a new single class of common membership interests, the LLC Interests of Holdco, and (ii) exchange all of the then-existing membership interests of the Continuing LLC Owners for common units of Holdco. This Recapitalization changed the relative membership rights of the Continuing LLC Owners such that retroactive application of the Recapitalization to periods prior to the IPO for the purposes of calculating earnings per share would not be appropriate.

Prior to the IPO, the PetIQ, LLC membership structure included several different types of LLC interests including ownership interests and profits interests. The Company analyzed the calculation of earnings per unit for periods prior to the IPO using the two-class method and determined that it resulted in values that would not be meaningful to the users of these consolidated financial statements. Therefore, earnings per share information has not been presented for periods prior to the IPO on July 20, 2017. The basic and diluted earnings per share for the three and nine months ended September 30, 2017 represents only the period of July 20, 2017 to September 30, 2017.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:


	Three months ended
	September 30, 2017
Numerator:
Net income	$	859
Less: net income attributable to non-controlling interests		(1,085)
Net income attributable to PetIQ, Inc. — basic		(226)
Denominator:
Weighted-average shares of Class A common stock outstanding (in 000's)-- basic		13,223
Dilutive stock options that are convertible into Class A common stock		—
Weighted-average shares of Class A common stock outstanding -- diluted		13,223

Earnings per share of Class A common stock — basic	$	(0.02)
Earnings per share of Class A common stock — diluted	$	(0.02)

Shares of the Company’s Class B common stock do not share in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented.

Shares of the Company’s Class B common stock as well as stock options have not been included in the diluted earnings per share calculation as they have been determined to be anti-dilutive under the if-converted method and treasury stock method, respectively.

Stock Based Compensation

9 Months Ended

Sep. 30, 2017

Stock Based Compensation

Stock Based Compensation

Note 6 – Stock Based Compensation

Stock based compensation expense is recorded within general and administrative expenses.

PetIQ, Inc. Omnibus Incentive Plan

The PetIQ, Inc. Omnibus Incentive Plan (the “Plan”) provides for the grant of various equity-based incentive awards to directors of the Company, employees, and consultants. The types of equity-based awards that may be granted under the Plan include: stock options, stock appreciation rights (SARs), restricted stock, restricted stock units (RSUs), and other stock-based awards. The Company initially reserved 1,914,047 registered shares of Class A common stock for issuance under the Plan. As of September 30, 2017, 1,109,998 shares were available for issuance under the Plan. All awards issued under the Plan may only be settled in shares of Class A common stock.

Stock Options

The Company awards stock options to certain employees and directors under the Plan, which are subject to time-based vesting conditions, typically 25% on each anniversary of the grant date until fully vested. Upon a termination of service relationship by the Company, all unvested options will be forfeited and the shares of common stock underlying such awards will become available for issuance under the Plan. The maximum contractual term for stock options is 10 years

The fair value of these equity awards is amortized to equity based compensation expense over the vesting period, which totaled $246 for the three and nine months ended September 30, 2017. All stock based compensation expense is included in general and administrative expenses based on the role of recipients. The fair value of the stock option awards was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions for the period ended September 30:


	2017
Expected term (years) (1)		6.25
Expected volatility (2)		35.00	%
Risk-free interest rate (3)		1.98	%
Dividend yield (4)		0.00	%

⁽¹⁾

The Company utilized the simplified method to determine the expected term of the stock options since we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

⁽²⁾

The expected volatility assumption was calculated based on a peer group analysis of stock price volatility with a look back period consistent with the expected option term.

⁽³⁾

The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds to the expected term of the stock options.

⁽⁴⁾

The Company has not paid and does not anticipate paying a cash dividend on our common stockThe following table summarizes the activity of the Company’s unvested stock options for the period ended September 30, 2017:

The following table summarizes the activity of the Company’s unvested stock options for the period ended September 30, 2017:

Weighted

Average

Weighted

Remaining

Average

Aggregate

Contractual

Stock

Exercise

Intrinsic

Life

Options

Price

Value

(years)

Outstanding at December 31, 2016

—

Granted

804,049

Exercised

—

Forfeited

—

Cancelled

—

Outstanding at September 30, 2017

804,049

8,909

9.8

Options exercisable at September 30, 2017

—

The grant date fair value of stock options granted during the period ended September 30, 2017 was $6.08 per option. At September 30, 2017, total unrecognized compensation cost related to unvested stock options was $4.4 million and is expected to be recognized over a weighted-average period of 3.8 years.

