Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 05, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | New Age Beverages Corp | |
Entity Central Index Key | 0001579823 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 78,166,042 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 83,580 | $ 42,517 |
Accounts receivable, net of allowance of $80 and $134, respectively | 15,177 | 9,837 |
Inventories | 36,943 | 37,148 |
Prepaid expenses and other | 10,219 | 6,473 |
Total current assets | 145,919 | 95,975 |
Long-term assets: | ||
Identifiable intangible assets, net | 66,062 | 67,830 |
Property and equipment, net | 27,476 | 57,281 |
Goodwill | 31,514 | 31,514 |
Right-of-use lease assets | 33,844 | 18,489 |
Deferred income taxes | 17,494 | 8,908 |
Restricted cash and other | 9,392 | 6,935 |
Total assets | 331,701 | 286,932 |
Current liabilities: | ||
Accounts payable | 9,282 | 8,960 |
Accrued liabilities | 53,604 | 34,019 |
Current portion of business combination liabilities | 14,431 | 8,718 |
Current maturities of long-term debt | 10,852 | 3,369 |
Total current liabilities | 88,169 | 55,066 |
Long-term liabilities: | ||
Business combination liabilities, net of current portion | 6,030 | 43,412 |
Long-term debt, net of current maturities | 13,364 | 1,325 |
Right-of-use liabilities, net of current portion: Lease liability | 30,557 | 13,686 |
Right-of-use liabilities, net of current portion: Deferred lease incentive obligation | 16,538 | |
Deferred income taxes | 9,790 | 9,747 |
Other | 9,453 | 9,160 |
Total liabilities | 173,901 | 132,396 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity: | ||
Common Stock; $0.001 par value. Authorized 200,000 shares; issued and outstanding 77,624 and 75,067 shares as of June 30, 2019 and December 31, 2018, respectively | 77 | 75 |
Additional paid-in capital | 192,034 | 176,471 |
Accumulated other comprehensive loss | 1,622 | 626 |
Accumulated deficit | (35,933) | (22,636) |
Total stockholders' equity | 157,800 | 154,536 |
Total liabilities and stockholders' equity | $ 331,701 | $ 286,932 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance | $ 80 | $ 134 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 200,000,000 | 200,000,000 |
Common Stock, shares issued | 77,624,000 | 75,067,000 |
Common Stock, shares outstanding | 77,624,000 | 75,067,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Net revenue | $ 66,348 | $ 13,363 | $ 124,655 | $ 24,921 |
Cost of goods sold | 24,699 | 11,603 | 44,430 | 20,545 |
Gross profit | 41,649 | 1,760 | 80,225 | 4,376 |
Operating expenses: | ||||
Commissions | 19,607 | 346 | 37,645 | 673 |
Selling, general and administrative | 28,175 | 4,142 | 55,017 | 8,398 |
Change in fair value of earnout obligations | (6,665) | (6,665) | 100 | |
Impairment of right-of-use lease assets | 1,500 | 1,500 | ||
Depreciation and amortization expense | 2,017 | 517 | 4,253 | 1,038 |
Total operating expenses | 44,634 | 5,005 | 91,750 | 10,209 |
Operating loss | (2,985) | (3,245) | (11,525) | (5,833) |
Non-operating income (expenses): | ||||
Gain from sale of land and building | 6,442 | |||
Interest expense | (756) | (125) | (2,402) | (181) |
Other debt financing expenses | (224) | |||
Gain from change in fair value of embedded derivatives | 470 | |||
Interest and other income (expense), net | (143) | 3 | 39 | (4) |
Loss before income taxes | (3,884) | (3,367) | (7,200) | (6,018) |
Income tax benefit (expense) | (7,797) | (6,097) | ||
Net loss | (11,681) | (3,367) | (13,297) | (6,018) |
Other comprehensive income: | ||||
Foreign currency translation adjustments, net of tax | 569 | 996 | ||
Comprehensive loss | $ (11,112) | $ (3,367) | $ (12,301) | $ (6,018) |
Net loss per share attributable to common stockholders (basic and diluted) | $ (0.15) | $ (0.09) | $ (0.18) | $ (0.16) |
Weighted average number of shares of Common Stock outstanding (basic and diluted) | 76,331 | 38,911 | 75,780 | 37,513 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 35 | $ 63,204 | $ (10,501) | $ 52,738 | ||
Balance, shares at Dec. 31, 2017 | 169,000 | 35,172,000 | ||||
Issuance of common stock for conversion of Series B Preferred Stock | (1) | |||||
Issuance of common stock for conversion of Series B Preferred Stock, shares | (169,000) | 1,354,000 | ||||
Issuance of common stock for grant of restricted stock awards | 325 | 325 | ||||
Issuance of common stock for grant of restricted stock awards, shares | 154,000 | |||||
Issuance of common stock for public offering, net of offering costs | $ 3 | 3,290 | 3,293 | |||
Issuance of common stock for public offering, net of offering costs, shares | 2,560,000 | |||||
Issuance of common stock for Debt discount | 470 | 470 | ||||
Issuance of common stock for Debt discount, shares | 225,000 | |||||
Issuance of common stock for Conversion of Series B promissory notes | $ 1 | 871 | 872 | |||
Issuance of common stock for Conversion of Series B promissory notes, shares | 461,000 | |||||
Stock-based compensation related to stock options | 317 | 317 | ||||
Fair value of stock options issued for license agreement | ||||||
Net loss | (6,018) | (6,018) | ||||
Balance at Jun. 30, 2018 | $ 40 | 68,476 | (16,519) | 51,997 | ||
Balance, shares at Jun. 30, 2018 | 39,926 | |||||
Balance at Dec. 31, 2018 | $ 75 | 176,471 | 626 | (22,636) | 154,536 | |
Balance, shares at Dec. 31, 2018 | 75,067,000 | |||||
Issuance of common stock for grant of restricted stock awards | 576 | 576 | ||||
Issuance of common stock for grant of restricted stock awards, shares | 126,000 | |||||
Issuance of common stock for exercise of stock options | 418 | 418 | ||||
Issuance of common stock for exercise of stock options, shares | 200,000 | |||||
Issuance of common stock for ATM public offering, net of offering costs | $ 2 | 11,139 | 11,141 | |||
Issuance of common stock for ATM public offering, net of offering costs, shares | 2,225,000 | |||||
Issuance of common stock for Employee services | 31 | 31 | ||||
Issuance of common stock for Employee services, shares | 6,000 | |||||
Stock-based compensation expense | 2,561 | 2,561 | ||||
Fair value of stock options issued for license agreement | 838 | 838 | ||||
Net change in other comprehensive income | 996 | 996 | ||||
Net loss | (13,297) | (13,297) | ||||
Balance at Jun. 30, 2019 | $ 77 | $ 192,034 | $ 1,622 | $ (35,933) | $ 157,800 | |
Balance, shares at Jun. 30, 2019 | 77,624 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (13,297) | $ (6,018) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Stock-based compensation expense | 4,287 | 898 |
Depreciation and amortization | 4,253 | 1,038 |
Accretion and amortization of debt discount and issuance costs | 1,609 | 15 |
Impairment of right-of-use lease assets | 1,500 | |
Make-whole premium on early payment of Siena Revolver | 480 | |
Deferred income taxes | (8,543) | |
Issuance of Common Stock for employee services | 31 | |
Issuance of common stock for accrued interest | 61 | |
Gain from sale of land and building | (6,442) | |
Gain from change in fair value of embedded derivatives | (470) | |
Change in fair value of earnout obligations | (6,665) | 100 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,340) | 130 |
Inventories | 205 | (2,479) |
Prepaid expenses, deposits and other | (3,515) | (712) |
Accounts payable | 308 | 1,420 |
Other accrued liabilities | 16,696 | (877) |
Deferred lease incentive obligation | 17,420 | |
Net cash provided by (used in) operating activities | 2,517 | (6,424) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Related to sale of the property | 31,445 | |
Repair obligations | 1,675 | |
Loan receivable from BWR | (1,000) | |
Capital expenditures for property and equipment | (1,241) | (64) |
Net cash provided by (used in) investing activities | 30,879 | (64) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from borrowings | 41,678 | 4,565 |
Principal payments on borrowings | (19,701) | (2,000) |
Principal payments on business combination obligations | (26,000) | |
Proceeds from issuance of common stock | 11,380 | 3,851 |
Payments for deferred offering costs | (140) | |
Proceeds from exercise of stock options | 418 | |
Debt issuance costs paid | (719) | |
Net cash provided by financing activities | 6,916 | 6,416 |
Effect of foreign currency translation changes | 1,188 | |
Net change in cash, cash equivalents and restricted cash | 41,500 | (72) |
Cash, cash equivalents and restricted cash at beginning of period | 45,856 | 285 |
SUMMARY OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | ||
Cash and cash equivalents at end of period | 83,580 | 213 |
Restricted cash at end of period | 3,776 | |
Total at end of period | 87,356 | 213 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 217 | 169 |
Cash paid for income taxes | 1,936 | |
Cash paid under right-of-use operating lease obligations | 4,205 | 193 |
Siena Revolver payments from borrowings under EWB Credit Facility: | ||
Principal payment | 1,944 | |
Make-whole premium | 480 | |
Total | 2,424 | |
Repayment of mortgage from proceeds from sale of land and building | 2,628 | |
Restricted stock granted for prepaid compensation | 576 | 353 |
Debt issuance costs paid from proceeds of borrowings | 210 | 170 |
Increase in payables for capital expenditures | 14 | |
Increase in payables for deferred offering costs | 99 | |
Fair value of stock options issued for license agreement | 838 | |
Right-of-use lease assets acquired in exchange for operating lease obligations | 19,841 | 214 |
Common stock issued for settlement of principal balance under note payable | $ 811 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Nature of Operations and Basis of Presentation | NOTE 1 — NATURE OF OPERATIONS AND BASIS OF PRESENTATION Nature of Operations and Segments New Age Beverages Corporation (the “Company”) was formed under the laws of the State of Washington on April 26, 2010. On December 21, 2018, the Company completed a business combination with Morinda Holdings, Inc., a Utah corporation (“Morinda”), whereby Morinda became a wholly-owned subsidiary of the Company. For further information about the Morinda business combination, please refer to Note 3. The Company’s chief operating decision maker (the “CODM”), who is the Company’s Chief Executive Officer, allocates resources and assesses performance based on financial information of the Company. The CODM reviews financial information presented for each reporting segment for purposes of making operating decisions and assessing financial performance. As a result of the business combination with Morinda, the Company changed its operating segments to consist of the Morinda segment and the New Age segment beginning in December 2018. After the Morinda business combination, the Company’s CODM began assessing performance and allocating resources based on the financial information of these two reporting segments. The New Age segment was previously comprised of the Brands segment and the DSD segment which are now combined as a single segment as they are operating with a single management team. Accordingly, the Company’s previous segment disclosures have been restated for the three and six months ended June 30, 2018. The Morinda segment is engaged in the development, manufacturing, and marketing of Tahitian Noni® Juice, MAX and other noni beverages as well as other nutritional, cosmetic and personal care products. The majority of Morinda’s products have a component of the Noni plant, Morinda Citrifolia (“Noni”) as a common element. The Morinda products are sold and distributed in more than 60 countries throughout the world using independent product consultants (“IPC) through a direct to consumer selling network. The New Age segment manufactures, markets and sells a portfolio of healthy beverage brands including XingTea, Marley, Aspen Pure®, Búcha® Live Kombucha, and Coco-Libre. The portfolio is distributed through the Company’s own Direct Store Distribution (“DSD”) network and a hybrid of other routes to market throughout the United States and in 15 countries around the world. The New Age brands are sold in all channels of distribution including Hypermarkets, Supermarkets, Pharmacies, Convenience, Gas and other outlets. Legal Structure and Consolidation The Company has four wholly-owned subsidiaries, NABC, Inc., NABC Properties, LLC (“NABC Properties”), New Age Health Sciences Holdings, Inc., and Morinda. NABC, Inc. is a Colorado-based operating company that consolidates performance and financial results of the Company’s subsidiaries and divisions. NABC Properties manages ownership issues for the Company’s facilities (except for those leased by Morinda), and New Age Health Sciences owns the Company’s intellectual property and manages operating performance in the medical and hospital channels. Basis of Presentation The unaudited condensed consolidated financial statements, which include the accounts of the Company and its wholly owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). All significant intercompany balances and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. These unaudited condensed consolidated financial statements for the three and six months ended June 30, 2019 should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2018, included in the Company’s 2018 Annual Report on Form 10-K as filed with the SEC on April 1, 2019 (the “2018 Form 10-K”). The accompanying condensed consolidated balance sheet and related disclosures as of December 31, 2018 have been derived from the Company’s audited financial statements. The Company’s financial condition as of June 30, 2019, and operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the year ending December 31, 2019. Emerging Growth Company The accompanying unaudited condensed consolidated financial statements and related footnotes have been prepared in accordance with applicable rules and regulations of the SEC. The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. The Company previously elected to opt out of the extended transition period to adopt new or revised accounting standards. Therefore, the Company is required to adopt such standards at the same time as other public companies that are not emerging growth companies. The Company currently expects its status as an emerging growth company will terminate after the year ending December 31, 2019. Reclassifications Certain amounts in the previously issued unaudited condensed consolidated financial statements for the three and six months ended June 30, 2018 have been reclassified to conform to the current period financial statement presentation. These reclassifications had no effect on the previously reported net loss, working capital, cash flows and stockholders’ equity. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Recent Accounting Pronouncements Recently Adopted Standards. In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, “ Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Standards Required to be Adopted in Future Years. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Codification Improvements to Topic 326, Financial Instruments – Credit Losses. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. |
Business Combination
Business Combination | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Business Combination | NOTE 3 — BUSINESS COMBINATIONS BWR Merger Agreement On May 30, 2019, the Company entered into an Agreement and Plan of Merger with Brands Within Reach, LLC, a New York limited liability corporation (“BWR”), the sole owner of BWR, and BWR Acquisition Corp., a newly organized New York corporation that was wholly owned by the Company (“Merger Sub”). As discussed in Note 16, the total consideration was approximately $5.9 million. At the closing on July 10, 2019, the transactions contemplated by the Merger Agreement were completed resulting in the merger of Merger Sub with and into BWR and BWR became a wholly owned subsidiary of the Company. This transaction will be accounted for in the third quarter of 2019 using the acquisition method of accounting based on ASC 805, Business Combinations Fair Value Measurement In connection with the BWR merger, the Company made a loan to BWR in the amount of $1.0 million. The terms of this loan provided that it would be settled upon the earlier of the closing of the Merger Agreement or upon demand by the Company beginning on December 31, 2019. Since this loan is effectively a deposit for the business combination, it is included in restricted cash and other Morinda Merger Agreement On December 2, 2018, the Company entered into a Plan of Merger (the “Morinda Merger Agreement”) with Morinda and New Age Health Sciences Holdings, Inc., a newly formed Utah corporation and wholly-owned subsidiary of the Company (“Merger Sub”). On December 21, 2018 (the “Closing Date”), the transactions contemplated by the Morinda Merger Agreement were completed. Merger Sub was merged with and into Morinda and Morinda became a wholly-owned subsidiary of the Company. This transaction is referred to herein as the “Merger”. Pursuant to the Morinda Merger Agreement, Morinda’s equity holders received (i) $75.0 million in cash; (ii) 2,016,480 shares of the Company’s Common Stock with an estimated fair value on the closing Date of approximately $11.0 million, (iii) 43,804 shares of Series D Preferred Stock (the “Preferred Stock”) providing for the potential payment of up to $15.0 million contingent upon Morinda achieving certain post-closing milestones, as discussed below. Pursuant to the Certificate of Designations of the Series D Preferred Stock (the “CoD”), the holders of the Preferred Stock are entitled to receive a dividend of up to an aggregate of $15.0 million (the “Milestone Dividend”) if the Adjusted EBITDA (as defined in the CoD) of Morinda is at least $20.0 million for the year ending December 31, 2019. The Milestone Dividend is payable on April 15, 2020. If the Adjusted EBITDA of Morinda is less than $20.0 million, the Milestone Dividend shall be reduced by applying a five-times multiple to the difference between the Adjusted EBITDA target of $20.0 million and actual Adjusted EBITDA for the year ending December 31, 2019. Accordingly, no Milestone Dividend is payable if actual Adjusted EBITDA is $17.0 million or lower. As of June 30, 2019 and December 31, 2018, the estimated fair value of the Milestone Dividend earnout was approximately $6.5 million and $13.1 million, respectively. For the six months ended June 30, 2019, the reduction in the fair value of the Milestone Dividend earnout resulted in an unrealized gain of approximately $6.7 million, which is reflected as a reduction of operating expenses in the accompanying unaudited condensed consolidated statement of operations and comprehensive loss. The Series D Preferred Stock provides for quarterly dividends to the holders of the Preferred Stock at a rate of 1.5% per annum of the Milestone Dividend amount, payable on a pro rata basis. The Company may pay the Milestone Dividend and /or the annual dividend in cash or in kind, provided that if the Company chooses to pay in kind, the shares of Common Stock issued as payment therefore must be registered under the Securities Act of 1933, as amended (the “Securities Act”). The Preferred Stock shall terminate on April 15, 2020. These quarterly dividends will be reflected as an adjustment to the fair value of the Milestone Dividend earnout liability as the quarterly dividends are settled in future periods. Through June 30, 2019, no quarterly dividends have been paid. Prior to the Merger, Morinda was an S corporation for U.S. federal and state income tax purposes. Accordingly, Morinda’s taxable earnings were reported on the individual income tax returns of the stockholders who were responsible for payment of the related income tax liabilities. In December 2018, Morinda agreed to distribute to its stockholders approximately $39.6 million of its previously-taxed S corporation earnings whereby distributions are payable (i) up to $25.0 million for which the timing and amount was subject to completion of the Sale Leaseback transaction discussed in Note 6, and (ii) approximately $14.6 million based on the calculation of excess working capital (“EWC”) as of the Closing Date. EWC is the amount by which Morinda’s actual working capital (as defined in the Merger Agreement) on the Closing Date exceeded $25.0 million. The Closing Date balance sheet of Morinda indicated that EWC was approximately $14.6 million as of the Closing Date. Business Combination Liabilities Presented below is a summary of the earnout obligations related to the Morinda and Marley business combinations and payables to the former Morinda stockholders as of June 30, 2019 and December 31, 2018 (in thousands): 2019 2018 Marley earnout obligation $ 900 (1) $ 900 (1) Payables to former Morinda stockholders, net of imputed interest discount: EWC payable in April 2019 - (2)(5) 986 (2)(5) EWC payable in July 2019 7,962 (2)(5) 7,732 (2)(5) EWC payable in July 2020 5,130 (2)(5) 4,976 (2)(5) Earnout under Series D preferred stock 6,469 (3) 13,134 (3) Contingent on financing event - (4)(5) 24,402 (4)(5) Total 20,461 52,130 Less current portion 14,431 8,718 Long-term portion $ 6,030 $ 43,412 (1) The Company is obligated to make a one-time earnout payment of $1.25 million over a period of two years beginning at such time that revenue for the Marley reporting