Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 11, 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 | Sep. 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 | 78,393,965 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 68,373 | $ 42,517 |
Accounts receivable, net of allowance of $191 and $134, respectively | 12,573 | 9,837 |
Inventories | 38,242 | 37,148 |
Prepaid expenses and other | 9,452 | 6,473 |
Total current assets | 128,640 | 95,975 |
Long-term assets: | ||
Identifiable intangible assets, net | 66,489 | 67,830 |
Property and equipment, net | 26,639 | 57,281 |
Goodwill | 33,545 | 31,514 |
Right-of-use assets | 38,954 | 18,489 |
Deferred income taxes | 10,981 | 8,908 |
Restricted cash and other | 8,428 | 6,935 |
Total assets | 313,676 | 286,932 |
Current liabilities: | ||
Accounts payable | 13,428 | 8,960 |
Accrued liabilities | 51,283 | 34,019 |
Current portion of business combination liabilities | 5,432 | 8,718 |
Current maturities of long-term debt | 11,090 | 3,369 |
Total current liabilities | 81,233 | 55,066 |
Long-term liabilities: | ||
Business combination liabilities, net of current portion | 900 | 43,412 |
Long-term debt, net of current maturities | 13,149 | 1,325 |
Operating lease liabilities, net of current portion: Lease liability | 35,475 | 13,686 |
Operating lease liabilities, net of current portion: Deferred lease financing obligation | 16,702 | |
Deferred income taxes | 7,290 | 9,747 |
Other | 8,880 | 9,160 |
Total liabilities | 163,629 | 132,396 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity: | ||
Common Stock; $0.001 par value. Authorized 200,000 shares; issued and outstanding 78,274 and 75,067 shares as of September 30, 2019 and December 31, 2018, respectively | 78 | 75 |
Additional paid-in capital | 196,105 | 176,471 |
Accumulated other comprehensive income | 484 | 626 |
Accumulated deficit | (46,620) | (22,636) |
Total stockholders' equity | 150,047 | 154,536 |
Total liabilities and stockholders' equity | $ 313,676 | $ 286,932 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance | $ 191 | $ 134 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 200,000,000 | 200,000,000 |
Common Stock, shares issued | 78,274,000 | 75,067,000 |
Common Stock, shares outstanding | 78,274,000 | 75,067,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Net revenue | $ 69,828 | $ 13,243 | $ 194,483 | $ 38,164 |
Cost of goods sold | 29,532 | 11,544 | 73,962 | 32,089 |
Gross profit | 40,296 | 1,699 | 120,521 | 6,075 |
Operating expenses: | ||||
Commissions | 21,185 | 356 | 58,830 | 1,029 |
Selling, general and administrative | 26,104 | 4,338 | 81,121 | 12,736 |
Change in fair value of earnout obligations | (6,244) | (12,909) | 100 | |
Impairment of right-of-use lease assets | 1,500 | |||
Depreciation and amortization expense | 2,241 | 416 | 6,494 | 1,454 |
Total operating expenses | 43,286 | 5,110 | 135,036 | 15,319 |
Operating loss | (2,990) | (3,411) | (14,515) | (9,244) |
Non-operating income (expenses): | ||||
Gain (loss) from sale of property and equipment | (85) | 6,357 | ||
Gain (loss) from change in fair value of derivatives | (166) | 304 | ||
Interest expense | (727) | (44) | (3,129) | (225) |
Other expense, net | (48) | (49) | (233) | (53) |
Loss before income taxes | (4,016) | (3,504) | (11,216) | (9,522) |
Income tax expense | (6,671) | (12,768) | ||
Net loss | (10,687) | (3,504) | (23,984) | (9,522) |
Other comprehensive income: | ||||
Foreign currency translation adjustments, net of tax | (1,138) | (142) | ||
Comprehensive loss | $ (11,825) | $ (3,504) | $ (24,126) | $ (9,522) |
Net loss per share attributable to common stockholders (basic and diluted) | $ (0.14) | $ (0.08) | $ (0.31) | $ (0.24) |
Weighted average number of shares of Common Stock outstanding (basic and diluted) | 78,076,000 | 43,346,000 | 76,550,000 | 39,492,000 |
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 | (1) | ||||
Issuance of common stock for conversion of Series B Preferred Stock, shares | (169,000) | 1,354,000 | ||||
Issuance of common stock for conversion of Series C Preferred Stock | $ (7) | 7 | ||||
Issuance of common stock for conversion of Series C Preferred Stock, Shares | 7,000 | (6,900,000) | ||||
Issuance of common stock for Cashless exercise of options and warrants | ||||||
Issuance of common stock for Cashless exercise of options and warrants, Shares | 108,000 | |||||
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 | $ 19 | 43,581 | 43,600 | |||
Issuance of common stock for public offering, net of offering costs, shares | 18,660,000 | |||||
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 | 1,486 | 1,487 | |||
Issuance of common stock for Conversion of Series B promissory notes, shares | 741,000 | |||||
Stock-based compensation related to stock options | 476 | 476 | ||||
Fair value of stock options issued for license agreement | ||||||
Net loss | (9,522) | (9,522) | ||||
Balance at Sep. 30, 2018 | $ 49 | 109,548 | (20,023) | 89,574 | ||
Balance, shares at Sep. 30, 2018 | 7,000 | 49,514,000 | ||||
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 Business combination with BWR | 453 | 453 | ||||
Issuance of common stock for Business combination with BWR, Shares | 108,000 | |||||
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 | $ 3 | 13,232 | 13,235 | |||
Issuance of common stock for ATM public offering, net of offering costs, shares | 2,767,000 | |||||
Issuance of common stock for Employee services | 31 | 31 | ||||
Issuance of common stock for Employee services, shares | 6,000 | |||||
Stock-based compensation expense | 4,086 | 4,086 | ||||
Fair value of stock options issued for license agreement | 838 | 838 | ||||
Net change in other comprehensive income | (142) | (142) | ||||
Net loss | (23,984) | (23,984) | ||||
Balance at Sep. 30, 2019 | $ 78 | $ 196,105 | $ 484 | $ (46,620) | $ 150,047 | |
Balance, shares at Sep. 30, 2019 | 78,274,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (23,984) | $ (9,522) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 6,776 | 1,454 |
Non-cash lease expense | 4,910 | 71 |
Stock-based compensation expense | 5,278 | 1,387 |
Accretion and amortization of debt discount and issuance costs | 1,796 | 185 |
Impairment of right-of-use lease assets | 1,500 | |
Make-whole premium on early payment of Siena Revolver | 480 | |
Issuance of Common Stock for employee services | 31 | |
Change in fair value of earnout obligations | (12,909) | 100 |
Deferred income taxes | (4,919) | |
Gain from sale of property and equipment | (6,357) | |
Gain from change in fair value of derivatives | (304) | |
Issuance of Common Stock for accrued interest | 61 | |
Changes in operating assets and liabilities, net of effects of business combination: | ||
Accounts receivable | (1,912) | (236) |
Inventories | 1,190 | (2,955) |
Prepaid expenses, deposits and other | (3,201) | 61 |
Accounts payable | 657 | (2,477) |
Other accrued liabilities | 10,030 | (1,395) |
Net cash used in operating activities | (20,941) | (13,266) |
Net proceeds from sale of land and building in Japan: | ||
Related to sale of property | 35,873 | |
Repair obligations | 1,675 | |
Capital expenditures for property and equipment | (2,576) | (70) |
Security deposit under sale leaseback arrangement | (1,799) | |
Acquistion of BWR net of cash Acquired of $537 | (963) | |
Net cash provided by (used in) investing activities | 32,210 | (70) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from borrowings | 52,068 | 4,565 |
Proceeds from deferred lease financing obligation | 17,640 | |
Proceeds from issuance of common stock | 13,529 | 43,863 |
Proceeds from exercise of stock options | 418 | |
Principal payments on borrowings | (34,415) | (6,750) |
Principal payments on business combination obligations | (34,000) | |
Debt issuance costs paid | (931) | |
Payment of make-whole premium | (480) | |
Payments under deferred lease financing obligation | (307) | |
Payments for deferred offering costs | (195) | |
Net cash provided by financing activities | 13,327 | 41,678 |
Effect of foreign currency translation changes | 1,578 | |
Net change in cash, cash equivalents and restricted cash | 26,174 | 28,342 |
Cash, cash equivalents and restricted cash at beginning of period | 45,856 | 285 |
Cash, cash equivalents and restricted cash at end of period | 72,030 | 28,627 |
SUMMARY OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | ||
Cash and cash equivalents at end of period | 68,373 | 28,627 |
Restricted cash at end of period | 3,657 | |
Total at end of period | 72,030 | 28,627 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 584 | 253 |
Cash paid for income taxes | 2,388 | |
Fair value of assets acquired: | ||
Identifiable assets, excluding cash, cash equivalents and restricted cash | 6,517 | |
Goodwill | 2,031 | |
Liabilities assumed | (7,132) | |
Net assets acquired | 1,416 | |
Issuance of common stock in business combinations | (453) | |
Cash paid, net of cash acquired of $ 537 | 963 | |
Other non-cash investing and financing activities: | ||
Right-of-use assets acquired in exchange for operating lease liabilities | 26,899 | 214 |
Fair value of warrant issued for license agreement | 838 | |
Restricted stock granted for prepaid compensation | 500 | 353 |
Accrued liability for patents | 163 | |
Increase in payables for deferred offering costs | 99 | |
Common stock issued for settlement of principal balance under note payable | $ 1,488 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Parenthetical) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Statement of Cash Flows [Abstract] | |
Cash paid for acquisition | $ 537 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 9 Months Ended |
Sep. 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 Direct Store Distribution (“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 nine months ended September 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 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 five wholly-owned subsidiaries, NABC, Inc., NABC Properties, LLC (“NABC Properties”), New Age Health Sciences Holdings, Inc., Morinda and BWR. 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 Holdings, Inc. owns the Company’s intellectual property and manages operating performance in the medical and hospital channels. BWR owns key licensing and distribution rights in the United States for some of the world’s leading beverage brands. 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 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 nine months ended September 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 September 30, 2019 and operating results for the three and nine months ended September 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 of 1933, as amended (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’s status as an emerging growth company will terminate on December 31, 2019. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES 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, valuation assumptions for earnout obligations, 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 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, integrate recent business combinations, its ability to attract new customers and expand sales to existing customers, the risks of attracting and retaining qualified management personnel, the risks related to litigation and operating in a highly regulated business environment, 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 ability to generate significant net revenue and cash flows from the use of this expertise. Recent Accounting Pronouncements Recently Adopted Accounting 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 Compensation—Stock Compensation 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. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Business Combination | NOTE 3 — BUSINESS COMBINATIONS BWR Merger Agreement Overview. Business Combinations Fair Value Measurement In connection with the Merger Agreement, the Company made a loan to BWR in the amount of $1.0 million in June 2019. The Merger Agreement provided that if BWR’s working capital set forth on its opening balance sheet was negative, then the number of shares of Common Stock issuable by the Company would be reduced from 700,000 shares to account for the deficiency. The opening balance sheet resulted in negative working capital of approximately $2.5 million, which resulted in a reduction of the number of shares issued at closing to 107,602 shares. Accordingly, the estimated fair value of the shares was approximately $453,000 based on the fair value of the Company’s Common Stock of $4.21 per share on the BWR Closing Date. The Merger Agreement also provided for a cash payment of $0.5 million to the former owner of BWR. The total purchase consideration for the transaction consisted of the following (in thousands, except share number): Pre-closing cash advance to BWR $ 1,000 Cash paid to former owner of BWR at closing 500 Fair value of 107,602 shares of Common stock issued 453 Total purchase consideration $ 1, 953 As provided for in the Merger Agreement, the Company paid approximately $2.5 million after the BWR Closing Date to repay the outstanding principal and interest owed by BWR under its existing line of credit and certain other liabilities. Purchase Price Allocation. Current assets: Cash and cash equivalents $ 537 Accounts receivable 1,293 Inventories 2,398 (1) Prepaid expenses and other 452 Total current assets acquired 4,680 Identifiable intangible assets 1,530 (2) Right-of-use lease assets 708 (3) Property, equipment and other 136 Total identifiable assets acquired 7,054 Current liabilities assumed: Accounts payable and accrued liabilities (3,756 ) (3) Note payable under line of credit (2,353 ) Deferred income taxes (401 ) (4) Long-term operating lease liabilities assumed (622 ) (3) Net identifiable assets acquired (78 ) Goodwill 2,031 (5) Total purchase price allocation $ 1,953 (1) Based on the report of an independent valuation specialist, the fair value of work-in-process and finished goods inventories on the BWR Closing Date exceeded the historical carrying value by approximately $150,000. This amount represents an element of built-in profit on the BWR Closing Date and will be charged to cost of goods sold as the related inventories are sold. The fair value of inventories was determined using both the “cost approach” and the “market approach.” (2) The fair value of identifiable intangible assets was $1.5 million and was determined based on the report of an independent valuation specialist, primarily using variations of the “income approach,” which is based on the present value of the future after-tax cash flows attributable to each identifiable intangible asset. (3) In order to conform with the Company’s accounting policies, BWR adopted ASU No. 2016-02, Leases (4) BWR’s operations were previously taxed on the individual income tax return of the sole owner, whereby no deferred income tax assets or liabilities had been recognized for U.S. federal and state income tax purposes. Upon consummation of the BWR Merger, BWR’s operations are included in the consolidated income tax returns of the Company. Accordingly, an adjustment of approximately $0.4 million has been reflected for net deferred income tax liabilities that resulted from differences between the financial reporting basis and the income tax basis of such assets and liabilities. (5) Goodwill related to BWR is recognized for the difference between the total consideration transferred to consummate the BWR Merger of $0.9 million and the fair value of net identifiable assets acquired of negative $1.1 million. Goodwill and intangible assets in connection with the BWR business combination are not expected to be deductible for income tax purposes. Consulting Agreement. Commencing on the effective date of the ICA, the Company is required to provide special performance incentives to Mr. Sonnois consisting of issuing unregistered shares of Common Stock with a fair value of $1.5 million if NABD’s gross profit is $10.0 million or more for the first 12 consecutive months of the agreement, an additional $1.5 million of shares if NABD’s gross profit is $20.0 million or more for the first 24 consecutive months, and an additional $2.0 million of shares if NABD’s gross profit is $35.0 million or more for the first 36 consecutive months of the agreement. All shares issued for the special performance incentives will vest immediately upon achievement of the performance targets. If the Company elects not to terminate or not renew the ICA, a payment to Mr. Sonnois equal to six months of base compensation is required. Future bonuses and incentive compensation based on future gross profit of NABD will be charged to expense in the period earned. Morinda Merger Agreement On December 2, 2018, the Company and New Age Health Sciences Holdings, Inc., a newly formed Utah corporation and wholly-owned subsidiary of the Company (“Merger Sub”), entered into a Plan of Merger (the “Morinda Merger Agreement”) with Morinda. 