Stockholder's Equity

9 Months Ended

Sep. 30, 2017

Stockholder's Equity

Stockholder's Equity

Note 7 - Stockholders’ Equity

Reorganization Transactions

In connection with the IPO on July 20, 2017, the Company completed the following Reorganization Transactions:

The Company amended and restated its certificate of incorporation (see “Amendment and Restatement of Certificate of Incorporation” below);

PetIQ Holdings, LLC (“Holdco”) amended and restated its limited liability company agreement (the “LLC Agreement”) (see “Holdco Recapitalization” below);

The Company acquired, by the contribution by certain sponsors, three entities (“Sponsor Corps”) that were owned by former indirect members of Holdco (the “Sponsors”), for which the Company issued 5,615,981 shares of Class A common stock and Preference Notes equal to $30,526 as merger consideration (the “Merger”). The only significant asset held by the Sponsor Corps prior to the Merger was 7,523,839 LLC Interests. Upon consummation of the Merger, the Company recognized the 7,523,839 LLC Interests at carrying value, as the contribution was considered to be a transaction between entities under common control;

The Company acquired 419,102 LLC interests in exchange for an equal number of Class A common stock from certain employee owners;

The Company purchased from Continuing LLC Owners 1,589,642 LLC Interests in exchange for $25,434 in preference notes;

The Company purchased from Continuing LLC Owners 133,334 LLC Interests in exchange for $2,133.

Following the completion of the Reorganization Transactions and IPO, PetIQ owned 61.5% of HoldCo. The remaining 38.5% of Holdco was held by the “Continuing LLC Owners,” whom the Company defines as all remaining direct and indirect owners of Holdco except for PetIQ. As a result of the Reorganization Transactions, PetIQ became the sole managing member of Holdco and has the sole voting power in, and controls the management of, Holdco. Accordingly, the Company consolidated the financial results of Holdco and reported a non-controlling interest in its consolidated financial statements.

As the Reorganization Transactions are considered transactions between entities under common control, the financial statements for the previously separate entities have been combined for presentation purposes.

Amendment and Restatement of Certificate of Incorporation

On July 20, 2017, the Company amended and restated its certificate of incorporation to, among other things, provide for the (i) authorization of 125,000,000 shares of Class A common stock with a par value of $0.001 per share; (ii) authorization of 8,401,521 shares of Class B common stock with a par value of $0.001 per share; (iii) authorization of 12,500,000 shares of blank check preferred stock; and (iv) establishment of a classified board of directors, divided into three classes, each of whose members will serve for staggered three-year terms.

Each share of the Company’s Class A common stock and Class B common stock entitles its holders to one vote per share on all matters presented to the Company’s stockholders generally.

Holders of the Company’s Class B common stock are not entitled to receive dividends and will not be entitled to receive any distributions upon the liquidation, dissolution or winding up of the Company. Shares of Class B common stock may only be issued to the extent necessary to maintain the one-to-one ratio between the number of LLC interests of Holdco held by Continuing LLC Owners. Shares of Class B common stock are transferable only together with an equal number of LLC Interests. Shares of Class B common stock will be canceled on a one-for-one basis upon the redemption or exchange any of the outstanding LLC Interests held by the Continuing LLC Owners.

The Company must, at all times, maintain a one-to-one ratio between the number of outstanding shares of Class A common stock and the number of LLC Interests owned by PetIQ (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities).

Initial Public Offering

On July 20, 2017, the Company completed an IPO of 7,187,500 shares of the Company’s Class A common stock at a public offering price of $16.00 per share, inclusive of the contemporaneous exercise of the underwriters option to purchase additional shares. The Company received $106,950 in proceeds, net of underwriting discounts and commissions, which were used repay $55,960 in preference notes, to purchase 3,556,666 newly-issued LLC Interests from Holdco at a price per unit equal to the initial public offering price per share of Class A common stock in the IPO less underwriting discounts and commissions, and to purchase 133,334 LLC Interests and corresponding Class B common shares from entities affiliated with the Company’s CEO and President.

Immediately following the completion of the IPO and the underwriters’ exercise of their option to purchase additional shares of Class A common stock, there were 13,222,583 shares of Class A common stock outstanding and 8,268,188 shares of Class B common stock outstanding.

PetIQ Holdings, LLC Recapitalization

On July 20, 2017, Holdco amended and restated the LLC Agreement (the “Recapitalization”) to, among other things, (i) provide for a new single class of common membership interests in Holdco, the LLC Interests, (ii) exchange all of the then-existing membership interests for LLC Interests of Holdco and (iii) appoint the Company as the sole managing member of Holdco.

The LLC Agreement also provides that the Continuing LLC Owners may from time to time at each of their options require Holdco to exchange all or a portion of their LLC Interests in exchange for, at the Company’s election (determined solely by the Company’s board of directors, which includes directors who hold LLC Interests or are otherwise affiliated with holders of LLC interests), shares of the Company’s Class A common stock on a one-for-one basis or a cash payment equal to a volume weighted average market price of one share of Class A common stock for each LLC interest exchanged, in each case in accordance with the terms of the LLC Agreement; provided that, at the Company’s election (determined solely by the Company’s board of directors, which includes directors who hold LLC interests or are otherwise affiliated with holders of LLC interests), the Company may effect a direct exchange of such Class A common stock or such cash, as applicable, for such LLC interests. The Continuing LLC Owners may exercise such redemption right for as long as their LLC interests remain outstanding. Simultaneously with the payment of cash or shares of Class A common stock, as applicable, in connection with a redemption or exchange of LLC interests pursuant to the terms of the LLC Agreement, a number of shares of the Company’s Class B common stock will be cancelled for no consideration on a one-for-one basis with the number of LLC interests so redeemed or exchanged.