unit is equal to or greater than $15.0 million during any trailing twelve calendar month period after the closing. The Marley business combination closed on June 13, 2017, and revenue for the Marley brand is not expected to exceed the $15.0 million earnout threshold during the next 12 months. Payment for 50% of the $1.25 million is due within 15 days after the month in which the earnout payment is triggered, 25% is payable one year after the first payment, and the remaining 25% is payable two years after the first payment. (2) Pursuant to a separate agreement between the parties, EWC is payable to Morinda’s stockholders for $1.0 million in April 2019, $8.0 million in July 2019, and the remainder of $5.5 million is payable in July 2020. (3) The fair value of earnout consideration under the Series D Preferred Stock is based on the probability of achieving the Milestone Dividend, whereby the maximum Milestone Dividend is $15.0 million if the Adjusted EBITDA of Morinda is $20.0 million or more for the year ending December 31, 2019. The fair value of the earnout was $13.1 million as of December 31, 2018 and $6.5 million as of June 30, 2019. As of June 30, 2019, fair value of the earnout was determined using an option pricing model and will continue to be adjusted as additional information becomes available about the progress toward achievement of the Milestone Dividend earnout. The earnout is classified within Level 3 of the fair value hierarchy. Valuation of the earnout was performed by an independent valuation specialist at the original issuance date and as of June 30, 2019. The valuation methodology was performed through an option pricing model based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.3%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 19.2%, and an estimated credit spread of 6.0%. Key Level 3 assumptions inherent in the valuation methodology as of December 31, 2018 included an option pricing model based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.6%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 18.9%, and an estimated credit spread of 5.7%. (4) Pursuant to a separate agreement between the parties prior to the consummation of the Merger, Morinda agreed to pay its former stockholders up to $25.0 million from the net proceeds of a sale leaseback to be completed after the Closing Date. As discussed in Note 6, the closing for this transaction occurred on March 22, 2019. Since this payment was to be made from the proceeds of a long-term financing, the net carrying value was classified in long-term liabilities in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2018. This obligation was paid during the three months ended June 30, 2019. (5) Interest was imputed on these obligations based on a credit and tax adjusted interest rate of 6.1% for the period from the Closing Date until the respective contractual or estimated payment dates. Accretion of discount related to these obligations amounted to an aggregate of $0.4 million and $1.0 million for the three and six months ended June 30, 2019, respectively, which is included in interest expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. Pro Forma Disclosures The following unaudited pro forma financial results for the three and six months ended June 30, 2018 reflects (i) the historical operating results of the Company, and (ii) the unaudited pro forma results of Morinda prior to its acquisition date of December 21, 2018, as if the Morinda business combination had occurred as of January 1, 2018. The pro forma information presented below does not purport to represent what the actual results of operations would have been for the periods indicated, nor does it purport to represent the Company’s future results of operations. The following table summarizes on an unaudited pro forma basis the Company’s results of operations for the three and six months ended June 30, 2018 (in thousands, except per share amounts): Three Six Months Months Net revenue $ 71,647 $ 138,428 Net loss $ (2,013 ) $ (3,657 ) Net loss per share- basic and diluted $ (0.05 ) $ (0.09 ) Weighted average number of shares of common stock outstanding- basic and diluted 41,141 39,743 The calculations of pro forma net revenue and pro forma net loss give effect to the pre-acquisition operating results of Morinda based on (i) the historical net revenue and net income (loss) of Morinda, (ii) incremental depreciation and amortization based on the fair value of property, equipment and identifiable intangible assets acquired and the related estimated useful lives, and (iii) recognition of accretion of discounts on obligations with extended payment terms that were assumed in the Morinda business combination. |
Other Information
Other Information | 6 Months Ended |
Jun. 30, 2019 | |
Other Information | |
Other Information | NOTE 4 — OTHER INFORMATION Inventories Inventories consist of the following as of June 30, 2019 and December 31, 2018 (in thousands): 2019 2018 Raw materials $ 12,183 $ 12,538 Work-in-process 11,222 907 Finished goods, net 13,538 23,703 Total inventories $ 36,943 $ 37,148 In connection with the Morinda business combination discussed in Note 3, the fair value of work-in-process and finished goods inventories on the Closing Date exceeded the historical carrying value by approximately $2.2 million. This amount represented an element of built-in profit on the Closing Date that is being charged to cost of goods sold as the related inventories are sold. For the three and six months ended June 30, 2019, a portion of the Closing Date inventories were sold which resulted in a charge to cost of goods sold of approximately $0.9 million and $1.7 million, respectively. The remaining Closing Date built-in profit of $0.4 million is expected to be charged to cost of goods sold by the third quarter of 2019. Prepaid Expenses and Other Current Assets As of June 30, 2019 and December 31, 2018, prepaid expenses and other current assets consist of the following (in thousands): 2019 2018 Prepaid expenses and deposits $ 9,219 $ 4,982 Prepaid stock-based compensation 380 347 Supplier and other receivables 620 1,144 Total $ 10,219 $ 6,473 Property and Equipment As of June 30, 2019 and December 31, 2018, property and equipment consisted of the following (in thousands): 2019 2018 Land $ 37 $ 25,726 Buildings and improvements 16,888 19,822 Leasehold improvements 3,528 4,398 Machinery and equipment 5,618 5,208 Office furniture and equipment 2,414 2,087 Transportation equipment 1,837 1,727 Total property and equipment 30,322 58,968 Less accumulated depreciation (2,846 ) (1,687 ) Property and equipment, net $ 27,476 $ 57,281 Depreciation and amortization expense included in operating expenses amounted to $0.8 million and $0.1 million for the three months ended June 30, 2019 and 2018, respectively. Depreciation and amortization expense included in operating expenses amounted to $1.8 million and $0.3 million for the six months ended June 30, 2019 and 2018, respectively. Depreciation and amortization expense included in cost of goods sold amounted to $0.1 million and $0.2 million for the three and six months ended June 30, 2019. Repairs and maintenance costs amounted to $0.4 million and $0.2 million for the three months ended June 30, 2019 and 2018, respectively. Repairs and maintenance costs amounted to $1.0 million and $0.4 million for the six months ended June 30, 2019 and 2018, respectively. Restricted Cash and Other As of June 30, 2019 and December 31, 2018, restricted cash and other long-term assets consist of the following (in thousands): 2019 2018 Restricted cash $ 3,776 (1) $ 3,339 (1) Debt issuance costs, net 348 548 Prepaid stock-based compensation - 210 Loan receivable from BWR 1,000 - Deposits and other 4,268 2,838 Total $ 9,392 $ 6,935 (1) Restricted cash primarily represents long-term cash deposits held in a bank for a foreign governmental agency. This deposit is required to maintain the Company’s direct selling license to do business in China. Accrued Liabilities As of June 30, 2019 and December 31, 2018, accrued liabilities consist of the following (in thousands): 2019 2018 Accrued commissions $ 8,532 $ 9,731 Accrued compensation and benefits 5,744 4,715 Accrued marketing events 5,008 (1) 3,757 (1) Deferred revenue 5,266 2,701 Income taxes payable 15,842 (2) 1,670 Current portion of right of use liabilities: Lease liability 5,117 4,798 Deferred lease incentive obligation 882 - Restricted stock obligations 1,012 (3) - Embedded derivative liability - 470 Other accrued liabilities 6,201 6,177 Total accrued liabilities $ 53,604 $ 34,019 (1) Represents accruals for incentive trips associated with Morinda’s direct sales marketing program, which rewards certain IPCs with paid attendance at future conventions, meetings, and retreats. Expenses associated with incentive trips are accrued over qualification periods as they are earned. Incentive trip accruals are based on historical experience in relation to current sales trends in order to determine the related contractual obligations. (2) Includes approximately $12.1 million of income taxes payable in Japan primarily related to the gain on sale of the land and building in Tokyo as discussed further in Note 6. (3) Represents the fair value of restricted stock awards required to be settled in cash as discussed in Note 9. |
Goodwill and Identifiable Intan
Goodwill and Identifiable Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | NOTE 5 — GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS Goodwill Goodwill consists of the following by reporting unit as of June 30, 2019 and December 31, 2018 (in thousands): Reporting Unit Morinda $ 10,284 Marley 9,418 Maverick 5,149 Xing 4,506 PMC 1,768 B&R 389 Total Goodwill $ 31,514 Identifiable Intangible Assets Identifiable intangible assets consist of the following as of June 30, 2019 and December 31, 2018 (in thousands): June 30, 2019 December 31, 2018 Accumulated Net Book Accumulated Net Book Identifiable Intangible Asset Cost Amortization Value Cost Amortization Value License agreements China direct selling license $ 20,420 $ 721 $ 19,699 $ 20,420 $ 40 $ 20,380 Other 6,827 560 6,267 5,989 318 5,671 Manufacturing processes and recipes 11,610 770 10,840 11,610 380 11,230 Trade names 12,301 1,012 11,289 12,301 584 11,717 IPC distributor sales force 9,760 517 9,243 9,760 29 9,731 Customer relationships 6,444 1,404 5,040 6,444 1,194 5,250 Patents 4,100 569 3,531 4,100 433 3,667 Former Morinda shareholder non-compete agreements 186 33 153 186 2 184 Total identifiable intangible assets $ 71,648 $ 5,586 $ 66,062 $ 70,810 $ 2,980 $ 67,830 Docklight Agreement and Marley License Extension On January 14, 2019, the Company entered into an agreement with Docklight LLC (“Docklight”) for the exclusive licensing rights in the United States for the manufacturing, sale, distribution, marketing and advertising of certain products which include shelf-stable, ready to drink, non-alcoholic, consumer beverages infused with Cannabidiol derived from hemp-based or synthetic sources. The licensed property includes the name, image, likeness, caricature, signature and biography of Bob Marley, the trademarks MARLEY and BOB MARLEY for use in connection with the Company’s existing licensed marks. The initial term of the Docklight license expires in January 2024, unless extended or earlier terminated as provided in the agreement. As consideration for the license, the Company agreed to pay a fee equal to fifty percent of the gross margin, as defined in the agreement, on future sales of approved licensed products, which fee shall be reviewed annually by the parties. Through June 30, 2019, the Company has not commenced sales of the licensed products and, accordingly, no fees have been incurred. On March 28, 2019, the Company extended its license agreement with Marley Merchandising LLC through March 31, 2030. As consideration for the extension, the Company issued a warrant that was immediately exercisable for 200,000 shares of Common Stock at an exercise price of $5.14 per share. This warrant is exercisable for ten years and had a grant date fair value of $0.8 million, which is included in the table above for other license agreements. This intangible asset is being amortized over the remaining term of the Marley license. Fair value of the warrant was determined using the Black-Scholes-Merton (“BSM”) option-pricing model. Key assumptions included an expected term of five years, volatility of 115%, and a risk-free interest rate of 2.2%. Amortization of Identifiable Intangible Assets Amortization expense related to identifiable intangible assets was $1.3 million and $0.4 million for the three months ended June 30, 2019 and 2018, respectively. Amortization expense related to identifiable intangible assets was $2.6 million and $0.7 million for the six months ended June 30, 2019 and 2018, respectively. In order to more closely reflect the estimated economic life of the license agreement acquired in the June 2017 acquisition of Marley, the Company revised the estimated useful life from 42 years to 15 years during the fourth quarter of 2018. For the three months ended June 30, 2019 and 2018, total amortization expense related to this license agreement was approximately $0.1 million and $36,000, respectively. For the six months ended June 30, 2019 and 2018, total amortization expense related to this license agreement was approximately $0.2 million and $72,000, respectively. Estimated future amortization expense for the Company’s identifiable intangible assets is set forth below (in thousands): 12-Months ending June 30, 2020 $ 4,953 2021 4,953 2022 4,920 2023 4,891 2024 4,812 Thereafter 41,533 Total $ 66,062 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | NOTE 6 — LEASES The Company leases various office and warehouse facilities, vehicles and equipment under non-cancellable operating lease agreements that expire between July 2019 and March 2039. For the three months ended June 30, 2019 and 2018, the Company had operating lease expense of $2.9 million and $0.3 million respectively. For the six months ended June 30, 2019 and 2018, the Company had operating lease expense of $5.2 million and $0.6 million respectively. On January 21, 2019, the Company entered into a lease for approximately 11,200 square feet of office space in the downtown area of Denver, Colorado. The monthly obligation for base rent will average approximately $33,000 per month over the lease term which expires in December 2029. The Company has options to terminate the lease after 90 months as well as the option to extend the lease for an additional period of five years. The Company determined the right-of-use (“ROU”) lease liability of $2.8 million based upon a discount rate of 6.1% and assuming that the Company will not exercise its options to terminate the lease after 90 months or extend the lease for an additional five years. During the first quarter of 2019, the Company entered into operating lease obligations for transportation equipment. These leases provide for fixed minimum payments of approximately $17,000 per month over the eight-year lease term for an aggregate commitment of $1.7 million. The present value of these obligations of $1.3 million was recorded as ROU lease assets and ROU lease liabilities during the six months ended June 30, 2019. The Company determined the ROU lease liabilities based upon a discount rate of 6.1%. On April 3, 2019, the Company entered into a lease for approximately 156,000 square feet of warehouse space in Aurora Colorado. The monthly obligation for base rent averages approximately $66,000 per month over the lease term which expires in July 2029. The Company has an option to extend the lease for an additional period of five years. The Company determined the right-of-use (“ROU”) lease liability of approximately $6.0 million based upon a discount rate of 6.1% and assuming that the Company will not exercise its option to extend the lease for an additional five years. Sale Leaseback On March 22, 2019, the Company entered into an agreement with a major Japanese real estate company resulting in the sale for approximately $57.1 million of the land and building in Tokyo that serves as the corporate headquarters of Morinda’s Japanese subsidiary. Concurrently with the sale, the Company entered into a lease of this property for a term of 27 years. The monthly lease cost is ¥20.0 million (approximately $181,000 as of June 30, 2019) for the initial seven-year term, and thereafter either party may elect to adjust the monthly lease payment to the then current market rate for similar buildings in Tokyo. In order to secure its obligations under the lease, the Company provided a refundable security deposit of approximately $1.8 million. At any time after the initial seven-year term, the Company may elect to terminate the lease. However, if the lease is terminated before the 20 th In connection with this transaction, the Company repaid the $2.6 million mortgage on the building and cancelled the related interest rate swap agreement discussed in Note 7, paid the refundable security deposit of $1.8 million, and the Company became obligated to pay $25.0 million to the former stockholders of Morinda to settle the full amount of the contingent financing liability discussed in Note 3. Other cash payments that have been or will be made include transaction costs of $1.9 million, post-closing repair obligations of $1.7 million, and Japanese income taxes of $11.9 million. Presented below is a summary of the selling price and resulting gain on sale calculation (in thousands): Gross selling price $ 57,129 Less commissions and other expenses (1,941 ) Less repair obligations (1,675 ) Net selling price 53,513 Cost of land and building sold (29,431 ) Total gain on sale 24,082 Portion of gain related to above-market rent concession (17,640 ) Recognized gain on sale $ 6,442 As shown above, the sale of this property resulted in a gain of $24.1 million and the Company determined that $17.6 million of the gain was the result of above-market rent inherent in the leaseback arrangement. The remainder of the gain of $6.4 million was attributable to the highly competitive process among the entities that bid to purchase the property. The $17.6 million portion of the gain related to above market rent is being accounted for as a lease concession whereby the gain will result in a reduction of rent expense of approximately $0.9 million per year over the 20-year lease term. The present value of the lease payments amounted to $25.0 million. After deducting the $17.6 million lease incentive concession, the Company recognized an initial ROU lease asset and ROU lease liability of approximately $7.4 million. Impairment In June 2019, the Company began attempting to sublease a portion of its ROU lease assets previously used for warehouse space that are no longer needed for current operations. As a result, an impairment evaluation was completed that resulted in recognition of an impairment charge of $1.5 million for the three and six months ended June 30, 2019. This evaluation was based on the expected time to obtain a suitable subtenant and current market rates for similar commercial properties. Balance Sheet Presentation As of June 30, 2019 and December 31, 2018, the carrying value of ROU lease assets, ROU lease obligations, and the deferred lease incentive obligation are as follows (in thousands): June 30, 2019 December 31, 2018 Right-of-Use Assets: Cost basis, net of impairment $ 37,563 $ 19,221 Accumulated amortization (3,719 ) (732 ) Net $ 33,844 $ 18,489 Right-of-Use Liabilities: Current $ 5,117 $ 4,798 Long-term 30,557 13,686 Total $ 35,674 $ 18,484 Deferred Lease Incentive Obligation: Current $ 882 $ - Long-term 16,538 - Total $ 17,420 $ - As of June 30, 2019 and December 31, 2018, the weighted average remaining lease term under ROU leases was 8.3 and 5.9 years, respectively. As of June 30, 2019 and December 31, 2018, the weighted average discount rate for ROU lease liabilities was approximately 6.6%. Lease Commitments Future minimum lease payments and amortization of the related lease incentive obligation related to non-cancellable ROU operating lease agreements are as follows (in thousands): 12-Months Ending June 30, 2020 $ 9,051 2021 7,248 2022 6,367 2023 6,120 2024 5,730 Thereafter 44,421 Total minimum lease payments 78,937 Less imputed interest (43,263 ) Present value of minimum lease payments $ 35,674 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 7 — DEBT Credit Facility On March 29, 2019, the Company entered into a Loan and Security Agreement (the “Credit Facility”) with East West Bank (“EWB”). The Credit Facility matures on March 29, 2023 (the “Maturity Date”) and provides for (i) a term loan in the aggregate principal amount of $15.0 million, which may be increased to $25.0 million subject to the satisfaction of certain conditions (the “Term Loan”) and (ii) a $10.0 million revolving loan facility (the “EWB Revolver”). At the closing, EWB funded $25.0 million to the Company consisting of the $15.0 million Term Loan and $10.0 million as an advance under the EWB Revolver. The Company utilized a portion of the proceeds from the Credit Facility to repay all outstanding amounts and terminate the Siena Revolver discussed below. The obligations of the Company under the