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, and (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 (i) dividends 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, and (ii) dividends at a rate of 1.5% per annum (the “Annual Dividend”) based on the maximum Milestone Dividend amount. 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 September 30, 2019 and December 31, 2018, the estimated fair value of the Series D Preferred Stock was approximately $0.2 million and $13.1 million, respectively. For the three and nine months ended September 30, 2019, the reduction in the fair value of the Series D Preferred Stock resulted in an unrealized gain of approximately $6.2 million and $12.9 million, respectively. This unrealized gain 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 also provides that 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 must be registered under the Securities Act. The Series D Preferred Stock terminates on April 15, 2020. The obligation to pay the Annual Dividend for $0.2 million is included in the fair value of the Milestone Dividend earnout liability as of September 30, 2019. 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 Morinda 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 earnout obligations related to business combinations with Marley Beverage Company, LLC (“Marley”) and Morinda, and payables to the former Morinda stockholders as of September 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 - (2)(5) 7,732 (2)(5) EWC payable in July 2020 5,207 (2)(5) 4,976 (2)(5) Earnout under Series D preferred stock 225 (3) 13,134 (3) Contingent on financing event - (4)(5) 24,402 (4)(5) Total 6,332 52,130 Less current portion 5,432 8,718 Long-term portion $ 900 $ 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 September 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. 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 nine months ended September 30, 2018. (2) Pursuant to a separate agreement between the parties, EWC is payable to Morinda’s stockholders as follows: $1.0 million in April 2019, $8.0 million in July 2019, and the remainder of $5.5 million 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. As of September 30, 2019, the reduction in fair value was due to an assessment that the Adjusted EBITDA target will not be achieved, and that the only value associated with the Milestone Dividend is for the Annual Dividend. As of September 30, 2019, fair value 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. This earnout obligation 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 September 30, 2019. The valuation methodology was performed through an option pricing model based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 20.0%, the risk-free interest rate of 1.8%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 19.7%, and an estimated credit spread of 6.5%. (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 $0.1 million and $1.1 million for the three and nine months ended September 30, 2019, respectively, which is included in interest expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. Net Revenue and Earnings Related to Business Combinations For the nine months ended September 30, 2019, the accompanying unaudited condensed consolidated statement of operations includes net revenue of $155.1 million and a net loss of $4.1 million for the post-acquisition results of operations of Morinda. For the period from July 10, 2019 through September 30, 2019, the accompanying unaudited condensed consolidated statements of operations and comprehensive loss include net revenue of $2.4 million and a net loss of $0.9 million for the post-acquisition results of operations of BWR. Unaudited Pro Forma Disclosures The following unaudited pro forma financial results for the three and nine months ended September 30, 2019 reflect (i) the historical operating results of the Company, and (ii) the unaudited pro forma results of BWR prior to its acquisition date of July 10, 2019, as if the BWR business combination had occurred as of January 1, 2018. The following unaudited pro forma financial results for the three and nine months ended September 30, 2018 reflect (i) the historical operating results of the Company, (ii) the unaudited pro forma results of Morinda prior to its acquisition date of December 21, 2018, and (iii) the unaudited pro forma results of BWR prior to its acquisition date of July 10, 2019, as if the Morinda and BWR business combinations 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. As applicable for the periods presented, the calculations of pro forma net revenue and pro forma net loss give effect to the pre-acquisition operating results of Morinda and BWR based on (i) the historical net revenue and net income (loss) of Morinda and BWR, (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. Based on these assumptions, the following table summarizes on an unaudited pro forma basis the Company’s results of operations for the three and nine months ended September 30, 2019 and 2018 (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net revenue $ 70,189 $ 76,144 $ 203,007 $ 223,759 Net loss $ (10,823 ) $ (1,799 ) $ (25,425 ) $ (5,636 ) Net loss per share- basic and diluted $ (0.14 ) $ (0.04 ) $ (0.33 ) $ (0.13 ) Weighted average number of shares of common stock outstanding- basic and diluted 78,184 45,684 76,658 41,830 |
Supplemental Information
Supplemental Information | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Information | NOTE 4 — SUPPLEMENTAL INFORMATION Inventories Inventories consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): 2019 2018 Raw materials $ 12,230 $ 12,538 Work-in-process 2,006 907 Finished goods, net 24,006 23,703 Total inventories $ 38,242 $ 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 was charged to cost of goods sold as the related inventories were sold. For the three and nine months ended September 30, 2019, the Closing Date inventories were sold which resulted in a charge to cost of goods sold of approximately $0.4 million and $2.1 million, respectively. Please refer to Note 3 for discussion of the built-in profit related to the inventories acquired from BWR in July 2019. Prepaid Expenses and Other Current Assets As of September 30, 2019 and December 31, 2018, prepaid expenses and other current assets consisted of the following (in thousands): 2019 2018 Prepaid expenses and deposits $ 8,750 $ 4,982 Prepaid stock-based compensation 240 347 Supplier and other receivables 462 1,144 Total $ 9,452 $ 6,473 Property and Equipment As of September 30, 2019 and December 31, 2018, property and equipment consisted of the following (in thousands): 2019 2018 Land $ 37 $ 25,726 Buildings and improvements 16,419 19,822 Leasehold improvements 3,728 4,398 Machinery and equipment 5,358 5,208 Office furniture and equipment 2,324 2,087 Transportation equipment 1,704 1,727 Total property and equipment 29,570 58,968 Less accumulated depreciation (2,931 ) (1,687 ) Property and equipment, net $ 26,639 $ 57,281 Depreciation related to property and equipment is included in both operating expenses and in cost of goods sold in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. Total depreciation expense amounted to $0.9 million and $0.1 million for the three months ended September 30, 2019 and 2018, respectively. Depreciation expense amounted to $2.5 million and $0.4 million for the nine months ended September 30, 2019 and 2018, respectively. Repairs and maintenance costs amounted to $0.4 million and $0.1 million for the three months ended September 30, 2019 and 2018, respectively. Repairs and maintenance costs amounted to $1.5 million and $0.6 million for the nine months ended September 30, 2019 and 2018, respectively. Restricted Cash and Other As of September 30, 2019 and December 31, 2018, restricted cash and other long-term assets consisted of the following (in thousands): 2019 2018 Restricted cash $ 3,657 (1) $ 3,339 (1) Debt issuance costs, net 318 548 Prepaid stock-based compensation - 210 Deposits and other 4,453 2,838 Total $ 8,428 $ 6,935 (1) Restricted cash primarily represents long-term cash deposits held in a bank for a foreign governmental agency. This restricted cash is required to maintain the Company’s direct selling license to do business in China. Accrued Liabilities As of September 30, 2019 and December 31, 2018, accrued liabilities consisted of the following (in thousands): 2019 2018 Accrued commissions $ 9,885 $ 9,731 Accrued compensation and benefits 5,929 4,715 Accrued marketing events 2,836 (1) 3,757 (1) Deferred revenue 1,271 2,701 Income taxes payable 18,467 (2) 1,670 Current portion of operating lease liabilities: Lease liability 5,464 4,798 Deferred lease financing obligation 631 - Restricted stock obligations 304 (3) - Derivative liability 166 470 Other accrued liabilities 6,330 6,177 Total accrued liabilities $ 51,283 $ 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 $12.4 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 cumulative vesting related to the fair value as of September 30, 2019 for restricted stock awards required to be settled in cash, as discussed in Note 9. |
Goodwill and Identifiable Intan
Goodwill and Identifiable Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | NOTE 5 — GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS Goodwill Goodwill by reporting unit consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): Reporting Unit 2019 2018 Morinda $ 10,284 $ 10,284 Marley 9,418 9,418 Maverick 5,149 5,149 Xing 4,506 4,506 PMC 1,768 1,768 BWR 2,031 - B&R 389 389 Total Goodwill $ 33,545 $ 31,514 Identifiable Intangible Assets Identifiable intangible assets consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): September 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 $ (1,061 ) $ 19,359 $ 20,420 $ (40 ) $ 20,380 Other 6,828 (700 ) 6,128 5,989 (318 ) 5,671 Manufacturing processes and recipes 11,610 (972 ) 10,638 11,610 (380 ) 11,230 Trade names 12,587 (1,229 ) 11,358 12,301 (584 ) 11,717 IPC distributor sales force 9,760 (761 ) 8,999 9,760 (29 ) 9,731 Customer relationships 6,860 (1,514 ) 5,346 6,444 (1,194 ) 5,250 Patents 4,263 (638 ) 3,625 4,100 (433 ) 3,667 Distribution rights and other 795 (11 ) 784 - - - Non-compete agreements 306 (54 ) 252 186 (2 ) 184 Total identifiable intangible assets $ 73,429 $ (6,940 ) $ 66,489 $ 70,810 $ (2,980 ) $ 67,830 Impairment Risk Over the past several years, the Company has continued to invest in business combinations to accelerate its core business strategy of developing, marketing, selling, and distributing healthy liquid dietary supplements and ready-to-drink beverages. The carrying value of the New Age segment includes several reporting units with goodwill and identifiable intangible assets with an aggregate net carrying value of $46.7 million as of September 30, 2019. These intangible assets of the New Age segment primarily arose from a series of business combinations between April 2015 and June 2017. The acquisition of Maverick Brands, LLC (“Maverick”) in March 2017 resulted in total goodwill and identifiable intangible assets of $11.8 million, and the acquisition of Marley Beverage Company LLC (“Marley”) in June 2017 resulted in total goodwill and identifiable intangible assets of $18.7 million. As of the date of the Company’s 2018 annual impairment test, the estimated fair value of each of the New Age segment’s reporting units exceeded the carrying value of the related goodwill and identifiable intangible assets. The Company considered events and circumstances impacting the Maverick and Marley businesses during the third quarter of 2019 and concluded that it is not considered “more likely than not” that an impairment of the goodwill balances of these reporting units exists. However, the Company’s standard practice is to perform an annual goodwill impairment test during the fourth quarter of each calendar year. During the fourth quarter of each year, the Company also completes its annual budget process to reassess strategic priorities and forecast future operating performance and capital spending. Accordingly, the Company will perform an updated quantitative assessment of the fair value of each of its reporting units for the New Age and Morinda segments during the fourth quarter of 2019. This annual quantitative assessment involves substantial judgment and estimation. If sustained decline in a reporting unit’s revenues and earnings is projected, it would have a significant negative impact on the fair value of the reporting unit which could result in material impairment charges in the future. Such a decline could be driven by, among other things: (i) changes in strategic priorities; (ii) anticipated decreases in product pricing, sales volumes, and long-term growth rates as a result of competitive pressures or other factors; and (iii) the inability to achieve, or delays in achieving the goals of the Company’s strategic initiatives and synergies. Adverse changes to macroeconomic factors, such as increases to long-term interest rates, would also negatively impact the fair value of the reporting units. The Maverick and Marley reporting units have experienced increasing market pressures throughout 2019 that have resulted in lower than expected revenues, gross margins and earnings. The upcoming quantitative assessment may result in impairment charges if there is any further deterioration in business conditions or negative changes in market factors, or if the recent trend of declining results for the Maverick and Marley reporting units is not remediated. 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, and 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, less certain marketing and distribution costs, on future sales of approved licensed products, which fee shall be reviewed annually by the parties. Through September 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 other license agreements in the identifiable intangible assets table above. This intangible asset is being amortized over the remaining term of the Marley license. The 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%. |
Leases
Leases | 9 Months Ended |