The amendment also requires that Holdco, at all times, maintain (i) a one-to-one ratio between the number of outstanding shares of Class A common stock and the number of LLC interests of Holdco owned by PetIQ, Inc. and (ii) a one-to-one ratio between the number of shares of Class B common stock owned by Continuing LLC Owners and the number of LLC Interests of Holdco owned by the Continuing LLC Owners.

Non-Controlling Interests

9 Months Ended

Sep. 30, 2017

Non-controlling interest

Non-controlling interest

Note 8 - Non-Controlling Interests

In connection with the Reorganization Transactions described in Note 7 — Stockholders’ Equity, PetIQ became the sole managing member of Holdco and, as a result, consolidates the financial results of Holdco.

The Company reports a non-controlling interest representing the LLC interests of Holdco held by Continuing LLC Owners. Changes in PetIQ’s ownership interest in Holdco while PetIQ retains its controlling interest in Holdco will be accounted for as equity transactions. As such, future redemptions or direct exchanges of LLC interests of Holdco by the Continuing LLC Owners will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in capital when Holdco has positive or negative net assets, respectively. The Company is also required to make tax distributions based on the LLC Agreement to Continuing LLC Members on a regular basis, these distributions will reduce the noncontrolling interest.

The Company used the net proceeds from its IPO to purchase 3,556,666 newly-issued LLC Interests of Holdco and 133,334 LLC Interests from Continuing LLC Owners. Additionally, in connection with the Reorganization Transactions, the Company acquired 9,532,583 LLC Interests of Holdco.

As of September 30, 2017, there were 21,490,771 LLC Interests outstanding, of which PetIQ owned 13,222,583, representing a 61.5% ownership interest in Holdco.

-0

LLC Interests held

% of Total

Continuing LLC

Owners

PetIQ, Inc.

Total

Owners

PetIQ, Inc.

As of September 30, 2017

8,268,188

13,222,583

21,490,771

38.5%

61.5%

Customer Concentration	9 Months Ended
Customer Concentration	Sep. 30, 2017
Customer Concentration
Customer Concentration	Note 9 - Customer Concentration The Company has significant exposure to customer concentration. During the three and nine months ended September 30, 2017 and 2016, three and three customers, respectively, accounted for more than 10% of sales individually. In total for the three months ended September 30, 2017 and 2016, the three customers accounted for 61% and 68% of net sales, respectively. In total for the nine months ended September 30, 2017 and 2016, the three customers accounted for 61% and 71% of net sales, respectively. At September 30, 2017 and December 31, 2016 four and four customers, respectively, individually accounted for more than 10% of outstanding trade receivables, and in aggregate accounted for 53% and 60%, respectively, of outstanding trade receivables, net. The customers are customers of the domestic segment.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2017
Commitments and Contingencies
Commitments and Contingencies Disclosure [Text Block]	Note 10 - Commitments and Contingencies Litigation Contingencies In May 2017, Bayer Healthcare LLC and its affiliates (collectively “Bayer”) filed suit in the United States District Court for the District of Delaware, against CAP IM Supply, Inc. (“CAP IM”), our supplier of Advecta 3 and PetLock MAX, which we began to sell in 2017 as our value-branded alternatives to Bayer’s K9 Advantix II. Bayer alleges that Advecta 3 and PetLock MAX infringe a patent relating to K9 Advantix II. Bayer seeks unspecified monetary damages and an injunction against future sales by CAP IM of Advecta 3 and PetLock MAX to the Company. Bayer has filed a motion for preliminary injunction, though no hearing has been set on that motion. Although we have not been named in the suit, our license and supply agreement with CAP IM requires us to share with CAP IM the payment of defense and settlement costs of such litigation and allows us to control the defense of the proceeding. CAP IM intends to vigorously defend this case and we believe that CAP IM has meritorious defenses. However, because of the inherent uncertainties of litigation, we can provide no assurance of an outcome favorable to CAP IM and to us. The case is presently scheduled for trial in February 2019. The Company records a liability when a particular contingency is probable and estimable and provides disclosure for contingencies that are at least reasonably possible of resulting in a loss including an estimate which we currently cannot make. The Company has not accrued for any contingency at September 30, 2017 and December 31, 2016, as the Company does not consider any contingency to be probable or estimable. The Company expenses legal costs as incurred within general and administrative expenses on the consolidated condensed statements of operations.