Credit Facility are secured by substantially all assets of the Company and guaranteed by certain subsidiaries of the Company. The Credit Facility requires compliance with certain financial and restrictive covenants and includes customary events of default. Key financial covenants include maintenance of minimum Adjusted EBITDA and a maximum Total Leverage Ratio (all as defined and set forth in the Credit Facility). During any period when an event of default occurs, the Credit Facility provides for interest at a rate that is 3.0% above the rate otherwise applicable to such obligations. Borrowings outstanding under the Credit Facility bear interest at the Prime Rate plus 0.25%. However, if the Total Leverage Ratio (as defined in the Credit Facility) is equal to or greater than 1.50 to 1.00, borrowings will bear interest at the Prime Rate plus 0.50%. The Company may voluntarily prepay amounts outstanding under the EWB Revolver on ten business days’ prior notice to EWB without prepayment charges. In the event the EWB Revolver is terminated prior to the Maturity Date, the Company would be required to pay an early termination fee in the amount of 0.50% of the revolving line. Additional borrowing requests under the EWB Revolver are subject to various customary conditions precedent, including satisfaction of a borrowing base test as more fully described in the Credit Facility. The EWB Revolver also provides for an unused line fee equal to 0.5% per annum of the undrawn portion. The EWB Revolver includes a subjective acceleration clause and a lockbox arrangement where the Company is required to direct its customers to remit payments to a restricted bank account, whereby all available funds are used to pay down the outstanding principal balance under the EWB Revolver. Accordingly, the entire outstanding principal balance of the EWB Revolver is classified as a current liability as of June 30, 2019. On July 1, 2019, the Company elected to make a voluntary prepayment of $9.7 million of principal to repay all outstanding borrowings under the EWB Revolver. Subject to the terms of the Credit Facility, the Company may reborrow up to $10.0 million under the EWB Revolver through the Maturity Date. Payments under the Term Loan are interest-only for the first six months and are followed by monthly principal payments of $125,000 amortized over the remaining term of the Term Loan plus interest. The Company may elect to prepay the Term Loan before the Maturity Date on 10 business days’ notice to EWB subject to a prepayment fee of 2% for the first year of the Term Loan and 1% for the second year of the Term Loan. No later than 120 days after the end of each fiscal year, commencing with the fiscal year ending December 31, 2019, the Company is required to make a payment towards the outstanding principal amount of the Term Loan in an amount equal to 35% of the Excess Cash Flow (as defined in the Credit Facility), if the Total Leverage Ratio is less than 1.50 to 1.00 or (i) 50% of the Excess Cash Flow if the Total Leverage Ratio is greater than or equal to 1.50 to 1.00. Mandatory principal payments based on Excess Cash Flow generated in subsequent quarters are excluded from current liabilities since they are contingent payments based on the generation of working capital in the future. Siena Revolver On August 10, 2018 (the “Siena Closing Date”), the Company entered into a loan and security agreement with Siena Lending Group LLC (“Siena”) that provided for a $12.0 million revolving credit facility (the “Siena Revolver”) with a scheduled maturity date of August 10, 2021. Outstanding borrowings provided for interest at the greater of (i) 7.5% or (ii) the prime rate plus 2.75%. As of December 31, 2018, the effective interest rate was 8.25%. The Siena Revolver also provided for an unused line fee equal to 0.5% per annum of the undrawn portion of the $12.0 million commitment. The Siena Revolver was subject to availability based on eligible accounts receivables and eligible inventory of the Company. As of December 31, 2018, the borrowing base calculation permitted total borrowings of approximately $2.5 million. Pursuant to the Siena Revolver, the Company granted a security interest in substantially all assets and intellectual property of the Company and its subsidiaries, except for such assets owned by Morinda. In connection with the Siena Revolver the Company incurred debt issuance costs of $0.6 million. This amount was accounted for as debt issuance costs that was amortized using the straight-line method over the three-year term of the Siena Revolver. The Siena Revolver was paid off and terminated on March 29, 2019 and the unamortized debt issuance costs of $0.5 million were written off as additional interest expense for the six months ended June 30, 2019. Additionally, the Company incurred a make-whole premium payment of $0.5 million that was also charged to interest expense for the six months ended June 30, 2019. Summary of Debt As of June 30, 2019 and December 31, 2018, debt consists of the following (in thousands): 2019 2018 EWB Credit Facility: Term loan, net of discount of $516 $ 14,484 $ - Revolver 9,700 - Installment notes payable 32 (1) 66 (1) Siena Revolver - 2,000 Mortgage payable to a foreign bank - 2,628 (2) Total 24,216 4,694 Less current maturities (10,852 ) (3,369 ) Long-term debt, less current maturities $ 13,364 $ 1,325 (1) Consists of various installment notes payable that are collateralized by equipment and that bear interest at 12.4% to 22.1%. (2) This mortgage note payable was collateralized by land and a building in Tokyo, Japan. Quarterly principal payments of $0.3 million plus interest were payable in Japanese Yen at TIBOR plus 0.7% (0.76% as of December 31, 2018) through the maturity date in December 2020. This debt was repaid, and the interest rate swap agreement discussed below was terminated upon sale of the property on March 22, 2019 as discussed in Note 6. Future Debt Maturities As of June 30, 2019, the scheduled future maturities of long-term debt, exclusive of unaccreted discount of $0.5 million related to the EWB Term Loan, are as follows (in thousands): 12-Months Ending June 30, 2020 $ 10,852 2021 1,504 2022 1,501 2023 10,875 Total $ 24,732 Embedded Derivatives The Siena Revolver included features that were determined to be embedded derivatives requiring bifurcation and accounting as separate financial instruments. The Company determined that embedded derivatives included the requirement to pay (i) an early termination premium if the Siena Revolver was terminated before the maturity date in August 2021, and (ii) default interest at a 5.0% premium if events of default existed. The early termination premium was 4.0% of the $12.0 million commitment if termination occurred during the first year after the Siena Closing Date. As of December 31, 2018, the embedded derivatives for the Siena Revolver had an aggregate fair value of approximately $0.5 million, which was included in accrued liabilities as of December 31, 2018. As a result of the termination of the Siena Revolver as discussed above, a make-whole premium of $0.5 million was incurred on March 29, 2019, and the Company recognized a gain on change in fair value of embedded derivatives of $0.5 million which is included in non-operating income (expenses) for the six months ended June 30, 2019. Interest Rate Swap Agreement At December 31, 2018, the Company had one contract for an interest rate swap with a total notional amount of approximately $2.6 million. At December 31, 2018, the Company had an unrealized loss from this interest rate swap agreement of approximately $36,000 that is included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheet. As discussed in Note 6, this swap agreement was terminated upon sale of the property in Tokyo and repayment of the related mortgage. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 8 — STOCKHOLDERS’ EQUITY Amendment to Articles of Incorporation On May 30, 2019, the Company’s stockholders voted to approve an amendment to the Company’s Articles of Incorporation increasing the authorized shares of Common Stock from 100,000,000 shares to 200,000,000 shares. At the Market Offering Agreement On April 30, 2019, the Company entered into an At the Market Offering Agreement (the “ATM Offering Agreement”) with Roth Capital Partners, LLC (the “Agent”), pursuant to which the Company may offer and sell from time to time up to an aggregate of $100 million in shares of the Company’s Common Stock (the “Placement Shares”), through the Agent. The Agent will act as sales agent and will use commercially reasonable efforts to sell on the Company’s behalf all of the Placement Shares requested to be sold by the Company, consistent with its normal trading and sales practices, on mutually agreed terms between the Agent and the Company. The Company has no obligation to sell any of the Placement Shares under the ATM Offering Agreement. The ATM Offering Agreement terminates on April 30, 2020 and may be earlier terminated by the Company upon five business days’ notice to the Agent and at any time by the Agent or by the mutual agreement of the parties. The Company intends to use the net proceeds from this offering for general corporate purposes, including working capital. Under the terms of the ATM Offering Agreement, the Company will pay the Agent a commission equal to 3% of the gross proceeds from the gross sales price of the Placement Shares up to $30 million, and 2.5% of the gross proceeds from the gross sales price of the Placement Shares in excess of $30 million. In addition, the Company has agreed to pay certain expenses incurred by the Agent in connection with the offering. Through June 30, 2019, an aggregate of approximately 2.2 million shares of Common Stock were sold for net proceeds of approximately $11.4 million. Total commissions and fees deducted from the net proceeds were $0.4 million and other offering costs of $0.2 million were incurred for the three and six months ended June 30, 2019. Series D Preferred In December 2018, the Board of Directors designated 44,000 shares as Series D Preferred Stock. As discussed in Note 3, the Series D Preferred provides for the potential payment of up to $15.0 million contingent upon Morinda achieving certain post-closing milestones. As of June 30, 2019 and December 31, 2018, the Series D Preferred Stock is classified as a liability since it provides for the issuance of a variable number of shares of Common Stock if the Company elects to settle in shares rather than pay the cash redemption value. Please refer to Note 3 for additional information on the consideration issued in the Morinda business combination and the valuation and carrying value of the Series D Preferred. Changes in Stockholders’ Equity Changes in stockholders’ equity for the three months ended June 30, 2019 are as follows (in thousands): Accumulated Additional Other Common Stock Paid-in Comprehensive Accumulated Shares Amount Capital Income Deficit Total Balances, March 31, 2019 75,393 $ 75 $ 179,592 $ 1,053 $ (24,252 ) $ 156,468 Issuance of Common Stock for: ATM public offering, net of offering costs 2,225 2 11,139 - - 11,141 Employee services 6 - 31 - - 31 Stock-based compensation expense - - 434 - - 434 Fair value of warrant issued for license agreement - - 838 - - 838 Net change in other comprehensive income - - - 569 - 569 Net loss - - - - (11,681 ) (11,681 ) Balances, June 30, 2019 77,624 $ 77 $ 192,034 $ 1,622 $ (35,933 ) $ 157,800 Changes in stockholders’ equity for the three months ended June 30, 2018 are as follows (in thousands): Additional Common Stock Paid-in Accumulated Shares Amount Capital Deficit Total Balances, March 31, 2018 36,649 $ 36 $ 63,620 $ (13,152 ) $ 50,504 Issuance of Common Stock for: Conversion of Series B promissory note, including accrued interest of approximately $61 461 1 871 - 872 Grant of restricted stock awards 31 - 65 - 65 Public offering, net of offering costs 2,560 3 3,290 - 3,293 Debt discount 225 - 470 - 470 Stock-based compensation related to stock options - - 160 - 160 Net loss - - - (3,367 ) (3,367 ) Balances, June 30, 2018 39,926 $ 40 $ 68,476 $ (16,519 ) $ 51,997 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | NOTE 9 — STOCK-BASED COMPENSATION 2019 Equity Incentive Plan On May 30, 2019, the Company’s stockholders voted to approve the New Age Beverages Corporation 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan will terminate in April 2029. A total of up to 10.0 million shares of Common Stock may be issued under the 2019 Plan. Participation in the 2019 Plan is limited to employees, non-employee directors, and consultants. The 2019 Plan provides for grants of both incentive stock options, or “ISOs”, which are subject to special income tax treatment, and non-statutory options, or “NSOs.” Eligibility for ISOs is limited to employees of the Company and its subsidiaries. The exercise price of an ISO cannot be less than the fair market value of the Common Stock at the time of grant. In addition, the expiration date of an ISO cannot be more than ten years after the date of the original grant. In the case of NSOs, the exercise price and the expiration date are determined in the discretion of the administrator. The administrator also determines all other terms and conditions related to the exercise of an option, including the consideration to be paid, if any, for the grant of the option, the time at which options may be exercised and conditions related to the exercise of options. The 2019 Plan also provides for awards of shares of restricted Common Stock. Awards of restricted stock may be made in exchange for services or other lawful consideration. Generally, awards of restricted stock are subject to the requirement that the shares be forfeited or resold to the Company unless specified conditions are met. Subject to these restrictions, conditions and forfeiture provisions, any recipient of an award of restricted stock will have all the rights of a stockholder of the Company, including the right to vote the shares and to receive dividends. The 2019 Plan also provides for deferred grants (“deferred stock”) entitling the recipient to receive shares of Common Stock in the future on such conditions as the administrator may specify. As of June 30, 2019, all of the 10.0 million shares authorized under the 2019 Plan are available for future grants of stock options, restricted stock and similar instruments. LTI Stock Option Plan On August 3, 2016, the Company’s approved and implemented the New Age Beverages Corporation 2016-2017 Long Term Incentive Plan (the “LTI Plan”). The LTI Plan provides for stock options to be granted to employees, directors and consultants at an exercise price not less than 100% of the fair value of the Company’s Common Stock on the grant date. The options granted generally have a maximum term of 10 years from the grant date and are exercisable upon vesting. Option grants generally vest over a period between one and three years after the grant date of such award. The number of shares reserved for grants is adjusted annually on the first day of January whereby a maximum of 10% of the Company’s outstanding shares of Common Stock are available for grant under the LTI Plan. Accordingly, as of January 1, 2019, a maximum of approximately 7.5 million shares of Common Stock were available for grants under the LTI Plan. As of June 30, 2019, after deducting stock options and restricted stock grants to date, there were approximately 2.3 million shares available for future grants of stock options, restricted stock and similar instruments under the LTI Plan. Stock Option Activity The following table sets forth the summary of stock option activity under the LTI Plan for the six months ended June 30, 2019 (shares in thousands): Shares Price (1) Term (2) Outstanding, beginning of period 2,786 $ 2.84 9.0 Grants to: Employees 36 $ 5.57 Non-employees 25 $ 5.30 Forfeited (87 ) $ 3.70 Exercised (200 ) $ 2.09 Outstanding, end of period 2,560 (3) $ 2.90 8.5 Vested, end of period 740 (4) $ 1.90 7.8 (1) Represents the weighted average exercise price. (2) Represents the weighted average remaining contractual term until the stock options expire. (3) As of June 30, 2019 and December 31, 2018, the aggregate intrinsic value of stock options outstanding was $4.5 million and $6.6 million, respectively. (4) As of June 30, 2019 and December 31, 2018, the aggregate intrinsic value of vested stock options was $2.0 million and $3.1 million, respectively. As of June 30, 2019, unrecognized compensation expense related to unvested stock options amounts to $3.9 million. This amount is expected to be recognized on a straight-line basis over the weighted-average vesting period of 2.3 years. The fair value of stock options granted under the LTI Plan was estimated on the date of grant using the BSM option-pricing model, with the following weighted-average assumptions for the six months ended June 30, 2019: Grant date fair value of common stock (exercise price) $ 5.41 Expected life (in years) 6.5 Volatility 113 % Dividend yield 0 % Risk-free interest rate 2.4 % Based on the assumptions set forth above, the weighted-average grant date fair value of stock options granted during the six months ended June 30, 2019 was $4.65 per share. The BSM model requires various highly subjective assumptions that represent management’s best estimates of the fair value of the Company’s Common Stock, volatility, risk-free interest rates, expected term, and dividend yield. The expected term represents the weighted-average period that options granted are expected to be outstanding giving consideration to vesting schedules. Since the Company does not have an extended history of actual exercises, the Company has estimated the expected term using a simplified method which calculates the expected term as the average of the time-to-vesting and the contractual life of the awards. The Company has never declared or paid cash dividends and does not plan to pay cash dividends in the foreseeable future; therefore, the Company used an expected dividend yield of zero. The risk-free interest rate is based on U.S. Treasury rates in effect during the expected term of the grant. The expected volatility is based on the historical volatility of the Company’s Common Stock for the period beginning in August 2016 when its shares were first publicly traded through the grant date of the respective stock options. Restricted Stock Activity In connection with the business combination with Morinda in December 2018, the Company made restricted stock award grants for an aggregate of 1.2 million shares of the Company’s Common Stock. None of these shares will be issued until a vesting event occurs. Upon vesting of the Morinda awards, settlement will occur in (i) cash where foreign regulatory requirements prohibit settlement in shares, (ii) shares of Common Stock, or (iii) a combination of shares and cash at the Company’s election for certain awards. The following table sets forth a summary of restricted stock award activity for the six months ended June 30, 2019 (in thousands): LTI Plan Equity Awards LTI Plan Liability Awards Non-Plan Awards Number of Unvested Number of Unvested Number of Unvested Shares Compensation Shares Compensation Shares Compensation Outstanding, beginning of period 1,151 $ 3,988 474 $ 2,490 629 $ 64 Restricted shares issued 91 (1) 500 (1) - - - - Other 35 76 - - - - Forfeited (2 ) (10 ) (1 ) - - - Fair value adjustment - - - (284 ) (4) - - Vested shares and expense (359 ) (2,273 ) - (1,012 ) (629 ) (5) (64 ) (5) Outstanding, end of period 916 (2) $ 2,281 (2) 473 (3) $ 1,194 (3) - $ - Intrinsic value, end of period $ 4,265 (6) $ 2,206 (6) $ - Weighted average remaining term for recognition of unvested expense 0.8 0.7 - (1) The weighted average fair value was $5.50 per share based on the closing price of the Company’s Common Stock on the grant date. (2) As of June 30, 2019, unvested shares of restricted stock consist of approximately 0.7 million shares that will be issued upon vesting and 0.2 million shares that have been issued subject to vesting conditions. For unvested shares that have been issued, approximately $0.4 million of unvested compensation is included in prepaid expenses as of June 30, 2019. Outstanding unvested shares include awards for 216,000 shares that vest if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. The Company assesses the probability of achievement of such performance conditions in the recognition of compensation expense related to these awards. (3) Due to Morinda’s foreign operations, these awards will be settled in cash upon vesting since regulatory requirements prohibit settlement in shares. These awards vest between one and three years after the grant date and are classified as liabilities in the Company’s consolidated balance sheets based on the fair value of the Company’s Common Stock at the end of each reporting period. The liability is being recorded with a corresponding charge to stock-based compensation expense over the vesting period. As of June 30, 2019, approximately $1.2 million is included in current liabilities. (4) Change in unvested compensation resulted from a decrease in the closing price of the Company’s Common Stock for the six months ended June 30, 2019. (5) Consists of restricted stock