Sep. 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. The Company has made an accounting policy election to not apply the recognition requirements for short-term leases, which have historically been insignificant. For the three months ended September 30, 2019 and 2018, the Company had operating lease expense of $2.8 million and $0.4 million, respectively. For the nine months ended September 30, 2019 and 2018, the Company had operating lease expense of $8.1 million and $1.0 million, respectively. On January 21, 2019, the Company entered into a lease for approximately 11,200 square feet of office space in downtown 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 operating 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 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 right-of-use (“ROU”) assets and operating lease liabilities during the nine months ended September 30, 2019. The Company determined the operating 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 operating 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. In connection with the BWR Merger discussed in Note 3, the Company assumed a lease that provides for aggregate cash payments of $0.9 million through the expiration date in September 2025. The Company has an option to extend the lease for an additional period of five years that would result in additional cash payments of $0.8 million. The Company determined the operating lease liability of approximately $0.7 million assuming that the Company will not exercise its option to extend the lease for an additional five years and based upon a discount rate of 6.1%. 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 with the option to terminate any time after seven years. The monthly lease cost is ¥20.0 million (approximately $185,000 based on the exchange rate as of September 30, 2019) for the initial seven-year period of the lease term. After the seventh year of the lease term, 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 seventh year of the lease 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 $2.6 million mortgage on the building was repaid at closing and the related interest rate swap agreement discussed in Note 7 was cancelled, the refundable security deposit of $1.8 million was paid at closing, 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 Deferred lease financing obligation (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 deferred lease financing obligation. Accordingly, the operating lease payments are allocated to (i) reduce the operating lease liability, (ii) reduce the principal portion of the deferred lease financing obligation, and (iii) to recognize imputed interest expense at an incremental borrowing rate of 3.5% on the deferred lease financing obligation over the 20-year lease term. The present value of the future lease payments amounted to a gross operating lease liability of $25.0 million. After deducting the $17.6 million deferred lease financing obligations, the Company recognized an initial ROU asset and operating lease liability of approximately $13.1 million. Impairment In June 2019, the Company began attempting to sublease a portion of its ROU 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 in June 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 September 30, 2019 and December 31, 2018, the carrying value of ROU assets, operating lease obligations, and the deferred lease financing obligation were as follows (in thousands): September 30, December 31, 2019 2018 Right-of-Use Assets $ 38,954 $ 18,489 Operating Lease Liabilities: Current $ 5,464 $ 4,798 Long-term 35,475 13,686 Total $ 40,939 $ 18,484 Deferred Lease Financing Obligation: Current $ 631 $ - Long-term 16,702 - Total $ 17,333 $ - As of September 30, 2019 and December 31, 2018, the weighted average remaining lease term under operating leases was 13.2 and 5.9 years, respectively. As of September 30, 2019 and December 31, 2018, the weighted average discount rate for operating lease liabilities was approximately 5.6% and 6.6%, respectively. Lease Commitments Future lease payments and amortization of the related lease incentive obligation related to non-cancellable operating lease agreements are as follows (in thousands): 12-Months Ending September 30, 2020 $ 8,848 2021 6,996 2022 6,433 2023 6,125 2024 5,834 Thereafter 43,092 Total lease payments 77,328 Less imputed interest (36,389 ) Present value of operating lease liabilities $ 40,939 |
Debt
Debt | 9 Months Ended |
Sep. 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%. As of September 30, 2019, the prime rate was 5.0% and the contractual rate applicable to outstanding borrowings under the Credit Facility was 5.5%. As discussed below, the Company has also entered into a swap agreement that provides for a total notional amount of $10.0 million at a fixed interest rate of approximately 5.4% through May 1, 2023. 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 September 30, 2019. On October 1, 2019, the Company elected to make a voluntary prepayment of $9.7 million 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 through September 30, 2019, followed by monthly principal payments of $125,000 plus interest through the Maturity Date of the Term Loan. 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. 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 nine months ended September 30, 2019. Additionally, the Company incurred a make-whole premium payment of $0.5 million that was also charged to interest expense for the nine months ended September 30, 2019. Summary of Debt As of September 30, 2019 and December 31, 2018, debt consisted of the following (in thousands): 2019 2018 EWB Credit Facility: Term loan, net of discount of $476 $ 14,524 $ - Revolver 9,700 - Installment notes payable 15 66 Siena Revolver - 2,000 Mortgage payable to a foreign bank - 2,628 (1) Total 24,239 4,694 Less current maturities (11,090 ) (3,369 ) Long-term debt, less current maturities $ 13,149 $ 1,325 (1) 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 September 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 September 30, 2020 $ 11,090 2021 1,500 2022 1,500 2023 10,625 Total $ 24,715 Interest Rate Swap Agreements As of 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. The Company entered into an interest rate swap agreement with EWB dated July 31, 2019. This swap 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%. As of September 30, 2019, the Company had an unrealized loss from this interest rate swap agreement of approximately $0.2 million that is included in accrued liabilities in the accompanying unaudited condensed consolidated balance sheet. 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. Please refer to Note 16 regarding a Second Amendment and Waiver to the Credit Facility. 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 nine months ended September 30, 2019. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 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 the offering for general corporate purposes, including working capital. Under the terms of the ATM Offering Agreement, the Company agreed to 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 September 30, 2019, an aggregate of approximately 2.8 million shares of Common Stock were sold for net proceeds of approximately $13.2 million. Total commissions and fees deducted from the net proceeds were $0.4 million and other offering costs of $0.3 million were incurred for the nine months ended September 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 Stock provides for the potential payment of up to $15.0 million contingent upon Morinda achieving certain post-closing milestones. As of September 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 Stock. Changes in Stockholders’ Equity Changes in stockholders’ equity for the three months ended September 30, 2019 were as follows (in thousands): Accumulated Additional Other Common Stock Paid-in Comprehensive Accumulated Shares Amount Capital Income Deficit Total Balances, June 30, 2019 77,624 $ 77 $ 192,034 $ 1,622 $ (35,933 ) $ 157,800 Issuance of Common Stock: ATM public offering, net of offering costs 542 1 2,093 - - 2,094 Business combination with BWR 108 - 453 - - 453 Stock-based compensation expense - - 1,525 - - 1,525 Net change in other comprehensive income - - - (1,138 ) - (1,138 ) Net loss - - - - (10,687 ) (10,687 ) Balances, September 30, 2019 78,274 $ 78 $ 196,105 $ 484 $ (46,620 ) $ 150,047 Changes in stockholders’ equity for the three months ended September 30, 2018 were as follows (in thousands): Additional Preferred Stock Common Stock Paid-in Accumulated Shares Amount Shares Amount Capital Deficit Total Balances, June 30, 2018 - $ - 39,926 $ 40 $ 68,476 $ (16,519 ) $ 51,997 Issuance of Common Stock for: Public offering, net of offering costs - - 16,100 16 40,290 - 40,306 Conversion of Series B promissory notes - - 288 - 616 - 616 Cashless exercise of options and warrants - - 100 - - - - Common Stock exchanged for Series C Preferred Stock 7 - (6,900 ) (7 ) 7 - - Stock-based compensation related to stock options - - 159 - 159 Net loss - - - - - (3,504 ) (3,504 ) Balances, September 30, 2018 7 $ - 49,514 $ 49 $ 109,548 $ (20,023 ) $ 89,574 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 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 September 30, 2019, all of the 10.0 million shares authorized under the 2019 Plan were 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. The LTI Plan has been superseded by the 2019 Plan and, accordingly, no further grants will be made under the LTI Plan. Stock Option Activity The following table sets forth the summary of stock option activity under the LTI Plan for the nine months ended September 30, 2019 (shares in thousands): Shares Price (1) Term (2) Outstanding, beginning of period 2,786 $ 2.84 9.0 Grants to: Employees 363 $ 3.63 Non-employees 25 $ 5.30 Forfeited (328 ) $ 3.58 Exercised (200 ) $ 2.09 Outstanding, end of period 2,646 (3) $ 2.94 8.4 Vested, end of period 852 (4) $ 1.93 7.5 (1) Represents the weighted average exercise price. (2) Represents the weighted average remaining contractual term until the stock options expire. (3) As of September 30, 2019 and December 31, 2018, the aggregate intrinsic value of stock options outstanding was $1.3 million and $6.6 million, respectively. (4) As of September 30, 2019 and December 31, 2018, the aggregate intrinsic value of vested stock options was $0.7 million and $3.1 million, respectively. As of September 30, 2019, unrecognized compensation expense related to unvested stock options was $3.7 million. This amount is expected to be recognized on a straight-line basis over the weighted-average vesting period of 2.2 years. In July 2019, the Company entered into a modification agreement for approximately 0.3 million shares of outstanding stock options. The modification resulted in an extension of the exercise period from July 2019 until July 2020, which increased the fair value of the stock options by approximately $0.8 million. The modified options became vested in August 2019, and the Company recognized a charge of $0.8 million for the three months ended September 30, 2019. For the nine months ended September 30, 2019, the valuation assumptions for the modified options and other stock options granted for an aggregate of 388,000 shares granted under the LTI Plan were estimated on the date of grant or modification using the BSM option-pricing model, with the following weighted-average assumptions: Stock Options Valuation Inputs Granted Modified Grant date fair value of common stock (exercise price) $ 3.83 $ 4.75 Expected life (in years) 6.5 1.0 Volatility 110 % 138 % Dividend yield 0 % 0 % Risk-free interest rate 1.7 % 1.9 % Based on the assumptions set forth above, during the nine months ended September 30, 2019, the weighted-average fair value of stock options granted and modified was $3.26 per share and $3.40 per share, respectively. The BSM model requires various 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 unless 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 nine months ended September 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 $ 3,236 474 $ 2,490 629 $ 64 Restricted shares granted 461 (1) 2,258 (1) - - - - Other 35 79 - - - - Forfeited and not expected to vest (219 ) (2) (260 ) (2) (318 ) (5) (1,673 ) (5) - - Modification of award - (95 ) - - - - Fair value adjustment - - - (388 ) (7) - - Vested shares and expense (423 ) (2,870 ) - (304 ) (629 ) (8) (64 ) (8) Outstanding, end of period 1,005 (3) $ 2,348 (3) 156 $ 125 - $ - Intrinsic value, end of period $ 2,774 (4) $ 430 (4)(6) $ - Weighted average remaining term for recognition of unvested expense 0.8 1.0 - (1) The weighted average fair value was $4.90 per share based on the closing price of the Company’s Common Stock on the grant date. (2) Forfeitures of LTI Plan Equity Awards include 162,000 shares that vest only if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. Based on the Company’s current assessment, these shares are not expected to vest. Therefore, all previously recognized compensation expense related to these shares was reversed for the three months ended September 30, 2019. (3) As of September 30, 2019, unvested shares of restricted stock consist of approximately 1.0 million shares that will be issued upon vesting, and 0.1 million shares that are included in issued and outstanding shares but are subject to restrictive vesting conditions. For unvested shares that have been issued, $240,000 of unvested compensation is included in prepaid expenses and other current assets as of September 30, 2019. (4) The intrinsic value was based on the closing price of the Company’s common stock of $2.76 per share on September 30, 2019. (5) Forfeitures of LTI Plan Liability Awards include approximately 317,000 shares that vest only if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. Based on the Company’s current assessment, these shares are not expected to vest. Therefore, all previously recognized compensation expense related to these shares was reversed for the three months ended September 30, 2019. (6) 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 September 30, 2019, approximately $0.3 million is included in current liabilities. (7) The change in unvested compensation resulted from a decrease in the closing price of the Company’s Common Stock for the nine months ended September 30, 2019. (8) 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. Stock-based Compensation Expense Substantially all stock-based compensation expense is included in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. The table below summarizes stock-based compensation expense related to stock options and restricted stock awards for the nine months ended September 30, 2019 and 2018 (in thousands): 2019 2018 Stock options awards: Employees $ 2,026 $ 557 Non-employees 14 - Restricted stock awards: Equity classified 2,934 830 Liability classified 304 - Total $ 5,278 $ 1,387 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 10 — INCOME TAXES The Company’s provision for income taxes for the three and nine months ended September 30, 2019 resulted in income tax expense of $6.7 million and $12.8 million, respectively. The effective tax rate as a percentage of pre-tax earnings for the three and nine months ended September 30, 2019 was negative 168% and negative 110%, respectively. The negative effective tax rate for the three months ended September 30, 2019 was due to foreign tax expense and a domestic valuation allowance. The valuation allowance was partially reduced by the acquisition of BWR. The negative effective tax rates for the nine months ended September 30, 2019 was primarily due to establishment of valuation allowances and income tax expense in foreign jurisdictions. A valuation allowance is established when necessary to reduce the deferred tax assets to amounts expected to be realized. As of September 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 income tax expense of $8.2 million for the nine months ended September 30, 2019. 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 allow income tax examinations for up to ten prior years. The total outstanding balance for liabilities related to unrecognized tax benefits as of September 30, 2019 was $0.4 million. There were no unrecognized tax benefits as of September 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 had federal net operating loss (“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. The Company’s ability to utilize net operating losses may be limited due to changes in its ownership as defined by Section 382 of the Internal Revenue Code (the Code). Under the provisions of Section 382 and 383 of the Code, a change in control, as defined by the Code, may impose an annual limitation on the amount of the Company’s net operating loss and tax credit carryforwards, and other tax attributes that can be used to reduce future tax liabilities. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 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 was included in the accompanying unaudited condensed consolidated balance sheets as of September 30, 2019 and December 31, 2018. After the executives retire, the deferred compensation obligation is payable over a period of 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 $0.2 million and $0.5 million for the three and nine months ended September 30, 2019, respectively. The Company did not have a 401(k) Plan for the three and nine months ended September 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 $3.4 million and $3.0 million as of September 30, 2019 and December 31, 2018, respectively. Of this amount, approximately $3.2 million and $2.9 million is included in other long-term liabilities in the accompanying unaudited condensed consolidated balance sheets as of September 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 in which 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 September 30, 2019 and December 31, 2018, the Company has recorded a current liability under 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 September 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 | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 12 — RELATED PARTY TRANSACTIONS For the nine months ended September 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 shares and 153,000 shares of Common Stock, respectively. 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 nine months ended September 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 | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | NOTE 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 nine months ended September 30, 2019 and 2018, basic and diluted net loss per share were the same since all Common Stock equivalents were anti-dilutive. As of September 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 2,646 1,486 Unissued restricted stock awards under LTI Plan 1,161 - Warrant issued for license agreement 200 - Total 4,007 1,486 |