Segments

9 Months Ended

Sep. 30, 2017

Segments

Segments

Note 11 - Segments

The Company has two operating segments, and thus two reportable segments, which are the procurement, packaging, and distribution of pet health and wellness products in the Domestic markets (U.S. and Canada) and in the International markets (primarily Europe). The determination of the operating segments is based on the level at which the chief operating decision maker reviews discrete financial information to assess performance and make resource allocation decisions, which is done based on these two geographic areas.

Financial information relating to the Company’s operating segments for the three and nine months ended:


	Three months ended				Nine months ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Net Sales
Domestic	$	59,328	$	40,513	$	211,095	$	151,792
International		1,226		1,158		3,666		3,457
Net Sales		60,554		41,671		214,761		155,249
Gross Profit
Domestic	$	11,974	$	5,665	$	39,074	$	23,424
International		543		495		1,594		1,469
Gross Profit		12,517		6,160		40,668		24,893
General and administrative expenses
Domestic	$	10,207	$	7,522	$	25,977	$	22,991
International		532		420		1,444		1,316
General and administrative expenses		10,739		7,942		27,421		24,307
Operating income
Domestic	$	1,767	$	(1,857)	$	13,097	$	433
International		11		75		150		153
Operating income		1,778		(1,782)		13,247		586

Related Parties	9 Months Ended
Related Parties	Sep. 30, 2017
Related Parties
Related Parties	Note 12 - Related Parties Opco had entered into management consulting services agreements with members of Holdco. The services were related to financial transactions and other senior management matters related to business administration. Those agreements provided for the Company to pay base annual management fees plus expenses, typically paid quarterly. These expenses were recorded in general and administrative expenses in the condensed consolidated statement of comprehensive income (loss). The Company recorded $545 and $508 for the nine months ended September 30, 2017 and 2016, respectively, and $158 and $208 for the three months ended September 30, 2017 and 2016, respectively. Upon consummation of the recapitalization and IPO transactions, these agreements were terminated. As discussed in Note 4– Income taxes, the Company has accrued tax distributions that are payable to Continuing LLC Owners to facilitate the Continuing LLC Owners periodic estimated tax obligations. At September 30, 2017, the Company had accrued $709 for estimated tax distributions, which are included in accounts payable on the condensed consolidated balance sheets.

Principal Business Activity and Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Principal Business Activity and Significant Accounting Policies

Use of Estimates

Foreign Currencies

Cash and Cash Equivalents

Receivables and Credit Policy

Accounts receivable consists of the following as of:


	September 30, 2017		December 31, 2016

Trade receivables	$	25,981	$	18,086
Notes receivable		324		440
		26,305		18,526
Less: Allowance for doubtful accounts		(911)		(498)
Non-current portion of receivables		(553)		(833)
Total accounts receivable, net	$	24,841	$	17,195

Inventories


	September 30, 2017		December 31, 2016
Raw materials and work in progress	$	5,227	$	5,924
Finished goods		29,427		28,308
Total inventories	$	34,654	$	34,232

Property, Plant, and Equipment


Computer equipment and software		3 years
Buildings		33 years
Equipment		3-15 years
Leasehold improvements		3-9 years
Furniture and fixtures		8-10 years

Restricted Deposits

Deferred Acquisition Liability

Revenue Recognition

Shipping and Handling Costs

Shipping and handling costs are recorded as cost of sales, and are not billed to customers.

Research and Development and Advertising Costs

Income taxes

Non-controlling interest

Litigation

Recently Issued Accounting Pronouncements

Principal Business Activity and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2017

Principal Business Activity and Significant Accounting Policies

Schedule of accounts receivable


	September 30, 2017		December 31, 2016

Trade receivables	$	25,981	$	18,086
Notes receivable		324		440
		26,305		18,526
Less: Allowance for doubtful accounts		(911)		(498)
Non-current portion of receivables		(553)		(833)
Total accounts receivable, net	$	24,841	$	17,195

Schedule of components of inventories


	September 30, 2017		December 31, 2016
Raw materials and work in progress	$	5,227	$	5,924
Finished goods		29,427		28,308
Total inventories	$	34,654	$	34,232

Schedule of estimated useful lives of property, plant, and equipment


Computer equipment and software		3 years
Buildings		33 years
Equipment		3-15 years
Leasehold improvements		3-9 years
Furniture and fixtures		8-10 years

Debt (Tables)

9 Months Ended

Sep. 30, 2017

Debt

Schedule of components of long term debt


	September 30, 2017		December 31, 2016
Term Loans	$	—	$	5,000
Revolving credit facility		18,059		22,473
Mortgage		1,913		—
Net discount on debt and deferred financing fees		—		(92)
	$	19,972	$	27,381
Less current maturities of long-term debt		(44)		(2,223)
Total long-term debt	$	19,928	$	25,158

Future maturities of long term debt, excluding the net discount on debt and deferred financing fees