issued to the Company’s Chief Executive Officer in 2016 that vested over three years. The remaining shares became fully vested in March and April 2019 and the remaining compensation charge was recorded. (6) The intrinsic value was based on the closing price of the Company’s common stock of $4.66 per share on the last trading day for June 2019. Stock-based Compensation Expense Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. The table below summarizes stock-based compensation expense related to stock options and restricted stock awards for the six months ended June 30, 2019 and 2018 (in thousands): 2019 2018 Stock options awards: Employees $ 933 $ 398 Non-employees 5 - Restricted stock awards: Equity classified 2,337 500 Liability classified 1,012 - Total $ 4,287 $ 898 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 10 — INCOME TAXES The Company’s provision for income taxes for the three and six months ended June 30, 2019 resulted in income tax expense of $7.8 million and $6.1 million, respectively. The effective tax rate as a percentage of pre-tax earnings for the three and six months ended June 30, 2019 was negative 108.5% and negative 84.8%, respectively. The negative effective tax rate for the three months ended June 30, 2019 was due to the establishment of a valuation allowance applied to the Company’s domestic net deferred tax assets of $3.3 million and the reversal of the benefit recognized for the three months ended March 31, 2019. The negative effective tax rate for the six months ended June 30, 2019 was due to establishment of the valuation allowance. The Company continues to maintain a taxable income position in its foreign jurisdictions. A valuation allowance is established when necessary to reduce the deferred tax assets to amounts expected to be realized. As of June 30, 2019, we evaluated our domestic net deferred tax assets and liabilities and determined that a valuation allowance was necessary. The determination was made primarily due to the existence of negative evidence of historical domestic net operating losses, possible limitations on the usability of certain net operating losses, and uncertainty regarding future domestic taxability due to the Company’s operations, and the reversal of taxable temporary differences. The establishment of this valuation allowance resulted in an adjustment of $7.4 million and $3.3 million for the three and six months ended June 30, 2019, respectively. The Company’s U.S. federal income tax returns for 2015 through 2017 are open to examination for federal tax purposes. In major foreign jurisdictions, the Company is generally no longer subject to income tax examinations for years before 2012. However, statutes in certain countries may be as long as ten years. The total outstanding balance for liabilities related to unrecognized tax benefits as of June 30, 2019 was $0.4 million, which would favorably impact the effective tax rate if recognized. There were no unrecognized tax benefits as of June 30, 2018. The increase in 2019 relates to tax audits in foreign jurisdictions, transfer pricing adjustments, and state tax expense. The Company does not anticipate that unrecognized tax benefits will significantly increase or decrease within the next twelve months. Significant judgment is required in determining the Company’s provision for income taxes, recording valuation allowances against deferred income tax assets and evaluating the Company’s uncertain tax positions. In evaluating the ability to recover its deferred income tax assets, in full or in part, the Company considers all available positive and negative evidence, including past operating results, forecast of future market growth, forecasted earnings, future taxable income and prudent and feasible tax planning strategies. Interim income taxes are based on an estimated annualized effective tax rate applied to the respective quarterly periods, adjusted for discrete tax items in the period in which they occur. Although the Company believes its tax estimates are reasonable, the Company can make no assurance that the final tax outcome of these matters will not be different from that which it has reflected in its historical income tax provisions and accruals. Such differences could have a material impact on the Company’s income tax provision and operating results in the period in which the Company makes such determination. At December 31, 2018, the Company has federal NOL carryforwards of approximately $36.3 million, of which $24.9 million does not expire and $11.4 million will begin to expire in 2023. Additionally, the Company has varying amounts of NOL carryforwards in the U.S. states in which it does business that start to expire in 2023. Federal and state laws impose substantial restrictions on the utilization of NOL and tax credit carryforwards in the event of an ownership change for income tax purposes, as defined in Section 382 of the Internal Revenue Code. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 11 — COMMITMENTS AND CONTINGENCIES Executive Deferred Compensation Plan Morinda’s Board of Directors implemented an unfunded executive deferred compensation plan in 2009 for certain executives of Morinda. All financial performance targets under the plan were achieved as of December 31, 2018, and a long-term liability of $4.1 million is included in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2019 and December 31, 2018. After the executives retire, the deferred compensation obligation is payable over a period up to 20 years. 401(k) Plan The Company has a defined contribution employee benefit plan under section 401(k) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan covers all eligible U.S. employees who are entitled to participate at the beginning of the first full quarter following commencement of employment. The Company matches contributions up to 3% of the participating employee’s compensation, and these matching contributions vest over four years with 0% vested through the end of the first year of service and 33% vesting upon completion of each of the next three years of service. Total contributions to the 401(k) Plan amounted to $0.1 million and $0.2 million for the three and six months ended June 30, 2019, respectively. The Company did not have a 401(k) Plan for the three and six months ended June 30, 2018. Foreign Benefit Plans Morinda has an unfunded retirement benefit plan for the Company’s Japanese branch that entitles substantially all employees in Japan, other than directors, to retirement payments. Morinda also has an unfunded retirement benefit plan in Indonesia that entitles all permanent employees to retirement payments. Upon termination of employment, the Morinda employees of the Japanese branch are generally entitled to retirement benefits determined by reference to basic rates of pay at the time of termination, years of service, and conditions under which the termination occurs. If the termination is involuntary or caused by retirement at the mandatory retirement age of 65, the employee is entitled to a greater payment than in the case of voluntary termination. Morinda employees in Indonesia whose service is terminated are generally entitled to retirement benefits determined by reference to basic rates of pay at the time of termination, years of service and conditions under which the termination occurs. The unfunded benefit obligation for these defined benefit pension plans was approximately $3.3 and $3.0 million as of June 30, 2019 and December 31, 2018, respectively. Of this amount, approximately $3.2 and $2.9 million is included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2019 and December 31, 2018, respectively. Contingencies The Company’s operations are subject to numerous governmental rules and regulations in each of the countries it does business. These rules and regulations include a complex array of tax and customs regulations as well as restrictions on product ingredients and claims, the commissions paid to the Company’s IPCs, labeling and packaging of products, conducting business as a direct-selling business, and other facets of manufacturing and selling products. In some instances, the rules and regulations may not be fully defined under the law or are otherwise unclear in their application. Additionally, laws and regulations can change from time to time, as can their interpretation by the courts, administrative bodies, and the tax and customs authorities in each country. The Company actively seeks to be in compliance, in all material respects, with the laws of each of the countries in which it does business and expects its IPCs to do the same. The Company’s operations are often subject to review by local country tax and customs authorities and inquiries from other governmental agencies. No assurance can be given that the Company’s compliance with governmental rules and regulations will not be challenged by the authorities or that such challenges will not result in assessments or required changes in the Company’s business that could have a material impact on its business, consolidated financial statements and cash flow. The Company has various non-income tax contingencies in several countries. Such exposure could be material depending upon the ultimate resolution of each situation. As of June 30, 2019 and December 31, 2018, the Company has recorded a current liability under Accounting Standards Codification (ASC) 450, Contingencies From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. Guarantee Deposits Morinda has deposits in Korea for collateral on IPC returns dictated by law, and collateral to credit card companies for guarantee of IPC payments. As of June 30, 2019 and December 31, 2018, guarantee deposits of approximately $0.8 million are included in other long-term assets in the accompanying unaudited condensed consolidated balance sheets. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 12 — RELATED PARTY TRANSACTIONS For the six months ended June 30, 2019 and 2018, the Company granted restricted stock awards to five non-employee members of the Board of Directors for an aggregate of 90,910 and 153,000 shares of Common Stock. The fair value of these shares was based on the closing price of the Company’s Common Stock on the grant date and amounted to an aggregate of $0.5 million and $0.3 million for the six months ended June 30, 2019 and 2018, respectively. Compensation expense is recognized over the 12-month vesting period after the respective grant dates for these restricted stock awards. Please refer to Note 9 for additional information about restricted stock awards. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | OTE 13 —NET LOSS PER SHARE Net loss per share is computed by dividing loss attributable to common stockholders by the weighted average number of common shares outstanding during the year. The calculation of diluted net loss per share includes dilutive stock options, unvested restricted stock awards, and other Common Stock equivalents computed using the treasury stock method, in order to compute the weighted average number of shares outstanding. For the three and six months ended June 30, 2019 and 2018, basic and diluted net loss per share were the same since all Common Stock equivalents were anti-dilutive. As of June 30, 2019 and 2018, the following potential Common Stock equivalents were excluded from the computation of diluted net loss per share since the impact of inclusion was anti-dilutive (in thousands): 2019 2018 Stock options 2,560 1,257 Restricted stock awards under LTI Plan: Unvested shares of Common Stock issued 163 1,027 Unissued and unvested awards to Morinda employees 1,226 - Non-plan restricted stock awards - 982 Warrant issued for license agreement 200 - Total 4,149 3,266 |
Financial Instruments and Signi
Financial Instruments and Significant Concentrations | 6 Months Ended |
Jun. 30, 2019 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments and Significant Concentrations | NOTE 14 — FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS Fair Value Measurements Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair measurement: Level 1—Quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date Level 2—Other than quoted prices included in Level 1 that are observable for the asset and liability, either directly or indirectly through market collaboration, for substantially the full term of the asset or liability Level 3—Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any market activity for the asset or liability at measurement date The fair value of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities, payables to former Morinda shareholders, and notes payable approximate their carrying values as of June 30, 2019 and December 31, 2018. The contingent consideration obligations incurred in the business combinations with Marley and Morinda are recorded at estimated fair value as of June 30, 2019 and December 31, 2018. In addition, the net assets acquired in the business combinations discussed in Note 3 were generally recorded at fair market value on the date of closing. The Company did not have any other nonrecurring assets and liabilities measured at fair value as of June 30, 2019 and December 31, 2018. The Company’s interest rate swap, earnout obligations under business combinations, and embedded derivative liability are the only liabilities that have been carried at fair value on a recurring basis. The Company’s interest rate swap was recorded at fair market value and was classified within Level 2 of the fair value hierarchy. The Company’s earnout obligations under business combinations are recorded at fair market value and have been classified within Level 3 of the fair value hierarchy. The Company’s embedded derivative liability was recorded at fair market value and was classified within Level 3 of the fair value hierarchy. Details of the business combination earnout obligations, including valuation methodology and key assumptions and estimates used, are disclosed in Note 3. Details of the interest rate swap and the embedded derivative liabilities, including valuation methodology and key assumptions and estimates used, are disclosed in Note 7. The Company’s policy is to recognize asset or liability transfers among Level 1, Level 2 and Level 3 as of the actual date of the events or change in circumstances that caused the transfer. During the six months ended June 30, 2019 and 2018, the Company had no transfers of its assets or liabilities between levels of the fair value hierarchy. Significant Concentrations For the three and six months ended June 30, 2019, no single customer comprised more than 10% of the Company’s consolidated net revenue. For each of the three and six months ended June 30, 2018, one customer comprised approximately 11% of the Company’s consolidated net revenue. A substantial portion of the Morinda segment is conducted in foreign markets, exposing the Company to the risks of trade or foreign exchange restrictions, increased tariffs, foreign currency fluctuations and similar risks associated with foreign operations. Approximately 70% of the Company’s consolidated net revenue and 90% of Morinda’s net revenue for 2019 is expected to be generated outside the United States, primarily in the Asia Pacific market. Morinda’s Tahitian Noni® Juice, MAX and other noni-based beverage products are expected to comprise over 85% of Morinda’s net revenue for 2019. However, if consumer demand for these products decreases significantly or if the Company ceases to offer these products without a suitable replacement, the Company’s consolidated financial condition and operating results would be adversely affected. The Company purchases fruit and other Noni-based raw materials from French Polynesia, but these purchases of materials are from a wide variety of individual suppliers with no single supplier accounting for more than 10% of its raw material purchases for the six months ended June 30, 2019. However, as the majority of the raw materials are consolidated and processed at the Company’s plant in Tahiti, the Company could be negatively affected by certain governmental actions or natural disasters if they occurred in that region of the world. Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. The Company maintains its cash, cash equivalents and restricted cash at high-quality financial institutions. Cash deposits, including those held in foreign branches of global banks often exceed the amount of insurance, if any, provided on such deposits. As of June 30, 2019, the Company had cash and cash equivalents with four financial institution in the United States with balances of $22.9 million, $8.4 million, $1.8 million and $1.0 million; three financial institutions in China with balances of $10.7 million, $4.5 million and $1.0 million; and two financial institutions in Japan with balances of $22.0 million and $6.2 million. As of December 31, 2018, the Company had cash and cash equivalents with a single financial institution in the United States with a balance of $6.5 million, and two financial institutions in China with balances of $14.5 million and $8.0 million. The Company has never experienced any losses related to its investments in cash, cash equivalents and restricted cash. Generally, credit risk with respect to accounts receivable is diversified due to the number of entities comprising the Company’s customer base and their dispersion across different geographies and industries. The Company performs ongoing credit evaluations on certain customers and generally does not require collateral on accounts receivable. The Company maintains reserves for potential bad debts and historically such losses have been insignificant. As of June 30, 2019, the Company did not have any customers with an accounts receivable balance in excess of 10% of consolidated accounts receivable. As of June 30, 2018, the Company had two customers that comprised 11% and 10% of accounts receivable, net. |
Segments and Geographic Concent
Segments and Geographic Concentrations | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segments and Geographic Concentrations | NOTE 15 — SEGMENTS AND GEOGRAPHIC CONCENTRATIONS Reportable Segments The Company follows segment reporting in accordance with ASC Topic 280, Segment Reporting The New Age segment distributes beverages to retail customers throughout Colorado and surrounding states, and sells beverages to wholesale distributors, broad-liners, key account owned warehouses and international accounts using several distribution channels. Morinda is a healthy lifestyles and beverage company with operations in more than 60 countries around the world, and manufacturing operations in Tahiti, Germany, Japan, the United States, and China. Morinda is primarily a direct-to-consumer and e-commerce business with over 70% of its business generated in the key Asia Pacific markets of Japan, China, Korea, Taiwan, and Indonesia. Net revenue by reporting segment for the three and six months ended June 30, 2019 and 2018, is as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Morinda $ 52,060 $ - $ 100,282 $ - New Age 14,288 13,363 24,373 24,921 Total revenue $ 66,348 $ 13,363 $ 124,655 $ 24,921 Gross profit by reporting segment for the three and six months ended June 30, 2019 and 2018, is as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Morinda $ 40,469 $ - $ 78,174 $ - New Age 1,180 1,760 2,051 4,376 Total gross profit $ 41,649 $ 1,760 $ 80,225 $ 4,376 Assets by reporting segment as of June 30, 2019 and December 31, 2018, are as follows (in thousands): 2019 2018 Morinda $ 216,464 $ 206,222 New Age 115,237 80,710 Total assets $ 331,701 $ 286,932 Capital expenditures for property and equipment and identifiable intangible assets incurred by reporting segment for the three and six months ended June 30, 2019 and 2018, are as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Morinda $ 461 $ - $ 577 $ - New Age 576 - 1,709 (1) 64 Total capital expenditures $ 1,037 $ - $ 2,286 $ 64 (1) Consists of additions to property and equipment of $0.9 million and the fair value of $0.8 million for a license agreement obtained through the issuance of a warrant as discussed in Note 5. Geographic Concentrations The following table presents net revenue by geographic region for the three and six months ended June 30, 2019 and 2018 (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 United States of America $ 16,945 $ 13,363 $ 33,400 $ 24,921 International 49,403 - 91,255 - Total revenue $ 66,348 $ 13,363 $ 124,655 $ 24,921 As of June 30, 2019, the net carrying value of the Company’s property and equipment located outside of the United States amounted to approximately $22.0 million. As of December 31, 2018, the net carrying value of the Company’s property and equipment located outside of the United States amounted to approximately $50.6 million, including approximately $30.7 million located in Japan. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 16 — SUBSEQUENT EVENTS BWR Merger Agreement As discussed in Note 3, on May 30, 2019, the Company entered into the BWR Merger Agreement. On July 10, 2019, the closing occurred resulting in completion of the transactions contemplated by the BWR Merger Agreement. Pursuant to the BWR Merger Agreement, the total consideration amounted to approximately $5.9 million consisting of (i) cash of $0.5 million to the Seller; (ii) repayment of $2.5 million of the outstanding indebtedness of BWR, and (iii) issuance of up to 700,000 shares of the Company’s Common Stock with an estimated fair value on the closing date of approximately $2.9 million. The BWR Merger Agreement provided that if BWR’s working capital set forth on the closing date balance sheet is negative, then the 700,000 shares issuable to the Seller will be reduced to account for the deficiency. The shares of Common Stock, as adjusted for any working capital deficiency, are expected to be issued in the first half of August 2019. The BWR Merger Agreement will be accounted for in the third quarter of 2019 and the Company will begin consolidating the financial results of BWR commencing on the closing date. Interest Rate Agreement The Company entered into an ISDA 2002 Master Agreement (the “Interest Rate Agreement”) dated July 31, 2019, including all Schedules and Annexes thereto, with EWB. The confirmation under the Interest Rate Agreement, provides for a total notional amount of $10.0 million at a fixed interest rate of approximately 5.4% through May 1, 2023, in exchange for a floating rate indexed to the prime rate plus 0.5%. The Interest Rate Agreement was entered into pursuant to the terms of the Credit Facility with EWB discussed in Note 7, which required the entry into interest rate swap agreements with an aggregate face amount equal to 50% of the Term Loan principal amount. In connection with the Interest Rate Agreement, certain of the Company’s direct and indirect subsidiaries (the “Subsidiaries”) entered into an Unlimited Continuing Guaranty (Swap Transactions), as of July 31, 2019 (the “Guaranty”) for the benefit of EWB pursuant to which each of the Subsidiaries agreed to guaranty all Swap Obligations, as defined in the Guaranty, including all debt obligations and liabilities arising under the Interest Rate Agreement. First Amendment, Waiver and Consent to Credit Facility On August 5, 2019, the Company entered into a First Amendment, Waiver and Consent to the Credit Facility, effective as of July 11, 2019 (the “Amendment”), pursuant to which EWB waived any non-compliance by the Company with certain covenants in the Credit Facility that may have occurred or would otherwise arise as a result of the BWR Merger Agreement. Pursuant to the Amendment, BWR entered into a Supplement to Guarantee and Pledge and an Intellectual Property Security Agreement. The Amendment also includes certain post-closing obligations to be completed by the Company. Payment of Current Liabilities In July 2019, the Company paid $8.0 million of the business combination liabilities discussed in Note 3, and $9.7 million of borrowings outstanding under the EWB Revolver discussed in Note 7. Offering Agreement In connection with the ATM Offering Agreement discussed in Note 8, for the period from July 1, 2019 through August 8, 2019, the Company sold an aggregate of approximately 542,000 shares of Common Stock for net proceeds of approximately $2.1 million. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Significant Accounting Policies Policies Abstract | |