Financial Instruments and Signi
Financial Instruments and Significant Concentrations | 9 Months Ended |
Sep. 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 value 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 September 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 September 30, 2019 and December 31, 2018. In addition, the net assets acquired in the business combinations discussed in Note 3 were 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 September 30, 2019 and December 31, 2018. The Company’s interest rate swaps, earnout obligations under business combinations, and embedded derivative liabilities 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 liabilities were recorded at fair market value and were 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 nine months ended September 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 nine months ended September 30, 2019, no single customer comprised more than 10% of the Company’s consolidated net revenue. For each of the three and nine months ended September 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 73% of the Company’s consolidated net revenue and 91% of Morinda’s net revenue for the nine months ended September 30, 2019 has been generated outside the United States, primarily in the Asia Pacific market. Morinda’s Tahitian Noni® Juice, MAX and other noni-based beverage products comprise over 82% of Morinda’s net revenue for the nine months ended September 30, 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 nine months ended September 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 are subject 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 September 30, 2019, the Company had cash and cash equivalents with three financial institutions in the United States with balances of $21.3 million, $3.0 million, and $0.7 million; two financial institutions in China with balances of $7.5 million and $3.8 million; and two financial institutions in Japan with balances of $20.7 million and $6.0 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 September 30, 2019, the Company did not have any customers with an accounts receivable balance in excess of 10% of consolidated accounts receivable. As of September 30, 2018, the Company had two customers that comprised 11% and 10% of accounts receivable, net. |
Segments and Geographic Concent
Segments and Geographic Concentrations | 9 Months Ended |
Sep. 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 80% 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 nine months ended September 30, 2019 and 2018, was as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Morinda $ 54,843 $ - $ 155,125 $ - New Age 14,985 13,243 39,358 38,164 Total revenue $ 69,828 $ 13,243 $ 194,483 $ 38,164 Gross profit (loss) by reporting segment for the three and nine months ended September 30, 2019 and 2018, was as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Morinda $ 43,288 $ - $ 121,462 $ - New Age (2,992 ) 1,699 (941 ) 6,075 Total gross profit $ 40,296 $ 1,699 $ 120,521 $ 6,075 Assets by reporting segment as of September 30, 2019 and December 31, 2018, were as follows (in thousands): 2019 2018 Morinda $ 202,241 $ 206,222 New Age 111,435 80,710 Total assets $ 313,676 $ 286,932 Capital expenditures for property and equipment and identifiable intangible assets incurred by reporting segment for the three and nine months ended September 30, 2019 and 2018, were as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Morinda $ 205 $ - $ 746 $ - New Age 1,996 8 3,705 (1) 72 Total capital expenditures $ 2,201 $ 8 $ 4,451 $ 72 (1) Consists of additions to property and equipment of $0.9 million, the fair value of identifiable intangible assets acquired for $1.1 million, and property, equipment and intangible assets of $1.7 million acquired in the acquisition of BWR as discussed in Note 3. Geographic Concentrations The following table presents net revenue by geographic region for the three and nine months ended September 30, 2019 and 2018 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 United States of America $ 19,610 $ 13,243 $ 53,010 $ 38,164 International 50,218 - 141,473 - Net revenue $ 69,828 $ 13,243 $ 194,483 $ 38,164 As of September 30, 2019, the net carrying value of the Company’s property and equipment located outside of the United States amounted to approximately $11.0 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 $38.5 million, including approximately $27.8 million located in Japan. See Note 6 for a discussion of the sale leaseback of the Company’s property in Japan. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 16 — SUBSEQUENT EVENTS Second Amendment to Credit Facility On October 9, 2019, the Company entered into a Second Amendment and Waiver (the “Second Amendment”) to the Credit Facility discussed in Note 7. Under the Second Amendment, EWB waived (i) any default for failure to maintain at least $5.0 million of net cash with EWB in the United States or in China during the period from July 25, 2019 to October 9, 2019 and (ii) any default for failing to maintain primary operating accounts with EWB, and ensure that the Company’s deposit and investment accounts with third party financial institutions located in China contain no more than 40% of the Company’s total cash, cash equivalents and investment balances maintained in China. The Second Amendment also amended the Credit Facility to (i) extend the time period to establish compliance with the operating account provisions until November 30, 2019, (ii) to make the covenants no longer applicable to the Company’s subsidiaries in China, and (iii) to decrease the amount of net cash from $5.0 million to $2.0 million that the Company is required to maintain with EWB on and after December 31, 2019. Equity Awards On October 14, 2019, the Company made restricted stock grants for an aggregate of approximately 159,000 shares to certain key employees of BWR. The fair value of the restricted stock on the date of grant was approximately $0.4 million. In addition, stock options for an aggregate of approximately 75,000 shares were granted to certain BWR employees at an exercise price of $2.71 per share. These restricted stock awards and stock options vest annually for approximately one-third of the shares in each of July 2020, July 2021 and July 2022. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 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, valuation assumptions for earnout obligations, 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, integrate recent business combinations, its ability to attract new customers and expand sales to existing customers, the risks of attracting and retaining qualified management personnel, the risks related to litigation and operating in a highly regulated business environment, 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 ability to generate significant net revenue and cash flows from the use of this expertise. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting 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 Compensation—Stock Compensation 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. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
OtherInformationDisclosureTextBlock | |
Schedule of Purchase Consideration | The total purchase consideration for the transaction consisted of the following (in thousands, except share number): Pre-closing cash advance to BWR $ 1,000 Cash paid to former owner of BWR at closing 500 Fair value of 107,602 shares of Common stock issued 453 Total purchase consideration $ 1, 953 |
Summary of Purchase Price Allocation | Purchase Price Allocation. Current assets: Cash and cash equivalents $ 537 Accounts receivable 1,293 Inventories 2,398 (1) Prepaid expenses and other 452 Total current assets acquired 4,680 Identifiable intangible assets 1,530 (2) Right-of-use lease assets 708 (3) Property, equipment and other 136 Total identifiable assets acquired 7,054 Current liabilities assumed: Accounts payable and accrued liabilities (3,756 ) (3) Note payable under line of credit (2,353 ) Deferred income taxes (401 ) (4) Long-term operating lease liabilities assumed (622 ) (3) Net identifiable assets acquired (78 ) Goodwill 2,031 (5) Total purchase price allocation $ 1,953 (1) Based on the report of an independent valuation specialist, the fair value of work-in-process and finished goods inventories on the BWR Closing Date exceeded the historical carrying value by approximately $150,000. This amount represents an element of built-in profit on the BWR Closing Date and will be charged to cost of goods sold as the related inventories are sold. The fair value of inventories was determined using both the “cost approach” and the “market approach.” (2) The fair value of identifiable intangible assets was $1.5 million and was determined based on the report of an independent valuation specialist, primarily using variations of the “income approach,” which is based on the present value of the future after-tax cash flows attributable to each identifiable intangible asset. (3) In order to conform with the Company’s accounting policies, BWR adopted ASU No. 2016-02, Leases (4) BWR’s operations were previously taxed on the individual income tax return of the sole owner, whereby no deferred income tax assets or liabilities had been recognized for U.S. federal and state income tax purposes. Upon consummation of the BWR Merger, BWR’s operations are included in the consolidated income tax returns of the Company. Accordingly, an adjustment of approximately $0.4 million has been reflected for net deferred income tax liabilities that resulted from differences between the financial reporting basis and the income tax basis of such assets and liabilities. (5) Goodwill related to BWR is recognized for the difference between the total consideration transferred to consummate the BWR Merger of $0.9 million and the fair value of net identifiable assets acquired of negative $1.1 million. Goodwill and intangible assets in connection with the BWR business combination are not expected to be deductible for income tax purposes. |
Summary of Earnout Obligations | Presented below is a summary of earnout obligations related to business combinations with Marley Beverage Company, LLC (“Marley”) and Morinda, and payables to the former Morinda stockholders as of September 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 - (2)(5) 7,732 (2)(5) EWC payable in July 2020 5,207 (2)(5) 4,976 (2)(5) Earnout under Series D preferred stock 225 (3) 13,134 (3) Contingent on financing event - (4)(5) 24,402 (4)(5) Total 6,332 52,130 Less current portion 5,432 8,718 Long-term portion $ 900 $ 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 September 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. 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 nine months ended September 30, 2018. (2) Pursuant to a separate agreement between the parties, EWC is payable to Morinda’s stockholders as follows: $1.0 million in April 2019, $8.0 million in July 2019, and the remainder of $5.5 million 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. As of September 30, 2019, the reduction in fair value was due to an assessment that the Adjusted EBITDA target will not be achieved, and that the only value associated with the Milestone Dividend is for the Annual Dividend. As of September 30, 2019, fair value 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. This earnout obligation 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 September 30, 2019. The valuation methodology was performed through an option pricing model based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 20.0%, the risk-free interest rate of 1.8%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 19.7%, and an estimated credit spread of 6.5%. (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 $0.1 million and $1.1 million for the three and nine months ended September 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 | Based on these assumptions, the following table summarizes on an unaudited pro forma basis the Company’s results of operations for the three and nine months ended September 30, 2019 and 2018 (in thousands, except per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Net revenue $ 70,189 $ 76,144 $ 203,007 $ 223,759 Net loss $ (10,823 ) $ (1,799 ) $ (25,425 ) $ (5,636 ) Net loss per share- basic and diluted $ (0.14 ) $ (0.04 ) $ (0.33 ) $ (0.13 ) Weighted average number of shares of common stock outstanding- basic and diluted 78,184 45,684 76,658 41,830 |
Supplemental Information (Table
Supplemental Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Inventories | Inventories consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): 2019 2018 Raw materials $ 12,230 $ 12,538 Work-in-process 2,006 907 Finished goods, net 24,006 23,703 Total inventories $ 38,242 $ 37,148 |
Schedule of Prepaid Expenses and Other Current Assets | As of September 30, 2019 and December 31, 2018, prepaid expenses and other current assets consisted of the following (in thousands): 2019 2018 Prepaid expenses and deposits $ 8,750 $ 4,982 Prepaid stock-based compensation 240 347 Supplier and other receivables 462 1,144 Total $ 9,452 $ 6,473 |
Schedule of Property and Equipment | As of September 30, 2019 and December 31, 2018, property and equipment consisted of the following (in thousands): 2019 2018 Land $ 37 $ 25,726 Buildings and improvements 16,419 19,822 Leasehold improvements 3,728 4,398 Machinery and equipment 5,358 5,208 Office furniture and equipment 2,324 2,087 Transportation equipment 1,704 1,727 Total property and equipment 29,570 58,968 Less accumulated depreciation (2,931 ) (1,687 ) Property and equipment, net $ 26,639 $ 57,281 |
Schedule of Restricted Cash and Other | As of September 30, 2019 and December 31, 2018, restricted cash and other long-term assets consisted of the following (in thousands): 2019 2018 Restricted cash $ 3,657 (1) $ 3,339 (1) Debt issuance costs, net 318 548 Prepaid stock-based compensation - 210 Deposits and other 4,453 2,838 Total $ 8,428 $ 6,935 (1) Restricted cash primarily represents long-term cash deposits held in a bank for a foreign governmental agency. This restricted cash is required to maintain the Company’s direct selling license to do business in China. |