Remainder of 2017	$	15
2018		44
2019		18,105
2020		48
2021		50
Thereafter		1,710

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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-Section 50
-Paragraph 3
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

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-Name Accounting Standards Codification
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-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=64930739&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
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-Paragraph 1A
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 30
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-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21521-112644

+ Details

Leases (Tables)

9 Months Ended

Sep. 30, 2017

Leases

Summary of annual future commitments under non-cancelable leases


	Lease Obligation
	Operating Leases		Capital Leases
Reminder of 2017	$	436	$	27
2018		1,716		108
2019		597		104
2020		46		90
2021		29		88
Thereafter		85		103
Total minimum future obligations	$	2,909	$	520
Less Interest				(16)
Present value of net future minimum obligations				504
Less current capital lease obligations				(101)
Long-term capital lease obligations			$	403

Earnings per share (Tables)

9 Months Ended

Sep. 30, 2017

Earnings per share

Reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock


	Three months ended
	September 30, 2017
Numerator:
Net income	$	859
Less: net income attributable to non-controlling interests		(1,085)
Net income attributable to PetIQ, Inc. — basic		(226)
Denominator:
Weighted-average shares of Class A common stock outstanding (in 000's)-- basic		13,223
Dilutive stock options that are convertible into Class A common stock		—
Weighted-average shares of Class A common stock outstanding -- diluted		13,223

Earnings per share of Class A common stock — basic	$	(0.02)
Earnings per share of Class A common stock — diluted	$	(0.02)

Stock Based Compensation (Tables)

9 Months Ended

Sep. 30, 2017

Stock Based Compensation

Fair value of the stock option awards was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions

	2017
Expected term (years) (1)		6.25
Expected volatility (2)		35.00	%
Risk-free interest rate (3)		1.98	%
Dividend yield (4)		0.00	%

⁽¹⁾

⁽²⁾

The expected volatility assumption was calculated based on a peer group analysis of stock price volatility with a look back period consistent with the expected option term.

⁽³⁾

The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant, which corresponds to the expected term of the stock options.

The Company has not paid and does not anticipate paying a cash dividend on our common stock

Summary of the activity of the Company’s unvested stock options

Weighted

Average

Weighted

Remaining

Average

Aggregate

Contractual

Stock

Exercise

Intrinsic

Life

Options

Price

Value

(years)

Outstanding at December 31, 2016

—

Granted

804,049

Exercised

—

Forfeited

—

Cancelled

—

Outstanding at September 30, 2017

804,049

8,909

9.8

Options exercisable at September 30, 2017

—

Non-Controlling Interests (Tables)

9 Months Ended

Sep. 30, 2017

Non-controlling interest

Summary of noncontrolling interest

-0

LLC Interests held

% of Total

Continuing LLC

Owners

PetIQ, Inc.

Total

Owners

PetIQ, Inc.

As of September 30, 2017

8,268,188

13,222,583

21,490,771

38.5%

61.5%

Segments (Tables)

9 Months Ended

Sep. 30, 2017

Segments

Summary of financial information relating to the Company’s operating segments


	Three months ended				Nine months ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Net Sales
Domestic	$	59,328	$	40,513	$	211,095	$	151,792
International		1,226		1,158		3,666		3,457
Net Sales		60,554		41,671		214,761		155,249
Gross Profit
Domestic	$	11,974	$	5,665	$	39,074	$	23,424
International		543		495		1,594		1,469
Gross Profit		12,517		6,160		40,668		24,893
General and administrative expenses
Domestic	$	10,207	$	7,522	$	25,977	$	22,991
International		532		420		1,444		1,316
General and administrative expenses		10,739		7,942		27,421		24,307
Operating income
Domestic	$	1,767	$	(1,857)	$	13,097	$	433
International		11		75		150		153
Operating income		1,778		(1,782)		13,247		586

Principal Business Activity and Significant Accounting Policies - Receivables (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Receivables and Credit Policy
Fixed interest rate	4.35%
Accounts receivable, gross	$ 26,305	$ 18,526
Less: Allowance for doubtful accounts	(911)	(498)
Non-current portion of receivables	(553)	(833)
Total accounts receivable, net	$ 24,841	17,195
Maximum
Receivables and Credit Policy
Fixed interest rate	4.00%
Trade receivables
Receivables and Credit Policy
Accounts receivable, gross	$ 25,981	18,086
Notes receivable
Receivables and Credit Policy
Accounts receivable, gross	$ 324	$ 440

Principal Business Activity and Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Inventories
Raw materials and work in progress	$ 5,227	$ 5,924
Finished goods	29,427	28,308
Total inventories	$ 34,654	$ 34,232

