Note 13 – Commitments and Contingencies

We have entered into lease, royalty and line of credit agreements for which we are committed to pay certain amounts over a period of time.  See Notes 8, 9, and 10.

In the normal course of business, the Company is subject to certain claims or lawsuits. Management is not aware of any claims or lawsuits that may have a material adverse effect on the consolidated financial position or results of operations of the Company.

The Company has historically collected and remitted sales tax based on the locations of its significant physical operations. On June 21, 2018, the U.S. Supreme Court rendered a 5-4 majority decision in South Dakota v. Wayfair Inc., 17-494. Among other things, the Court held that a state may require an out-of-state seller with no physical presence in the state to collect and remit sales taxes on goods the seller ships to consumers in the state, overturning existing court precedent.  Additionally, the Company discovered that TruPet had not collected and paid sales tax related to all sales in some states where it had a physical presence.  The Company has estimated and recorded $1.2 million of sales tax liability as of September 30, 2019.  While additional assessments are not anticipated, additional states may assert that the Company has nexus and must pay sales tax for prior sales.  We do not believe that additional assessments, if any, will have a material impact on our financial position or results of operations.