Use of Estimates | Use of Estimates The preparation of financial statements and related disclosures in conformity with GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company’s significant accounting estimates include, but are not necessarily limited to, estimated useful lives for identifiable intangible assets and property and equipment, impairment of goodwill and long-lived assets, valuation assumptions for stock options, warrants and equity instruments issued for goods or services, the allowance for doubtful accounts receivable, inventory obsolescence, the allowance for sales returns and chargebacks, deferred income taxes and the related valuation allowances, and the evaluation and measurement of contingencies. To the extent there are material differences between the Company’s estimates and the actual results, the Company’s future consolidated results of operation will be affected. |
Risks and Uncertainties | Risks and Uncertainties Inherent in the Company’s business are various risks and uncertainties, including its limited operating history in a rapidly changing industry. These risks include the Company’s ability to manage its rapid growth and its ability to attract new customers and expand sales to existing customers, risks related to litigation, as well as other risks and uncertainties. In the event that the Company does not successfully execute its business plan, certain assets may not be recoverable, certain liabilities may not be paid and investments in its capital stock may not be recoverable. The Company’s success depends upon the acceptance of its expertise in creating products and brands which consumers like and want to buy, development of sales and distribution channels, and its ability to generate significant net revenue and cash flows from the use of this expertise. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Standards. In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, “ Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Standards Required to be Adopted in Future Years. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Codification Improvements to Topic 326, Financial Instruments – Credit Losses. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Combination Tables Abstract | |
Summary of Earnout Obligations | Presented below is a summary of the earnout obligations related to the Morinda and Marley business combinations and payables to the former Morinda stockholders as of June 30, 2019 and December 31, 2018 (in thousands): 2019 2018 Marley earnout obligation $ 900 (1) $ 900 (1) Payables to former Morinda stockholders, net of imputed interest discount: EWC payable in April 2019 - (2)(5) 986 (2)(5) EWC payable in July 2019 7,962 (2)(5) 7,732 (2)(5) EWC payable in July 2020 5,130 (2)(5) 4,976 (2)(5) Earnout under Series D preferred stock 6,469 (3) 13,134 (3) Contingent on financing event - (4)(5) 24,402 (4)(5) Total 20,461 52,130 Less current portion 14,431 8,718 Long-term portion $ 6,030 $ 43,412 (1) The Company is obligated to make a one-time earnout payment of $1.25 million over a period of two years beginning at such time that revenue for the Marley reporting unit is equal to or greater than $15.0 million during any trailing twelve calendar month period after the closing. The Marley business combination closed on June 13, 2017, and revenue for the Marley brand is not expected to exceed the $15.0 million earnout threshold during the next 12 months. Payment for 50% of the $1.25 million is due within 15 days after the month in which the earnout payment is triggered, 25% is payable one year after the first payment, and the remaining 25% is payable two years after the first payment. (2) Pursuant to a separate agreement between the parties, EWC is payable to Morinda’s stockholders for $1.0 million in April 2019, $8.0 million in July 2019, and the remainder of $5.5 million is payable in July 2020. (3) The fair value of earnout consideration under the Series D Preferred Stock is based on the probability of achieving the Milestone Dividend, whereby the maximum Milestone Dividend is $15.0 million if the Adjusted EBITDA of Morinda is $20.0 million or more for the year ending December 31, 2019. The fair value of the earnout was $13.1 million as of December 31, 2018 and $6.5 million as of June 30, 2019. As of June 30, 2019, fair value of the earnout was determined using an option pricing model and will continue to be adjusted as additional information becomes available about the progress toward achievement of the Milestone Dividend earnout. The earnout is classified within Level 3 of the fair value hierarchy. Valuation of the earnout was performed by an independent valuation specialist at the original issuance date and as of June 30, 2019. The valuation methodology was performed through an option pricing model based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.3%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 19.2%, and an estimated credit spread of 6.0%. Key Level 3 assumptions inherent in the valuation methodology as of December 31, 2018 included an option pricing model based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.6%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 18.9%, and an estimated credit spread of 5.7%. (4) Pursuant to a separate agreement between the parties prior to the consummation of the Merger, Morinda agreed to pay its former stockholders up to $25.0 million from the net proceeds of a sale leaseback to be completed after the Closing Date. As discussed in Note 6, the closing for this transaction occurred on March 22, 2019. Since this payment was to be made from the proceeds of a long-term financing, the net carrying value was classified in long-term liabilities in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2018. This obligation was paid during the three months ended June 30, 2019. (5) Interest was imputed on these obligations based on a credit and tax adjusted interest rate of 6.1% for the period from the Closing Date until the respective contractual or estimated payment dates. Accretion of discount related to these obligations amounted to an aggregate of $0.4 million and $1.0 million for the three and six months ended June 30, 2019, respectively, which is included in interest expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. |
Schedule of Pro Forma Disclosure | The following table summarizes on an unaudited pro forma basis the Company’s results of operations for the three and six months ended June 30, 2018 (in thousands, except per share amounts): Three Six Months Months Net revenue $ 71,647 $ 138,428 Net loss $ (2,013 ) $ (3,657 ) Net loss per share- basic and diluted $ (0.05 ) $ (0.09 ) Weighted average number of shares of common stock outstanding- basic and diluted 41,141 39,743 |
Other Information (Tables)
Other Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Other Information Tables Abstract | |
Schedule of Inventories | Inventories consist of the following as of June 30, 2019 and December 31, 2018 (in thousands): 2019 2018 Raw materials $ 12,183 $ 12,538 Work-in-process 11,222 907 Finished goods, net 13,538 23,703 Total inventories $ 36,943 $ 37,148 |
Schedule of Prepaid Expenses and Other Current Assets | As of June 30, 2019 and December 31, 2018, prepaid expenses and other current assets consist of the following (in thousands): 2019 2018 Prepaid expenses and deposits $ 9,219 $ 4,982 Prepaid stock-based compensation 380 347 Supplier and other receivables 620 1,144 Total $ 10,219 $ 6,473 |
Schedule of Property and Equipment | As of June 30, 2019 and December 31, 2018, property and equipment consisted of the following (in thousands): 2019 2018 Land $ 37 $ 25,726 Buildings and improvements 16,888 19,822 Leasehold improvements 3,528 4,398 Machinery and equipment 5,618 5,208 Office furniture and equipment 2,414 2,087 Transportation equipment 1,837 1,727 Total property and equipment 30,322 58,968 Less accumulated depreciation (2,846 ) (1,687 ) Property and equipment, net $ 27,476 $ 57,281 |
Schedule of Restricted Cash and Other | As of June 30, 2019 and December 31, 2018, restricted cash and other long-term assets consist of the following (in thousands): 2019 2018 Restricted cash $ 3,776 (1) $ 3,339 (1) Debt issuance costs, net 348 548 Prepaid stock-based compensation - 210 Loan receivable from BWR 1,000 - Deposits and other 4,268 2,838 Total $ 9,392 $ 6,935 (1) Restricted cash primarily represents long-term cash deposits held in a bank for a foreign governmental agency. This deposit is required to maintain the Company’s direct selling license to do business in China. |
Schedule of Other Accrued Liabilities | As of June 30, 2019 and December 31, 2018, accrued liabilities consist of the following (in thousands): 2019 2018 Accrued commissions $ 8,532 $ 9,731 Accrued compensation and benefits 5,744 4,715 Accrued marketing events 5,008 (1) 3,757 (1) Deferred revenue 5,266 2,701 Income taxes payable 15,842 (2) 1,670 Current portion of right of use liabilities: Lease liability 5,117 4,798 Deferred lease incentive obligation 882 - Restricted stock obligations 1,012 (3) - Embedded derivative liability - 470 Other accrued liabilities 6,201 6,177 Total accrued liabilities $ 53,604 $ 34,019 (1) Represents accruals for incentive trips associated with Morinda’s direct sales marketing program, which rewards certain IPCs with paid attendance at future conventions, meetings, and retreats. Expenses associated with incentive trips are accrued over qualification periods as they are earned. Incentive trip accruals are based on historical experience in relation to current sales trends in order to determine the related contractual obligations. (2) Includes approximately $12.1 million of income taxes payable in Japan primarily related to the gain on sale of the land and building in Tokyo as discussed further in Note 6. (3) Represents the fair value of restricted stock awards required to be settled in cash as discussed in Note 9. |
Goodwill and Identifiable Int_2
Goodwill and Identifiable Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Goodwill | Goodwill consists of the following by reporting unit as of June 30, 2019 and December 31, 2018 (in thousands): Reporting Unit Morinda $ 10,284 Marley 9,418 Maverick 5,149 Xing 4,506 PMC 1,768 B&R 389 Total Goodwill $ 31,514 |
Schedule of Identifiable Intangible Assets | Identifiable intangible assets consist of the following as of June 30, 2019 and December 31, 2018 (in thousands): June 30, 2019 December 31, 2018 Accumulated Net Book Accumulated Net Book Identifiable Intangible Asset Cost Amortization Value Cost Amortization Value License agreements China direct selling license $ 20,420 $ 721 $ 19,699 $ 20,420 $ 40 $ 20,380 Other 6,827 560 6,267 5,989 318 5,671 Manufacturing processes and recipes 11,610 770 10,840 11,610 380 11,230 Trade names 12,301 1,012 11,289 12,301 584 11,717 IPC distributor sales force 9,760 517 9,243 9,760 29 9,731 Customer relationships 6,444 1,404 5,040 6,444 1,194 5,250 Patents 4,100 569 3,531 4,100 433 3,667 Former Morinda shareholder non-compete agreements 186 33 153 186 2 184 Total identifiable intangible assets $ 71,648 $ 5,586 $ 66,062 $ 70,810 $ 2,980 $ 67,830 |
Schedule of Amortization of Identifiable Intangible Assets | Estimated future amortization expense for the Company’s identifiable intangible assets is set forth below (in thousands): 12-Months ending June 30, 2020 $ 4,953 2021 4,953 2022 4,920 2023 4,891 2024 4,812 Thereafter 41,533 Total $ 66,062 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Summary of Selling Price and Resulting Gain On Sale | Presented below is a summary of the selling price and resulting gain on sale calculation (in thousands): Gross selling price $ 57,129 Less commissions and other expenses (1,941 ) Less repair obligations (1,675 ) Net selling price 53,513 Cost of land and building sold (29,431 ) Total gain on sale 24,082 Portion of gain related to above-market rent concession (17,640 ) Recognized gain on sale $ 6,442 |
Summary of Carrying Value of Operating Lease Rou Assets | As of June 30, 2019 and December 31, 2018, the carrying value of ROU lease assets, ROU lease obligations, and the deferred lease incentive obligation are as follows (in thousands): June 30, 2019 December 31, 2018 Right-of-Use Assets: Cost basis, net of impairment $ 37,563 $ 19,221 Accumulated amortization (3,719 ) (732 ) Net $ 33,844 $ 18,489 Right-of-Use Liabilities: Current $ 5,117 $ 4,798 Long-term 30,557 13,686 Total $ 35,674 $ 18,484 Deferred Lease Incentive Obligation: Current $ 882 $ - Long-term 16,538 - Total $ 17,420 $ - |
Summary of Future Minimum Lease Payments | Future minimum lease payments and amortization of the related lease incentive obligation related to non-cancellable ROU operating lease agreements are as follows (in thousands): 12-Months Ending June 30, 2020 $ 9,051 2021 7,248 2022 6,367 2023 6,120 2024 5,730 Thereafter 44,421 Total minimum lease payments 78,937 Less imputed interest (43,263 ) Present value of minimum lease payments $ 35,674 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Debt | As of June 30, 2019 and December 31, 2018, debt consists of the following (in thousands): 2019 2018 EWB Credit Facility: Term loan, net of discount of $516 $ 14,484 $ - Revolver 9,700 - Installment notes payable 32 (1) 66 (1) Siena Revolver - 2,000 Mortgage payable to a foreign bank - 2,628 (2) Total 24,216 4,694 Less current maturities (10,852 ) (3,369 ) Long-term debt, less current maturities $ 13,364 $ 1,325 (1) Consists of various installment notes payable that are collateralized by equipment and that bear interest at 12.4% to 22.1%. (2) This mortgage note payable was collateralized by land and a building in Tokyo, Japan. Quarterly principal payments of $0.3 million plus interest were payable in Japanese Yen at TIBOR plus 0.7% (0.76% as of December 31, 2018) through the maturity date in December 2020. This debt was repaid, and the interest rate swap agreement discussed below was terminated upon sale of the property on March 22, 2019 as discussed in Note 6. |
Summary Future Debt Maturities | As of June 30, 2019, the scheduled future maturities of long-term debt, exclusive of unaccreted discount of $0.5 million related to the EWB Term Loan, are as follows (in thousands): 12-Months Ending June 30, 2020 $ 10,852 2021 1,504 2022 1,501 2023 10,875 Total $ 24,732 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Schedule of Changes in Stockholders' Equity | Changes in stockholders’ equity for the three months ended June 30, 2019 are as follows (in thousands): Accumulated Additional Other Common Stock Paid-in Comprehensive Accumulated Shares Amount Capital Income Deficit Total Balances, March 31, 2019 75,393 $ 75 $ 179,592 $ 1,053 $ (24,252 ) $ 156,468 Issuance of Common Stock for: ATM public offering, net of offering costs 2,225 2 11,139 - - 11,141 Employee services 6 - 31 - - 31 Stock-based compensation expense - - 434 - - 434 Fair value of warrant issued for license agreement - - 838 - - 838 Net change in other comprehensive income - - - 569 - 569 Net loss - - - - (11,681 ) (11,681 ) Balances, June 30, 2019 77,624 $ 77 $ 192,034 $ 1,622 $ (35,933 ) $ 157,800 Changes in stockholders’ equity for the three months ended June 30, 2018 are as follows (in thousands): Additional Common Stock Paid-in Accumulated Shares Amount Capital Deficit Total Balances, March 31, 2018 36,649 $ 36 $ 63,620 $ (13,152 ) $ 50,504 Issuance of Common Stock for: Conversion of Series B promissory note, including accrued interest of approximately $61 461 1 871 - 872 Grant of restricted stock awards 31 - 65 - 65 Public offering, net of offering costs 2,560 3 3,290 - 3,293 Debt discount 225 - 470 - 470 Stock-based compensation related to stock options - - 160 - 160 Net loss - - - (3,367 ) (3,367 ) Balances, June 30, 2018 39,926 $ 40 $ 68,476 $ (16,519 ) $ 51,997 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The following table sets forth the summary of stock option activity under the LTI Plan for the six months ended June 30, 2019 (shares in thousands): Shares Price (1) Term (2) Outstanding, beginning of period 2,786 $ 2.84 9.0 Grants to: Employees 36 $ 5.57 Non-employees 25 $ 5.30 Forfeited (87 ) $ 3.70 Exercised (200 ) $ 2.09 Outstanding, end of period 2,560 (3) $ 2.90 8.5 Vested, end of period 740 (4) $ 1.90 7.8 (1) Represents the weighted average exercise price. (2) Represents the weighted average remaining contractual term until the stock options expire. (3) As of June 30, 2019 and December 31, 2018, the aggregate intrinsic value of stock options outstanding was $4.5 million and $6.6 million, respectively. (4) As of June 30, 2019 and December 31, 2018, the aggregate intrinsic value of vested stock options was $2.0 million and $3.1 million, respectively. |
Summary of Stock Options Weighted-Average Assumptions | The fair value of stock options granted under the LTI Plan was estimated on the date of grant using the BSM option-pricing model, with the following weighted-average assumptions for the six months ended June 30, 2019: Grant date fair value of common stock (exercise price) $ 5.41 Expected life (in years) 6.5 Volatility 113 % Dividend yield 0 % Risk-free interest rate 2.4 % |