Schedule of Other Accrued Liabilities | As of September 30, 2019 and December 31, 2018, accrued liabilities consisted of the following (in thousands): 2019 2018 Accrued commissions $ 9,885 $ 9,731 Accrued compensation and benefits 5,929 4,715 Accrued marketing events 2,836 (1) 3,757 (1) Deferred revenue 1,271 2,701 Income taxes payable 18,467 (2) 1,670 Current portion of operating lease liabilities: Lease liability 5,464 4,798 Deferred lease financing obligation 631 - Restricted stock obligations 304 (3) - Derivative liability 166 470 Other accrued liabilities 6,330 6,177 Total accrued liabilities $ 51,283 $ 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 $12.4 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 cumulative vesting related to the fair value as of September 30, 2019 for 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) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Goodwill | Goodwill by reporting unit consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): Reporting Unit 2019 2018 Morinda $ 10,284 $ 10,284 Marley 9,418 9,418 Maverick 5,149 5,149 Xing 4,506 4,506 PMC 1,768 1,768 BWR 2,031 - B&R 389 389 Total Goodwill $ 33,545 $ 31,514 |
Schedule of Identifiable Intangible Assets | Identifiable intangible assets consisted of the following as of September 30, 2019 and December 31, 2018 (in thousands): September 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 $ (1,061 ) $ 19,359 $ 20,420 $ (40 ) $ 20,380 Other 6,828 (700 ) 6,128 5,989 (318 ) 5,671 Manufacturing processes and recipes 11,610 (972 ) 10,638 11,610 (380 ) 11,230 Trade names 12,587 (1,229 ) 11,358 12,301 (584 ) 11,717 IPC distributor sales force 9,760 (761 ) 8,999 9,760 (29 ) 9,731 Customer relationships 6,860 (1,514 ) 5,346 6,444 (1,194 ) 5,250 Patents 4,263 (638 ) 3,625 4,100 (433 ) 3,667 Distribution rights and other 795 (11 ) 784 - - - Non-compete agreements 306 (54 ) 252 186 (2 ) 184 Total identifiable intangible assets $ 73,429 $ (6,940 ) $ 66,489 $ 70,810 $ (2,980 ) $ 67,830 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 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 Deferred lease financing obligation (17,640 ) Recognized gain on sale $ 6,442 |
Summary of Carrying Value of Operating Lease Rou Assets | As of September 30, 2019 and December 31, 2018, the carrying value of ROU assets, operating lease obligations, and the deferred lease financing obligation were as follows (in thousands): September 30, December 31, 2019 2018 Right-of-Use Assets $ 38,954 $ 18,489 Operating Lease Liabilities: Current $ 5,464 $ 4,798 Long-term 35,475 13,686 Total $ 40,939 $ 18,484 Deferred Lease Financing Obligation: Current $ 631 $ - Long-term 16,702 - Total $ 17,333 $ - |
Summary of Future Minimum Lease Payments | Future lease payments and amortization of the related lease incentive obligation related to non-cancellable operating lease agreements are as follows (in thousands): 12-Months Ending September 30, 2020 $ 8,848 2021 6,996 2022 6,433 2023 6,125 2024 5,834 Thereafter 43,092 Total lease payments 77,328 Less imputed interest (36,389 ) Present value of operating lease liabilities $ 40,939 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Debt | As of September 30, 2019 and December 31, 2018, debt consisted of the following (in thousands): 2019 2018 EWB Credit Facility: Term loan, net of discount of $476 $ 14,524 $ - Revolver 9,700 - Installment notes payable 15 66 Siena Revolver - 2,000 Mortgage payable to a foreign bank - 2,628 (1) Total 24,239 4,694 Less current maturities (11,090 ) (3,369 ) Long-term debt, less current maturities $ 13,149 $ 1,325 (1) 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 September 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 September 30, 2020 $ 11,090 2021 1,500 2022 1,500 2023 10,625 Total $ 24,715 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Schedule of Changes in Stockholders' Equity | Changes in stockholders’ equity for the three months ended September 30, 2019 were as follows (in thousands): Accumulated Additional Other Common Stock Paid-in Comprehensive Accumulated Shares Amount Capital Income Deficit Total Balances, June 30, 2019 77,624 $ 77 $ 192,034 $ 1,622 $ (35,933 ) $ 157,800 Issuance of Common Stock: ATM public offering, net of offering costs 542 1 2,093 - - 2,094 Business combination with BWR 108 - 453 - - 453 Stock-based compensation expense - - 1,525 - - 1,525 Net change in other comprehensive income - - - (1,138 ) - (1,138 ) Net loss - - - - (10,687 ) (10,687 ) Balances, September 30, 2019 78,274 $ 78 $ 196,105 $ 484 $ (46,620 ) $ 150,047 Changes in stockholders’ equity for the three months ended September 30, 2018 were as follows (in thousands): Additional Preferred Stock Common Stock Paid-in Accumulated Shares Amount Shares Amount Capital Deficit Total Balances, June 30, 2018 - $ - 39,926 $ 40 $ 68,476 $ (16,519 ) $ 51,997 Issuance of Common Stock for: Public offering, net of offering costs - - 16,100 16 40,290 - 40,306 Conversion of Series B promissory notes - - 288 - 616 - 616 Cashless exercise of options and warrants - - 100 - - - - Common Stock exchanged for Series C Preferred Stock 7 - (6,900 ) (7 ) 7 - - Stock-based compensation related to stock options - - 159 - 159 Net loss - - - - - (3,504 ) (3,504 ) Balances, September 30, 2018 7 $ - 49,514 $ 49 $ 109,548 $ (20,023 ) $ 89,574 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 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 nine months ended September 30, 2019 (shares in thousands): Shares Price (1) Term (2) Outstanding, beginning of period 2,786 $ 2.84 9.0 Grants to: Employees 363 $ 3.63 Non-employees 25 $ 5.30 Forfeited (328 ) $ 3.58 Exercised (200 ) $ 2.09 Outstanding, end of period 2,646 (3) $ 2.94 8.4 Vested, end of period 852 (4) $ 1.93 7.5 (1) Represents the weighted average exercise price. (2) Represents the weighted average remaining contractual term until the stock options expire. (3) As of September 30, 2019 and December 31, 2018, the aggregate intrinsic value of stock options outstanding was $1.3 million and $6.6 million, respectively. (4) As of September 30, 2019 and December 31, 2018, the aggregate intrinsic value of vested stock options was $0.7 million and $3.1 million, respectively. |
Summary of Stock Options Weighted-Average Assumptions | The following weighted-average assumptions: Stock Options Valuation Inputs Granted Modified Grant date fair value of common stock (exercise price) $ 3.83 $ 4.75 Expected life (in years) 6.5 1.0 Volatility 110 % 138 % Dividend yield 0 % 0 % Risk-free interest rate 1.7 % 1.9 % |
Schedule of Restricted Stock Award Activity | The following table sets forth a summary of restricted stock award activity for the nine months ended September 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 $ 3,236 474 $ 2,490 629 $ 64 Restricted shares granted 461 (1) 2,258 (1) - - - - Other 35 79 - - - - Forfeited and not expected to vest (219 ) (2) (260 ) (2) (318 ) (5) (1,673 ) (5) - - Modification of award - (95 ) - - - - Fair value adjustment - - - (388 ) (7) - - Vested shares and expense (423 ) (2,870 ) - (304 ) (629 ) (8) (64 ) (8) Outstanding, end of period 1,005 (3) $ 2,348 (3) 156 $ 125 - $ - Intrinsic value, end of period $ 2,774 (4) $ 430 (4)(6) $ - Weighted average remaining term for recognition of unvested expense 0.8 1.0 - (1) The weighted average fair value was $4.90 per share based on the closing price of the Company’s Common Stock on the grant date. (2) Forfeitures of LTI Plan Equity Awards include 162,000 shares that vest only if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. Based on the Company’s current assessment, these shares are not expected to vest. Therefore, all previously recognized compensation expense related to these shares was reversed for the three months ended September 30, 2019. (3) As of September 30, 2019, unvested shares of restricted stock consist of approximately 1.0 million shares that will be issued upon vesting, and 0.1 million shares that are included in issued and outstanding shares but are subject to restrictive vesting conditions. For unvested shares that have been issued, $240,000 of unvested compensation is included in prepaid expenses and other current assets as of September 30, 2019. (4) The intrinsic value was based on the closing price of the Company’s common stock of $2.76 per share on September 30, 2019. (5) Forfeitures of LTI Plan Liability Awards include approximately 317,000 shares that vest only if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. Based on the Company’s current assessment, these shares are not expected to vest. Therefore, all previously recognized compensation expense related to these shares was reversed for the three months ended September 30, 2019. (6) 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 September 30, 2019, approximately $0.3 million is included in current liabilities. (7) The change in unvested compensation resulted from a decrease in the closing price of the Company’s Common Stock for the nine months ended September 30, 2019. (8) 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. |
Schedule of Stock-based Compensation Expense | The table below summarizes stock-based compensation expense related to stock options and restricted stock awards for the nine months ended September 30, 2019 and 2018 (in thousands): 2019 2018 Stock options awards: Employees $ 2,026 $ 557 Non-employees 14 - Restricted stock awards: Equity classified 2,934 830 Liability classified 304 - Total $ 5,278 $ 1,387 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Loss Per Share | As of September 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 2,646 1,486 Unissued restricted stock awards under LTI Plan 1,161 - Warrant issued for license agreement 200 - Total 4,007 1,486 |
Segments and Geographic Informa
Segments and Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Summary of Segment Reporting | Net revenue by reporting segment for the three and nine months ended September 30, 2019 and 2018, was as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Morinda $ 54,843 $ - $ 155,125 $ - New Age 14,985 13,243 39,358 38,164 Total revenue $ 69,828 $ 13,243 $ 194,483 $ 38,164 Gross profit (loss) by reporting segment for the three and nine months ended September 30, 2019 and 2018, was as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Morinda $ 43,288 $ - $ 121,462 $ - New Age (2,992 ) 1,699 (941 ) 6,075 Total gross profit $ 40,296 $ 1,699 $ 120,521 $ 6,075 Assets by reporting segment as of September 30, 2019 and December 31, 2018, were as follows (in thousands): 2019 2018 Morinda $ 202,241 $ 206,222 New Age 111,435 80,710 Total assets $ 313,676 $ 286,932 Capital expenditures for property and equipment and identifiable intangible assets incurred by reporting segment for the three and nine months ended September 30, 2019 and 2018, were as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 Morinda $ 205 $ - $ 746 $ - New Age 1,996 8 3,705 (1) 72 Total capital expenditures $ 2,201 $ 8 $ 4,451 $ 72 (1) Consists of additions to property and equipment of $0.9 million, the fair value of identifiable intangible assets acquired for $1.1 million, and property, equipment and intangible assets of $1.7 million acquired in the acquisition of BWR as discussed in Note 3. |
Schedule of Net revenue by geographic region | The following table presents net revenue by geographic region for the three and nine months ended September 30, 2019 and 2018 (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2019 2018 2019 2018 United States of America $ 19,610 $ 13,243 $ 53,010 $ 38,164 International 50,218 - 141,473 - Net revenue $ 69,828 $ 13,243 $ 194,483 $ 38,164 |
Nature of Operations and Basi_2
Nature of Operations and Basis of Presentation (Details Narrative) | 9 Months Ended |
Sep. 30, 2019Number | |
Accounting Policies [Abstract] | |
Number of segments | 2 |
Significant Accounting Polici_3
Significant Accounting Policies (Details Narrative) - Non-Employees [Member] $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($)shares | |
Number of stock options granted | shares | 25,000 |
Fair value of stock granted | $ | $ 100 |
Business Combination - (Details
Business Combination - (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jun. 30, 2019 | May 30, 2019 | Dec. 02, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 |
Loan to related party amount | $ 963 | ||||||||||
Repayment of outstanding principal and interest | 34,415 | 6,750 | |||||||||
Gross profit | $ 40,296 | $ 1,699 | 120,521 | 6,075 | |||||||
Estimated fair value of dividend earnout amount | $ 200 | $ 13,100 | 200 | $ 200 | $ 200 | 200 | |||||
Fair value of unrealized gain | 6,200 | 12,900 | |||||||||
Amount of annual dividend included in the milestone earnout liability | 200 | 200 | 200 | 200 | 200 | ||||||
Sale leaseback transaction amount | $ 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | ||||||
Net revenue | 69,828 | 13,243 | 194,483 | 38,164 | |||||||
Net loss | $ (10,687) | $ (3,504) | $ (23,984) | $ (9,522) | |||||||
Morinda [Member] | |||||||||||
Net revenue | 155,100 | ||||||||||
Net loss | $ 4,100 | ||||||||||
Milestone Dividend [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] | |||||||||||
Dividend amount | $ 15,000 | ||||||||||
Minimum [Member] | Milestone Dividend [Member] | |||||||||||
Expected EBITDA adjusted dividend amount | $ 20,000 | ||||||||||
BWR Acquisition Corp [Member] | |||||||||||
Cash | $ 537 | ||||||||||
Net revenue | 2,400 | ||||||||||
Net loss | $ 900 | ||||||||||
Morinda Merger Agreement [Member] | |||||||||||
Stock issued during the period, shares | 2,016,480 | ||||||||||
Number of shares stock | 1,100,000 | ||||||||||
Cash | $ 75,000 | ||||||||||
Stock rate percentage | 1.50% | ||||||||||
Agreed to distribute the stockholders equity | 39,600 | ||||||||||
Sale leaseback transaction amount | $ 25,000 | ||||||||||
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, shares | 43,804 | ||||||||||
Morinda Merger Agreement [Member] | Series D Preferred Stock [Member] | Maximum [Member] | |||||||||||
Payment of potential amount | $ 15,000 | ||||||||||
Morinda Merger Agreement [Member] | BWR Acquisition Corp [Member] | |||||||||||
Loan to related party amount | $ 1,000 | ||||||||||
Stock issued during the period, shares | 700,000 | ||||||||||
Working capital | $ 2,500 | ||||||||||
Number of shares stock | 107,602 | ||||||||||
Estimated fair value of shares | $ 453 | ||||||||||
Fair value of common stock | $ 4.21 | ||||||||||
Repayment of outstanding principal and interest | $ 2,500 | ||||||||||
Consulting Agreement [Member] | Olivier Sonnois [Member] | |||||||||||
Number of shares stock | 1,500,000 | ||||||||||
Consulting Agreement [Member] | Mr.Sonnois [Member] | First 12 Consecutive Months [Member] | |||||||||||
Gross profit | $ 1,500 | ||||||||||
Additional amount of gross shares | 1,000,000 | ||||||||||
Consulting Agreement [Member] | Mr.Sonnois [Member] | First 24 Consecutive Months [Member] | |||||||||||
Gross profit | 20,000 | ||||||||||
Additional amount of gross shares | 2,000,000 | ||||||||||
Consulting Agreement [Member] | Mr.Sonnois [Member] | First 36 Consecutive Months [Member] | |||||||||||
Additional amount of gross shares | $ 3,500,000 | ||||||||||
Consulting Agreement [Member] | BWR Acquisition Corp [Member] | |||||||||||
Business combination agreement description | (i) grant 100,000 shares of restricted Common Stock to Mr. Sonnois, which vest over the initial three-year term of the ICA, (ii) pay base compensation of $350,000 per year, (iii) pay annual short term performance bonuses between 25% and 100% of base salary depending on achievement of criteria established by the Company, (iv) annually issue stock options, restricted stock or other annual long-term equity awards, up to 25% of base compensation with vesting over three years, and (v) pay special performance incentives based on the future gross profit of NABD. | ||||||||||
Number of restricted common stock | 100,000 |
Business Combination - Schedule
Business Combination - Schedule of Purchase Consideration (Details) $ in Thousands | May 30, 2019USD ($) |
Business Combinations [Abstract] | |
Pre-closing cash advance to BWR | $ 1,000 |
Cash paid to former owner of BWR at closing | 500 |
Fair value of 107,602 shares of Common stock issued | 453 |
Total purchase consideration | $ 1,953 |
Business Combination - Schedu_2
Business Combination - Schedule of Purchase Consideration (Details) (Parenthetical) | May 30, 2019shares |
Business Combinations [Abstract] | |
Stock issued for acquisition | 107,602 |
Business Combination - Schedu_3
Business Combination - Schedule of Purchase Price Allocation (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | May 30, 2019 | Dec. 31, 2018 | |
Identifiable intangible assets | $ 1,500 | |||