Principal Business Activity and Significant Accounting Policies - PPNE (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Property, Plant, and Equipment
Depreciation expense	$ 684	$ 375	$ 1,795	$ 1,350
Computer equipment and software
Property, Plant, and Equipment
Estimated useful life			3 years
Buildings
Property, Plant, and Equipment
Estimated useful life			33 years
Equipment \| Minimum
Property, Plant, and Equipment
Estimated useful life			3 years
Equipment \| Maximum
Property, Plant, and Equipment
Estimated useful life			15 years
Leasehold improvements \| Minimum
Property, Plant, and Equipment
Estimated useful life			3 years
Leasehold improvements \| Maximum
Property, Plant, and Equipment
Estimated useful life			9 years
Furniture and fixtures \| Minimum
Property, Plant, and Equipment
Estimated useful life			8 years
Furniture and fixtures \| Maximum
Property, Plant, and Equipment
Estimated useful life			10 years

Principal Business Activity and Significant Accounting Policies (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Jul. 20, 2017	Dec. 31, 2016
Restricted Cash and Deposits
Restricted deposits	$ 200		$ 200			$ 250
Deferred Acquisition Liability
Non current portion of deferred acquisition liability						1,303
Research and Development and Advertising Costs
Research and development costs	114	$ 82	427	$ 248
Advertising costs	$ 436	$ 273	$ 2,028	$ 883
Non-controlling interest
Non-controlling interest rate	61.50%		61.50%		61.50%
Non-controlling interest rate	38.50%		38.50%		38.50%
Other accrued expenses
Deferred Acquisition Liability
Current portion of deferred acquisition liability	$ 1,745		$ 1,745			250
Deferred acquisition liability
Deferred Acquisition Liability
Non current portion of deferred acquisition liability						$ 1,303

Debt (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 21, 2016	Mar. 31, 2016	Mar. 16, 2015
Debt
Maximum borrowing capacity				$ 50,000		$ 40,000
Purchase price of a commercial building	$ 1,920
Fixed interest rate	4.35%
Amortization schedule	25 years
Balloon payment	10 years
Net discount on debt and deferred financing fees			$ (92)
Long-term Debt, Total	$ 19,972		27,381
Less current maturities of long-term debt	(44)		(2,223)
Long-term debt	19,928		25,158
Long-term Debt, Fiscal Year Maturity [Abstract]
Remainder of 2017	15
2018	44
2019	18,105
2020	48
2021	50
Thereafter	1,710
Debt issuance costs		$ 248
Loss on debt extinguishment		$ (993)
Revolving credit facility
Debt
Maximum borrowing capacity				45,000
Aggregate principal amount	25,000					7,000
Outstanding balance	$ 18,059		$ 22,473
Variable interest rate, basis points spread over variable reference rate (as a percent)	4.75%		4.25%
Term loans
Debt
Maximum borrowing capacity				$ 5,000
Aggregate principal amount					$ 48,000	$ 33,000
Outstanding balance			$ 5,000
Variable interest rate, basis points spread over variable reference rate (as a percent)			4.25%
Term B Loans
Debt
Aggregate principal amount			$ 3,000
Term A Loans
Debt
Aggregate principal amount	$ 20,000
Mortgage
Debt
Mortgage	$ 1,913

Leases (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Operating Leases
Reminder of 2017	$ 436
2018	1,716
2019	597
2020	46
2021	29
Thereafter	85
Operating Leases, Total minimum future obligations	2,909
Capital Leases
Reminder of 2017	27
2018	108
2019	104
2020	90
2021	88
Thereafter	103
Capital Leases, Total minimum future obligations	520
Less Interest	(16)
Present value of net future minimum obligations	504
Less current capital lease obligations	(101)
Long-term capital lease obligations	$ 403

Leases (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Leases
Net book value of equipment under capital lease	$ 883		$ 883		$ 775
Total operating lease expense	$ 449	$ 1,357	$ 472	$ 1,250

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Sep. 30, 2017	Jul. 20, 2017	Dec. 31, 2016
Income Taxes
Non-controlling interest rate	61.50%	61.50%	61.50%
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners	38.50%	38.50%	38.50%
Effective tax rate		35.00%
Anticipated Tax Distributions	$ 709	$ 709
Deferred tax assets				$ 482

Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands	2 Months Ended	3 Months Ended		7 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2017	Sep. 30, 2016	Jul. 19, 2017	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Numerator:
Net income (loss)	$ 51	$ 859	$ (2,512)	$ 11,157	$ 11,208	$ (2,218)	$ (3,395)
Less: net income attributable to non-controlling interests		(1,085)	$ 2,512		(11,434)	$ 2,218
Net income attributable to PetIQ, Inc. — basic		$ (226)			$ (226)
Denominator:
Weighted-average shares of Class A common stock outstanding (in 000's)-- basic		13,222,583			13,222,583
Weighted Average Number of Shares Outstanding, Diluted, Total		13,222,583			13,222,583
Earnings per share of Class A common stock — basic		$ (0.02)			$ (0.02)
Earnings per share of Class A common stock — diluted		$ (0.02)			$ (0.02)