Schedule of Restricted Stock Award Activity | The following table sets forth a summary of restricted stock award activity for the six months ended June 30, 2019 (in thousands): LTI Plan Equity Awards LTI Plan Liability Awards Non-Plan Awards Number of Unvested Number of Unvested Number of Unvested Shares Compensation Shares Compensation Shares Compensation Outstanding, beginning of period 1,151 $ 3,988 474 $ 2,490 629 $ 64 Restricted shares issued 91 (1) 500 (1) - - - - Other 35 76 - - - - Forfeited (2 ) (10 ) (1 ) - - - Fair value adjustment - - - (284 ) (4) - - Vested shares and expense (359 ) (2,273 ) - (1,012 ) (629 ) (5) (64 ) (5) Outstanding, end of period 916 (2) $ 2,281 (2) 473 (3) $ 1,194 (3) - $ - Intrinsic value, end of period $ 4,265 (6) $ 2,206 (6) $ - Weighted average remaining term for recognition of unvested expense 0.8 0.7 - (1) The weighted average fair value was $5.50 per share based on the closing price of the Company’s Common Stock on the grant date. (2) As of June 30, 2019, unvested shares of restricted stock consist of approximately 0.7 million shares that will be issued upon vesting and 0.2 million shares that have been issued subject to vesting conditions. For unvested shares that have been issued, approximately $0.4 million of unvested compensation is included in prepaid expenses as of June 30, 2019. Outstanding unvested shares include awards for 216,000 shares that vest if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. The Company assesses the probability of achievement of such performance conditions in the recognition of compensation expense related to these awards. (3) Due to Morinda’s foreign operations, these awards will be settled in cash upon vesting since regulatory requirements prohibit settlement in shares. These awards vest between one and three years after the grant date and are classified as liabilities in the Company’s consolidated balance sheets based on the fair value of the Company’s Common Stock at the end of each reporting period. The liability is being recorded with a corresponding charge to stock-based compensation expense over the vesting period. As of June 30, 2019, approximately $1.2 million is included in current liabilities. (4) Change in unvested compensation resulted from a decrease in the closing price of the Company’s Common Stock for the six months ended June 30, 2019. (5) Consists of restricted stock issued to the Company’s Chief Executive Officer in 2016 that vested over three years. The remaining shares became fully vested in March and April 2019 and the remaining compensation charge was recorded. (6) The intrinsic value was based on the closing price of the Company’s common stock of $4.66 per share on the last trading day for June 2019. |
Schedule of Stock-based Compensation Expense | Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. The table below summarizes stock-based compensation expense related to stock options and restricted stock awards for the six months ended June 30, 2019 and 2018 (in thousands): 2019 2018 Stock options awards: Employees $ 933 $ 398 Non-employees 5 - Restricted stock awards: Equity classified 2,337 500 Liability classified 1,012 - Total $ 4,287 $ 898 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Loss Per Share | As of June 30, 2019 and 2018, the following potential Common Stock equivalents were excluded from the computation of diluted net loss per share since the impact of inclusion was anti-dilutive (in thousands): 2019 2018 Stock options 2,560 1,257 Restricted stock awards under LTI Plan: Unvested shares of Common Stock issued 163 1,027 Unissued and unvested awards to Morinda employees 1,226 - Non-plan restricted stock awards - 982 Warrant issued for license agreement 200 - Total 4,149 3,266 |
Segments and Geographic Informa
Segments and Geographic Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Summary of Segment Reporting | Net revenue by reporting segment for the three and six months ended June 30, 2019 and 2018, is as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Morinda $ 52,060 $ - $ 100,282 $ - New Age 14,288 13,363 24,373 24,921 Total revenue $ 66,348 $ 13,363 $ 124,655 $ 24,921 Gross profit by reporting segment for the three and six months ended June 30, 2019 and 2018, is as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Morinda $ 40,469 $ - $ 78,174 $ - New Age 1,180 1,760 2,051 4,376 Total gross profit $ 41,649 $ 1,760 $ 80,225 $ 4,376 Assets by reporting segment as of June 30, 2019 and December 31, 2018, are as follows (in thousands): 2019 2018 Morinda $ 216,464 $ 206,222 New Age 115,237 80,710 Total assets $ 331,701 $ 286,932 Capital expenditures for property and equipment and identifiable intangible assets incurred by reporting segment for the three and six months ended June 30, 2019 and 2018, are as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Morinda $ 461 $ - $ 577 $ - New Age 576 - 1,709 (1) 64 Total capital expenditures $ 1,037 $ - $ 2,286 $ 64 (1) Consists of additions to property and equipment of $0.9 million and the fair value of $0.8 million for a license agreement obtained through the issuance of a warrant as discussed in Note 5. |
Schedule of Net revenue by geographic region | The following table presents net revenue by geographic region for the three and six months ended June 30, 2019 and 2018 (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 United States of America $ 16,945 $ 13,363 $ 33,400 $ 24,921 International 49,403 - 91,255 - Total revenue $ 66,348 $ 13,363 $ 124,655 $ 24,921 |
Nature of Operations and Basi_2
Nature of Operations and Basis of Presentation (Details Narrative) | 6 Months Ended |
Jun. 30, 2019Number | |
Accounting Policies [Abstract] | |
Number of segments | 2 |
Business Combination - (Details
Business Combination - (Details Narrative) - USD ($) | Dec. 31, 2019 | May 30, 2019 | Dec. 02, 2018 | Dec. 31, 2018 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Number of shares stock | $ 3,293,000 | $ 3,293,000 | |||||
Estimated fair value of dividend earnout amount | $ 13,100,000 | $ 6,500,000 | |||||
Fair value of unrealized gain | 6,700,000 | ||||||
Sale leaseback transaction amount | $ 25,000,000 | ||||||
Milestone Dividend [Member] | Forecast [Member] | |||||||
Dividend description | The Milestone Dividend is payable on April 15, 2020. If the Adjusted EBITDA of Morinda is less than $20.0 million, the Milestone Dividend shall be reduced by applying a five-times multiple to the difference between the Adjusted EBITDA target of $20.0 million and actual Adjusted EBITDA for the year ending December 31, 2019. Accordingly, no Milestone Dividend is payable if actual Adjusted EBITDA is $17.0 million or lower. | ||||||
Maximum [Member] | Milestone Dividend [Member] | Forecast [Member] | |||||||
Dividend amount | $ 15,000,000 | ||||||
Minimum [Member] | Milestone Dividend [Member] | Forecast [Member] | |||||||
Adjusted EBITDA dividend amount | $ 20,000,000 | ||||||
BWR Merger Agreement [Member] | |||||||
Total consideration amount | $ 5,900,000 | ||||||
Morinda Merger Agreement [Member] | |||||||
Cash | $ 75,000,000 | ||||||
Stock issued during the period | 2,016,480 | ||||||
Number of shares stock | $ 11,000,000 | ||||||
Stock rate percentage | 1.50% | ||||||
Agreed to distribute the stockholders equity | 39,600,000 | ||||||
Sale leaseback transaction amount | $ 25,000,000 | ||||||
Distributions payable description | (i) up to $25.0 million for which the timing and amount was subject to completion of the Sale Leaseback transaction discussed in Note 6, and (ii) approximately $14.6 million based on the calculation of excess working capital ("EWC") as of the Closing Date. EWC is the amount by which Morinda's actual working capital (as defined in the Merger Agreement) on the Closing Date exceeded $25.0 million. The Closing Date balance sheet of Morinda indicated that EWC was approximately $14.6 million as of the Closing Date. | ||||||
Morinda Merger Agreement [Member] | Series D Preferred Stock [Member] | |||||||
Stock issued during the period | 43,804 | ||||||
Morinda Merger Agreement [Member] | Series D Preferred Stock [Member] | Maximum [Member] | |||||||
Payment of potential amount | $ 15,000,000 | ||||||
Morinda Merger Agreement [Member] | BWR Acquisition Corp [Member] | |||||||
Loan to related party amount | $ 1,000,000 |
Business Combination - Summary
Business Combination - Summary of Earnout Obligations (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | |
Marley earnout obligation | [1] | $ 900 | $ 900 |
Total | 20,461 | 52,130 | |
Less current portion | 14,431 | 8,718 | |
Long-term portion | 6,030 | 43,412 | |
EWC payable in April 2019 [Member] | |||
Total | [2],[3] | 986 | |
EWC payable in July 2019 [Member] | |||
Total | [2],[3] | 7,962 | 7,732 |
EWC payable in July 2020 [Member] | |||
Total | [2],[3] | 5,130 | 4,976 |
Earnout under Series D Preferred Stock [Member] | |||
Total | [4] | 6,469 | 13,134 |
Contingent on financing event [Member] | |||
Total | [2],[5] | $ 24,402 | |
[1] | The Company is obligated to make a one-time earnout payment of $1.25 million over a period of two years beginning at such time that revenue for the Marley reporting unit is equal to or greater than $15.0 million during any trailing twelve calendar month period after the closing. Revenue for the Marley brand is not expected to exceed the $15.0 million earnout threshold during the next 12 months. The fair value of the earnout was valued using the weighted average return on assets whereby the fair value increased from $0.8 million to $0.9 million during the first quarter of 2018. The increase in the fair value of the earnout of $0.1 million was recognized as an expense in the accompanying unaudited condensed consolidated statement of operations and comprehensive loss for the six months ended June 30, 2018. | ||
[2] | Interest was imputed on these obligations based on a credit and tax adjusted interest rate of 6.1% for the period from the Closing Date until the respective contractual or estimated payment dates. Accretion of discount related to these obligations amounted to an aggregate of $0.4 million and $1.0 million for the three and six months ended June 30, 2019, respectively, which is included in interest expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. | ||
[3] | Pursuant to a separate agreement between the parties, EWC is payable to Morinda's stockholders for $1.0 million in April 2019, $8.0 million in July 2019, and the remainder of $5.5 million is payable in July 2020. | ||
[4] | The fair value of earnout consideration under the Series D Preferred Stock is based on the probability of achieving the Milestone Dividend, whereby the maximum Milestone Dividend is $15.0 million if the Adjusted EBITDA of Morinda is $20.0 million or more for the year ending December 31, 2019. The fair value of the earnout was $13.1 million as of December 31, 2018 and $6.5 million as of June 30, 2019. As of June 30, 2019, fair value of the earnout was determined using an option pricing model and will continue to be adjusted as additional information becomes available about the progress toward achievement of the Milestone Dividend earnout. The earnout is classified within Level 3 of the fair value hierarchy. Valuation of the earnout was performed by an independent valuation specialist at the original issuance date and as of June 30, 2019. The valuation methodology was performed through an option pricing model based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.3%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 19.2%, and an estimated credit spread of 6.0%. Key Level 3 assumptions inherent in the valuation methodology as of December 31, 2018 included an option pricing model based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.6%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 18.9%, and an estimated credit spread of 5.7%. | ||
[5] | Pursuant to a separate agreement between the parties prior to the consummation of the Merger, Morinda agreed to pay its former stockholders up to $25.0 million from the net proceeds of a sale leaseback to be completed after the Closing Date. As discussed in Note 6, the closing for this transaction occurred on March 22, 2019. Since this payment was to be made from the proceeds of a long-term financing, the net carrying value was classified in long-term liabilities in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2018. This obligation was paid during the three months ended June 30, 2019. |
Business Combination - Summar_2
Business Combination - Summary of Earnout Obligations (Details) (Parenthetical) - USD ($) | Dec. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | Apr. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Mar. 31, 2018 |
One time earnout payment | $ 1,250,000 | |||||||||
One time earnout payment period | 2 years | |||||||||
Revenue reporting unit description | The Marley reporting unit is equal to or greater than $15.0 million during any trailing twelve calendar month period after the closing. Revenue for the Marley brand is not expected to exceed the $15.0 million earnout threshold during the next 12 months. | |||||||||
Fair value of earout recognized expense | $ (6,665,000) | $ (6,665,000) | $ 100,000 | |||||||
Estimated fair value of dividend earnout amount | 6,500,000 | $ 6,500,000 | $ 13,100,000 | |||||||
Fair value of valuation methodology description | The valuation methodology was performed through an option pricing model based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.3%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 19.2%, and an estimated credit spread of 6.0%. Key Level 3 assumptions inherent in the valuation methodology as of December 31, 2018 included an option pricing model based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.6%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 18.9%, and an estimated credit spread of 5.7%. | |||||||||
Sale leaseback transaction amount | 25,000,000 | $ 25,000,000 | ||||||||
Obligations credit and tax interest rate | 6.10% | |||||||||
Obligations amount | $ 400,000 | $ 1,000,000 | ||||||||
Morinda's Stockholders [Member] | ||||||||||
Excess working capital payable to related party | $ 1,000,000 | |||||||||
Morinda's Stockholders [Member] | Scenario, Plan [Member] | ||||||||||
Excess working capital payable to related party | $ 5,500,000 | $ 8,000,000 | ||||||||
Minimum [Member] | ||||||||||
Asset fair value increased amount | $ 800,000 | |||||||||
Minimum [Member] | Forecast [Member] | Milestone Dividend [Member] | ||||||||||
Adjusted EBITDA dividend amount | $ 20,000,000 | |||||||||
Maximum [Member] | ||||||||||
Asset fair value increased amount | $ 900,000 | |||||||||
Maximum [Member] | Forecast [Member] | Milestone Dividend [Member] | ||||||||||
Dividend amount | $ 15,000,000 |
Business Combination - Schedule
Business Combination - Schedule of Pro Forma Disclosure (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
Business Combinations [Abstract] | ||
Net revenue | $ 71,647 | $ 138,428 |
Net loss | $ (2,013) | $ (3,657) |
Net loss per share- basic and diluted | $ (0.05) | $ (0.09) |
Weighted average number of shares of common stock outstanding- basic and diluted | 41,141 | 39,743 |
Other Information (Details Narr
Other Information (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Sep. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Fair value of work-in-process and finished goods inventories | $ 2,200 | $ 2,200 | |||
Cost of goods sold | 900 | 1,700 | |||
Depreciation and amortization expense | 2,017 | $ 517 | 4,253 | $ 1,038 | |
Repairs and maintenance costs | 400 | 200 | 100 | 400 | |
Operating Expense [Member] | |||||
Depreciation and amortization expense | 800 | $ 100 | 1,800 | $ 300 | |
Cost of Goods Sold [Member] | |||||
Depreciation and amortization expense | $ 100 | $ 200 | |||
Forecast [Member] | |||||
Built-in profit charged to cost of goods sold | $ 400 |
Other Information - Schedule of
Other Information - Schedule of Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Other Information | ||
Raw materials | $ 12,183 | $ 12,538 |
Work-in-process | 11,222 | 907 |
Finished goods, net | 13,538 | 23,703 |
Total inventories | $ 36,943 | $ 37,148 |
Other Information - Schedule _2
Other Information - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Other Information | ||
Prepaid expenses and deposits | $ 9,219 | $ 4,982 |
Prepaid stock-based compensation | 380 | 347 |
Supplier and other receivables | 620 | 1,144 |
Total | $ 10,219 | $ 6,473 |
Other Information - Schedule _3
Other Information - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Property and Equipment, Gross | $ 30,322 | $ 58,968 |
Less accumulated depreciation | (2,846) | (1,687) |
Property and Equipment, Net | 27,476 | 57,281 |
Land [Member] | ||
Property and Equipment, Gross | 37 | 25,726 |
Building and Improvements [Member] | ||
Property and Equipment, Gross | 16,888 | 19,822 |
Leasehold Improvements [Member] | ||
Property and Equipment, Gross | 3,528 | 4,398 |
Machinery and Equipment [Member] | ||
Property and Equipment, Gross | 5,618 | 5,208 |
Office Furniture and Equipment [Member] | ||
Property and Equipment, Gross | 2,414 | 2,087 |
Transportation Equipment [Member] | ||
Property and Equipment, Gross | $ 1,837 | $ 1,727 |
Other Information - Schedule _4
Other Information - Schedule of Restricted Cash and Other (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | |
Other Information | |||
Restricted cash | [1] | $ 3,776 | $ 3,339 |
Debt issuance costs, net | 348 | 548 | |
Prepaid stock-based compensation | 210 | ||
Loan receivable from BWR | 1,000 | ||
Deposits and other | 4,268 | 2,838 | |
Total | $ 9,392 | $ 6,935 | |
[1] | Restricted cash primarily represents long-term cash deposits held in a bank for a foreign governmental agency. This deposit is required to maintain the Company's direct selling license to do business in China. |
Other Information - Schedule _5
Other Information - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | ||
Other Information | ||||
Accrued commissions | $ 8,532 | $ 9,731 | ||
Accrued compensation and benefits | 5,744 | 4,715 | ||
Accrued marketing events | [1] | 5,008 | 3,757 | |
Deferred revenue | 5,266 | 2,701 | ||
Income taxes payable | 15,842 | [2] | 1,670 | |
Current portion of right of use liabilities: Lease liability | 5,117 | 4,798 | ||
Current portion of right of use liabilities: Deferred lease incentive obligation | 882 | |||
Restricted stock obligations | 1,012 | [3] | ||
Embedded derivative liability | 470 | |||
Other accrued liabilities | 6,201 | 6,177 | ||
Total other accrued liabilities | $ 53,604 | $ 34,019 | ||
[1] | Represents accruals for incentive trips associated with Morinda's direct sales marketing program, which rewards certain IPCs with paid attendance at future conventions, meetings, and retreats. Expenses associated with incentive trips are accrued over qualification periods as they are earned. Incentive trip accruals are based on historical experience in relation to current sales trends in order to determine the related contractual obligations. | |||
[2] | Includes approximately $12.1 million of income taxes payable in Japan primarily related to the gain on sale of the land and building in Tokyo as discussed further in Note 6. | |||
[3] | Represents the fair value of restricted stock awards required to be settled in cash as discussed in Note 9. |
Other Information - Schedule _6
Other Information - Schedule of Other Accrued Liabilities (Details) (Parenthetical) $ in Thousands | Jun. 30, 2019USD ($) |
Other Information | |
Income taxes payable | $ 12,100 |
Goodwill and Identifiable Int_3
Goodwill and Identifiable Intangible Assets (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jan. 14, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Amortization expense | $ 1,300 | $ 400 | $ 700 | $ 2,600 | ||
Maximum [Member] | ||||||
Intangible asset amortized term | 42 years | |||||
Minimum [Member] | ||||||
Intangible asset amortized term | 15 years | |||||
Docklight LLC [Member] | ||||||
Number of stock option shares, exercisable | 200,000 | |||||
Stock options exercise price | $ 5.14 | |||||
Stock option exercisable term | 10 years | |||||
Stock option grant fair value | $ 800 | |||||
Intangible asset amortized term | 5 years | |||||
Agreement expired description | The initial term of the Agreement expires in January 2024, unless extended or earlier terminated as provided in the agreement. | |||||
License Agreement [Member] | ||||||
Amortization expense | $ 100 | $ 36 | $ 200 | $ 72 |
Goodwill and Identifiable Int_4
Goodwill and Identifiable Intangible Assets - Summary of Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Goodwill | $ 31,514 | $ 31,514 |
Morinda [Member] | ||
Goodwill | 10,284 | 10,284 |
Marley [Member] | ||
Goodwill | 9,418 | 9,418 |
Maverick [Member] | ||
Goodwill | 5,149 | 5,149 |
Xing [Member] | ||
Goodwill | 4,506 | 4,506 |
PMC [Member] | ||
Goodwill | 1,768 | 1,768 |
B&R [Member] | ||
Goodwill | $ 389 | $ 389 |
Goodwill and Identifiable Int_5
Goodwill and Identifiable Intangible Assets - Schedule of Identifiable Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Identifiable Intangible Asset, Cost | $ 71,648 | $ 70,810 |
Less: Accumulated Amortization | 5,586 | 2,980 |
Identifiable Intangible Asset, Net | 66,062 | 67,830 |
ChinaDirectSellingLicense [Member] | ||
Identifiable Intangible Asset, Cost | 20,420 | 20,420 |
Less: Accumulated Amortization | 721 | 40 |
Identifiable Intangible Asset, Net | 19,699 | 20,380 |
Other [Member] | ||
Identifiable Intangible Asset, Cost | 6,827 | 5,989 |
Less: Accumulated Amortization | 560 | 318 |
Identifiable Intangible Asset, Net | 6,267 | 5,671 |
Manufacturing Processes and Recipes [Member] | ||
Identifiable Intangible Asset, Cost | 11,610 | 11,610 |
Less: Accumulated Amortization | 770 | 380 |
Identifiable Intangible Asset, Net | 10,840 | 11,230 |
Trade Names [Member] | ||
Identifiable Intangible Asset, Cost | 12,301 | 12,301 |
Less: Accumulated Amortization | 1,012 | 584 |
Identifiable Intangible Asset, Net | 11,289 | 11,717 |
IPC Distributor Sales Force [Member] | ||
Identifiable Intangible Asset, Cost | 9,760 | 9,760 |
Less: Accumulated Amortization | 517 | 29 |
Identifiable Intangible Asset, Net | 9,243 | 9,731 |
Customer Relationships [Member] | ||