Goodwill | $ 33,545 | 900 | $ 31,514 | |
BWR Acquisition Corp [Member] | ||||
Cash and cash equivalents | 537 | |||
Accounts receivable | 1,293 | |||
Inventories | [1] | 2,398 | ||
Prepaid expenses and other | 452 | |||
Total current assets acquired | 4,680 | |||
Identifiable intangible assets | [2] | 1,530 | ||
Right-of-use lease assets | 708 | |||
Property, equipment and other | [3] | 136 | ||
Total identifiable assets acquired | 7,054 | |||
Accounts payable and accrued liabilities | [3] | (3,756) | ||
Note payable under line of credit | (2,353) | |||
Deferred income taxes | [4] | (401) | ||
Long-term operating lease liabilities assumed | [3] | (622) | ||
Net identifiable assets acquired | (78) | |||
Goodwill | [5] | 2,031 | ||
Total purchase price allocation | $ 1,953 | |||
[1] | Based on the report of an independent valuation specialist, the fair value of work-in-process and finished goods inventories onthe BWR Closing Date exceeded the historical carrying value by approximately $150,000. This amount represents an element ofbuilt-in profit on the BWR Closing Date and will be charged to cost of goods sold as the related inventories are sold. Thefair value of inventories was determined using both the "cost approach" and the "market approach." | |||
[2] | The fair value of identifiable intangible assets was $1.5 million and was determined based on the report of an independent valuationspecialist, primarily using variations of the "income approach," which is based on the present value of the futureafter-tax cash flows attributable to each identifiable intangible asset. | |||
[3] | In order to conform with the Company's accounting policies, BWR adopted ASU No. 2016-02, Leases, which requiresthat assets and liabilities be recognized on the balance sheet for the rights and obligations created by those leases. Accordingly,right-of-use assets of approximately $0.7 million were recognized, along with the current and long-term portions of operatinglease liabilities of $0.1 million and $0.6 million, respectively. | |||
[4] | BWR'soperations were previously taxed on the individual income tax return of the sole owner, whereby no deferred income tax assetsor liabilities had been recognized for U.S. federal and state income tax purposes. Upon consummation of the BWR Merger, BWR'soperations are included in the consolidated income tax returns of the Company. Accordingly, an adjustment of approximately$0.4 million has been reflected for net deferred income tax liabilities that resulted from differences between the financialreporting basis and the income tax basis of such assets and liabilities. | |||
[5] | Goodwill related to BWR is recognized for the difference between the total consideration transferred to consummate the BWR Merger of$0.9 million and the fair value of net identifiable assets acquired of negative $1.1 million. Goodwill and intangible assetsin connection with the BWR business combination are not expected to be deductible for income tax purposes. |
Business Combination - Schedu_4
Business Combination - Schedule of Purchase Price Allocation (Details) (Parenthetical) - USD ($) $ in Thousands | May 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Fair value inventories | $ 150 | ||
Fair value of identifiable intangible assets | 1,500 | ||
Right-of-use assets | 700 | $ 38,954 | $ 18,489 |
Current operating lease | 100 | 5,464 | 4,798 |
Long-term operating leae | 600 | 35,475 | 13,686 |
Goodwill | 900 | $ 33,545 | $ 31,514 |
Goodwill [Member] | |||
Fair value inventories | $ 1,100 |
Business Combination - Summary
Business Combination - Summary of Earnout Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | |
Marley earnout obligation | [1] | $ 900 | $ 900 |
Total | 6,332 | 52,130 | |
Less current portion | 5,432 | 8,718 | |
Long-term portion | 900 | 43,412 | |
EWC payable in April 2019 [Member] | |||
Total | [2],[3] | 986 | |
EWC payable in July 2019 [Member] | |||
Total | [2],[3] | 7,732 | |
EWC payable in July 2020 [Member] | |||
Total | [2],[3] | 5,207 | 4,976 |
Earnout under Series D Preferred Stock [Member] | |||
Total | [4] | 225 | 13,134 |
Contingent on financing event [Member] | |||
Total | [4],[5] | $ 24,402 | |
[1] | TheCompany is obligated to make a one-time earnout payment of $1.25 million over a period of two years beginning at such timethat revenue for the Marley reporting unit is equal to or greater than $15.0 million during any trailing twelve calendar monthperiod after the closing. The Marley business combination closed on September 13, 2017, and revenue for the Marley brand isnot expected to exceed the $15.0 million earnout threshold during the next 12 months. Payment for 50% of the $1.25 millionis 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. The fair value of the earnout was valued using the weightedaverage 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 condensedconsolidated statement of operations and comprehensive loss for the nine months ended September 30, 2018. | ||
[2] | Pursuant to a separate agreement between the parties, EWC is payable to Morinda's stockholders as follows: $1.0 million in April2019, $8.0 million in July 2019, and the remainder of $5.5 million in July 2020. | ||
[3] | The fair value of earnout consideration under the Series D Preferred Stock is based on the probability of achieving the MilestoneDividend. As of September 30, 2019, the reduction in fair value was due to an assessment that the Adjusted EBITDA target willnot be achieved, and that the only value associated with the Milestone Dividend is for the Annual Dividend. As of September30, 2019, fair value was determined using an option pricing model and will continue to be adjusted as additional informationbecomes available about the progress toward achievement of the Milestone Dividend earnout. This earnout obligation is classifiedwithin Level 3 of the fair value hierarchy. Valuation of the earnout was performed by an independent valuation specialistat the original issuance date and as of September 30, 2019. The valuation methodology was performed through an option pricingmodel based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 20.0%, the risk-free interest rateof 1.8%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 19.7%, and an estimated credit spreadof 6.5%. | ||
[4] | Pursuant to a separate agreement between the parties prior to the consummation of the Merger, Morinda agreed to pay its former stockholdersup to $25.0 million from the net proceeds of a sale leaseback to be completed after the Closing Date. As discussed in Note6, the closing for this transaction occurred on March 22, 2019. Since this payment was to be made from the proceeds of a long-termfinancing, the net carrying value was classified in long-term liabilities in the accompanying unaudited condensed consolidatedbalance 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 ClosingDate until the respective contractual or estimated payment dates. Accretion of discount related to these obligations amountedto an aggregate of $0.1 million and $1.1 million for the three and nine months ended September 30, 2019, respectively, whichis included in interest expense in the accompanying unaudited condensed consolidated statements of operations and comprehensiveloss. |
Business Combination - Summar_2
Business Combination - Summary of Earnout Obligations (Details) (Parenthetical) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Jul. 31, 2020 | Sep. 30, 2019 | Jul. 31, 2019 | Apr. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Jun. 30, 2018 | |
One time earnout payment | $ 1,250 | |||||||||
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 | $ (6,244) | $ (12,909) | $ 100 | |||||||
Estimated fair value of dividend earnout amount | $ 200 | 200 | 200 | $ 13,100 | ||||||
Fair value of valuation methodology description | The valuation methodology was performed through an option pricingmodel based on forecast annual EBITDA, expected volatility of forecast annual EBITDA of 20.0%, the risk-free interest rateof 1.8%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 19.7%, and an estimated credit spreadof 6.5%. | |||||||||
Sale leaseback transaction amount | 25,000 | 25,000 | $ 25,000 | |||||||
Obligations credit and tax interest rate | 6.10% | |||||||||
Obligations amount | $ 100 | $ 400 | ||||||||
Morinda's Stockholders [Member] | ||||||||||
Excess working capital payable to related party | $ 1,000 | |||||||||
Morinda's Stockholders [Member] | Scenario, Plan [Member] | ||||||||||
Excess working capital payable to related party | $ 5,500 | $ 8,000 | ||||||||
Minimum [Member] | ||||||||||
Asset fair value increased amount | $ 800 | |||||||||
Minimum [Member] | Milestone Dividend [Member] | ||||||||||
Adjusted EBITDA dividend amount | 20,000 | |||||||||
Maximum [Member] | ||||||||||
Asset fair value increased amount | $ 900 | |||||||||
Maximum [Member] | Milestone Dividend [Member] | ||||||||||
Dividend amount | $ 15,000 |
Business Combination - Schedu_5
Business Combination - Schedule of Pro Forma Disclosure (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Business Combinations [Abstract] | ||||
Net revenue | $ 70,189 | $ 76,144 | $ 203,007 | $ 223,759 |
Net loss | $ (10,823) | $ (1,799) | $ (25,425) | $ (5,636) |
Net loss per share- basic and diluted | $ (0.14) | $ (0.04) | $ (0.33) | $ (0.13) |
Weighted average number of shares of common stock outstanding- basic and diluted | 78,184 | 45,684 | 76,658 | 41,830 |
Supplemental Information (Detai
Supplemental Information (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Fair value of work-in-process and finished goods inventories | $ 2,200 | $ 2,200 | ||
Cost of goods sold | 400 | 2,100 | ||
Repairs and maintenance costs | 400 | $ 100 | 150 | $ 600 |
Property and Equipment [Member] | ||||
Depreciation | $ 900 | $ 100 | $ 2,500 | $ 400 |
Supplementa Information - Sched
Supplementa Information - Schedule of Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Other Information | ||
Raw materials | $ 12,230 | $ 12,538 |
Work-in-process | 2,006 | 907 |
Finished goods, net | 24,006 | 23,703 |
Total inventories | $ 38,242 | $ 37,148 |
Supplemental Information - Sche
Supplemental Information - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Other Information | ||
Prepaid expenses and deposits | $ 8,750 | $ 4,982 |
Prepaid stock-based compensation | 240 | 347 |
Supplier and other receivables | 462 | 1,144 |
Total | $ 9,452 | $ 6,473 |
Supplemental Information - Sc_2
Supplemental Information - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Property and Equipment, Gross | $ 29,570 | $ 58,968 |
Less accumulated depreciation | (2,931) | (1,687) |
Property and Equipment, Net | 26,639 | 57,281 |
Land [Member] | ||
Property and Equipment, Gross | 37 | 25,726 |
Building and Improvements [Member] | ||
Property and Equipment, Gross | 16,419 | 19,822 |
Leasehold Improvements [Member] | ||
Property and Equipment, Gross | 3,728 | 4,398 |
Machinery and Equipment [Member] | ||
Property and Equipment, Gross | 5,358 | 5,208 |
Office Furniture and Equipment [Member] | ||
Property and Equipment, Gross | 2,324 | 2,087 |
Transportation Equipment [Member] | ||
Property and Equipment, Gross | $ 1,704 | $ 1,727 |
Supplemental Information - Sc_3
Supplemental Information - Schedule of Restricted Cash and Other (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | |
Other Information | |||
Restricted cash | [1] | $ 3,657 | $ 3,339 |
Debt issuance costs, net | 318 | 548 | |
Prepaid stock-based compensation | 210 | ||
Deposits and other | 4,453 | 2,838 | |
Total | $ 8,428 | $ 6,935 | |
[1] | Restrictedcash primarily represents long-term cash deposits held in a bank for a foreign governmental agency. This restricted cash isrequired to maintain the Company's direct selling license to do business in China. |
Supplemental Information - Sc_4
Supplemental Information - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | ||
Other Information | ||||
Accrued commissions | $ 9,885 | $ 9,731 | ||
Accrued compensation and benefits | 5,929 | 4,715 | ||
Accured marketing events | [1] | 2,836 | 3,757 | |
Deferred revenue | 1,271 | 2,701 | ||
Income taxes payable | 18,467 | [2] | 1,670 | |
Current portion of right of use liabilities: Lease liability | 5,464 | 4,798 | ||
Current portion of right of use liabilities: Deferred lease financing obligation | 631 | |||
Restricted stock obligations | 304 | [3] | ||
Derivative liability | 166 | 470 | ||
Other accrued liabilities | 6,330 | 6,177 | ||
Total other accrued liabilities | $ 51,283 | $ 34,019 | ||
[1] | Representsaccruals for incentive trips associated with Morinda's direct sales marketing program, which rewards certain IPCs withpaid attendance at future conventions, meetings, and retreats. Expenses associated with incentive trips are accrued over qualificationperiods as they are earned. Incentive trip accruals are based on historical experience in relation to current sales trendsin order to determine the related contractual obligations. | |||
[2] | Includesapproximately $12.4 million of income taxes payable in Japan primarily related to the gain on sale of the land and buildingin Tokyo as discussed further in Note 6. | |||
[3] | Representscumulative vesting related to the fair value as of September 30, 2019 for restricted stock awards required to be settled incash, as discussed in Note 9. |
Supplemental Information - Sc_5
Supplemental Information - Schedule of Other Accrued Liabilities (Details) (Parenthetical) $ in Thousands | Sep. 30, 2019USD ($) |
Other Information | |
Income taxes payable | $ 12,400 |
Goodwill and Identifiable Int_3
Goodwill and Identifiable Intangible Assets (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jan. 14, 2019 | Sep. 30, 2019 | Jun. 30, 2017 | Mar. 31, 2017 |
Goodwill and identifiable intangible assets carrying amount | $ 46,700 | |||
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 | |||
Agreement expired description | The initial term of the Docklight license expires in January 2024, unless extended or earlier terminated as provided in the agreement. | |||
Maverick Brands, LLC [Member] | ||||
Goodwill and identifiable intangible assets carrying amount | $ 11,800 | |||
Marley Beverage Company LLC [Member] | ||||
Goodwill and identifiable intangible assets carrying amount | $ 18,700 | |||
Marley Merchandising LLC [Member] | License Agreement [Member] | Expected Term [Member] | ||||
Intangible asset amortized term | 5 years | |||
Marley Merchandising LLC [Member] | License Agreement [Member] | Risk Free Interest Rate [Member] | ||||
Fair value of intangible measurement input | 2.20% | |||
Marley Merchandising LLC [Member] | License Agreement [Member] | Price Volatility [Member] | ||||
Fair value of intangible measurement input | 115.00% |
Goodwill and Identifiable Int_4
Goodwill and Identifiable Intangible Assets - Summary of Goodwill (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | May 30, 2019 | Dec. 31, 2018 |
Goodwill | $ 33,545 | $ 900 | $ 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 | |
BWR [Member] | |||
Goodwill | 2,031 | ||
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 | Sep. 30, 2019 | Dec. 31, 2018 |
Identifiable Intangible Asset, Cost | $ 73,429 | $ 70,810 |
Less: Accumulated Amortization | (6,940) | (2,980) |
Identifiable Intangible Asset, Net | 66,489 | 67,830 |
China Direct Selling License [Member] | ||
Identifiable Intangible Asset, Cost | 20,420 | 20,420 |
Less: Accumulated Amortization | (1,061) | (40) |
Identifiable Intangible Asset, Net | 19,359 | 20,380 |
Other [Member] | ||
Identifiable Intangible Asset, Cost | 6,828 | 5,989 |
Less: Accumulated Amortization | (700) | (318) |
Identifiable Intangible Asset, Net | 6,128 | 5,671 |
Manufacturing Processes and Recipes [Member] | ||
Identifiable Intangible Asset, Cost | 11,610 | 11,610 |
Less: Accumulated Amortization | (972) | (380) |
Identifiable Intangible Asset, Net | 10,638 | 11,230 |
Trade Names [Member] | ||
Identifiable Intangible Asset, Cost | 12,587 | 12,301 |
Less: Accumulated Amortization | (1,229) | (584) |
Identifiable Intangible Asset, Net | 11,358 | 11,717 |
IPC Distributor Sales Force [Member] | ||
Identifiable Intangible Asset, Cost | 9,760 | 9,760 |
Less: Accumulated Amortization | (761) | (29) |
Identifiable Intangible Asset, Net | 8,999 | 9,731 |
