Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 10, 2020 | Jun. 28, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | New Age Beverages Corp | ||
Entity Central Index Key | 0001579823 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 345,120,000 | ||
Entity Common Stock, Shares Outstanding | 85,437,046 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 60,842 | $ 42,517 |
Accounts receivable, net of allowance of $535 and $134, respectively | 11,012 | 9,837 |
Inventories | 36,718 | 37,148 |
Prepaid expenses and other | 4,384 | 6,473 |
Total current assets | 112,956 | 95,975 |
Long-term assets: | ||
Identifiable intangible assets, net | 43,443 | 67,830 |
Property and equipment, net | 28,443 | 57,281 |
Goodwill | 10,284 | 31,514 |
Right-of-use lease assets | 38,458 | 18,489 |
Deferred income taxes | 9,128 | 8,908 |
Restricted cash and other | 8,418 | 6,935 |
Total assets | 251,130 | 286,932 |
Current liabilities: | ||
Accounts payable | 13,259 | 8,960 |
Accrued liabilities | 49,451 | 34,019 |
Current portion of business combination liabilities | 5,508 | 8,718 |
Current maturities of long-term debt | 11,208 | 3,369 |
Total current liabilities | 79,426 | 55,066 |
Long-term liabilities: | ||
Business combination liabilities, net of current portion | 43,412 | |
Long-term debt, net of current maturities | 12,802 | 1,325 |
Operating lease liabilities, net of current portion: Lease liability | 35,513 | 13,686 |
Operating lease liabilities, net of current portion: Deferred lease financing obligation | 16,541 | |
Deferred income taxes | 5,441 | 9,747 |
Other | 9,132 | 9,160 |
Total liabilities | 158,855 | 132,396 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Common Stock; $0.001 par value. Authorized 200,000 shares; issued and outstanding 81,873 and 75,067 shares as of December 31, 2019 and 2018, respectively | 82 | 75 |
Additional paid-in capital | 203,862 | 176,471 |
Accumulated other comprehensive income | 802 | 626 |
Accumulated deficit | (112,471) | (22,636) |
Total stockholders' equity | 92,275 | 154,536 |
Total liabilities and stockholders' equity | $ 251,130 | $ 286,932 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance | $ 535 | $ 134 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 200,000,000 | 200,000,000 |
Common Stock, shares issued | 81,873,000 | 75,067,000 |
Common Stock, shares outstanding | 81,873,000 | 75,067,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
Income Statement [Abstract] | |||
Net revenue | $ 253,708 | $ 52,160 | |
Cost of goods sold | 101,001 | 42,865 | |
Gross profit | 152,707 | 9,295 | |
Operating expenses: | |||
Commissions | 75,961 | 2,781 | |
Selling, general and administrative | 114,982 | 20,288 | |
Business combination expense (gain): Financial advisor and other transaction costs | 3,189 | ||
Business combination expense (gain): Change in fair value of earnout obligations | (13,809) | 100 | |
Long-lived asset impairment expense: Goodwill and identifiable intangible assets | 44,925 | [1] | |
Long-lived asset impairment expense: Right-of-use assets | 2,265 | ||
Depreciation and amortization expense | 8,382 | 2,310 | |
Total operating expenses | 232,706 | 28,668 | |
Operating loss | (79,999) | (19,373) | |
Non-operating income (expenses): | |||
Gain from sale of property and equipment | 6,365 | ||
Interest expense | (3,677) | (1,068) | |
Gain (loss) from change in fair value of derivatives, net | 371 | (470) | |
Interest and other income (expense), net | (227) | (151) | |
Loss before income taxes | (77,167) | (21,062) | |
Income tax benefit (expense) | (12,668) | 8,927 | |
Net loss | (89,835) | (12,135) | |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments, net of tax | 176 | 626 | |
Comprehensive loss | $ (89,659) | $ (11,509) | |
Net loss per share attributable to common stockholders (basic and diluted) | $ (1.16) | $ (0.26) | |
Weighted average number of shares of Common Stock outstanding (basic and diluted) | 77,252,000 | 46,448,000 | |
[1] | All impairment write-offs were attributable to the NewAge segment. |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - 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 B promissory notes | $ 1 | 1,487 | 1,488 | |||
Issuance of common stock for Conversion of Series B promissory notes, shares | 794,000 | |||||
Issuance of common stock for public offering, net of offering costs | $ 35 | 97,606 | 97,641 | |||
Issuance of common stock for public offering, net of offering costs, shares | 34,684,000 | |||||
Issuance of common stock for debt issuance costs | 470 | 470 | ||||
Issuance of common stock for debt issuance costs, shares | 226,000 | |||||
Issuance of common stock for transaction costs in business combination | 1,166 | 1,166 | ||||
Issuance of common stock for transaction costs in business combination, shares | 214,000 | |||||
Issuance of common stock for Cashless exercise of options and warrants | $ 1 | (1) | ||||
Issuance of common stock for Cashless exercise of options and warrants, Shares | 449,000 | |||||
Issuance of common stock for Grant of restricted stock awards, net of forfeitures | 353 | 353 | ||||
Issuance of common stock for Grant of restricted stock awards, net of forfeitures, shares | 158,000 | |||||
Issuance of common stock for In business combination with Morinda | $ 2 | 10,968 | 10,970 | |||
Issuance of common stock for In business combination with Morinda, shares | 2,016 | |||||
Common Stock exchanged for Series C Preferred Stock | $ (7) | (7) | ||||
Common Stock exchanged for Series C Preferred Stock, shares | 7,000 | (6,900) | ||||
Series C Preferred Stock converted to Common Stock | $ 7 | 7 | ||||
Series C Preferred Stock converted to Common Stock, shares | (7,000) | 6,900 | ||||
Stock-based compensation expense | 1,219 | 1,219 | ||||
Net change in accumulated other comprehensive income | 626 | 626 | ||||
Net loss | (12,135) | (12,135) | ||||
Balance at Dec. 31, 2018 | $ 75 | 176,471 | 626 | (22,636) | 154,536 | |
Balance, shares at Dec. 31, 2018 | 75,067,000 | |||||
Issuance of common stock for Grant of restricted stock awards, net of forfeitures | 500 | 500 | ||||
Issuance of common stock for Grant of restricted stock awards, net of forfeitures, shares | 91,000 | |||||
Stock-based compensation expense | 5,232 | 5,232 | ||||
Net change in accumulated other comprehensive income | 176 | 176 | ||||
Issuance of common stock for ATM public offering, net of offering costs | $ 6 | 19,517 | 19,523 | |||
Issuance of common stock for ATM public offering, net of offering costs, shares | 5,957,000 | |||||
Issuance of common stock for vesting of restricted stock awards | ||||||
Issuance of common stock for vesting of restricted stock awards, shares | 269,000 | |||||
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 Employee services | 65 | 65 | ||||
Issuance of common stock for Employee services, shares | 16,000 | |||||
Issuance of common stock for acquisition of patents | 163 | 163 | ||||
Issuance of common stock for acquisition of patents, shares | 60,000 | |||||
Issuance of common stock for exercise of stock options | $ 1 | 623 | 624 | |||
Issuance of common stock for exercise of stock options, shares | 305,000 | |||||
Fair value of warrants issued for identifiable intangible assets | 838 | 838 | ||||
Net loss | (89,835) | (89,835) | ||||
Balance at Dec. 31, 2019 | $ 82 | $ 203,862 | $ 802 | $ (112,471) | $ 92,275 | |
Balance, shares at Dec. 31, 2019 | 81,873,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (89,835) | $ (12,135) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Long-lived asset impairment expense | 47,190 | |
Depreciation and amortization | 8,759 | 2,310 |
Non-cash lease expense | 7,086 | 413 |
Stock-based compensation expense | 6,388 | 2,533 |
Accretion and amortization of debt discount and issuance costs | 1,937 | 780 |
Expense for make-whole premium | 480 | 176 |
Issuance of common stock for acquisition expenses in business combination | 1,166 | |
Change in fair value of earnout obligations | (13,809) | 100 |
Gain from sale of property and equipment | (6,365) | |
Deferred income tax benefit | (4,944) | (8,927) |
Loss (gain) from change in fair value of derivatives | (371) | 470 |
Changes in operating assets and liabilities, net of effects of business contributions: | ||
Accounts receivable | (501) | 1,286 |
Inventories | 2,792 | (3,374) |
Prepaid expenses, deposits and other | 902 | (1,777) |
Accounts payable | 907 | (3,583) |
Other accrued liabilities | 7,583 | (1,269) |
Net cash used in operating activities | (31,801) | (21,831) |
Net proceeds from sale of land and building in Japan: | ||
Related to sale of property | 35,873 | |
Repair obligation | 1,675 | |
Capital expenditures for property and equipment | (5,357) | (744) |
Security deposit under sale leaseback arrangement | (1,799) | |
Cash paid for business combinations, net of cash acquired | (963) | (28,694) |
Net cash provided by (used in) investing activities | 29,429 | (29,438) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from borrowings | 61,288 | 9,526 |
Principal payments on borrowings | (43,887) | (9,955) |
Proceeds from issuance of common stock | 20,102 | 99,857 |
Proceeds from deferred lease financing obligation | 17,640 | |
Proceeds from exercise of stock options | 624 | |
Principal payments on business combination obligations | (34,000) | |
Debt issuance costs paid | (951) | (634) |
Cash paid for make-whole premium on early prepayment of debt | (480) | (176) |
Payments for deferred offering costs | (479) | (2,217) |
Payments under deferred lease financing obligation | (463) | |
Net cash provided by financing activities | 19,394 | 96,401 |
Effect of foreign currency translation changes | 1,693 | 439 |
Net change in cash, cash equivalents and restricted cash | 18,715 | 45,571 |
Cash, cash equivalents and restricted cash at beginning of year | 45,856 | 285 |
Cash, cash equivalents and restricted cash at end of year | 64,571 | 45,856 |
SUMMARY OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | ||
Cash and cash equivalents at end of year | 60,842 | 42,517 |
Restricted cash at end of year | 3,729 | 3,339 |
Total | 64,571 | 45,856 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 719 | 386 |
Cash paid for income taxes | 3,462 | |
Cash paid for amounts included in the measurement of operating lease liabilities | 8,942 | 2,080 |
Right-of-use assets acquired in exchange for operating lease liabilities | 29,368 | 1,569 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Fair value of warrants issued for license agreement | 838 | |
Restricted stock granted for prepaid compensation | 500 | 353 |
Issuance of common stock in business combinations | 453 | 10,970 |
Issuance of shares of Common Stock for patents | 163 | |
Increase in payables for deferred offering costs | 100 | |
Exchange of 6,900,000 shares of Common Stock for 6,900 shares of Series C Preferred Stock | ||
Liability for contingent consideration in business combination | 13,134 | |
Issuance of Common Stock for conversion of principal under Series B notes payable | 1,488 | |
Debt issuance costs paid from proceeds of borrowings | 170 | |
Issuance of Common Stock for debt discount | $ 470 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Common stock, shares | 6,900,000 | 6,900,000 |
Series C Preferred Stock [Member] | ||
Common stock, shares | 6,900 | 6,900 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Nature of Operations | NOTE 1 — NATURE OF OPERATIONS Overview 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”). The Company is a healthy beverages and lifestyles company engaged in the development and commercialization of a portfolio of organic, natural and other better-for-you healthy beverages, liquid dietary supplements, cannabidiol (“CBD”) topical products, and other healthy lifestyle products. On July 10, 2019, the Company completed a business combination with Brands Within Reach, LLC (“BWR”). For further information about the Morinda and BWR business combinations, please refer to Note 4. Legal Structure, Regulation and Consolidation The Company has four direct subsidiaries, all of which are wholly-owned. These subsidiaries consist of NABC, Inc., NABC Properties, LLC (“NABC Properties”), 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 administers a building owned by the Company in southern Colorado. BWR is a component of the NewAge segment and owns key licensing and distribution rights in the United States for some of the world’s leading beverage brands. The Company’s former subsidiary, New Age Health Sciences, Inc., was merged with and into NABC, Inc. in November 2019. The Company and its subsidiaries are subject to regulation by a number of governmental agencies, including the U.S. Food and Drug Administration; Federal Trade Commission; Consumer Product Safety Commission; federal, state, and local taxing agencies; and others. In addition, the Company and its subsidiaries are subject to regulation by a number of foreign government agencies. The 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 (“U.S. GAAP”). All intercompany balances and transactions have been eliminated. Segments 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 reportable segment for purposes of making operating decisions and assessing financial performance. Upon consummation of the business combination with Morinda in December 2018, the Company’s CODM began assessing performance and allocating resources based on the financial information of two operating segments, the Morinda segment and the NewAge segment. In 2020, the Morinda segment began doing business as Noni by NewAge. As a result of this change, all references to the former Morinda segment are referred to herein as the Noni by NewAge segment. These two reportable segments focus on the sale of distinctly different beverage products and are managed separately because they have different marketing strategies, customer bases, and economic characteristics. Please refer to Note 15 for additional information about the Company’s operating segments. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 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 U.S. 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, impairment of goodwill and long-lived assets; valuation assumptions for earnout obligations and assets acquired in business combinations; valuation assumptions for stock options, warrants and equity instruments issued for goods or services; estimated useful lives for identifiable intangible assets and property and equipment; allowances for sales returns, chargebacks and inventory obsolescence; 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. Cash and Cash Equivalents All highly liquid investments purchased with an original maturity of three months or less that are freely available for the Company’s immediate and general business use are classified as cash and cash equivalents. Cash consists of demand deposits with financial institutions. Cash equivalents consist of short-term certificates of deposit. Allowance for Doubtful Accounts The Company records a provision for doubtful accounts based on historical experience and a detailed assessment of the collectability of its accounts receivable. In estimating the allowance for doubtful accounts, the Company considers, among other factors, the aging of the accounts receivable, its historical write-offs, the credit worthiness of customers, and general economic conditions. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. Inventories Inventories are adjusted to the lower of cost and net realizable value, using the first-in, first-out method. The components of inventory cost include raw materials, labor and overhead. The determination of net realizable value involves various assumptions related to excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning, and market conditions. If future demand and market conditions are less favorable than management’s assumptions, additional inventory adjustments could be required in future periods. Identifiable Intangible Assets Identifiable intangible assets are recorded at the estimated acquisition date fair value. Finite lived intangible assets are amortized over the shorter of the contractual life or their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the intangible asset are expected to be generated. In connection with the Company’s business combinations, identifiable intangible assets were acquired that were recorded at estimated fair value on the date of acquisition. These assets are being amortized using the straight-line method over the estimated useful lives as follows: License agreements 15 Trade names 1-15 Manufacturing processes and recipes 15 IPC distributor sales force 10 Product distribution rights 16 Patents 15 Non-compete agreements 3 Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, as follows: Years Buildings and improvements 28-40 Machinery and equipment 3-7 Office furniture and equipment 3-7 Delivery vehicles 3-5 Leasehold improvements 1-20 Leasehold improvements are amortized over the remaining lease term or the estimated useful life of the asset, whichever is shorter. Maintenance and repairs are expensed as incurred. Depreciation commences when assets are initially placed into service for their intended use. Goodwill Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but tested for impairment annually on December 31 of each year, or more frequently when events or circumstances indicates that the carrying value of a reporting unit more likely than not exceeds its fair value. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the reporting unit. If, on the basis of qualitative factors, it is considered more likely than not that the fair value of the reporting unit is greater than the carrying amount, further testing of goodwill for impairment is not required. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Leases The Company determines if contractual arrangements are considered a lease at inception. Operating leases are included in right-of-use (“ROU”) assets, whereas assets related to finance leases are included in property and equipment. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the related obligations to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Most of the Company’s leases do not set forth an implicit interest rate, which requires use of the Company’s estimated incremental borrowing rate to determine the present value of lease payments. The Company has a central treasury function and determines the incremental borrowing rate based on local economic conditions in the jurisdiction of the related leased property. When lease terms include options to extend or terminate the lease that are reasonably certain to be exercised, the ROU calculations give effect to such options. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Some of the Company’s lease agreements contain lease and non-lease components, which are generally accounted for separately. However, for certain leases, the Company elects to account for the lease and non-lease components as a single lease component. Additionally, for certain equipment leases, the Company applies a portfolio approach to effectively account for the operating lease ROU assets and liabilities. Impairment of Long-lived Assets Long-lived assets consist of identifiable intangible assets, property, equipment, and ROU assets, which are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists for long-lived assets if the carrying amounts of such assets exceed the estimates of future net undiscounted cash flows expected to be generated by such assets. An impairment charge is recognized for the amount by which the carrying amount of the asset, or asset group, exceeds its fair value. Debt Issuance Costs and Discounts Debt issuance costs are costs incurred to obtain new debt financing or modify existing debt agreements and consist of incremental direct costs incurred for professional fees and due diligence services, including reimbursement of similar costs incurred by the lenders. Amounts paid to the lenders when a financing is consummated are a reduction of the proceeds and are treated as a debt discount. Except for revolving lines of credit, debt issuance costs and discounts are presented in the accompanying consolidated balance sheets as a reduction in the carrying value of the debt and are accreted to interest expense using the effective interest method. Debt issuance costs related to revolving lines of credit are presented in the accompanying consolidated balance sheets as a long-term asset and are amortized using the straight-line method over the contractual term of the debt agreement. Unamortized deferred debt issuance costs are not charged to expense when the related debt becomes a demand obligation due to the violation of terms so long as it is probable that the lenders will either waive the violation or will agree to amend or restructure the terms of the indebtedness. If either circumstance is probable, the deferred debt issuance costs continue to be amortized over the remaining term of the initial amortization period. If it is not probable, the costs will be charged to expense. Deferred Offering Costs Commissions, legal fees and other costs that are directly associated with equity offerings are capitalized as deferred offering costs, pending a determination of the success of the offering. Deferred offering costs related to successful offerings are charged to additional paid-in capital in the period it is determined that the offering was successful. Deferred offering costs related to unsuccessful equity offerings are recorded as expense in the period when it is determined that an offering is unsuccessful. Restricted Cash 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. Revenue Recognition Product sales are recognized when the Company satisfies its performance obligations and transfers control of the promised products to its customers, which generally occurs over a very short period of time. Performance obligations are typically satisfied by shipping or delivering products to customers, which is also the point when title transfers to customers. Revenue is measured as the amount of consideration expected to be received in exchange for transferring the related products. Revenue consists of the gross sales price, less estimated returns and allowances for which provisions are made at the time of sale, and less certain other discounts, allowances, and personal rebates that are accounted for as a reduction from gross revenue. Shipping and handling charges that are billed to customers are included as a component of revenue. Costs incurred by the Company for shipping and handling charges are included in cost of goods sold. Payments received for undelivered or back-ordered products are recorded as deferred revenue. The Company’s policy is to defer revenue related to distributor convention fees, payments received on products ordered in the current period but not delivered until the subsequent period, initial independent product consultants (“IPC”) fees, IPC renewal fees and internet subscription fees until the products or services have been provided. Deferred revenue is included in other accrued liabilities in the consolidated balance sheets and amounted to $1.4 million and $2.7 million for the years ended December 31, 2019 and 2018, respectively. Customer Programs and Incentives The Company incurs customer program costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to revenue or as advertising, promotional and selling expenses, based on the nature of the expenditure. The Company accounts for volume rebates made to its IPCs, and similar discounts and incentives, as a reduction of revenue in the accompanying consolidated statements of operations. Sales and Marketing Expenses Advertising, promotional and selling expenses consisted of media advertising costs, sales and marketing expenses, and promotional activity expenses and are recognized in the period incurred. The Company accrues expenses for incentive trips associated with Morinda’s direct sales marketing program, which rewards certain IPCs with paid attendance at its conventions, meetings, and retreats. Expenses associated with incentive trips are accrued over qualification periods as they are earned. The Company specifically analyzes incentive trip accruals based on historical and current sales trends as well as contractual obligations when evaluating the adequacy of the incentive trip accrual. Actual results could result in liabilities being more or less than the amounts recorded. Research and Development Research and development costs are primarily related to development of new product formulas. All research and development costs are expensed as incurred and amounts incurred through December 31, 2019 have not been material. Loss and Gain Contingencies The Company is subject to the possibility of various loss contingencies arising in the ordinary course of business. An estimated loss contingency is accrued when it is probable that an asset has been impaired, or a liability has been incurred, and the amount of loss can be reasonably estimated. If some amount within a range of loss appears to be a better estimate than any other amount within the range, the Company accrues that amount. Alternatively, when no amount within a range of loss appears to be a better estimate than any other amount, the Company accrues the lowest amount in the range. If the Company determines that a loss is reasonably possible and the range of the loss is estimable, then the Company discloses the range of the possible loss. If the Company cannot estimate the range of loss, it will disclose the reason why it cannot estimate the range of loss. The Company regularly evaluates current information available to it to determine whether an accrual is required, an accrual should be adjusted and if a range of possible loss should be disclosed. Legal fees related to contingencies are charged to general and administrative expense as incurred. Contingencies that may result in gains are not recognized until realization is assured, which typically requires collection in cash. Stock-Based Compensation The Company measures the cost of employee and director services received in exchange for all equity awards granted, including stock options, based on the fair market value of the award as of the grant date. The Company computes the fair value of options using the Black-Scholes-Merton (“BSM”) option pricing model. The Company recognizes the cost of the equity awards over the period that services are provided to earn the award, usually the vesting period. For awards granted which contain a graded vesting schedule, and the only condition for vesting is a service condition, compensation cost is recognized as an expense on a straight-line basis over the requisite service period as if the award was, in substance, a single award. The Company recognizes the impact of forfeitures in the period that the forfeiture occurs, rather than estimating the number of awards that are not expected to vest in accounting for stock-based compensation. Derivatives The Company holds derivative financial instruments in the form of interest rate swaps. The Company uses interest rate swaps to economically convert variable interest rate debt to a fixed rate. The Company has not designated these derivatives as hedging instruments. The interest rate swaps are recorded in the accompanying consolidated balance sheets at fair value. When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative instrument. The estimated fair value of the derivative feature is recorded in the accompanying consolidated balance sheets separately from the carrying value of the host contract. Subsequent changes in the estimated fair value of derivatives are recorded as a non-operating gain or loss in the Company’s consolidated statements of operations. Income Taxes The Company accounts for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes, under which deferred income taxes are recognized based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results, or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. A valuation allowance is recorded when it is more likely than not that a deferred tax asset will not be realized. The recorded valuation allowance is based on significant estimates and judgments and if the facts and circumstances change, the valuation allowance could materially change. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. Foreign Currency Translation The Company’s reporting currency is the U.S. Dollar, while the functional currencies of its foreign subsidiaries are their respective local currencies. A majority of Morinda’s business operations occur outside the United States. The local currency of each of the Morinda’s international subsidiaries and branches is used as its functional currency. All assets and liabilities are translated into U.S. dollars at exchange rates existing at the consolidated balance sheet date, and net revenue and expenses are translated at monthly average exchange rates. The resulting net foreign currency translation adjustments are recorded in accumulated other comprehensive income as a separate component of shareholders’ equity in the consolidated balance sheets. Gains and losses from foreign currency transactions and remeasurement gains (losses) on short-term intercompany borrowings, are recorded in other income and expense in the consolidated statements of operations and comprehensive loss. The tax effect has not been material to date. Loss Per Common Share Basic net loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding for each period presented. Diluted net loss per common share is computed by giving effect to all potential shares of Common Stock, including unvested restricted stock awards, stock options, convertible debt, Preferred Stock, and warrants, to the extent dilutive. Recent Accounting Pronouncements Recently Adopted Standards. In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation—Stock Compensation: Scope of Modification Accounting In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. In June 2018, the FASB issued ASU 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Compensation—Stock Compensation In December 2019, the FASB issued ASU 2019-12 , Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes 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 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. |
Liquidity and Going Concern
Liquidity and Going Concern | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity and Going Concern | NOTE 3 — LIQUIDITY AND GOING CONCERN If 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 that consumers want to buy, development of sales and distribution channels, and its ability to generate significant net revenue and cash flows from the use of this expertise. For the year ended December 31, 2019, the Company incurred a net loss of $89.8 million and net cash used in operating activities amounted to $31.8 million. As of December 31, 2019, the Company had an accumulated deficit of $112.5 million. As of December 31, 2019, the Company had contractual obligations of approximately $21.6 million that are due during the year ending December 31, 2020. This amount includes (i) payables to the former stockholders of Morinda of $5.7 million as discussed in Note 4, (ii) operating lease payments of $8.4 million, (iii) principal and estimated interest payments of $2.8 million due under the EWB Credit Facility discussed in Note 8, (iv) open purchase orders for inventories of $3.4 million, and (v) payments under certain employment agreements of $1.3 million. Our contractual obligations discussed above exclude discretionary principal payments under the EWB Revolver for $9.7 million that were paid on January 2, 2020 and which can be reborrowed subject to the terms of the EWB Credit Facility. As discussed in Note 16, the Company entered into the third amendment and waiver (the “Third Amendment”) to the EWB Credit Facility in March 2020. The Third Amendment is expected to have a significant impact on the Company’s liquidity and capital resources for the year ending December 31, 2020. The Third Amendment requires the Company to maintain an aggregate of $15.1 million in restricted cash balances with EWB. The Third Amendment also requires equity infusions of $10.0 million for the fiscal quarter ending March 31, 2020 (of which $6.3 million was received in January 2020). Cumulative equity infusions are required for $20.0 million and $30.0 million for the six- and nine-month periods ending June 30, 2020 and September 30, 2020, respectively. Management intends to raise the total required equity infusions of $30.0 million through the ATM Offering Agreement discussed in Note 9. The ATM Offering Agreement is scheduled to terminate on April 30, 2020, but management intends to seek an extension. The Company may also undertake other types of equity offerings to meet the requirements for equity infusions. As of December 31, 2019, the Company had cash and cash equivalents of $60.8 million and working capital amounted to $33.5 million. Management believes existing cash resources combined with expected proceeds under the ATM Offering Agreement will be sufficient to fund the restricted cash required by EWB of $15.1 million, contractual obligations of $21.6 million, and working capital requirements through March 2021. There are no assurances that the Company will be able to obtain additional financing through equity offerings and debt financings in the future. Even if these financing sources are available, they may be on terms that are not acceptable to the Company’s board of directors and stockholders. |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Business Combination | NOTE 4 — BUSINESS COMBINATIONS The Company completed business combinations with BWR in July 2019 and Morinda in December 2018. Both of these business combinations were accounted for using the acquisition method of accounting under ASC 805, Business Combinations Fair Value Measurement Brands Within Reach, LLC On May 30, 2019, the Company and BWR Acquisition Corp., a wholly owned subsidiary of the Company (“BWR Merger Sub”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Brands Within Reach, LLC (“BWR”), and Olivier Sonnois, the sole owner of BWR (“Mr. Sonnois”). At the closing on July 10, 2019 (the “BWR Closing Date”), the transactions contemplated by the Merger Agreement were completed resulting in the merger of BWR Merger Sub with and into BWR, and BWR became a wholly-owned subsidiary of the Company (the “BWR Merger”). This closing of the transaction was accounted for using the acquisition method of accounting based on ASC 805, 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. Morinda Holdings, Inc. On December 2, 2018, the Company entered into a Plan of Merger (the “Merger Agreement”) with Morinda and New Age Health Sciences Holdings, Inc., a wholly owned subsidiary of the Company (“Merger Sub”). On December 21, 2018 (the “Closing Date”), the transactions contemplated by the 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 Merger Agreement, the Company paid to Morinda’s equity holders (i) $75.0 million in cash; (ii) 2,016,480 shares of the Company’s Common Stock with an estimated fair value on the Closing Date of approximately $11.0 million, (iii) 43,804 shares of Series D Preferred Stock (the “Preferred Stock”) providing for the potential payment of up to $15 million contingent upon Morinda achieving certain post-closing milestones, as discussed below. Pursuant to the Certificate of Designations of Series D Preferred Stock (the “CoD”), the holders of the Preferred Stock were entitled to receive a dividend of up to an aggregate of $15.0 million (the “Milestone Dividend”) if the Adjusted EBITDA (as defined in the CoD) of Morinda was at least $20.0 million for the year ended December 31, 2019. If the Adjusted EBITDA of Morinda was less than $20.0 million, the Milestone Dividend was reduced by applying a five-times multiple to the difference between the Adjusted EBITDA target of $20 million and actual Adjusted EBITDA for the year ended December 31, 2019. Accordingly, no Milestone Dividend is payable if actual Adjusted EBITDA is $17.0 million or lower. Adjusted EBITDA of Morinda for the year ended December 31, 2019 was less than $17.0 million and, accordingly, no Milestone Dividend was payable to the holders of the Preferred Stock. Additionally, the Company was required to pay a quarterly dividend to the holders of the Preferred Stock at a rate of 1.5% per annum of the Milestone Dividend amount, payable on a pro rata basis. The Company may choose to pay the Milestone Dividend and /or the annual dividend in cash or in kind, provided that if the Company chooses to pay in kind, the shares of Common Stock issued as payment therefore must be registered under the Securities Act of 1933, as amended (the “Securities Act”). The Preferred Stock terminates on April 15, 2020. The annual cash dividend is payable on April 15, 2020. 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 are subject to a future financing event, 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 exceeds $25.0 million. The Closing Date balance sheet of Morinda indicated that EWC was approximately $14.6 million as of the Closing Date. Under ASC 805, acquisition-related transaction costs (e.g., advisory, legal and other professional fees) are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred. In connection with the Merger, the Company incurred transaction costs of $3.2 million, including (i) payment of cash of $1.1 million and issuance of 214,250 shares of Common Stock with a fair value of $1.2 million to a financial advisor that assisted with the consummation of the Merger, and (ii) professional fees and other incremental and direct costs associated with the Merger of $0.9 million. Summary of Purchase Consideration Presented below is a summary of the total purchase consideration for the BWR and Morinda business combinations (in thousands): 2019 2018 BWR Morinda Pre-closing cash advance to BWR $ 1,000 $ - Cash paid to former owners 500 75,000 Fair value of: Common stock issued 453 10,970 Contingent consideration payable - 13,134 Total purchase consideration $ 1,953 $ 99,104 Purchase Price Allocations Presented below is a summary of the purchase price allocations for the BWR and Morinda business combinations (in thousands): 2019 2018 BWR Morinda Identifiable assets acquired: Cash, cash equivalents and restricted cash $ 537 $ 46,306 Accounts receivable, net 1,293 4,250 Inventories 2,398 (1) 26,733 (1) Prepaid expenses and other assets 452 6,376 Identifiable intangible assets 1,530 (2) 45,886 (2) Right-of-use assets 708 13,268 Property and equipment 136 55,389 (3) Total identifiable assets acquired 7,054 198,208 Liabilities assumed: Accounts payable and accrued liabilities (4,071 ) (4) (41,194 ) (4) Liabilities to stockholders - (52,057 ) Mortgage and notes payable (2,353 ) (5) (2,869 ) Operating lease liabilities (708 ) (13,268 ) Net identifiable assets acquired (78 ) 88,820 Goodwill 2,031 (6) 10,284 (6) Total purchase price allocation $ 1,953 $ 99,104 (1) Based on the report of an independent valuation specialist, the fair value of work-in-process and finished goods inventories on the closing dates exceeded the historical carrying value by approximately $0.2 million for BWR and $2.2 million for Morinda. These amounts represent an element of built-in profit on the closing dates and were charged to cost of goods sold as the related inventories were subsequently 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 determined based on the reports 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) Fair value of Morinda’s real estate properties amounted to $44.4 million and was based upon real estate appraisals prepared by an independent firm, primarily using the “income approach”. Fair value of other property and equipment amounted to $10.9 million and was based primarily on the report of an independent valuation specialist with fair value determined using both the “cost approach” and the “market approach.” (4) BWR’s and Morinda’s U.S. operations were previously taxed on the owners’ individual income tax returns whereby no deferred income tax assets or liabilities had been recognized for U.S. federal and state income tax purposes. Accordingly, an adjustment of approximately $0.4 million for BWR and $9.9 million for Morinda 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) The Company assumed BWR’s obligations under its existing line of credit in connection with the business combination. Shortly after the closing date, the Company paid an aggregate of $2.5 million to terminate the line of credit and repay certain other liabilities. (6) Goodwill was recognized for the difference between the total purchase consideration transferred to consummate the business combinations and the fair value of the net identifiable assets acquired. Goodwill and intangible assets in connection with the BWR and Morinda business combinations are not expected to be deductible for income tax purposes. Earnout Obligations and Former Stockholder Payables Presented below is a summary of earnout obligations related to the Morinda and Marley Beverage Company (“Marley”) business combinations and payables to the former stockholders of Morinda (in thousands): 2019 2018 Marley earnout obligation $ - (1) $ 900 (1) Payables to former Morinda stockholders, net of imputed interest discount: Excess Working Capital (“EWC”) payable in: April 2019 - (2) 986 (2) July 2019 - (2) 7,732 (2) July 2020 5,283 (2) 4,984 (2) Earnout under Series D preferred stock 225 (3) 13,134 (3) Contingent on financing event - (4) 24,394 (4) Total 5,508 52,130 Less current portion 5,508 8,718 Long-term portion $ - $ 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. Revenue for the Marley reporting unit is not currently expected to exceed the $15.0 million earnout threshold, which resulted in the elimination of the liability during 2019. The fair value of the Marley earnout as of December 31, 2018 was valued using the weighted average return on assets for a total of $0.9 million. Changes in fair value of the Marley earnout resulted in a gain of $0.9 million for the year ended December 31, 2019 and an expense of $0.1 million for the year ended December 31, 2018. (2) Interest was imputed on these obligations based on a credit and tax adjusted interest rate of 6.1% for the period from the Closing Date until the respective contractual or estimated payment dates. This discount is being accreted using the effective interest method. Accretion of discount related to these obligations amounted to an aggregate of $1.2 million for the year ended December 31, 2019, which is included in interest expense in the accompanying consolidated statement of operations. (3) As of December 31, 2018, the fair value of earnout consideration under the Series D Preferred Stock was determined by an independent valuation specialist using an option pricing model. Key inputs in the valuation included forecast annual EBITDA of Morinda, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.6%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 18.9%, and an estimated credit spread of 5.7%. As of December 31, 2019, it was determined that Morinda’s EBITDA for the year ended December 31, 2019 was less than $17.0 million and therefore no Milestone Dividend was payable. Accordingly, the fair value of the Morinda earnout of $0.2 million was solely attributable to the 1.5% dividend set forth in the Series D Preferred Stock. (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 the sale leaseback discussed in Note 7. Since this amount was only payable from the proceeds of a long-term financing, the net carrying value was classified in long-term liabilities as of December 31, 2018. Net Revenue and Net Loss Related to Business Combinations For the years ended December 31, 2019 and 2018, the accompanying consolidated statements of operations include net revenue and net loss for the post-acquisition results of operations of BWR and Morinda as follows (in thousands): 2019 2018 BWR Morinda Total Morinda Net revenue $ 4,938 $ 200,708 $ 205,646 $ 3,825 Net loss $ (5,460 ) $ (9,100 ) $ (14,560 ) $ (457 ) Unaudited Pro Forma Disclosures The following table summarizes on an unaudited pro forma basis, the Company’s results of operations for the years ended December 31, 2019 and 2018 (in thousands, except per share amounts): 2019 2018 Net revenue $ 262,232 $ 300,092 Net loss $ (91,234 ) $ (12,548 ) Net loss per share- basic and diluted $ (1.17 ) $ (0.26 ) Weighted average number of shares of common stock outstanding- basic and diluted 78,043 48,786 The pro forma financial results shown above reflect the historical operating results of the Company, including the unaudited pro forma results of Morinda and BWR as if both of these business combinations and the related equity issuances had occurred at the beginning of the first full calendar year preceding the acquisition date. As applicable for the years 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), (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) the recognition of accretion of discounts on obligations with extended payment terms that were assumed in the Morinda business combination. The pro forma information presented above 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. |
Other Financial Information
Other Financial Information | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Other Financial Information | NOTE 5 — OTHER FINANCIAL INFORMATION Inventories Inventories consisted of the following as of December 31, 2019 and 2018 (in thousands): 2019 2018 Raw materials $ 12,848 $ 12,538 Work-in-process 872 907 Finished goods, net 22,998 23,703 Total inventories $ 36,718 $ 37,148 Prepaid Expenses and Other Current Assets As of December 31, 2019 and 2018, prepaid expenses and other current assets consisted of the following (in thousands): 2019 2018 Prepaid expenses and deposits $ 4,150 $ 4,982 Prepaid stock-based compensation 112 347 Supplier and other receivables 122 1,144 Total $ 4,384 $ 6,473 Property and Equipment As of December 31, 2019 and 2018, property and equipment consisted of the following (in thousands): 2019 2018 Land $ 37 $ 25,726 Buildings and improvements 16,686 19,822 Machinery and equipment 5,307 5,208 Leasehold improvements 5,019 4,398 Office furniture and equipment 3,964 2,087 Transportation equipment 1,733 1,727 Total property and equipment 32,746 58,968 Less accumulated depreciation (4,303 ) (1,687 ) Property and equipment, net $ 28,443 $ 57,281 Depreciation expense amounted to $3.4 million and $0.7 million for the years ended December 31, 2019 and 2018, respectively. Repairs and maintenance costs amounted to $2.2 million and $0.7 million for the years ended December 31, 2019 and 2018, respectively. Other Accrued Liabilities As of December 31, 2019 and 2018, other accrued liabilities consisted of the following (in thousands): 2019 2018 Accrued commissions $ 8,914 $ 9,731 Accrued compensation and benefits 5,868 4,715 Accrued marketing events 4,568 3,757 Deferred revenue 1,358 2,701 Income taxes payable 15,227 1,670 Current portion of operating lease liabilities 5,673 4,798 Other accrued liabilities 7,843 6,647 Total accrued liabilities $ 49,451 $ 34,019 |
Identifiable Intangible Assets
Identifiable Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Identifiable Intangible Assets and Goodwill | NOTE 6 —IDENTIFIABLE INTANGIBLE ASSETS AND GOODWILL Impairment Assessment Over the past several years, the Company invested in several 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 NewAge segment included several reporting units with goodwill and identifiable intangible assets with an aggregate net carrying value of $45.9 million as of December 31, 2019. These intangible assets primarily arose from a series of business combinations between April 2015 and July 2019. During the fourth quarter of 2019, the Company performed its annual goodwill impairment testing in conjunction with its annual budget process to reassess strategic priorities and forecast future operating performance and capital spending. Accordingly, the Company performed a quantitative assessment of the fair value of each of its reporting units in the NewAge and Noni by NewAge segments as of December 31, 2019. Fair value of the reporting units was determined using the fair value concepts set forth in ASC 820, Fair Value Measurement As a result of this valuation assessment, the Company determined that an aggregate impairment charge of $44.9 million was required to eliminate the net carrying value of all goodwill and substantially all identifiable intangible assets for all reporting units in the NewAge segment. For the year ended December 31, 2019, the changes in the net carrying value of identifiable intangible assets and goodwill are as follows (in thousands): Balance Changes in Net Carrying Value Balance December 31, Amortization Impairment December 31, Intangible Asset 2018 Additions (1) Expense Write-Offs (2) 2019 Identifiable intangible assets: License agreements China direct selling license $ 20,380 $ - $ (1,361 ) $ - $ 19,019 Other 5,671 838 (529 ) (5,980 ) - Manufacturing processes and recipes 11,230 - (796 ) (2,909 ) 7,525 Trade names 11,717 300 (886 ) (4,191 ) 6,940 IPC distributor sales force 9,731 - (976 ) - 8,755 Customer relationships 5,250 420 (439 ) (5,231 ) - Patents 3,667 163 (274 ) (3,244 ) 312 Product distribution rights and other - 795 (25 ) - 770 Non-compete agreements 184 119 (72 ) (109 ) 122 Total identifiable intangible assets 67,830 2,635 (5,358 ) (21,664 ) 43,443 Goodwill 31,514 2,031 - (23,261 ) 10,284 Total intangible assets $ 99,344 $ 4,666 $ (5,358 ) $ (44,925 ) $ 53,727 (1) Additions include identifiable intangible assets of $1.5 million and goodwill of $2.0 million in connection with the BWR business combination in July 2019, as discussed in Note 4. Identifiable intangible assets of $0.8 million and goodwill of $2.0 million related to BWR are included in the impairment write-offs. (2) All impairment write-offs were attributable to the NewAge segment. Identifiable Intangible Assets As of December 31, 2019 and 2018, identifiable intangible assets consisted of the following (in thousands): December 31, 2019 December 31, 2018 Accumulated Net Book Accumulated Net Book Identifiable Intangible Asset Cost (1) Amortization (1) Value Cost Amortization Value License agreements China direct selling license $ 20,420 $ (1,401 ) $ 19,019 $ 20,420 $ (40 ) $ 20,380 Other - - - 5,989 (318 ) 5,671 Manufacturing processes and recipes 8,080 (555 ) 7,525 11,610 (380 ) 11,230 Trade names 7,485 (545 ) 6,940 12,301 (584 ) 11,717 IPC distributor sales force 9,760 (1,005 ) 8,755 9,760 (29 ) 9,731 Customer relationships - - - 6,444 (1,194 ) 5,250 Patents 312 - 312 4,100 (433 ) 3,667 Product distribution rights and other 795 (25 ) 770 - - - Non-compete agreements 186 (64 ) 122 186 (2 ) 184 Total identifiable intangible assets $ 47,038 $ (3,595 ) $ 43,443 $ 70,810 $ (2,980 ) $ 67,830 (1) Reflects cost and accumulated amortization balances after impairment write-downs totaling $21.7 million as shown in the table above. Amortization expense related to identifiable intangible assets was $5.4 million and $1.7 million for the years ended December 31, 2019 and 2018, respectively. Assuming no future impairments or disposals, amortization expense for the above intangible assets for the next five years is set forth below: Year Ending December 31, 2020 $ 2,531 2021 2,531 2022 2,531 2023 2,531 2024 2,531 Thereafter 30,788 Total $ 43,443 Goodwill As shown above in the Impairment Assessment table, the Company recognized impairment write-downs of goodwill related to the NewAge segmen for an aggregate of $23.3 million in the fourth quarter of 2019. Goodwill, net of impairment write-downs, consisted of the following by reporting unit as of December 31, 2019 and 2018: Reporting Unit 2019 2018 Noni by NewAge $ 10,284 $ 10,284 Marley - 9,418 Maverick - 5,149 Xing - 4,506 PMC - 1,768 B&R - 389 Total goodwill $ 10,284 $ 31,514 Marley License Extension On March 28, 2019, the Company extended a 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 BSM option-pricing model. Key assumptions included an expected term of five years, volatility of 116%, and a risk-free interest rate of 2.2%. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | NOTE 7 — LEASES The Company leases various office and warehouse facilities, vehicles and equipment under non-cancellable operating lease agreements that expire between January 2020 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, to account for the lease and non-lease components as a single lease component. For the years ended December 31, 2019 and 2018, the Company had operating lease expense of $10.6 million and $1.6 million, respectively. 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 the lease any time after seven years. The monthly lease cost is ¥20.0 million (approximately $184,000 based on the exchange rate as of December 31, 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 8 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 4. Other cash payments that have been or will be made include transaction costs of $1.9 million, post-closing repair obligations of $1.7 million, and Japanese income taxes of $11.9 million. Presented below is a summary of the selling price and resulting gain on sale calculation (in thousands): Gross selling price $ 57,129 Less commissions and other expenses (1,941 ) Less repair obligations (1,675 ) Net selling price 53,513 Cost of land and building sold (29,431 ) Total gain on sale 24,082 Portion of gain related to above-market rent concession (17,640 ) Recognized gain on sale $ 6,442 The Company determined that $17.6 million of the $24.1 million gain on the sale of this property 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, and is included in gain from sale of property and equipment in the accompanying consolidated statement of operations for the year ended December 31, 2019. 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 $7.4 million. Impairment of ROU Asset 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. As of December 31, 2019, the Company was continuing its efforts to obtain a subtenant for this space. An updated impairment evaluation was performed, which resulted in an additional impairment charge of $0.8 million for total impairment of $2.3 million for the year ended December 31, 2019. Balance Sheet Presentation As of December 31, 2019 and 2018, the carrying value of ROU assets and the related operating lease obligations were as follows (in thousands): 2019 2018 Right-of-Use Assets $ 38,458 $ 18,489 Operating Lease Liabilities: Current $ 5,673 $ 4,798 Long-term 35,513 13,686 Total $ 41,186 $ 18,484 Deferred Lease Financing Obligation: Current $ 637 $ - Long-term 16,541 - Total $ 17,178 $ - As of December 31, 2019 and 2018, the weighted average remaining lease term under operating leases was 12.5 and 5.9 years, respectively. As of December 31, 2019 and 2018, the weighted average discount rate for ROU operating lease liabilities was 5.6% and 6.6%, respectively. Future Lease Payments As of December 31, 2019, future payments under operating lease agreements are as follows (in thousands): Years Ending December 31, 2020 $ 8,357 2021 6,836 2022 5,490 2023 5,424 2024 5,275 Thereafter 28,648 Total operating lease payments 60,030 Less imputed interest (18,844 ) (1) Present value of operating lease payments $ 41,186 (1) Calculated based on the term of the respective leases using corporate borrowing rates ranging from 2.0% to 10.0%. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 8 — DEBT Summary of Debt As of December 31, 2019 and 2018, debt consisted of the following (in thousands): 2019 2018 EWB Credit Facility: Term loan, net of discount of $448 $ 14,302 $ - Revolver 9,700 - Installment notes payable 8 (1) 66 (1) Siena Revolver - 2,000 Mortgage payable to a foreign bank - 2,628 (2) Total 24,010 4,694 Less current maturities (11,208 ) (3,369 ) Long-term debt, less current maturities $ 12,802 $ 1,325 (1) Consists of various installment notes payable that are collateralized by equipment and that bear interest at 12.4% to 22.1%. (2) This mortgage note payable was collateralized by land and a building in Japan. Quarterly principal payments of $0.3 million plus interest was payable in Japanese Yen at TIBOR plus 0.7% (0.76% as of December 31, 2018). This debt was subject to an interest rate swap agreement that fixed the interest rate at approximately 2.0%. This mortgage was repaid in March 2019 in connection with the sale leaseback transaction discussed in Note 7. Future Debt Maturities As of December 31, 2019, the scheduled future maturities of long-term debt, exclusive of discount accretion, are as follows: Years Ending December 31, 2020 $ 11,206 2021 1,502 2022 1,500 2023 10,250 Total $ 24,458 EWB Credit Facility On March 29, 2019, the Company entered into a Loan and Security Agreement (the “EWB Credit Facility”) with East West Bank (“EWB”). The EWB Credit Facility matures on March 29, 2023 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 “EWB 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 EWB Term Loan and $10.0 million as an advance under the EWB Revolver. The Company utilized a portion of the proceeds from the EWB Credit Facility to repay all outstanding amounts and terminate the Siena Revolver discussed below. The obligations of the Company under the EWB Credit Facility are secured by substantially all assets of the Company and guaranteed by certain subsidiaries of the Company Borrowings outstanding under the EWB Credit Facility bear interest at the Prime Rate plus 0.25%. However, if the Total Leverage Ratio (as defined in the EWB 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 December 31, 2019, the prime rate was 4.75% and the contractual rate applicable to outstanding borrowings under the EWB Credit Facility was 5.75%. 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 without prepayment charges on ten business days’ prior notice to EWB. In the event the EWB Revolver is terminated prior to the stated 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 EWB 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 December 31, 2019. On January 2, 2020, 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 EWB Credit Facility, the Company may reborrow up to $10.0 million under the EWB Revolver through the stated maturity date. Payments under the EWB Term Loan were interest-only through September 30, 2019, followed by monthly principal payments of $125,000 plus interest through the stated maturity date of the EWB Term Loan. The Company may elect to prepay the EWB Term Loan before the stated 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 ended December 31, 2019, the Company is required to make a payment towards the outstanding principal amount of the EWB Term Loan in an amount equal to 35% of the Excess Cash Flow (as defined in the EWB Credit Facility), if the Total Leverage Ratio is less than 1.50 to 1.00, or 50% of the Excess Cash Flow if the Total Leverage Ratio is greater than or equal to 1.50 to 1.00. The Company did not generate Excess Cash Flow for the year ended December 31, 2019 and, accordingly, no additional principal payments were required. 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. Amendments to EWB Credit Facility On August 5, 2019, the Company entered into the first amendment to the EWB Credit Facility effective as of July 11, 2019, pursuant to which EWB waived any non-compliance by the Company with certain covenants in the EWB Credit Facility that may have occurred or would otherwise arise as a result of the BWR Merger Agreement. Pursuant to the first amendment, BWR entered into a Supplement to Guarantee and Pledge and an Intellectual Property Security Agreement. On October 9, 2019, the Company entered into a second amendment to the EWB Credit Facility. 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 ensuring 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 EWB 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. See Note 16 for discussion of the Third Amendment to the EWB Credit Facility. Siena Revolver On August 10, 2018, 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%. Beginning on November 7, 2018, the Company was required to pay interest on a minimum of $2.0 million of borrowings, regardless of whether such funds had been borrowed. 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 year ended December 31, 2019. Additionally, the Company incurred a make-whole premium payment of $0.5 million that was also charged to interest expense for the year ended December 31, 2019. 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 is terminated before the stated maturity date, and (ii) default interest at a 5.0% premium if events of default existed. An early termination premium was required to be paid if Siena’s commitment to make revolving loans was terminated prior to the stated maturity date. The fee was equal to 4.00% of the $12.0 million commitment if termination occurred during the first year after the closing date. These embedded derivatives were classified within Level 3 of the fair value hierarchy. Fair value was estimated using the “with” and “without” method. Accordingly, the Siena Revolver was first valued with the embedded derivatives (the “with” scenario) and subsequently valued without the embedded derivatives (the “without” scenario). The fair value of the embedded derivatives was estimated as the difference between these two scenarios. The fair values were determined using the income approach, specifically the yield method. As of December 31, 2018, key Level 3 assumptions and estimates used in the valuation of the embedded derivatives included an assessment of the probability of early termination of the Siena Revolver, the remaining term to maturity of approximately 2.6 years, probability of default of approximately 10%, and a discount rate of 6.1%. As of December 31, 2018, the embedded derivatives for the Siena Revolver had an aggregate fair value of approximately $0.5 million, which is included in accrued liabilities as of December 31, 2018. The Company recognized a loss on change in fair value of embedded derivatives of $0.5 million which is included in non-operating expenses for the year ended 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 year ended December 31, 2019. Interest Rate Swap Agreements 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 December 31, 2019, the Company had an unrealized loss from this interest rate swap agreement of approximately $0.1 million that is included in other long-term liabilities in the accompanying consolidated balance sheet. 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 consolidated balance sheet. As discussed in Note 7, this swap agreement was terminated upon sale of the property in Tokyo and repayment of the related mortgage. Convertible Note On June 20, 2018, the Company issued a senior secured convertible promissory note (the “Convertible Note”) with a principal balance of $4.75 million and a maturity date of June 20, 2019. The Convertible Note provided for monthly payments of interest only at 8.0% per annum, and was collateralized by certain equipment, general intangibles, inventory, and a security interest in all of the Company’s trademarks, copyrights and patents. The Convertible Note was convertible into shares of Common Stock at a conversion price of $1.89 per share. After payment of the lender’s expenses of $0.2 million, the Company received net proceeds from the Convertible Note of $4.6 million. The Company also issued to the lender an aggregate of 226,190 shares of Common Stock with a fair value of approximately $0.4 million. These amounts were accounted for as an aggregate discount of $0.6 million that was accreted to interest expense using the effective interest method. On August 24, 2018, the Company repaid the Convertible Note by paying an aggregate of approximately $5.0 million, which consisted of the principal balance of $4.75 million plus a make-whole penalty for early prepayment of $0.2 million. Due to the early extinguishment of the Convertible Note, the Company recognized accretion for all of the debt discount and issuance costs of $0.6 million for the year ended December 31, 2018. The Company has no further obligations related to the Convertible Note. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 9 — STOCKHOLDERS’ EQUITY Common Stock In October 2018, the Company’s stockholders approved an amendment to the Company’s Articles of Incorporation increasing the authorized shares of Common Stock from 50 million shares to 100 million shares. In May 2019, the Company’s stockholders approved an amendment to the Company’s Articles of Incorporation increasing the authorized shares of Common Stock from 100 million shares to 200 million shares. Holders of the Company’s Common Stock are entitled to one vote for each issued share. Preferred Stock The Company is authorized to issue 1,000,000 shares of preferred stock in one or more series, each having a par value of $0.001 per share. The Board of Directors is authorized to establish the voting rights, if any, designations, powers, preferences, special rights, and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Through December 31, 2019, the Board of Directors had designated four series of Preferred Stock as discussed below: Series A Preferred. Series B Preferred. Series C Preferred. Series D Preferred. Public Offerings of Common Stock On April 30, 2019, the Company entered into an At the Market Offering Agreement (“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 is acting as sales agent and is required to 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 terminated earlier 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 3.0% 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 December 31, 2019, an aggregate of approximately 6.0 million shares of Common Stock were sold for gross proceeds of approximately $20.7 million. Total commissions and fees deducted from the net proceeds were $0.6 million and other offering costs of $0.6 million were incurred for the year ended December 31, 2019. In April 2018, the Company completed an underwritten public offering and issued approximately 2.6 million shares of Common Stock for net proceeds of approximately $3.8 million. In August 2018, the Company completed an underwritten public offering of 9.2 million shares of Common Stock at $1.28 per share for net proceeds of approximately $9.7 million. In September 2018, the Company entered into an ATM Offering Agreement with the Agent for an offering that resulted in the issuance of an aggregate of 8.1 million shares of Common Stock for net proceeds of approximately $35.8 million. In November 2018, the Company issued approximately 14.8 million shares of Common Stock in an underwritten public offering at $3.50 per share for net proceeds of approximately $47.8 million. Presented below is a summary of the shares of Common Stock issued and the net proceeds received for public offerings completed in 2019 and 2018: Number Gross Offering Costs Net Description Of Shares Proceeds Commissions Other Proceeds Year Ending December 31, 2019: ATM Offering 5,957 $ 20,724 $ (622 ) $ (579 ) $ 19,523 Year Ending December 31, 2018: April 2018 Offering 2,560 $ 4,480 $ (269 ) $ (448 ) $ 3,763 August 2018 Offering 9,200 11,776 (824 ) (647 ) 10,305 ATM Offering 8,089 37,533 (1,126 ) (603 ) 35,804 November 2018 Offering 14,835 51,922 (3,635 ) (518 ) 47,769 Total 34,684 $ 105,711 $ (5,854 ) $ (2,216 ) $ 97,641 |
Stock Options and Warrants