Identifiable Intangible Asset, Cost | 6,444 | 6,444 |
Less: Accumulated Amortization | 1,404 | 1,194 |
Identifiable Intangible Asset, Net | 5,040 | 5,250 |
Patents [Member] | ||
Identifiable Intangible Asset, Cost | 4,100 | 4,100 |
Less: Accumulated Amortization | 569 | 433 |
Identifiable Intangible Asset, Net | 3,531 | 3,667 |
Former Morinda Shareholder Non-compete Agreements [Member] | ||
Identifiable Intangible Asset, Cost | 186 | 186 |
Less: Accumulated Amortization | 33 | 2 |
Identifiable Intangible Asset, Net | $ 153 | $ 184 |
Goodwill and Identifiable Int_6
Goodwill and Identifiable Intangible Assets - Schedule of Amortization of Identifiable Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 | $ 4,953 | |
2021 | 4,953 | |
2022 | 4,920 | |
2023 | 4,891 | |
2024 | 4,812 | |
Thereafter | 41,534 | |
Total | $ 66,062 | $ 67,830 |
Leases (Details Narrative)
Leases (Details Narrative) $ in Thousands | Apr. 03, 2019USD ($)ft² | Mar. 22, 2019USD ($) | Jan. 21, 2019USD ($)ft² | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018 |
Operating lease expired | The lease term which expires in July 2029. The Company has an option to extend the lease for an additional period of five years. The Company determined the right-of-use ("ROU") lease liability of approximately $6.0 million based upon a discount rate of 6.1% and assuming that the Company will not exercise its option to extend the lease for an additional five years. | At any time after the initial seven-year term, the Company may elect to terminate the lease. However, if the lease is terminated before the 20th anniversary of the date the lease was entered into, then the Company will be obligated to perform certain restoration obligations that are currently estimated to cost between $1.6 million and $2.2 million. The Company determined that the restoration obligation is a significant penalty whereby there is reasonable certainty that the Company will not elect to terminate the lease prior to the 20-year anniversary. Therefore, the lease term was determined to be 20 years. | The lease term which expires in December 2029. The Company has options to terminate the lease after 90 months as well as the option to extend the lease for an additional period of five years. The Company determined the right-of-use ("ROU") lease liability of $2.8 million based upon a discount rate of 6.1% and assuming that the Company will not exercise its options to terminate the lease after 90 months or extend the lease for an additional five years. | The Company leases various office and warehouse facilities, vehicles and equipment under non-cancellable operating lease agreements that expire between July 2019 and March 2039. | |||||
Operating lease expense | $ 2,900 | $ 300 | $ 5,200 | $ 600 | |||||
Monthly base rental expense | $ 66 | $ 33 | |||||||
Operating lease liability | $ 2,800 | $ 35,674 | $ 35,674 | ||||||
Lease discount rate | 6.10% | 6.10% | 6.10% | 6.10% | |||||
Fixed minimum lease payments | $ 17 | ||||||||
Lease term | 27 years | 8 years | |||||||
Aggregate commitment | $ 1,700 | ||||||||
Obligation of Right use of assets | $ 7,400 | $ 1,300 | |||||||
Obligation of Right use of liabilities | $ 6,000 | 7,400 | 1,300 | ||||||
Sale of land | 57,100 | ||||||||
Lease cost | 181 | ||||||||
Reundable security deposit | $ 1,800 | ||||||||
Other cash payments description | Other cash payments description | ||||||||
Gain on sale of property | $ 24,100 | 6,442 | |||||||
Gain on leaseback arrangement | 17,600 | ||||||||
Remainder gain on properties | 6,400 | ||||||||
Reduction of rent expense | $ 900 | ||||||||
Reduction lease term | 20 years | ||||||||
Present lease payments | $ 25,000 | ||||||||
Lease incentive concession amount | 17,600 | ||||||||
Impairment charges | $ 1,500 | $ 1,500 | |||||||
Weighted average remaining lease term | 8 years 3 months 19 days | 8 years 3 months 19 days | |||||||
Weighted average discount lease | 6.60% | 6.60% | 6.60% | ||||||
Morinda's Stockholders [Member] | |||||||||
Payments of obligated | 25,000 | ||||||||
Swap Agreement [Member] | |||||||||
Reundable security deposit | 1,800 | ||||||||
Repayments of mortgage on building | $ 2,600 | ||||||||
Japanese Real Estate [Member] | |||||||||
Lease term | 7 years | 7 years | |||||||
Japanese Yen [Member] | |||||||||
Lease cost | $ 20,000 | ||||||||
Denver, Colorado [Member] | |||||||||
Office space | ft² | 11,200 | ||||||||
Aurora Colorado [Member] | |||||||||
Office space | ft² | 156,000 |
Leases - Summary of Selling Pri
Leases - Summary of Selling Price and Resulting Gain On Sale (Details) - USD ($) $ in Thousands | Mar. 22, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Leases [Abstract] | |||||
Gross selling price | $ 57,129 | ||||
Less commissions and other expenses | (1,941) | ||||
Less repair obligations | (1,675) | ||||
Net selling price | 53,513 | ||||
Cost of land and building sold | (29,431) | ||||
Total gain on sale | 24,082 | ||||
Portion of gain related to above-market rent concession | (17,640) | ||||
Recognized gain on sale | $ 24,100 | $ 6,442 |
Leases - Summary of Carrying Va
Leases - Summary of Carrying Value of Operating Lease Rou Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
Right-of-Use Assets: Cost basis, net of impairment | $ 37,563 | $ 19,221 |
Right-of-Use Assets: Accumulated amortization | (3,719) | (732) |
Net | 33,844 | 18,489 |
Right-of-Use Liabilities: Current | 5,117 | 4,798 |
Right-of-Use Liabilities: Long-term | 30,557 | 13,686 |
Total | 35,674 | 18,484 |
Deferred Lease Incentive Obligation: Current | 882 | |
Deferred Lease Incentive Obligation: Long-term | 16,538 | |
Total | $ 17,420 |
Leases - Summary of Future Mini
Leases - Summary of Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 21, 2019 |
Leases [Abstract] | ||
2020 | $ 9,051 | |
2021 | 7,248 | |
2022 | 6,367 | |
2023 | 6,120 | |
2024 | 5,730 | |
Thereafter | 44,421 | |
Total minimum lease payments | 78,937 | |
Less imputed interest | (43,263) | |
Present value of minimum lease payments | $ 35,674 | $ 2,800 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jul. 02, 2019 | Mar. 29, 2019 | Aug. 10, 2018 | Jun. 30, 2019 | Dec. 31, 2018 |
Debt description | The Company determined that embedded derivatives included the requirement to pay (i) an early termination premium if the Siena Revolver was terminated before the maturity date in August 2021, and (ii) default interest at a 5.0% premium if events of default existed. The early termination premium was 4.0% of the $12.0 million commitment if termination occurred during the first year after the Siena Closing Date. As of December 31, 2018, the embedded derivatives for the Siena Revolver had an aggregate fair value of approximately $0.5 million, which was included in accrued liabilities as of December 31, 2018. | ||||
Debt issuance cost | $ 348 | $ 548 | |||
Make whole premium Amount | $ 500 | ||||
Fair value of embedded derivatives | 500 | ||||
EWB RevolverMember | |||||
Debt description | The Company would be required to pay an early termination fee in the amount of 0.50% of the revolving line. Additional borrowing requests under the EWB Revolver are subject to various customary conditions precedent, including satisfaction of a borrowing base test as more fully described in the Credit Facility. The EWB Revolver also provides for an unused line fee equal to 0.5% per annum of the undrawn portion. | ||||
Voluntary prepayment principal amount | $ 9,700 | ||||
Reborrow amount | $ 10,000 | ||||
EWB Term Loan [Member] | |||||
Unaccreted discount to related party debt | 500 | ||||
Prime Rate [Member] | EWB RevolverMember | |||||
Interest rate percentage | 0.50% | ||||
Loan and Security Agreement [Member] | |||||
Debt maturity date | Mar. 29, 2023 | ||||
Aggregate principal amount | $ 15,000 | ||||
Increase amount in principal amount | 25,000 | ||||
Revolving loan facility | $ 10,000 | ||||
Debt description | (i) a term loan in the aggregate principal amount of $15.0 million, which may be increase to $25.0 subject to the satisfaction of certain conditions (the "Term Loan") and (ii) a $10.0 million revolving loan facility (the "EWB Revolver"). At the closing, EWB funded $25.0 million to the Company consisting of the $15.0 million Term Loan and $10.0 million as an advance under the EWB Revolver. | ||||
Interest rate percentage | 3.00% | ||||
Loan and Security Agreement [Member] | Siena Lending Group LLC [Member] | |||||
Debt maturity date | Aug. 10, 2021 | ||||
Revolving loan facility | $ 12,000 | ||||
Debt description | The Siena Revolver also provided for an unused line fee equal to 0.5% per annum | ||||
Interest rate percentage | 7.50% | ||||
Effective interest rate | 8.25% | ||||
Undrawn portion commitment | $ 120,000 | ||||
Permitted total borrowings amount | $ 2,500 | ||||
Debt issuance cost | $ 600 | ||||
Debt instrument term | 3 years | ||||
Unamortized debt issuance costs | 500 | ||||
Interest expense | $ 500 | ||||
Loan and Security Agreement [Member] | Term Loan [Member] | |||||
Debt description | The Company may elect to prepay the Term Loan before the Maturity Date on 10 business days' notice to EWB subject to a prepayment fee of 2% for the first year of the Term Loan and 1% for the second year of the Term Loan. No later than 120 days after the end of each fiscal year, commencing with the fiscal year ending December 31, 2019, the Company is required to make a payment towards the outstanding principal amount of the Term Loan in an amount equal to 35% of the Excess Cash Flow (as defined in the Credit Facility), if the Total Leverage Ratio is less than 1.50 to 1.00 or (i) 50% of the Excess Cash Flow if the Total Leverage Ratio is greater than or equal to 1.50 to 1.00. | ||||
Monthly principal payments amount | $ 125 | ||||
Loan and Security Agreement [Member] | Maximum [Member] | |||||
Total Leverage Ratio | $ 1.50 | ||||
Loan and Security Agreement [Member] | Minimum [Member] | |||||
Total Leverage Ratio | $ 1 | ||||
Loan and Security Agreement [Member] | Prime Rate [Member] | |||||
Interest rate percentage | 0.25% | ||||
Loan and Security Agreement [Member] | Prime Rate [Member] | Siena Lending Group LLC [Member] | |||||
Interest rate percentage | 2.75% | ||||
Interest Rate Swap Agreement [Member] | |||||
Total notional amount | 2,600 | ||||
Unrealized loss from interest rate | $ 36 |
Debt - Summary of Debt (Details
Debt - Summary of Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | ||
Total | $ 24,216 | $ 4,694 | ||
Less current maturities | 10,852 | 3,369 | ||
Long-term debt, less current maturities | 13,364 | 1,325 | ||
EWB Credit Facility Term Loan [Member] | ||||
Total | 14,484 | |||
EWB Credit Facility Revolver [Member] | ||||
Total | 9,700 | |||
Installment Notes Payable [Member] | ||||
Total | [1] | 32 | 66 | |
Siena Revolver [Member] | ||||
Total | 2,000 | |||
Mortgage Payable to a Foreign Bank [Member] | ||||
Total | $ 2,628 | [2] | ||
[1] | Consists of various installment notes payable that are collateralized by equipment and that bear interest at 12.4% to 22.1%. | |||
[2] | This mortgage note payable was collateralized by land and a building in Tokyo, Japan. Quarterly principal payments of $0.3 million plus interest were payable in Japanese Yen at TIBOR plus 0.7% (0.76% as of December 31, 2018) through the maturity date in December 2020. This debt was repaid, and the interest rate swap agreement discussed below was terminated upon sale of the property on March 22, 2019 as discussed in Note 6. |
Debt - Summary of Debt (Detai_2
Debt - Summary of Debt (Details) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2019 | |
Installment Notes Payable [Member] | Minimum [Member] | ||
Debt bear interest percentage | 12.40% | 12.40% |
Installment Notes Payable [Member] | Maximum [Member] | ||
Debt bear interest percentage | 22.10% | 22.10% |
Mortgage Payable to a Foreign Bank [Member] | ||
Debt bear interest percentage | 0.76% | |
Principal payments amount | $ 300 | |
Debt maturity date | Dec. 31, 2020 | |
Mortgage Payable to a Foreign Bank [Member] | TIBOR Plus [Member] | ||
Debt bear interest percentage | 0.70% |
Debt - Summary Future Debt Matu
Debt - Summary Future Debt Maturities (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 10,852 |
2021 | 1,504 |
2022 | 1,501 |
2023 | 10,875 |
Total | $ 24,732 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | Apr. 30, 2019 | Dec. 02, 2018 | Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | May 30, 2019 | May 29, 2019 | Dec. 31, 2018 |
Common stock share authorized | 200,000,000 | 200,000,000 | 200,000,000 | 200,000,000 | 100,000,000 | 200,000,000 | ||||
Stock issued during the period, value | $ 3,293,000 | $ 3,293,000 | ||||||||
Series D Preferred Stock [Member] | ||||||||||
Preferred stock, shares designated | 44,000 | |||||||||
Morinda Merger Agreement [Member] | ||||||||||
Stock issued during the period, value | $ 11,000,000 | |||||||||
Stock issued during the period | 2,016,480 | |||||||||
Morinda Merger Agreement [Member] | Series D Preferred Stock [Member] | ||||||||||
Stock issued during the period | 43,804 | |||||||||
Morinda Merger Agreement [Member] | Series D Preferred Stock [Member] | Maximum [Member] | ||||||||||
Payment of potential amount | $ 15,000,000 | |||||||||
Placement Shares [Member] | ATM Offering Agreement [Member] | ||||||||||
Stock issued during the period, value | $ 100,000,000 | $ 11,400,000 | ||||||||
Agreement termination date | Apr. 30, 2020 | |||||||||
Agreement termination, description | The ATM Offering Agreement terminates on April 30, 2020 and may be earlier terminated by the Company upon five business days' notice to the Agent and at any time by the Agent or by the mutual agreement of the parties. | |||||||||
Stock issued during the period | 2,200,000 | |||||||||
Commission and fees on sale of shares | $ 400,000 | $ 400,000 | ||||||||
Other offering costs | $ 200,000 | $ 200,000 | ||||||||
Placement Shares [Member] | ATM Offering Agreement [Member] | Gross Proceeds Upto $30 Million [Member] | ||||||||||
Percentage of agent commission equal to gross proceeds | 3.00% | |||||||||
Placement Shares [Member] | ATM Offering Agreement [Member] | Gross Proceeds Exceeds $30 Million [Member] | ||||||||||
Percentage of agent commission equal to gross proceeds | 2.50% |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Changes in Stockholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Beginning balance | $ 156,468 | $ 50,504 | ||
Issuance of common stock for ATM public offering, net of offering costs | 11,141 | $ 11,141 | ||
Issuance of common stock for Employee services | 31 | 31 | ||
Stock-based compensation expense | 434 | 2,561 | ||
Fair value of stock options issued for license agreement | 838 | 838 | ||
Net change in other comprehensive income | 569 | 996 | ||
Issuance of common stock for Conversion of Series B promissory note, including accrued interest | 872 | |||
Issuance of common stock for grant of restricted stock awards | 65 | 576 | 325 | |
Issuance of common stock for public offering, net of offering costs | 3,293 | 3,293 | ||
Issuance of common stock for Debt discount | 470 | 470 | ||
Stock-based compensation related to stock options | 160 | 317 | ||
Net loss | (11,681) | (3,367) | (13,297) | (6,018) |
Ending balance | 157,800 | 51,997 | 157,800 | 51,997 |
Common Stock [Member] | ||||
Beginning balance | $ 75 | $ 36 | ||
Beginning balance, shares | 75,393,000 | 36,649,000 | ||
Issuance of common stock for ATM public offering, net of offering costs | $ 2 | $ 2 | ||
Issuance of common stock for ATM public offering, net of offering costs, shares | 2,225,000 | 2,225,000 | ||
Issuance of common stock for Employee services | ||||
Issuance of common stock for Employee services, shares | 6,000 | 6,000 | ||
Stock-based compensation expense | ||||
Fair value of stock options issued for license agreement | ||||
Net change in other comprehensive income | ||||
Issuance of common stock for Conversion of Series B promissory note, including accrued interest | $ 1 | |||
Issuance of common stock for Conversion of Series B promissory notes, including accrued interest, shares | 461,000 | |||
Issuance of common stock for grant of restricted stock awards | ||||
Issuance of common stock for grant of restricted stock awards, shares | 31,000 | 126,000 | 154,000 | |
Issuance of common stock for public offering, net of offering costs | $ 3 | $ 3 | ||
Issuance of common stock for public offering, net of offering costs, shares | 2,560,000 | 2,560,000 | ||
Issuance of common stock for Debt discount | ||||
Issuance of common stock for Debt discount, shares | 225,000 | 225,000 | ||
Stock-based compensation related to stock options | ||||
Net loss | ||||
Ending balance | $ 77 | $ 40 | $ 77 | $ 40 |
Ending balance, shares | 77,624,000 | 39,926,000 | 77,624,000 | 39,926,000 |
Additional Paid-in Capital [Member] | ||||
Beginning balance | $ 179,592 | $ 63,620 | ||
Issuance of common stock for ATM public offering, net of offering costs | 11,139 | $ 11,139 | ||
Issuance of common stock for Employee services | 31 | 31 | ||
Stock-based compensation expense | 434 | 2,561 | ||
Fair value of stock options issued for license agreement | 838 | 838 | ||
Net change in other comprehensive income | ||||
Issuance of common stock for Conversion of Series B promissory note, including accrued interest | 871 | |||
Issuance of common stock for grant of restricted stock awards | 65 | 576 | $ 325 | |
Issuance of common stock for public offering, net of offering costs | 3,290 | 3,290 | ||
Issuance of common stock for Debt discount | 470 | 470 | ||
Stock-based compensation related to stock options | 160 | 317 | ||
Net loss | ||||
Ending balance | 192,034 | 68,476 | 192,034 | 68,476 |
Accumulated Other Comprehensive Income [Member] | ||||
Beginning balance | 1,053 | |||
Issuance of common stock for ATM public offering, net of offering costs | ||||
Issuance of common stock for Employee services | ||||
Stock-based compensation expense | ||||
Fair value of stock options issued for license agreement | ||||
Net change in other comprehensive income | 569 | 996 | ||
Issuance of common stock for grant of restricted stock awards | ||||
Issuance of common stock for public offering, net of offering costs | ||||
Issuance of common stock for Debt discount | ||||
Stock-based compensation related to stock options | ||||
Net loss | ||||
Ending balance | 1,622 | 1,622 | ||
Accumulated Deficit [Member] | ||||
Beginning balance | (24,252) | (13,152) | ||
Issuance of common stock for ATM public offering, net of offering costs | ||||
Issuance of common stock for Employee services | ||||
Stock-based compensation expense | ||||
Fair value of stock options issued for license agreement | ||||
Net change in other comprehensive income | ||||
Issuance of common stock for Conversion of Series B promissory note, including accrued interest | ||||
Issuance of common stock for grant of restricted stock awards | ||||
Issuance of common stock for public offering, net of offering costs | ||||
Issuance of common stock for Debt discount | ||||
Stock-based compensation related to stock options | ||||
Net loss | (11,681) | (3,367) | (13,297) | (6,018) |
Ending balance | $ (35,933) | $ (16,519) | $ (35,933) | $ (16,519) |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Aug. 03, 2019 | May 30, 2019 | Dec. 02, 2018 | Dec. 31, 2018 | Jun. 30, 2019 | Jan. 02, 2019 |
Unrecognized compensation expense related to unvested stock options | $ 3,900 | |||||
Weighted-average vesting period | 2 years 3 months 19 days | |||||
Expected dividend yield | 0.00% | |||||
Morinda Merger Agreement [Member] | ||||||
Stock issued during the period, shares | 2,016,480 | |||||
Employee Options [Member] | ||||||
Weighted-average grant date fair value | $ 4.27 | |||||
Restricted Stock Award [Member] | Morinda Merger Agreement [Member] | ||||||
Stock award granted | 1,200,000 | |||||
2019 Plan [Member] | ||||||
Plan termination date | 2029-04 | |||||
Stock issued during the period, shares | 10,000,000 | |||||
2019 Plan [Member] | Stock Options, Restricted Stock and Similar Instruments [Member] | ||||||
Number of shares authorized under the plan | 10,000,000 | |||||
Shares available for future grants | 10,000,000 | |||||
LTI Plan [Member] | ||||||
Expected dividend yield | 0.00% | |||||
LTI Plan [Member] | Maximum [Member] | ||||||
Shares available for future grants | 7,500,000 | |||||
LTI Plan [Member] | Employees, Directors and Consultants [Member] | ||||||
Option granted, term | 10 years | |||||
Percentage of maximum outstanding shares available for grant | 10.00% | |||||
LTI Plan [Member] | Employees, Directors and Consultants [Member] | Minimum [Member] | ||||||
Percentage of exercise price of stock options to be granted | 100.00% | |||||
Options vesting period | 1 year | |||||
LTI Plan [Member] | Employees, Directors and Consultants [Member] | Maximum [Member] | ||||||
Options vesting period | 3 years | |||||
LTI Plan [Member] | Stock Options, Restricted Stock and Similar Instruments [Member] | ||||||
Shares available for future grants | 2,100,000 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock Option Activity (Details) - LTI Plan [Member] | 6 Months Ended | |
Jun. 30, 2019$ / sharesshares | ||
Options outstanding, beginning of period | shares | 2,786,000 | |
Options, forfeited | shares | (87,000) | |
Options, exercised | shares | (200,000) | |