Customer Relationships [Member] | ||
Identifiable Intangible Asset, Cost | 6,860 | 6,444 |
Less: Accumulated Amortization | (1,514) | (1,194) |
Identifiable Intangible Asset, Net | 5,346 | 5,250 |
Patents [Member] | ||
Identifiable Intangible Asset, Cost | 4,263 | 4,100 |
Less: Accumulated Amortization | (638) | (433) |
Identifiable Intangible Asset, Net | 3,625 | 3,667 |
Distribution Rights and Other [Member] | ||
Identifiable Intangible Asset, Cost | 795 | |
Less: Accumulated Amortization | (11) | |
Identifiable Intangible Asset, Net | 784 | |
Non-compete Agreements [Member] | ||
Identifiable Intangible Asset, Cost | 306 | 186 |
Less: Accumulated Amortization | (54) | (2) |
Identifiable Intangible Asset, Net | $ 252 | $ 184 |
Leases (Details Narrative)
Leases (Details Narrative) $ in Thousands | Apr. 03, 2019USD ($)ft² | Mar. 22, 2019USD ($) | Jan. 21, 2019USD ($)ft² | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
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 operating 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 seventh year of the lease term, the Company may elect to terminate the lease. However, if the lease is terminated before the 20th anniversary of the lease inception date, then the Company will be obligated to perform certain restoration obligations. 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 operating 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. The Company has made accounting policy elections (i) to not apply the recognition requirements for short-term leases and (ii) for facility leases, when there are lease and non-lease components, such as common area maintenance charges, the lease and non-lease components are accounted for as a single lease component. | |||||
Operating lease expense | $ 2,800 | $ 400 | $ 8,100 | $ 1,000 | |||||
Monthly base rental expense | $ 66 | $ 33 | |||||||
Operating lease liability | $ 2,800 | $ 40,939 | $ 40,939 | $ 18,484 | |||||
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 | $ 13,100 | $ 1,300 | |||||||
Obligation of operating lease liabilities | $ 6,000 | 13,100 | 1,300 | ||||||
Operating lease cash payment | 800 | ||||||||
Sale of land | 57,100 | ||||||||
Lease cost | 185 | ||||||||
Reundable security deposit | $ 1,800 | ||||||||
Other cash payments description | 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. | ||||||||
Gain on sale of property | $ 24,100 | 6,442 | |||||||
Gain on leaseback arrangement | 17,600 | ||||||||
Remainder gain on properties | $ 6,400 | ||||||||
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 | 13 years 2 months 12 days | 13 years 2 months 12 days | 5 years 10 months 25 days | ||||||
Weighted average discount lease | 5.60% | 5.60% | 6.60% | ||||||
Morinda's Stockholders [Member] | |||||||||
Payments of obligated | 25,000 | ||||||||
BWR Merger Agreement [Member] | |||||||||
Operating lease liability | $ 700 | $ 700 | |||||||
Lease discount rate | 6.10% | 6.10% | |||||||
Operating lease cash payment | $ 900 | ||||||||
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 | Sep. 30, 2019 |
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 | |
Deferred lease financing obligation | (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 | Sep. 30, 2019 | May 30, 2019 | Jan. 21, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||||
Right-of-Use Assets | $ 38,954 | $ 700 | $ 18,489 | |
Operating Lease Liabilities: Current | 5,464 | 100 | 4,798 | |
Operating Lease Liabilities: Long-term | 35,475 | $ 600 | 13,686 | |
Total | 40,939 | $ 2,800 | 18,484 | |
Deferred Lease Financing Obligation: Current | 631 | |||
Deferred Lease Financing Obligation: Long-term | 16,702 | |||
Total | $ 17,333 |
Leases - Summary of Future Mini
Leases - Summary of Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 21, 2019 | Dec. 31, 2018 |
Leases [Abstract] | |||
2020 | $ 8,848 | ||
2021 | 6,996 | ||
2022 | 6,433 | ||
2023 | 6,125 | ||
2024 | 5,834 | ||
Thereafter | 43,092 | ||
Total minimum lease payments | 77,328 | ||
Less imputed interest | (36,389) | ||
Present value of minimum lease payments | $ 40,939 | $ 2,800 | $ 18,484 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Oct. 02, 2019 | Jul. 31, 2019 | Mar. 29, 2019 | Aug. 10, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | 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 | $ 318 | $ 318 | $ 548 | ||||||
Interest expense | 727 | $ 44 | 3,129 | $ 225 | |||||
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. | ||||||||
EWB RevolverMember | Subsequent Event [Member] | |||||||||
Voluntary prepayment principal amount | $ 9,700 | ||||||||
Reborrow amount | $ 10,000 | ||||||||
EWB Term Loan [Member] | |||||||||
Unaccreted discount to related party debt | 500 | $ 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% | ||||||||
Outstanding borrowing credit facility, percentage | 5.50% | ||||||||
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 | $ 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% | 5.00% | 5.00% | ||||||
Loan and Security Agreement [Member] | Prime Rate [Member] | Siena Lending Group LLC [Member] | |||||||||
Interest rate percentage | 2.75% | ||||||||
Swap Agreement [Member] | |||||||||
Debt maturity date | May 1, 2023 | ||||||||
Aggregate principal amount | $ 10,000 | $ 10,000 | |||||||
Interest rate percentage | 5.40% | 5.40% | |||||||
Interest Rate Swap Agreement [Member] | |||||||||
Debt maturity date | May 1, 2023 | ||||||||
Aggregate principal amount | $ 10,000 | ||||||||
Interest rate percentage | 5.40% | ||||||||
Total notional amount | 2,600 | ||||||||
Unrealized loss from interest rate | $ 200 | 36 | |||||||
Interest Rate Swap Agreement [Member] | Prime Rate [Member] | |||||||||
Interest rate percentage | 0.50% | ||||||||
Embedded Derivatives [Member] | |||||||||
Debt description | (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. | ||||||||
Fair value of embedded derivatives | $ 500 | ||||||||
Unrealized loss from interest rate | $ 500 | $ 500 |
Debt - Summary of Debt (Details
Debt - Summary of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | |
Total | $ 24,239 | $ 4,694 | |
Less current maturities | (11,090) | (3,369) | |
Long-term debt, less current maturities | 13,149 | 1,325 | |
EWB Credit Facility Term Loan [Member] | |||
Total | 14,524 | ||
EWB Credit Facility Revolver [Member] | |||
Total | 9,700 | ||
Installment Notes Payable [Member] | |||
Total | 15 | 66 | |
Siena Revolver [Member] | |||
Total | 2,000 | ||
Mortgage Payable to a Foreign Bank [Member] | |||
Total | $ 2,628 | [1] | |
[1] | 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) - Mortgage Payable to a Foreign Bank [Member] $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Principal payments amount | $ 300 |
Debt bear interest percentage | 0.76% |
Debt maturity date | Dec. 31, 2020 |
TIBOR Plus [Member] | |
Debt bear interest percentage | 0.70% |
Debt - Summary Future Debt Matu
Debt - Summary Future Debt Maturities (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 11,090 |
2021 | 1,500 |
2022 | 1,500 |
2023 | 10,625 |
Total | $ 24,715 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ in Thousands | Apr. 30, 2019 | Dec. 02, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | May 30, 2019 | May 29, 2019 | Dec. 31, 2018 |
Common stock share authorized | 200,000,000 | 200,000,000 | 200,000,000 | 100,000,000 | 200,000,000 | ||||
Stock issued during the period, value | $ 40,306 | $ 43,600 | |||||||
Series D Preferred Stock [Member] | |||||||||
Preferred stock, shares designated | 44,000 | ||||||||
Morinda Merger Agreement [Member] | |||||||||
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 | ||||||||
Placement Shares [Member] | ATM Offering Agreement [Member] | |||||||||
Stock issued during the period, value | $ 100,000 | $ 13,200 | |||||||
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 | 2,800,000 | ||||||||
Commission and fees on sale of shares | $ 400 | ||||||||
Other offering costs | $ 300 | ||||||||
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 | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Beginning balance | $ 157,800 | $ 51,997 | ||
Issuance of common stock for ATM public offering, net of offering costs | 2,094 | $ 13,235 | ||
Issuance of Common Stock for Business combination with BWR | 453 | 453 | ||
Stock-based compensation expense | 1,525 | 4,086 | ||
Net change in other comprehensive income | (1,138) | (142) | ||
Issuance of common stock for public offering, net of offering costs | 40,306 | $ 43,600 | ||
Issuance of common stock for Conversion of Series B promissory note | 616 | |||
Issuance of Common Stock for Cashless exercise of options and warrants | ||||
Issuance of Common Stock for Common Stock exchanged for Series C Preferred Stock | ||||
Stock-based compensation related to stock options | 159 | 476 | ||
Net loss | (10,687) | (3,504) | (23,984) | (9,522) |
Ending balance | 150,047 | 89,574 | 150,047 | 89,574 |
Common Stock [Member] | ||||
Beginning balance | $ 77 | $ 40 | ||
Beginning balance, shares | 77,624,000 | 39,926,000 | ||
Issuance of common stock for ATM public offering, net of offering costs | $ 1 | $ 3 | ||
Issuance of common stock for ATM public offering, net of offering costs, shares | 542,000 | 2,767,000 | ||
Issuance of Common Stock for Business combination with BWR | ||||
Issuance of Common Stock for Business combination with BWR, shares | 108,000 | 108,000 | ||
Stock-based compensation expense | ||||
Net change in other comprehensive income | ||||
Issuance of common stock for public offering, net of offering costs | $ 16 | $ 19 | ||
Issuance of common stock for public offering, net of offering costs, shares | 16,100,000 | 18,660,000 | ||
Issuance of common stock for Conversion of Series B promissory note | ||||
Issuance of common stock for Conversion of Series B promissory notes, shares | 288,000 | |||
Issuance of Common Stock for Cashless exercise of options and warrants | ||||
Issuance of Common Stock for Cashless exercise of options and warrants, shares | 100,000 | 108,000 | ||
Issuance of Common Stock for Common Stock exchanged for Series C Preferred Stock | $ (7) | |||
Issuance of Common Stock for Common Stock exchanged for Series C Preferred Stock, shares | (6,900,000) | |||
Stock-based compensation related to stock options | ||||
Net loss | ||||
Ending balance | $ 78 | $ 49 | $ 78 | $ 49 |
Ending balance, shares | 78,274,000 | 49,514,000 | 78,274,000 | 49,514,000 |
Additional Paid-in Capital [Member] | ||||
Beginning balance | $ 192,034 | $ 68,476 | ||
Issuance of common stock for ATM public offering, net of offering costs | 2,093 | $ 13,232 | ||
Issuance of Common Stock for Business combination with BWR | 453 | 453 | ||
Stock-based compensation expense | 1,525 | 4,086 | ||
Net change in other comprehensive income | ||||
Issuance of common stock for public offering, net of offering costs | 40,290 | $ 43,581 | ||
Issuance of common stock for Conversion of Series B promissory note | 616 | |||
Issuance of Common Stock for Cashless exercise of options and warrants | ||||
Issuance of Common Stock for Common Stock exchanged for Series C Preferred Stock | 7 | |||
Stock-based compensation related to stock options | 159 | 476 | ||
Net loss | ||||
Ending balance | 196,105 | 109,548 | 196,105 | 109,548 |
Accumulated Other Comprehensive Income [Member] | ||||
Beginning balance | 1,622 | |||
Issuance of common stock for ATM public offering, net of offering costs | ||||
Issuance of Common Stock for Business combination with BWR | ||||
Stock-based compensation expense | ||||
Net change in other comprehensive income | (1,138) | (142) | ||
Issuance of common stock for public offering, net of offering costs | ||||
Issuance of Common Stock for Cashless exercise of options and warrants | ||||
Stock-based compensation related to stock options | ||||
Net loss | ||||
Ending balance | 484 | 484 | ||
Accumulated Deficit [Member] | ||||
Beginning balance | (35,933) | (16,519) | ||
Issuance of common stock for ATM public offering, net of offering costs | ||||
Issuance of Common Stock for Business combination with BWR | ||||
Stock-based compensation expense | ||||
Net change in other comprehensive income | ||||
Issuance of common stock for public offering, net of offering costs | ||||
Issuance of common stock for Conversion of Series B promissory note | ||||
Issuance of Common Stock for Cashless exercise of options and warrants | ||||
Issuance of Common Stock for Common Stock exchanged for Series C Preferred Stock | ||||
Stock-based compensation related to stock options | ||||
Net loss | (10,687) | (3,504) | (23,984) | (9,522) |
Ending balance | $ (46,620) | (20,023) | (46,620) | (20,023) |
Preferred Stock [Member] | ||||
Beginning balance | ||||
Beginning balance, shares | ||||
Issuance of common stock for ATM public offering, net of offering costs | ||||
Issuance of common stock for ATM public offering, net of offering costs, shares | ||||
Issuance of Common Stock for Business combination with BWR | ||||
Issuance of Common Stock for Business combination with BWR, shares | ||||
Stock-based compensation expense | ||||
Net change in other comprehensive income | ||||
Issuance of common stock for public offering, net of offering costs | ||||
Issuance of common stock for public offering, net of offering costs, shares | ||||
Issuance of common stock for Conversion of Series B promissory note | ||||
Issuance of common stock for Conversion of Series B promissory notes, shares | ||||
Issuance of Common Stock for Cashless exercise of options and warrants | ||||
Issuance of Common Stock for Cashless exercise of options and warrants, shares | ||||
Issuance of Common Stock for Common Stock exchanged for Series C Preferred Stock | ||||
Issuance of Common Stock for Common Stock exchanged for Series C Preferred Stock, shares | 7,000 | |||
Stock-based compensation related to stock options | ||||
Net loss | ||||
Ending balance | ||||
Ending balance, shares | 7,000 | 7,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Aug. 03, 2019 | May 30, 2019 | Dec. 02, 2018 | Jul. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2019 | Jan. 03, 2019 | |
Unrecognized compensation expense related to unvested stock options | $ 3,700 | |||||||
Weighted-average vesting period | 2 years 2 months 12 days | |||||||
Expected dividend yield | 0.00% | |||||||
Modification Agreement [Member] | ||||||||
Number of outstanding options, shares | 300,000 | |||||||
Fair value of stock option | $ 800 | |||||||
Morinda Merger Agreement [Member] | ||||||||
Stock issued during the period, shares | 2,016,480 | |||||||
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] | ||||||||
Number of outstanding options, shares | 2,786,000 | 2,646,000 | [1] | |||||
Weighted-average grant date fair value | $ 3.26 | |||||||
Expected dividend yield | 0.00% | |||||||
Stock award granted | 388,000 | |||||||
LTI Plan [Member] | Modified Weighted Average [Member] | ||||||||
Weighted-average grant date fair value | $ 3.40 | |||||||
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 | |||||||
[1] | As of September 30, 2019 and December 31, 2018, the aggregate intrinsic value of stock options outstanding was $1.3 million and $6.6 million, respectively. |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock Option Activity (Details) | 9 Months Ended | |
Sep. 30, 2019$ / sharesshares | ||
Non-Employees [Member] | ||
Options, granted | 25,000 | |
LTI Plan [Member] | ||
Options outstanding, beginning of period | 2,786,000 | |
Options, forfeited | (328,000) | |
Options, exercised | (200,000) | |
Options outstanding, ending of period | 2,646,000 | [1] |
Options vested, end of period | 852,000 | [2] |
Weighted average grant date fair value outstanding, beginning balance | $ / shares | $ 2.84 | [3] |
Weighted average grant date fair value, forfeited | $ / shares | 3.58 | [3] |
Weighted average grant date fair value, exercised | $ / shares | 2.09 | [3] |
Weighted average grant date fair value outstanding, ending balance | $ / shares | 2.94 | [3] |
Weighted average grant date fair value vested, end of period | $ / shares | $ 1.93 | [3] |
Weighted average remaining contractual term, beginning balance | 9 years | [4] |
Weighted average remaining contractual term, ending balance | 8 years 4 months 24 days | [4] |
Weighted average contractual term vested, end of period | 7 years 6 months | [4] |