Stock Based Compensation (Details) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2017 USD ($) shares	Sep. 30, 2017 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage on each anniversary of the grant date		25.00%
Maximum term for stock options		6 years 3 months
Stock based compensation expense \| $	$ 246	$ 246
Grant date fair value of stock options granted \| $ / shares		$ 6.08
Unrecognized compensation cost related to unvested stock options \| $	$ 4,400	$ 4,400
Unrecognized compensation cost related to unvested options, recognized weighted-average period		3 years 9 months 18 days
Class A \| Omnibus Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance \| shares	1,914,047	1,914,047
Share available for issuance \| shares	1,109,998	1,109,998
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum term for stock options		10 years

Stock Based Compensation - Weighted Average Assumptions (Details)	9 Months Ended
	Sep. 30, 2017
Stock Based Compensation
Expected term (years)	6 years 3 months
Expected volatility	35.00%
Risk-free interest rate	1.98%
Dividend yield	0.00%

Stock Based Compensation - Summary of Unvested Stock Options (Details)	9 Months Ended
	Sep. 30, 2017 USD ($) $ / shares shares
Stock Based Compensation
Stock Options Outstanding - Beginning Balance
Stock Options Granted (in shares)	804,049
Stock Options Outstanding - Ending Balance	804,049
Options exercisable at September 30, 2017
Weighted Average Exercise Price - Granted \| $ / shares	$ 16
Weighted Average Exercise Price Outstanding - Ending Balance \| $ / shares	$ 16
Aggregate Intrinsic Value \| $	$ 8,909,000
Weighted Average Remaining Contractual Life (years)	9 years 9 months 18 days

Stockholder's Equity - Reorganization and amendment (Details) $ / shares in Units, $ in Thousands	Jul. 20, 2017 USD ($) Vote class $ / shares shares	Sep. 30, 2017 $ / shares shares	Jul. 19, 2017 shares
Class of Stock [Line Items]
Ownership interest in Holdco	61.50%	61.50%
Ownership interest by continuing LLC owners	38.50%	38.50%
Pet, LLC and Subsidiaries (the "Company")
Class of Stock [Line Items]
Number of shares purchased		3,556,666
Sponsor Corps
Class of Stock [Line Items]
LLC interests held			7,523,839
Continuing LLC Owners
Class of Stock [Line Items]
Common unit issued in exchange of shares (in shares)	133,334
Cash paid \| $	$ 2,133
Continuing LLC Owners \| Pet, LLC and Subsidiaries (the "Company")
Class of Stock [Line Items]
Number of shares purchased		133,334
Class A
Class of Stock [Line Items]
Common Stock, Shares, Issued		13,222,583
Common stock authorized		125,000,000
Common stock, par value \| $ / shares		$ 0.001
Class A \| IPO
Class of Stock [Line Items]
Common Stock, Shares, Issued	7,187,500
Class A \| IPO \| Holdco
Class of Stock [Line Items]
Number of shares purchased	3,556,666
Class A \| Sponsor Corps \| IPO
Class of Stock [Line Items]
Common Stock, Shares, Issued	5,615,981
Class B
Class of Stock [Line Items]
Common Stock, Shares, Issued		8,268,188
Common stock authorized		8,401,000
Common stock, par value \| $ / shares		$ 0.001
Amended Holdco LLC Agreement
Class of Stock [Line Items]
Ownership interest in Holdco		61.50%
Blank check preferred stock, authorized	12,500,000
Number of classes of directors \| class	3
Staggered service term	3 years
Number of vote per share \| Vote	1
Amended Holdco LLC Agreement \| Holdco
Class of Stock [Line Items]
Number of shares purchased		9,532,583
Amended Holdco LLC Agreement \| Sponsor Corps
Class of Stock [Line Items]
Preference notes payable \| $	$ 30,526
Amended Holdco LLC Agreement \| Continuing LLC Owners
Class of Stock [Line Items]
Preference notes payable \| $	$ 25,434
Common unit issued in exchange of shares (in shares)	1,589,642
Amended Holdco LLC Agreement \| Class A
Class of Stock [Line Items]
Common stock authorized	125,000,000
Common stock, par value \| $ / shares	$ 0.001
Conversion ratio	1
Amended Holdco LLC Agreement \| Class A \| Certain Employee Owners
Class of Stock [Line Items]
Common unit issued in exchange of shares (in shares)	419,102
Amended Holdco LLC Agreement \| Class B
Class of Stock [Line Items]
Common stock authorized	8,401,521
Common stock, par value \| $ / shares	$ 0.001
Conversion ratio	1
Cancellation ratio	1