Options outstanding, ending of period | shares | 2,760,000 | [1] |
Options vested, end of period | shares | 940,000 | [2] |
Weighted average grant date fair value outstanding, beginning balance | $ / shares | $ 2.84 | [3] |
Weighted average grant date fair value, forfeited | $ / shares | 3.70 | [3] |
Weighted average grant date fair value, exercised | $ / shares | 2.09 | [3] |
Weighted average grant date fair value outstanding, ending balance | $ / shares | 3.07 | [3] |
Weighted average grant date fair value vested, end of period | $ / shares | $ 2.59 | [3] |
Weighted average remaining contractual term, beginning balance | 9 years | [4] |
Weighted average remaining contractual term, ending balance | 8 years 7 months 6 days | [4] |
Weighted average contractual term vested, end of period | 8 years 2 months 12 days | [4] |
Employees [Member] | ||
Options, granted | shares | 36,000 | |
Weighted average grant date fair value, granted | $ / shares | $ 5.57 | [3] |
Non-Employees [Member] | ||
Options, granted | shares | 225,000 | [5] |
Weighted average grant date fair value, granted | $ / shares | $ 5.16 | [3] |
[1] | As of June 30, 2019 and December 31, 2018, the aggregate intrinsic value of stock options outstanding was $4.5 million and $6.6 million, respectively. | |
[2] | As of June 30, 2019 and December 31, 2018, the aggregate intrinsic value of vested stock options was $2.0 million and $3.1 million, respectively. | |
[3] | Represents the weighted average exercise price. | |
[4] | Represents the weighted average remaining contractual term until the stock options expire. | |
[5] | Includes a stock option for 200,000 shares of Common Stock exercisable at $5.14 per share that was issued in connection with the Docklight agreement discussed in Note 5. |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Stock Option Activity (Details) (Parenthetical) - USD ($) $ / shares in Units, $ in Thousands | Jun. 30, 2019 | Jan. 14, 2019 | Dec. 31, 2018 |
Docklight LLC [Member] | |||
Options, exercisable | 200,000 | ||
Weighted average exercise price | $ 5.14 | ||
LTI Plan [Member] | |||
Aggregate intrinsic value of stock options outstanding | $ 6,600 | $ 4,500 | |
Aggregate intrinsic value of vested stock options outstanding | $ 3,100 | $ 2,000 | |
LTI Plan [Member] | Docklight LLC [Member] | |||
Options, exercisable | 200,000 | ||
Weighted average exercise price | $ 5.14 |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of Stock Options Weighted-Average Assumptions (Details) | 6 Months Ended |
Jun. 30, 2019$ / shares | |
Dividend yield | 0.00% |
LTI Plan [Member] | |
Grant date fair value of common stock (exercise price) | $ 5.19 |
Expected life (in years) | 5 years 3 months 19 days |
Volatility | 115.00% |
Dividend yield | 0.00% |
Risk-free interest rate | 2.20% |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Restricted Stock Award Activity (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019USD ($)shares | ||
Weighted average remaining term for recognition of unvested expense | 2 years 3 months 19 days | |
LTI Plan Equity Awards [Member] | ||
Number of shares, outstanding, beginning of period | shares | 1,151,000 | |
Number of shares, restricted shares issued | shares | 91,000 | [1] |
Number of shares, other | shares | 35,000 | |
Number of shares, forfeited | shares | (2,000) | |
Number of shares, fair value adjustment | shares | ||
Number of shares, vested shares and expense | shares | 359,000 | |
Number of shares, outstanding, end of period | shares | 916,000 | [2] |
Number of shares, Intrinsic value, end of period | $ 4,265 | [3] |
Unvested compensation, outstanding, beginning of period | 3,988 | |
Unvested compensation, restricted shares issued | 500 | [1] |
Unvested compensation, other | 76 | |
Unvested compensation, forfeited | (10) | |
Unvested compensation, fair value adjustment | ||
Unvested compensation, vested shares and expense | (2,273) | |
Unvested compensation, outstanding, end of period | $ 2,281 | [2] |
Weighted average remaining term for recognition of unvested expense | 9 months 18 days | |
LTI Plan Liability Awards [Member] | ||
Number of shares, outstanding, beginning of period | shares | 474,000 | |
Number of shares, restricted shares issued | shares | ||
Number of shares, other | shares | ||
Number of shares, forfeited | shares | (1,000) | |
Number of shares, fair value adjustment | shares | ||
Number of shares, vested shares and expense | shares | ||
Number of shares, outstanding, end of period | shares | 473,000 | [4] |
Number of shares, Intrinsic value, end of period | $ 2,206 | |
Unvested compensation, outstanding, beginning of period | 2,490 | |
Unvested compensation, restricted shares issued | ||
Unvested compensation, other | ||
Unvested compensation, forfeited | ||
Unvested compensation, fair value adjustment | (284) | [5] |
Unvested compensation, vested shares and expense | (1,012) | |
Unvested compensation, outstanding, end of period | $ 1,194 | [4] |
Weighted average remaining term for recognition of unvested expense | 8 months 12 days | |
Non-Plan Awards [Member] | ||
Number of shares, outstanding, beginning of period | shares | 629,000 | |
Number of shares, restricted shares issued | shares | ||
Number of shares, other | shares | ||
Number of shares, forfeited | shares | ||
Number of shares, fair value adjustment | shares | ||
Number of shares, vested shares and expense | shares | ||
Number of shares, outstanding, end of period | shares | (629,000) | [6] |
Number of shares, Intrinsic value, end of period | ||
Unvested compensation, outstanding, beginning of period | 64 | |
Unvested compensation, restricted shares issued | ||
Unvested compensation, other | ||
Unvested compensation, forfeited | ||
Unvested compensation, fair value adjustment | ||
Unvested compensation, vested shares and expense | (64) | [6] |
Unvested compensation, outstanding, end of period | ||
Weighted average remaining term for recognition of unvested expense | 0 years | |
[1] | The weighted average fair value was $5.50 per share based on the closing price of the Company's Common Stock on the grant date. | |
[2] | As of June 30, 2019, unvested shares of restricted stock consist of approximately 0.7 million shares that will be issued upon vesting and 0.2 million shares that have been issued subject to vesting conditions. For unvested shares that have been issued, approximately $0.4 million of unvested compensation is included in prepaid expenses as of June 30, 2019. Outstanding unvested shares include awards for 216,000 shares that vest if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. The Company assesses the probability of achievement of such performance conditions in the recognition of compensation expense related to these awards. | |
[3] | The intrinsic value was based on the closing price of the Company's common stock of $4.66 per share on the last trading day for June 2019. | |
[4] | Due to Morinda's foreign operations, these awards will be settled in cash upon vesting since regulatory requirements prohibit settlement in shares. These awards vest between one and three years after the grant date and are classified as liabilities in the Company's consolidated balance sheets based on the fair value of the Company's Common Stock at the end of each reporting period. The liability is being recorded with a corresponding charge to stock-based compensation expense over the vesting period. As of June 30, 2019, approximately $1.2 million is included in current liabilities. | |
[5] | Change in unvested compensation resulted from a decrease in the closing price of the Company's Common Stock for the six months ended June 30, 2019. | |
[6] | Consists of restricted stock issued to the Company's Chief Executive Officer in 2016 that vested over three years. The remaining shares became fully vested in March and April 2019 and the remaining compensation charge was recorded. |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Restricted Stock Award Activity (Details) (Parenthetical) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2019 | Dec. 31, 2018 | ||
LTI Plan Equity Awards [Member] | |||
Weighted average fair value | $ 5.50 | ||
Unvested shares of restricted stock issued | 700,000 | ||
Restricted stock issued upon vesting condition | 200,000 | ||
Unvested compensation | $ 2,281 | [1] | $ 3,988 |
Intrinsic value based on closing price | $ 4.66 | ||
LTI Plan Equity Awards [Member] | Morinda [Member] | |||
Outstanding unvested shares | 216,000 | ||
EBITDA | $ 20,000 | ||
LTI Plan Equity Awards [Member] | Prepaid Expenses [Member] | |||
Unvested compensation | 400 | ||
LTI Plan Liability Awards [Member] | |||
Unvested compensation | $ 1,194 | [2] | 2,490 |
LTI Plan Liability Awards [Member] | Morinda's Foreign Operations [Member] | Minimum [Member] | |||
Vesting period | 1 year | ||
LTI Plan Liability Awards [Member] | Morinda's Foreign Operations [Member] | Maximum [Member] | |||
Vesting period | 3 years | ||
LTI Plan Liability Awards [Member] | Current Liabilities [Member] | |||
Intrinsic value based on closing price | $ 1,200 | ||
Non-Plan Awards [Member] | |||
Unvested compensation | $ 64 | ||
Non-Plan Awards [Member] | CEO [Member] | |||
Vesting period | 3 years | ||
Vesting period, description | The remaining shares became fully vested in March and April 2019 and the remaining compensation charge was recorded. | ||
[1] | As of June 30, 2019, unvested shares of restricted stock consist of approximately 0.7 million shares that will be issued upon vesting and 0.2 million shares that have been issued subject to vesting conditions. For unvested shares that have been issued, approximately $0.4 million of unvested compensation is included in prepaid expenses as of June 30, 2019. Outstanding unvested shares include awards for 216,000 shares that vest if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. The Company assesses the probability of achievement of such performance conditions in the recognition of compensation expense related to these awards. | ||
[2] | Due to Morinda's foreign operations, these awards will be settled in cash upon vesting since regulatory requirements prohibit settlement in shares. These awards vest between one and three years after the grant date and are classified as liabilities in the Company's consolidated balance sheets based on the fair value of the Company's Common Stock at the end of each reporting period. The liability is being recorded with a corresponding charge to stock-based compensation expense over the vesting period. As of June 30, 2019, approximately $1.2 million is included in current liabilities. |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Stock-based compensation expense | $ 4,287 | $ 898 |
Stock Options Awards [Member] | Employees [Member] | ||
Stock-based compensation expense | 933 | 398 |
Stock Options Awards [Member] | Non-Employees [Member] | ||
Stock-based compensation expense | 5 | |
Restricted Stock Awards [Member] | Equity Classified [Member] | ||
Stock-based compensation expense | 2,337 | 500 |
Restricted Stock Awards [Member] | Liability Classified [Member] | ||
Stock-based compensation expense | $ 1,012 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense, benefit | $ 7,797 | $ 6,097 | ||
Effective Income tax rate reconciliation, federal statutory income tax rate, percent | (108.50%) | (84.80%) | ||
Deferred tax assets, valuation allowance | $ 3,300 | $ 3,300 | ||
Deferred tax assets, valuation allowance adjustment | 7,400 | 3,300 | ||
Unrecognized tax benefits that would impact effective tax rate | 400 | 400 | ||
NOL Operating loss carryforwards | $ 36,300 | $ 36,300 | ||
NOL Operating loss carryforwards, description | $24.9 million does not expire and $11.4 million will begin to expire in 2023. |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Other long-term liabilities | $ 9,453 | $ 9,453 | $ 9,160 |
Current liability under (ASU) 450, contingencies | 800 | $ 800 | |
401 (K) Plan [Member] | |||
Defined contribution plan, plan name | 401(k) Plan | ||
Defined contribution plan, description | The 401(k) Plan covers all eligible U.S. employees who are entitled to participate at the beginning of the first full quarter following commencement of employment. The Company matches contributions up to 3% of the participating employee's compensation, and these matching contributions vest over four years with 0% vested through the end of the first year of service and 33% vesting upon completion of each of the next three years of service. The Company did not have a 401(k) Plan for the three and six months ended June 30, 2018. | ||
Defined contribution plan, cost | 100 | $ 200 | |
Foreign Benefit Plans [Member] | |||
Defined contribution plan, plan name | Foreign Benefit Plans | ||
Defined contribution plan, description | Upon termination of employment, the Morinda employees of the Japanese branch are generally entitled to retirement benefits determined by reference to basic rates of pay at the time of termination, years of service, and conditions under which the termination occurs. If the termination is involuntary or caused by retirement at the mandatory retirement age of 65, the employee is entitled to a greater payment than in the case of voluntary termination. Morinda employees in Indonesia whose service is terminated are generally entitled to retirement benefits determined by reference to basic rates of pay at the time of termination, years of service and conditions under which the termination occurs. | ||
Defined contribution plan, cost | $ 3,300 | 3,000 | |
Other Noncurrent Liabilities [Member] | Foreign Benefit Plans [Member] | |||
Other long-term liabilities | 3,200 | 3,200 | 2,900 |
Other Noncurrent Assets [Member] | |||
Current liability under (ASU) 450, contingencies | 800 | $ 800 | 800 |
Executive Deferred Compensation Plan [Member] | |||
Long-term liability | $ 4,100 | ||
Executive Deferred Compensation Plan [Member] | Maximum [Member] | |||
Deferred compensation obligation, period | 20 years | ||
Executive Deferred Compensation Plan [Member] | Long- Term Liability [Member] | |||
Long-term liability | $ 4,100 | $ 4,100 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Fair value of the restricted stock awards | $ 65 | $ 576 | $ 325 |
Common Stock [Member] | |||
Restricted stock awards granted during period | 31,000 | 126,000 | 154,000 |
Fair value of the restricted stock awards | |||
Five Non-employee Members of the Board of Directors [Member] | Common Stock [Member] | |||
Restricted stock awards granted during period | 90,910 | 153,000 | |
Fair value of the restricted stock awards | $ 500 | $ 300 | |
Compensation expense recognized period, vesting | 12 months |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Loss Per Share (Details) - shares | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Antidilutive securities excluded from computation of earnings per share | 4,149 | 3,266 |
Stock Options [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 2,760 | |
Unvested Shares of Common Stock Issued [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 163 | 1,027 |
Unissued and Unvested Awards to Morinda Employees | ||
Antidilutive securities excluded from computation of earnings per share | 1,226 | |
Non-Plan Restricted Stock Awards [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 982 | |
Stock Options [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 1,257 |
Financial Instruments and Sig_2
Financial Instruments and Significant Concentrations (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Concentration risk, percentage | 70.00% | |||
Cash and cash equivalents | $ 83,580 | $ 83,580 | $ 213 | $ 42,517 |
United States [Member] | Financial Institution One [Member] | ||||
Cash and cash equivalents | 22,900 | 22,900 | 6,500 | |
United States [Member] | Financial Institution Two [Member] | ||||
Cash and cash equivalents | 8,400 | 8,400 | ||
United States [Member] | Financial Institution Three [Member] | ||||
Cash and cash equivalents | 1,800 | 1,800 | ||
United States [Member] | Financial Institution Four [Member] | ||||
Cash and cash equivalents | 1,000 | 1,000 | ||
China [Mmeber] | Financial Institution One [Member] | ||||
Cash and cash equivalents | 10,700 | 10,700 | 14,500 | |
China [Mmeber] | Financial Institution Two [Member] | ||||
Cash and cash equivalents | 4,500 | 4,500 | $ 8,000 | |
China [Mmeber] | Financial Institution Three [Member] | ||||
Cash and cash equivalents | 1,000 | 1,000 | ||
Japan [Member] | Financial Institution One [Member] | ||||
Cash and cash equivalents | 22,000 | 22,000 | ||
Japan [Member] | Financial Institution Two [Member] | ||||
Cash and cash equivalents | $ 6,200 | $ 6,200 | ||
Morinda [Member] | United States [Member] | ||||
Concentration risk, percentage | 90.00% | |||
No Single Customer [Member] | ||||
Concentration risk, percentage | 10.00% | 10.00% | ||
No Single Customer [Member] | Accounts Receivable [Member] | ||||
Concentration risk, percentage | 10.00% | |||
One Customer [Member] | ||||
Concentration risk, percentage | 11.00% | 11.00% | ||
One Customer [Member] | Accounts Receivable [Member] | ||||
Concentration risk, percentage | 11.00% | |||
Consolidated Net Revenue [Member] | ||||
Concentration risk, percentage | 70.00% | |||
Max and Other Noni-Based Beverage Products [Member] | Morinda [Member] | ||||
Concentration risk, percentage | 85.00% | |||
No Single Supplier [Member] | ||||
Concentration risk, percentage | 10.00% | |||
Two Customer [Member] | Accounts Receivable [Member] | ||||
Concentration risk, percentage | 10.00% |
Segments and Geographic Conce_2
Segments and Geographic Concentrations (Details Narrative) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019USD ($)ft² | Dec. 31, 2018USD ($) | |
Number of operating segment | ft² | 2 | |
Concentration risk, percentage | 70.00% | |
Property and equipment, net carrying value | $ 27,476 | $ 57,281 |
License Agreement [Member] | ||
Additions to property and equipment, description | Consists of additions to property and equipment of $0.9 million and $0.8 million for the fair value of a license agreement obtained through the issuance of stock options as discussed in Note 5. | |
United States [Member] | ||
Property and equipment, net carrying value | $ 22,000 | 50,600 |
Japan [Member] | ||
Property and equipment, net carrying value | $ 30,700 |
Segments and Geographic Conce_3
Segments and Geographic Concentrations - Summary of Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | ||
Total revenue | $ 66,348 | $ 13,363 | $ 124,655 | $ 24,921 | ||
Total gross profit | 41,649 | 1,760 | 80,225 | 4,376 | ||
Total assets | 331,701 | 331,701 | $ 286,932 | |||
Total capital expenditures | 1,874 | 2,286 | 64 | |||
Morinda [Member] | ||||||
Total revenue | 52,060 | 100,282 | ||||
Total gross profit | 40,469 | 78,174 | ||||
Total assets | 216,464 | 216,464 | 206,222 | |||
Total capital expenditures | 461 | 577 | ||||
NewAge [Member] | ||||||
Total revenue | 14,288 | 13,363 | 24,373 | 24,921 | ||
Total gross profit | 1,180 | 1,760 | 2,051 | 4,376 | ||
Total assets | 115,237 | 115,237 | $ 80,710 | |||
Total capital expenditures | $ 1,414 | $ 1,709 | [1] | $ 64 | ||
[1] | Consists of additions to property and equipment of $0.9 million and $0.8 million for the fair value of a license agreement obtained through the issuance of stock options as discussed in Note 5. |
Segments and Geographic Conce_4
Segments and Geographic Concentrations - Schedule of Net revenue by geographic region (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Total revenue | $ 66,348 | $ 13,363 | $ 124,655 | $ 24,921 |
United States [Member] | ||||
Total revenue | 16,945 | 13,363 | 33,400 | 24,921 |
International [Member] | ||||
Total revenue | $ 49,403 | $ 91,255 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Jul. 31, 2019 | Jul. 10, 2019 | May 30, 2019 | Jun. 30, 2018 | Jun. 30, 2018 |
Number of shares stock | $ 3,293,000 | $ 3,293,000 | |||
BWR Merger Agreement [Member] | |||||
Total consideration amount | $ 5,900,000 | ||||
Subsequent Event [Member] | BWR Merger Agreement [Member] | |||||
Total consideration amount | $ 5,900,000 | ||||
Repayment of outstanding indebtedness | $ 2,500,000 | ||||
Stock issued during the period | 700,000 | ||||
Number of shares stock | $ 2,900,000 | ||||
Business combination, agreement description | The BWR Merger Agreement provided that if BWR's working capital set forth on the closing date balance sheet is negative, then the 700,000 shares issuable to the Seller will be reduced to account for the deficiency. The shares of Common Stock, as adjusted for any working capital deficiency, are expected to be issued in the first half of August 2019. | ||||
Subsequent Event [Member] | BWR Merger Agreement [Member] | Seller [Member] | |||||
Cash consideration | $ 500,000 | ||||
Subsequent Event [Member] | Interest Rate Swap Agreement [Member] | |||||
Total notional amount | $ 10,000,000 | ||||
Subsequent Event [Member] | Interest Rate Swap Agreement [Member] | May 1, 2023 [Member] | |||||
Rate of interest, percentage | 5.40% | ||||
Subsequent Event [Member] | Interest Rate Swap Agreement [Member] | May 1, 2023 [Member] | Prime Rate [Member] | |||||
Rate of interest, percentage | 0.50% | ||||
Subsequent Event [Member] | Offering Agreement [Member] | |||||
Sale of stock, shares | 542,000 | ||||
Proceeds from common stock sold | $ 2,100,000 |