LTI Plan [Member] | Employees [Member] | ||
Options, granted | 363,000 | |
Weighted average grant date fair value, granted | $ / shares | $ 3.63 | [3] |
LTI Plan [Member] | Non-Employees [Member] | ||
Options, granted | 25,000 | |
Weighted average grant date fair value, granted | $ / shares | $ 5.30 | [3] |
[1] | As of September 30, 2019 and December 31, 2018, the aggregate intrinsic value of stock options outstanding was $1.3 million and $6.6 million, respectively. | |
[2] | As of September 30, 2019 and December 31, 2018, the aggregate intrinsic value of vested stock options was $0.7 million and $3.1 million, respectively. | |
[3] | Represents the weighted average exercise price. | |
[4] | Represents the weighted average remaining contractual term until the stock options expire. |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Stock Option Activity (Details) (Parenthetical) - LTI Plan [Member] - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Aggregate intrinsic value of stock options outstanding | $ 1,300 | $ 6,600 |
Aggregate intrinsic value of vested stock options outstanding | $ 700 | $ 3,100 |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of Stock Options Weighted-Average Assumptions (Details) | 9 Months Ended |
Sep. 30, 2019$ / shares | |
Dividend yield | 0.00% |
LTI Plan [Member] | |
Grant date fair value of common stock (exercise price) | $ 3.83 |
Expected life (in years) | 6 years 6 months |
Volatility | 110.00% |
Dividend yield | 0.00% |
Risk-free interest rate | 1.70% |
LTI Plan [Member] | Modified [Member] | |
Grant date fair value of common stock (exercise price) | $ 4.75 |
Expected life (in years) | 1 year |
Volatility | 138.00% |
Dividend yield | 0.00% |
Risk-free interest rate | 1.90% |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Restricted Stock Award Activity (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019USD ($)shares | ||
Weighted average remaining term for recognition of unvested expense | 2 years 2 months 12 days | |
LTI Plan Equity Awards [Member] | ||
Number of shares, outstanding, beginning of period | shares | 1,151,000 | |
Number of shares, restricted shares granted | shares | 461,000 | [1] |
Number of shares, other | shares | 35,000 | |
Number of shares, forfeited and not expected to vest | shares | (219,000) | [2] |
Number of shares, Modification of award | shares | ||
Number of shares, fair value adjustment | shares | ||
Number of shares, vested shares and expense | shares | (423,000) | |
Number of shares, outstanding, end of period | shares | 1,005,000 | [3] |
Number of shares, Intrinsic value, end of period | $ 2,774,000 | [4] |
Unvested compensation, outstanding, beginning of period | 3,236 | |
Unvested compensation, restricted shares granted | 2,258 | [1] |
Unvested compensation, other | 79 | |
Unvested compensation, forfeited and not expected to vest | (260) | [2] |
Unvested compensation, Modification of award | (95) | |
Unvested compensation, fair value adjustment | ||
Unvested compensation, vested shares and expense | (2,870) | |
Unvested compensation, outstanding, end of period | $ 2,348 | [3] |
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 granted | shares | ||
Number of shares, other | shares | ||
Number of shares, forfeited and not expected to vest | shares | (318,000) | [5] |
Number of shares, Modification of award | shares | ||
Number of shares, fair value adjustment | shares | ||
Number of shares, vested shares and expense | shares | ||
Number of shares, outstanding, end of period | shares | 156,000 | |
Number of shares, Intrinsic value, end of period | $ 430,000 | [4],[6] |
Unvested compensation, outstanding, beginning of period | 2,490 | |
Unvested compensation, restricted shares granted | ||
Unvested compensation, other | ||
Unvested compensation, forfeited and not expected to vest | (1,673) | [5] |
Unvested compensation, Modification of award | ||
Unvested compensation, fair value adjustment | (388) | [7] |
Unvested compensation, vested shares and expense | (304) | |
Unvested compensation, outstanding, end of period | $ 125 | |
Weighted average remaining term for recognition of unvested expense | 1 year | |
Non-Plan Awards [Member] | ||
Number of shares, outstanding, beginning of period | shares | 629,000 | |
Number of shares, restricted shares granted | shares | ||
Number of shares, other | shares | ||
Number of shares, forfeited and not expected to vest | 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) | [8] |
Number of shares, Intrinsic value, end of period | ||
Unvested compensation, outstanding, beginning of period | 64 | |
Unvested compensation, restricted shares granted | ||
Unvested compensation, other | ||
Unvested compensation, forfeited and not expected to vest | ||
Unvested compensation, fair value adjustment | ||
Unvested compensation, vested shares and expense | (64) | [8] |
Unvested compensation, outstanding, end of period | ||
Weighted average remaining term for recognition of unvested expense | ||
[1] | The weighted average fair value was $4.90 per share based on the closing price of the Company's Common Stock on the grant date | |
[2] | Forfeitures of LTI Plan Equity Awards include 162,000 shares that vest only if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. Based on the Company's current assessment, these shares are not expected to vest. Therefore, all previously recognized compensation expense related to these shares was reversed for the three months ended September 30, 2019. | |
[3] | As of September 30, 2019, unvested shares of restricted stock consist of approximately 1.0 million shares that will be issued upon vesting, and 0.1 million shares that are included in issued and outstanding shares but are subject to restrictive vesting conditions. For unvested shares that have been issued, $240,000 of unvested compensation is included in prepaid expenses and other current assets as of September 30, 2019. | |
[4] | The intrinsic value was based on the closing price of the Company's common stock of $2.76 per share on September 30, 2019. | |
[5] | Forfeitures of LTI Plan Liability Awards include approximately 317,000 shares that vest only if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. Based on the Company's current assessment, these shares are not expected to vest. Therefore, all previously recognized compensation expense related to these shares was reversed for the three months ended September 30, 2019. | |
[6] | Due to Morindas 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 September 30, 2019, approximately $0.3 million is included in current liabilities. | |
[7] | The change in unvested compensation resulted from a decrease in the closing price of the Company's Common Stock for the nine months ended September 30, 2019. | |
[8] | Consists of restricted stock issued to the Company's Chief Executive Officer in 2016 that vested over three years. The remaining shares became fully vested in March and April 2019. |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Restricted Stock Award Activity (Details) (Parenthetical) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2018 | ||
LTI Plan Equity Awards [Member] | |||
Weighted average fair value | $ 4.90 | ||
Stock options, forfeitures, description | Forfeitures of LTI Plan Equity Awards include 162,000 shares that vest only if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. | ||
Unvested shares of restricted stock issued | 100,000 | ||
Restricted stock issued upon vesting condition | 100,000 | ||
Unvested compensation | $ 2,348 | [1] | $ 3,236 |
Intrinsic value based on closing price | $ 2.76 | ||
LTI Plan Equity Awards [Member] | Morinda [Member] | |||
Outstanding unvested shares | 162,000 | ||
EBITDA | $ 20,000 | ||
LTI Plan Equity Awards [Member] | Prepaid Expenses and Other Current Assets [Member] | |||
Unvested compensation | $ 240 | ||
LTI Plan Liability Awards [Member] | |||
Stock options, forfeitures, description | Forfeitures of LTI Plan Liability Awards include approximately 317,000 shares that vest only if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. | ||
Unvested compensation | $ 125 | 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 | $ 300 | ||
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. | ||
[1] | As of September 30, 2019, unvested shares of restricted stock consist of approximately 1.0 million shares that will be issued upon vesting, and 0.1 million shares that are included in issued and outstanding shares but are subject to restrictive vesting conditions. For unvested shares that have been issued, $240,000 of unvested compensation is included in prepaid expenses and other current assets as of September 30, 2019. |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Stock-based compensation expense | $ 5,278 | $ 1,387 |
Stock Options Awards [Member] | Employees [Member] | ||
Stock-based compensation expense | 2,026 | 557 |
Stock Options Awards [Member] | Non-Employees [Member] | ||
Stock-based compensation expense | 14 | |
Restricted Stock Awards [Member] | Equity Classified [Member] | ||
Stock-based compensation expense | 2,934 | 830 |
Restricted Stock Awards [Member] | Liability Classified [Member] | ||
Stock-based compensation expense | $ 304 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense, benefit | $ 6,671 | $ 12,768 | ||
Effective Income tax rate reconciliation, federal statutory income tax rate, percent | (168.00%) | (110.00%) | ||
Deferred tax assets, valuation allowance adjustment | $ 8,200 | |||
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 | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Other long-term liabilities | $ 8,880 | $ 8,880 | $ 9,160 |
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. | ||
Defined contribution plan, cost | 200 | $ 500 | |
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 | $ 3,400 | 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 | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Fair value of the restricted stock awards | $ 576 | $ 325 |
Common Stock [Member] | ||
Issuance of common stock for grant of restricted stock awards, shares | 126,000 | 154,000 |
Fair value of the restricted stock awards | ||
Five Non-employee Members of the Board of Directors [Member] | Common Stock [Member] | ||
Issuance of common stock for grant of restricted stock awards, shares | 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 | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Antidilutive securities excluded from computation of earnings per share | 4,007,000 | 1,486,000 |
Stock Options [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 2,646,000 | |
Unissued restricted stock awards under LTI Plan [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 1,161,000 | |
Warrant Issued for License Agreement [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 200,000 | |
Stock Options [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 1,486,000 |
Financial Instruments and Sig_2
Financial Instruments and Significant Concentrations (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Concentration risk, percentage | 60.00% | ||||
Cash and cash equivalents | $ 68,373 | $ 28,627 | $ 68,373 | $ 28,627 | $ 42,517 |
United States [Member] | Financial Institution One [Member] | |||||
Cash and cash equivalents | 21,300 | 21,300 | 6,500 | ||
United States [Member] | Financial Institution Two [Member] | |||||
Cash and cash equivalents | 3,000 | 3,000 | |||
United States [Member] | Financial Institution Three [Member] | |||||
Cash and cash equivalents | 700 | 700 | |||
China [Mmeber] | Financial Institution One [Member] | |||||
Cash and cash equivalents | 7,500 | 7,500 | 14,500 | ||
China [Mmeber] | Financial Institution Two [Member] | |||||
Cash and cash equivalents | 3,800 | 3,800 | $ 8,000 | ||
Japan [Member] | Financial Institution One [Member] | |||||
Cash and cash equivalents | 20,700 | 20,700 | |||
Japan [Member] | Financial Institution Two [Member] | |||||
Cash and cash equivalents | $ 6,000 | $ 6,000 | |||
Morinda [Member] | United States [Member] | |||||
Concentration risk, percentage | 91.00% | ||||
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 | 73.00% | ||||
Max and Other Noni-Based Beverage Products [Member] | Morinda [Member] | |||||
Concentration risk, percentage | 82.00% | ||||
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 | 9 Months Ended | |
Sep. 30, 2019USD ($)Number | Dec. 31, 2018USD ($) | |
Number of operating segment | Number | 2 | |
Concentration risk, percentage | 60.00% | |
Property and equipment, net carrying value | $ 26,639 | $ 57,281 |
United States [Member] | ||
Property and equipment, net carrying value | $ 11,000 | 38,500 |
Japan [Member] | ||
Property and equipment, net carrying value | $ 27,800 |
Segments and Geographic Conce_3
Segments and Geographic Concentrations - Summary of Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | ||
Total revenue | $ 69,828 | $ 13,243 | $ 194,483 | $ 38,164 | ||
Total gross profit | 40,296 | 1,699 | 120,521 | 6,075 | ||
Total assets | 313,676 | 313,676 | $ 286,932 | |||
Total capital expenditures | 2,201 | 8 | 4,451 | 72 | ||
Morinda [Member] | ||||||
Total revenue | 54,843 | 155,125 | ||||
Total gross profit | 43,288 | 121,462 | ||||
Total assets | 202,241 | 202,241 | 206,222 | |||
Total capital expenditures | 205 | 746 | ||||
NewAge [Member] | ||||||
Total revenue | 14,985 | 13,243 | 39,358 | 38,164 | ||
Total gross profit | (2,992) | 1,699 | (941) | 6,075 | ||
Total assets | 111,435 | 111,435 | $ 80,710 | |||
Total capital expenditures | $ 1,996 | $ 8 | $ 3,705 | [1] | $ 72 | |
[1] | Consists of additions to property and equipment of $0.9 million, the fair value of identifiable intangible assets acquired for $1.1 million, and property, equipment and intangible assets of $1.7 million acquired in the acquisition of BWR as discussed in Note 3. |
Segments and Geographic Conce_4
Segments and Geographic Concentrations - Summary of Segment Reporting (Details) (Parenthetical) - NewAge [Member] $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Property, plant and equipment, additions | $ 900 |
Fair value of identifiable intangible assets acquired | 1,100 |
BWR [Member] | |
Intangible assets, acquired on acquisition | $ 1,700 |
Segments and Geographic Conce_5
Segments and Geographic Concentrations - Schedule of Net revenue by geographic region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Total revenue | $ 69,828 | $ 13,243 | $ 194,483 | $ 38,164 |
United States [Member] | ||||
Total revenue | 19,610 | 13,243 | 53,010 | 38,164 |
International [Member] | ||||
Total revenue | $ 50,218 | $ 141,473 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($) $ / shares in Units, $ in Thousands | Oct. 14, 2019 | Oct. 09, 2019 |
Key Employees of BWR [Member] | ||
Issuance of common stock for grant of restricted stock awards, shares | 159,000 | |
Fair value of restricted stock | $ 400 | |
Certain Employees of BWR [Member] | ||
Share-based payment award, options, grants in period | 75,000 | |
Share-based payment award, options, grants, exercise price | $ 2.71 | |
Equity awards, description | These restricted stock awards and stock options vest annually for approximately one-third of the shares in each of July 2020, July 2021 and July 2022. | |
Second Amendment [Member] | ||
Credit facility, description | Under the Second Amendment, EWB waived (i) any default for failure to maintain at least $5.0 million of net cash with EWB in the United States or in China during the period from July 25, 2019 to October 9, 2019 and (ii) any default for failing to maintain primary operating accounts with EWB, and ensure that the Company's deposit and investment accounts with third party financial institutions located in China contain no more than 40% of the Company's total cash, cash equivalents and investment balances maintained in China. The Second Amendment also amended the Credit Facility to (i) extend the time period to establish compliance with the operating account provisions until November 30, 2019, (ii) to make the covenants no longer applicable to the Company's subsidiaries in China, and (iii) to decrease the amount of net cash from $5.0 million to $2.0 million that the Company is required to maintain with EWB on and after December 31, 2019. |