Stockholder's Equity - Initial public offering (Details) $ / shares in Units, $ in Thousands		9 Months Ended
	Jul. 20, 2017 USD ($) $ / shares shares	Sep. 30, 2017 USD ($) shares
Class of Stock [Line Items]
Proceeds from Initial Public Offering (IPO) of Class A Shares \| $		$ 104,010
Repayments of Notes Payable \| $		$ 55,960
Common stock, shares outstanding		13,222,583
Pet, LLC and Subsidiaries (the "Company")
Class of Stock [Line Items]
Number of shares purchased		3,556,666
Pet, LLC and Subsidiaries (the "Company") \| IPO
Class of Stock [Line Items]
Repayments of Notes Payable \| $	$ 55,960
Class A
Class of Stock [Line Items]
Common Stock, Shares, Issued		13,222,583
Common stock, shares outstanding		13,222,583
Class A \| IPO
Class of Stock [Line Items]
Common Stock, Shares, Issued	7,187,500
Share Price \| $ / shares	$ 16.00
Proceeds from Initial Public Offering (IPO) of Class A Shares \| $	$ 106,950
Class A \| Holdco \| IPO
Class of Stock [Line Items]
Number of shares purchased	3,556,666
Class B
Class of Stock [Line Items]
Common Stock, Shares, Issued		8,268,188
Common stock, shares outstanding		8,268,188
Certain Executives \| Class B
Class of Stock [Line Items]
Number of shares purchased	133,334
Amended Holdco LLC Agreement
Class of Stock [Line Items]
Common stock, shares outstanding		21,490,771
Amended Holdco LLC Agreement \| Holdco
Class of Stock [Line Items]
Number of shares purchased		9,532,583
Amended Holdco LLC Agreement \| Class A
Class of Stock [Line Items]
Stockholders' Equity Note, Stock Split, Conversion Ratio	1
Amended Holdco LLC Agreement \| Class B
Class of Stock [Line Items]
Stockholders' Equity Note, Stock Split, Conversion Ratio	1

Non-Controlling Interests (Details) - shares	Sep. 30, 2017	Jul. 20, 2017
LLC Interests outstanding	13,222,583
Ownership interest by continuing LLC owners	38.50%	38.50%
Ownership interest in Holdco	61.50%	61.50%
Continuing LLC Owners
LLC Interests outstanding	8,268,188
Amended Holdco LLC Agreement
LLC Interests outstanding	21,490,771
Ownership interest in Holdco	61.50%
Pet, LLC and Subsidiaries (the "Company")
Number of shares purchased	3,556,666
Pet, LLC and Subsidiaries (the "Company") \| Continuing LLC Owners
Number of shares purchased	133,334
Holdco \| Amended Holdco LLC Agreement
Number of shares purchased	9,532,583

Customer Concentration (Details) - customer	3 Months Ended		9 Months Ended		12 Months Ended
Customer Concentration (Details) - customer	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Customer concentrations \| Sales
Concentration Risk [Line Items]
Concentration risk	61.00%	68.00%	61.00%	71.00%
Credit concentrations \| Accounts receivable
Concentration Risk [Line Items]
Concentration risk			53.00%		60.00%
Domestic
Concentration Risk [Line Items]
Number of customers accounted for more than 10% of sales individually	3		4	3	4

Segments (Details) $ in Thousands	3 Months Ended		9 Months Ended
Segments (Details) $ in Thousands	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) segment	Sep. 30, 2016 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments \| segment			2
Number of reportable segments \| segment			2
Financial information relating to the Company’s operating segments
Net Sales	$ 60,554	$ 41,671	$ 214,761	$ 155,249
Gross profit	12,517	6,160	40,668	24,893
General and administrative expenses	10,739	7,942	27,421	24,307
Operating income	1,778	(1,782)	13,247	586
Domestic
Financial information relating to the Company’s operating segments
Net Sales	59,328	40,513	211,095	151,792
Gross profit	11,974	5,665	39,074	23,424
General and administrative expenses	10,207	7,522	25,977	22,991
Operating income	1,767	(1,857)	13,097	433
International
Financial information relating to the Company’s operating segments
Net Sales	1,226	1,158	3,666	3,457
Gross profit	543	495	1,594	1,469
General and administrative expenses	532	420	1,444	1,316
Operating income	$ 11	$ 75	$ 150	$ 153

Related Parties (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Related Parties (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Related Parties
Related party expenses	$ 158	$ 208	$ 545	$ 508
Accrued estimated tax distributions	$ 709		$ 709

Label	Element	Value
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	$ 515,000
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	314,000
Noncontrolling Interest [Member]
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	121,000
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	us-gaap_ProfitLoss	(4,000)
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	us-gaap_ProfitLoss	277,000
Accumulated Distributions In Excess Of Net Income [Member]
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	515,000
Other Comprehensive Income (Loss), Net of Tax	us-gaap_OtherComprehensiveIncomeLossNetOfTax	193,000
Retained Earnings [Member]
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	us-gaap_ProfitLoss	(226,000)
Member Units [Member]
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	us-gaap_ProfitLoss	$ 11,161,000