Stock Options and Warrants | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options and Warrants | NOTE 10 — STOCK OPTIONS AND WARRANTS Equity Incentive Plans On May 30, 2019, the Company’s stockholders voted to approve the New Age Beverages Corporation 2019 Equity Incentive Plan (the “2019 Plan”). On August 3, 2016, the Company’s stockholders approved and implemented the New Age Beverages Corporation 2016-2017 Long Term Incentive Plan (the “LTI Plan”). The 2019 Plan and the LTI Plan are collectively referred to as the “Equity Incentive Plans”. 2019 Plan. The 2019 Plan also provides for awards of shares of restricted Common Stock and restricted stock units. 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 a vested 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 December 31, 2019, 8.0 million shares under the 2019 Plan were available for future grants of stock options, restricted stock and similar instruments. LTI Plan. Stock Option Activity The following table sets forth stock option activity under the Equity Incentive Plans for the years ended December 31, 2019 and 2018 (shares in thousands): 2019 2018 Shares Price (1) Term (2) Shares Price (1) Term (2) Outstanding, beginning of year 2,786 $ 2.84 9.0 2,491 $ 1.93 9.4 Grants to: Employees 1,454 2.34 926 4.63 Non-employees 35 3.81 - - Forfeited (418 ) 3.40 (213 ) 2.00 Exercised (306) (3) 2.00 (418) (3) 1.79 Outstanding, end of year 3,551 (4) 2.65 8.7 2,786 (4) 2.84 9.0 Vested, end of year 1,365 (5) 2.46 7.7 943 (5) 1.94 8.4 (1) Represents the weighted average exercise price. (2) Represents the weighted average remaining contractual term until the stock options expire. (3) On the respective exercise dates, the aggregate intrinsic value of shares of Common Stock issued upon exercise of stock options amounted to $1.0 million and $1.4 million for the years ended December 31, 2019 and 2018, respectively. (4) As of December 31, 2019 and 2018, the aggregate intrinsic value of stock options outstanding was $19,000 and $6.6 million, respectively. (5) As of December 31, 2019 and 2018, the aggregate intrinsic value of vested stock options was $17,000 and $3.1 million, respectively. In July 2019, the Company entered into a modification agreement for approximately 292,000 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 $0.5 million. The modified options became vested in August 2019, and the Company recognized incremental stock-based compensation expense of $0.5 million for the year ended December 31, 2019. For the year ended December 31, 2019, the valuation assumptions for stock options granted to employees and non-employees under the Equity Incentive Plans and the modified options discussed above were estimated on the date of grant or modification, as applicable, using the BSM option-pricing model with the following weighted-average assumptions: 2019 2018 Granted Modified Granted Grant or modification date closing price of Common Stock $ 2.38 $ 4.75 $ 4.63 Expected life (in years) 6.4 1.0 6.0 Volatility 107 % 138 % 121 % Dividend yield 0 % 0 % 0 % Risk-free interest rate 1.7 % 1.9 % 2.8 % Based on the assumptions set forth above, the weighted-average grant date fair value per share for stock options granted for the years ended December 31, 2019 and 2018 was $1.99 and $4.05, respectively. With respect to the stock options modified in July 2019, the fair value of the modified options increased by $1.80 per share in comparison to the fair value of the stock options immediately before the modification. The BSM model requires various highly subjective assumptions that represent management’s best estimates of the fair value of the Company’s Common Stock, volatility, risk-free interest rates, expected term, and dividend yield. The expected term represents the weighted-average period that options granted are expected to be outstanding giving consideration to vesting schedules. Because 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 for maturities based on 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 The following table sets forth activity related to grants of restricted stock under the Equity Incentive Plans and non-plan awards for the years ended December 31, 2019 and 2018 (in thousands): Grants Under Equity Incentive Plans 2016 Non-Plan Grants Equity-Classified Awards Liability-Classified Awards (1) to Executive Officer Number of Unvested Number of Unvested Number of Unvested Shares Compensation Shares Compensation Shares Compensation Outstanding, December 31, 2017 613 $ 1,241 - $ - 1,240 $ 280 Shares issued to Board members 193 (2) 429 (2) - - - - Unvested awards granted to employees: Performance vesting criteria 216 (3) 1,000 (3) 318 (3) 1,651 (3) - - Service vesting criteria 539 (4) 2,491 (4) 156 (4) 815 (4) - - Unvested forfeitures (35 ) (76 ) - - - - Fair value adjustment and other - - - 23 (1) - - Vested shares and expense recognized (375 ) (5) (1,098 ) (5) - - (611 ) (5) (216 ) (5) Outstanding, December 31, 2018 1,151 3,987 474 2,489 629 64 Shares issued to Board members 91 (2) 500 (2) - - - - Unvested awards granted to employees with service vesting criteria 2,085 (4) 5,036 (4) - - - - Forfeitures (220 ) (1,019 ) (322 ) (1,693 ) - - Fair value adjustments and other - (27 ) - (519 ) (1) - - Vested shares and expense (984 ) (5) (3,872) (5) (115) (5) (210 ) (5) (629 ) (5) (64 ) (5) Outstanding, December 31, 2019 2,123 $ 4,605 37 $ 67 - $ - Intrinsic value, December 31, 2019 $ 3,865 (6) $ 67 (6) $ - (1) Certain awards granted to employees in China are not permitted to be settled in shares, which requires classification as a liability in the Company’s consolidated balance sheets. This liability is adjusted based on the closing price of the Company’s Common Stock at the end of each reporting period until these awards vest. As of December 31, 2019, the cumulative amount of compensation expense recognized is based on the progress toward vesting and the total fair value of the respective awards on that date. (2) Represents grants to members of the Board of Directors whereby the shares of Common Stock were issued with cliff vesting one year after the grant date. The shares were recorded at the closing price for the Company’s Common Stock on the respective grant dates. (3) Represents restricted stock awards that would have vested if Morinda achieved EBITDA of $20.0 million for the year ended December 31, 2019. All of the shares were forfeited as of December 31, 2019 with no compensation recognized. (4) Restricted stock awards that generally vest over three years with fair value determined based on the closing price of the Company’s Common Stock on the respective grant dates. (5) The “Number of Shares” column reflects shares that vested due to achievement of the service condition during the year. As of December 31, 2019, the vested shares include approximately 319,000 shares that are not issuable until March 2020. The “Unvested Compensation” column reflects the stock-based compensation expense recognized for vested and unvested awards during the year. (6) The intrinsic value is based on the closing price of the Company’s Common Stock of $1.82 per share on December 31, 2019. Stock-Based Compensation Expense Substantially all stock-based compensation expense is included in general and administrative expenses in the accompanying consolidated statements of operations. The table below summarizes stock-based compensation expense related to stock options and restricted stock awards for the years ended December 31, 2019 and 2018, and the unrecognized compensation expense as of December 31, 2019 and 2018 (in thousands): Expense Recognized Unrecognized Expense Year Ended December 31: as of December 31: 2019 2018 2019 2018 Plan-based stock options awards: Employees $ 2,218 $ 1,219 $ 4,716 $ 6,811 Non-employees 22 - 87 - Plan-based restricted stock awards: Equity-classified 3,872 1,314 4,605 557 Liability-classified 210 - 67 - Non-plan equity-classified restricted stock awards 64 - - - Warrants 2 - - - Total $ 6,388 $ 2,533 $ 9,475 $ 7,368 As of December 31, 2019, unrecognized stock-based compensation expense is expected to be recognized on a straight-line basis over a weighted-average period of approximately 2.3 years for stock options, 2.3 years for equity-classified restricted stock awards, and 2.0 years for liability-classified restricted stock awards. Warrants As of December 31, 2019, the Company had fully vested warrants outstanding for approximately 311,000 shares as follows (shares in thousands): Number Exercise Expiration Warrant Description of Shares Price Date Marley license extension 200 $ 5.14 March 2029 Former employee 8 1.83 December 2020 2017 underwriter warrants 103 4.38 February 2022 Total 311 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 11 — INCOME TAXES As of December 31, 2019, the Company has continued its position to return all foreign earnings to the U.S. parent company and has recorded deferred tax liabilities of $0.5 million for foreign withholding taxes associated with foreign retained earnings and cross-border payments. Morinda Business Combination Before the Company acquired Morinda on December 21, 2018, Morinda’s net earnings taxed for the U.S. and various state jurisdictions were payable personally by the shareholders pursuant to an election under Subchapter S of the Internal Revenue Code (the “Code”). The Subchapter S election terminated upon closing of Morinda’s business combination with the Company. Accordingly, the Company recognized net deferred income tax liabilities of approximately $10 million for differences between the income tax basis of the assets and liabilities and the related balances for financial reporting purposes. The Company is required to pay taxes to the appropriate governmental entities on profits derived from Morinda’s international operations, including foreign withholding taxes imposed on the remittance of earnings of Morinda’s foreign subsidiaries and withholding taxes imposed on royalty payments. The Company has recorded income tax liabilities for foreign withholding on distributed earnings. The Company is also responsible for state income taxes and other taxes assessed at the Company level. Income Tax Expense For the years ended December 31, 2019 and 2018, loss before income tax expense is as follows (in thousands): 2019 2018 Domestic $ (96,159 ) $ (20,529 ) International 18,992 (533 ) Loss before income taxes $ (77,167 ) $ (21,062 ) For the years ended December 31, 2019 and 2018, the reconciliation between the income tax benefit computed by applying the statutory U.S. federal income tax rate to the pre-tax loss before income taxes, and total income tax expense recognized in the financial statements is as follows (in thousands): 2019 2018 Income tax benefit at statutory U.S. federal rate $ 16,205 $ 4,423 Income tax benefit attributable to U.S. states 3,914 1,063 Stock-based compensation 774 1,367 Other 720 300 Code section 162(m) excess compensation (703 ) - Non-deductible expenses (725 ) (351 ) Change in fair value earnouts 2,900 - Benefit of foreign taxes 717 - Foreign deferred tax adjustments 2,194 - Foreign tax credit 6,146 - Foreign withholding/prior year tax (1,414 ) - Foreign rate differential (5,561 ) (27 ) Change in valuation allowance (37,835 ) 2,152 Total income tax benefit (expense) $ (12,668 ) $ 8,927 For the years ended December 31, 2019 and 2018, the Company’s income tax benefit (expense) consisted of the following components (in thousands): 2019 2018 Current income tax expense: U.S. Federal $ - $ - U.S. States (5 ) - Foreign (17,563 ) - Total current income tax expense (17,568 ) - Deferred income tax benefit (expense): U.S. Federal (8,419 ) 7,891 U.S. States - 1,063 Foreign 13,319 (27 ) Net deferred income tax benefit 4,900 8,927 Total income tax benefit (expense) $ (12,668 ) $ 8,927 Deferred Income Tax Assets and Liabilities As of December 31, 2019 and 2018, the income tax effects of temporary differences that give rise to significant deferred income tax assets and liabilities are as follows (in thousands): 2019 2018 Deferred income tax assets: Foreign tax credits $ 14,079 $ - Net operating loss carryforwards 15,348 9,295 Accrued liabilities 8,670 3,456 Accrued pension 1,927 1,767 Operating lease liabilities 16,596 Above market lease 10,370 - Property and equipment, net 363 - Other 758 574 Gross deferred income tax assets 68,111 15,092 Valuation allowance for deferred income tax assets (43,465 ) - Net deferred income tax assets 24,646 15,092 Deferred income tax liabilities: Goodwill and identifiable intangible assets (5,117 ) (12,405 ) Operating lease, right-of-use assets (15,842 ) - Property and equipment, net - (3,200 ) Notes payable - (326 ) Total deferred income tax liabilities (20,959 ) (15,931 ) Net deferred income tax asset (liability) $ 3,687 $ (839 ) As of December 31, 2019 and 2018, the Company’s net deferred income tax asset (liability) consisted of the following components (in thousands): 2019 2018 Foreign deferred income tax assets $ 9,128 $ 8,908 Foreign deferred income tax liabilities (5,441 ) (9,747 ) Net deferred income tax asset (liability) $ 3,687 $ (839 ) Net deferred income tax assets consist solely of foreign net deferred income tax assets which are expected to be realized in the future, and that are included in long-term assets in the accompanying consolidated balance sheets. For the year ended December 31, 2019, the valuation allowance increased by $37.8 million, primarily due to incremental net operating losses that were not considered realizable. For the year ended December 31, 2018, the net decrease in the valuation allowance of $2.2 million since net operating loss carryforwards were considered realizable due to net deferred tax liabilities related to purchase accounting for the Morinda business combination. In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. NOL Carryforwards and Other Matters At December 31, 2019, the Company had unused net operating loss (“NOL”) carryovers for income tax purposes of approximately $62.4 million with approximately $26.3 million relating to foreign subsidiaries and approximately $36.1 million relating to U.S. entities. The federal and state NOL carryforwards in the income tax returns filed included unrecognized tax benefits. The deferred tax assets recognized for those NOLs are presented net of these unrecognized tax benefits. The NOLs will expire at various dates from 2020 through 2039, with the exception of those in some foreign jurisdictions where there is no expiration. The U.S. NOLs have a full valuation allowance recorded against them. Of the $26.3 million foreign NOLs, all but $2.3 million have a valuation allowance recorded against them. Federal and state laws impose substantial restrictions on the utilization of NOL and tax credit carryforwards in the event of an ownership change for income tax purposes, as defined in Section 382 of the 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. The Company has performed a preliminary Section 382 analysis. The preliminary calculations indicate that the Company’s NOLs do not appear to be subject to the limitation. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. When weighing all available evidence, associated with the realizability of its deferred tax assets, in particular, uncertainties related to the future generation of taxable income, the recent negative trends in certain operating markets, and the cumulative losses in certain jurisdictions, the Company determined that it was not “more likely than not” that it would be able to realize the tax benefits associated with certain of its net deferred tax assets. On the basis of this evaluation, a valuation allowance against the U.S. and other foreign jurisdictions deferred tax assets has been recorded to recognize only the portion of deferred tax assets that is more likely than not to be realized. The Company will continue to monitor its historical and forecast operating results in the U.S. to assess the realizability of its deferred tax assets. Unrecognized Tax Benefits As of December 31, 2019 and 2018, the total outstanding balance for liabilities related to unrecognized income tax benefits was $1.5 million and $0.4 million, respectively. Unrecognized tax benefits of $0.8 million, if recognized, would affect the effective tax rate. Unrecognized tax benefits of $0.7 million, if recognized, would not affect the Company’s effective tax rate since the tax benefits would increase a deferred tax asset that is currently fully offset by a full valuation allowance. The Company accounts for interest expense and penalties associated with unrecognized tax benefits as part of its income tax expense. The unrecognized tax benefit as of December 31, 2019 includes an aggregate of approximately $0.2 million for interest and penalties, all of which was recognized for the year ended December 31, 2019. The Company does not anticipate any significant changes related to unrecognized tax benefits in the next twelve months. The following table summarizes changes in unrecognized tax benefits for the years ending December 31, 2019 and 2018 (in thousands): 2019 2018 Balance, beginning of year $ 430 $ 360 Increase related to: Prior tax positions 1,163 70 Current tax positions 22 - Decreases related to prior tax positions (46 ) - Settlements (24 ) - Balance, end of year $ 1,545 $ 430 The Company files income tax returns in the U.S. federal, and various states as well as the following foreign jurisdictions: Australia, Austria, Canada, Chile, China, Colombia, Germany, Hong Kong, Hungary, Indonesia, Italy, Japan, Korea, Malaysia, Mexico, New Zealand, Norway, Peru, Poland, Russia, Singapore, Sweden, Switzerland, Thailand, Tahiti, Taiwan, the UK and Vietnam. The Company’s federal and state tax years for 2016 and forward are subject to examination by taxing authorities. All foreign jurisdictions tax years are also subject to examination depending on their relative statutes of limitations. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 12 — 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 have been achieved. After the executives retire, the deferred compensation obligation is payable over a period up to 20 years. All executives covered under this plan have retired as of December 31, 2019, and cash payments do not commence until December 2020. As of December 31, 2019, the obligations under this plan consist of $3.8 million that is included in other long-term liabilities and $0.3 million included in other accrued current liabilities. As of December 31, 2018, the entire liability related to this plan of $4.1 million was included in other long-term liabilities. Consulting Agreement Concurrent with the BWR business combination discussed in Note 4, the Company entered into an independent contractor agreement (“ICA”) that provides for the former sole owner of BWR, Mr. Sonnois, to serve as president of the Company’s North American Brands Division (“NABD”). The ICA provides for an initial term that expires in June 2022 with an option by either party to renew on an annual basis thereafter. Under the ICA, the Company was required to (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. 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. 401(k) Plan Since December 2018, the Company has had a defined contribution employee benefit plan under section 401(k) of the 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 $0.7 million for the year ended December 31, 2019. Total contributions to the 401(k) Plan were insignificant for the year ended December 31, 2018. Foreign Benefit Plans The Noni by NewAge segment 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. The Noni by NewAge segment also has an unfunded retirement benefit plan in Indonesia that entitles all permanent employees to retirement payments. Upon termination of employment, the Noni by NewAge segment 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. Noni by NewAge segment 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 $3.5 million and $3.0 million as of December 31, 2019 and 2018, respectively. Of these amounts, approximately $3.4 million and $2.9 million are included in other long-term liabilities in the accompanying consolidated balance sheets as of December 31, 2019 and 2018, respectively. Contingencies The Company’s operations are subject to numerous governmental rules and regulations in each of the countries it does business. These rules and regulations include a complex array of tax and customs regulations as well as restrictions on product ingredients and claims, the commissions paid to the Company’s IPCs, labeling and packaging of products, conducting business as a direct-selling business, and other facets of manufacturing and selling products. In some instances, the rules and regulations may not be fully defined under the law or are otherwise unclear in their application. Additionally, laws and regulations can change from time to time, as can their interpretation by the courts, administrative bodies, and the tax and customs authorities in each country. The Company actively seeks to be in compliance, in all material respects, with the laws of each of the countries in which it does business and expects its IPCs to do the same. The Company’s operations are often subject to review by local country tax and customs authorities and inquiries from other governmental agencies. No assurance can be given that the Company’s compliance with governmental rules and regulations will not be challenged by the authorities or that such challenges will not result in assessments or required changes in the Company’s business that could have a material impact on its business, consolidated financial statements and cash flow. The Company has various non-income tax contingencies in several countries. Such exposure could be material depending upon the ultimate resolution of each situation. As of December 31, 2019 and 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. Approximately $0.8 million of guarantee deposits are included in other long-term assets in the accompanying consolidated balance sheets as of December 31, 2019 and 2018. |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 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 years ended December 31, 2019 and 2018, basic and diluted net loss per share were the same since all Common Stock equivalents were anti-dilutive. As of December 31, 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 Equity Incentive Plan awards: Stock options 3,551 2,786 Unissued and unvested restricted stock awards 2,069 1,229 Common stock purchase warrants 312 103 Total 5,932 4,118 |
Financial Instruments and Signi
Financial Instruments and Significant Concentrations | 12 Months Ended |
Dec. 31, 2019 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments and Significant Concentrations | NOTE 14 — FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS Fair Value Measurements Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair measurement: Level 1—Quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date Level 2—Other than quoted prices included in Level 1 that are observable for the asset and liability, either directly or indirectly through market collaboration, for substantially the full term of the asset or liability Level 3—Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any market activity for the asset or liability at measurement date As of December 31, 2019 and 2018, the fair value of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximated their carrying values due to the short-term nature of these instruments. Cash equivalents consist of short-term certificates of deposit that are classified as Level 2. The recorded amounts for the debt obligations in Notes 4 and 8 also approximated fair value due to the short-term maturities, variable nature of the interest rates and/or since the instruments had been recently negotiated. In addition, the net assets acquired in the business combinations discussed in Note 4 were recorded at fair market value on the date of the closings, with key valuation assumptions discussed in Note 4. Recurring Fair Value Measurements Recurring measurements of the fair value of assets and liabilities as of December 31, 2019 and 2018 were as follows: As of December 31, 2019 As of December 31, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Business combination liabilities: Morinda earnout under Series D preferred stock $ - $ - $ 225 $ 225 $ - $ - $ 13,134 $ 13,134 Marley earnout obligation - - - - - - 900 900 Interest rate swap liability - 99 - 99 - - - - Embedded derivative liability - - - - - - 470 470 Total $ - $ 99 $ 225 $ 324 $ - $ - $ 14,504 $ 14,504 Valuation assumptions for the business combination liabilities are set forth in Note 4. Valuation assumptions for the interest rate swap and the embedded derivative liabilities are set forth in Note 8. 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 years ended December 31, 2019 and 2018, the Company had no transfers of its assets or liabilities between levels of the fair value hierarchy. Significant Concentrations A substantial portion of the business acquired from Morinda 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. For the year ended December 31, 2019, approximately 72% of the Company’s consolidated net revenue was generated outside the United States, primarily in the Asia Pacific market. Most of the Noni by NewAge’s products have a component of the Noni plant, Morinda Citrifolia (“Noni”) as a common element. Tahitian Noni ® Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. The Company maintains its cash, cash equivalents and restricted cash at high-quality financial institutions. Cash deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. As of December 31, 2019, the Company had cash and cash equivalents with two financial institutions in the United States with balances of $22.2 million and $1.4 million, and two financial institutions in China with balances of $6.6 million and $3.6 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. |
Segments and Geographic Concent
Segments and Geographic Concentrations | 12 Months Ended |
Dec. 31, 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 Noni by NewAge 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 Noni by NewAge segment has manufacturing operations in Tahiti, Germany, Japan, the United States, and China. The Noni by NewAge segment’s products are sold and distributed in more than 60 countries using IPC’s through its direct to consumer selling network and ecommerce business model. Approximately 80% of the net revenue of the Noni by NewAge segment is generated in the key Asia Pacific markets of Japan, China, Korea, Taiwan, and Indonesia. The NewAge segment markets and sells a portfolio of healthy beverage brands including XingTea, Marley, Búcha® Live Kombucha, Coco-Libre, Evian, Nestea, Illy Coffee and Volvic. These products are distributed through the Company’s Direct Store Distribution (“DSD”) network and a hybrid of other routes to market throughout the United States and in 15 countries around the world. The NewAge brands are sold in all channels of distribution including Hypermarkets, Supermarkets, Pharmacies, Convenience, Gas and other outlets. The NewAge segment distributes beverages to retail customers in Colorado and surrounding states, and sells beverages to wholesale distributors, key account owned warehouses and international accounts using several distribution channels. Net revenue by reporting segment for the years ended December 31, 2019 and 2018, was as follows (in thousands): Segment 2019 2018 Noni by NewAge $ 200,708 $ 3,825 NewAge 53,000 48,335 Net revenue $ 253,708 $ 52,160 Gross profit by reporting segment for the years ended December 31, 2019 and 2018, was as follows (in thousands): Segment 2019 2018 Noni by NewAge $ 155,685 $ 2,915 NewAge (2,978 ) 6,380 Total gross profit $ 152,707 $ 9,295 Assets by reporting segment as of December 31, 2019 and 2018, were as follows (in thousands): Segment 2019 2018 Noni by NewAge $ 201,600 $ 206,222 NewAge 49,530 80,710 Total assets $ 251,130 $ 286,932 Depreciation and amortization expense by reporting segment for the years ended December 31, 2019 and 2018, was as follows (in thousands): Segment 2019 2018 Noni by NewAge $ 6,782 $ 193 NewAge 1,977 2,117 Total depreciation and amortization $ 8,759 $ 2,310 Cash payments for capital expenditures for property and equipment and identifiable intangible assets by reporting segment for the years ended December 31, 2019 and 2018, were as follows (in thousands): Segment 2019 2018 Noni by NewAge $ 4,204 $ 56,133 NewAge 1,153 93 Total capital expenditures $ 5,357 $ 56,226 Geographic Concentrations The Company attributes net revenue to geographic regions based on the location of its customers’ contracting entity. The following table presents net revenue by geographic region for the years ended December 31, 2019 and 2018 (in thousands): 2019 2018 United States of America $ 70,690 $ 48,460 International 183,018 3,700 Net revenue $ 253,708 $ 52,160 As of December 31, 2019, the net carrying value of property and equipment located outside of the United States amounted to approximately $22.1 million. As of December 31, 2018, the net carrying value of the Company’s property and equipment located outside of the United States amounted to approximately $50.6 million, including approximately $30.7 million located in Japan. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 16 — SUBSEQUENT EVENTS Repayment of EWB Revolver On January 2, 2020, the Company elected to make a voluntary prepayment of $9.7 million to repay all outstanding borrowings under the EWB Revolver. Coronavirus In December 2019, a novel strain of coronavirus was reported to have surfaced in China. The spread of this virus began to cause some business disruption through reduced net revenue in the Company’s Asia Pacific market in January and February 2020. While the disruption is currently expected to be temporary, there is considerable uncertainty around the duration. Therefore, while the Company expects this matter to negatively impact its operating results. However, the related financial impact and duration cannot be reasonably estimated at this time. Third Amendment to Credit Facility On March 13, 2020, the Company entered into the Third Amendment to the EWB Credit Facility discussed in Note 8. Under the Third Amendment, EWB waived the Company’s failure to comply with the minimum adjusted EBITDA covenant for the 12-month period ended December 31, 2019. In addition, the Third Amendment modified the Credit Facility as follows: ● The Company is required to maintain an aggregate of $15.1 million in restricted cash accounts designated by EWB. The future requirement to maintain restricted cash will be reduced by the amount of future principal payments under the EWB Term Loan. ● Less stringent requirements are applicable for future compliance with the minimum adjusted EBITDA covenant, the maximum total leverage ratio, and the fixed charge coverage ratio. Additionally, compliance with the maximum total leverage ratio and the fixed charge coverage ratio have been delayed until June 30, 2021. ● The existing provision related to “equity cures” that may be employed to maintain compliance with financial covenants was increased from $5.0 million to $15.0 million for the year ending December 31, 2020, and to $10.0 million per year for each calendar year thereafter. ● The Company is required to obtain equity infusions for at least $15.0 million for the first six months of 2020, of which $6.3 million was received in January 2020. In addition, cumulative equity infusions of $30.0 million must be received for the year ending December 31, 2020. ● The interest rate applicable to outstanding borrowings under the EWB Credit Facility increased from 0.5% to 2.0% in excess of the prime rate. If the Company subsequently complies for two consecutive fiscal quarters with both the maximum total leverage ratio and the fixed charge coverage ratio, the interest rate will be reduced to 0.50% in excess of the prime rate (assuming that the Company’s total leverage ratio is less than 1.50 to 1.00). Offering Agreement In connection with the ATM Offering Agreement discussed in Note 9, for the period from January 1, 2020 through January 23, 2020, the Company sold an aggregate of approximately 3.5 million shares of Common Stock for net proceeds of approximately $6.3 million. Employment Agreement On January 13, 2020, the Company entered into an employment agreement with David Vanderveen to serve as the Company’s chief operating officer. Pursuant to the employment agreement, Mr. Vanderveen receives an annual base salary of $550,000, and is eligible to receive an annual performance-based cash bonus with a target bonus opportunity equal to a range from 50% to 200% of his annual base salary, based upon the attainment of certain performance goals. The employment agreement provides for “at will” employment terminable by either party on 15 days’ notice. Mr. Vanderveen received an annual long-term incentive award equal to 50% of his base salary in the form of the Company’s restricted stock and stock options. As a sign-on incentive, Mr. Vanderveen also received a cash payment of $100,000, the grant of 125,000 stock options, one third of which will vest on each anniversary of the grant date, and the grant of 125,000 shares of restricted stock, one third of which will vest on each anniversary of the grant date. In the event of a change of control or significant change in the Company’s financial circumstances, 100% of Mr. Vanderveen’s equity awards will immediately vest. |
Schedule II Valuation and Quali
Schedule II Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2019 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II Valuation and Qualifying Accounts | SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (In Thousands) Additions Provisions Effect of Balance at Charged to Assumed in Amounts Foreign Balance at Beginning Costs and Business Written Currency End of Description of Year Expenses Combinations Off Translation Year Year Ended December 31, 2019: Allowance for doubtful accounts $ 134 $ 455 $ 114 $ (169 ) $ - $ 534 Allowance for sales returns 200 261 - - - 461 Income tax valuation allowance 5,197 38,682 - (433 ) 19 43,465 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Significant Accounting Policies Policies Abstract | |
Use of Estimates | Use of Estimates The preparation of financial statements and related disclosures in conformity with U.S. 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, impairment of goodwill and long-lived assets; valuation assumptions for earnout obligations and assets acquired in business combinations; valuation assumptions for stock options, warrants and equity instruments issued for goods or services; estimated useful lives for identifiable intangible assets and property and equipment; allowances for sales returns, chargebacks and inventory obsolescence; 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents All highly liquid investments purchased with an original maturity of three months or less that are freely available for the Company’s immediate and general business use are classified as cash and cash equivalents. Cash consists of demand deposits with financial institutions. Cash equivalents consist of short-term certificates of deposit. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company records a provision for doubtful accounts based on historical experience and a detailed assessment of the collectability of its accounts receivable. In estimating the allowance for doubtful accounts, the Company considers, among other factors, the aging of the accounts receivable, its historical write-offs, the credit worthiness of customers, and general economic conditions. Account balances are charged off against the allowance when the Company believes that it is probable that the receivable will not be recovered. |
Inventories | Inventories Inventories are adjusted to the lower of cost and net realizable value, using the first-in, first-out method. The components of inventory cost include raw materials, labor and overhead. The determination of net realizable value involves various assumptions related to excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning, and market conditions. If future demand and market conditions are less favorable than management’s assumptions, additional inventory adjustments could be required in future periods. |
Identifiable Intangible Assets | Identifiable Intangible Assets Identifiable intangible assets are recorded at the estimated acquisition date fair value. Finite lived intangible assets are amortized over the shorter of the contractual life or their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the intangible asset are expected to be generated. In connection with the Company’s business combinations, identifiable intangible assets were acquired that were recorded at estimated fair value on the date of acquisition. These assets are being amortized using the straight-line method over the estimated useful lives as follows: License agreements 15 Trade names 1-15 Manufacturing processes and recipes 15 IPC distributor sales force 10 Product distribution rights 16 Patents 15 Non-compete agreements 3 |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, as follows: Years Buildings and improvements 28-40 Machinery and equipment 3-7 Office furniture and equipment 3-7 Delivery vehicles 3-5 Leasehold improvements 1-20 Leasehold improvements are amortized over the remaining lease term or the estimated useful life of the asset, whichever is shorter. Maintenance and repairs are expensed as incurred. Depreciation commences when assets are initially placed into service for their intended use. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but tested for impairment annually on December 31 of each year, or more frequently when events or circumstances indicates that the carrying value of a reporting unit more likely than not exceeds its fair value. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the reporting unit. If, on the basis of qualitative factors, it is considered more likely than not that the fair value of the reporting unit is greater than the carrying amount, further testing of goodwill for impairment is not required. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. |
Leases | Leases The Company determines if contractual arrangements are considered a lease at inception. Operating leases are included in right-of-use (“ROU”) assets, whereas assets related to finance leases are included in property and equipment. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the related obligations to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Most of the Company’s leases do not set forth an implicit interest rate, which requires use of the Company’s estimated incremental borrowing rate to determine the present value of lease payments. The Company has a central treasury function and determines the incremental borrowing rate based on local economic conditions in the jurisdiction of the related leased property. When lease terms include options to extend or terminate the lease that are reasonably certain to be exercised, the ROU calculations give effect to such options. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Some of the Company’s lease agreements contain lease and non-lease components, which are generally accounted for separately. However, for certain leases, the Company elects to account for the lease and non-lease components as a single lease component. Additionally, for certain equipment leases, the Company applies a portfolio approach to effectively account for the operating lease ROU assets and liabilities. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets Long-lived assets consist of identifiable intangible assets, property, equipment, and ROU assets, which are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists for long-lived assets if the carrying amounts of such assets exceed the estimates of future net undiscounted cash flows expected to be generated by such assets. An impairment charge is recognized for the amount by which the carrying amount of the asset, or asset group, exceeds its fair value. |
Debt Issuance Costs and Discounts | Debt Issuance Costs and Discounts Debt issuance costs are costs incurred to obtain new debt financing or modify existing debt agreements and consist of incremental direct costs incurred for professional fees and due diligence services, including reimbursement of similar costs incurred by the lenders. Amounts paid to the lenders when a financing is consummated are a reduction of the proceeds and are treated as a debt discount. Except for revolving lines of credit, debt issuance costs and discounts are presented in the accompanying consolidated balance sheets as a reduction in the carrying value of the debt and are accreted to interest expense using the effective interest method. Debt issuance costs related to revolving lines of credit are presented in the accompanying consolidated balance sheets as a long-term asset and are amortized using the straight-line method over the contractual term of the debt agreement. Unamortized deferred debt issuance costs are not charged to expense when the related debt becomes a demand obligation due to the violation of terms so long as it is probable that the lenders will either waive the violation or will agree to amend or restructure the terms of the indebtedness. If either circumstance is probable, the deferred debt issuance costs continue to be amortized over the remaining term of the initial amortization period. If it is not probable, the costs will be charged to expense. |
Deferred Offering Costs | Deferred Offering Costs Commissions, legal fees and other costs that are directly associated with equity offerings are capitalized as deferred offering costs, pending a determination of the success of the offering. Deferred offering costs related to successful offerings are charged to additional paid-in capital in the period it is determined that the offering was successful. Deferred offering costs related to unsuccessful equity offerings are recorded as expense in the period when it is determined that an offering is unsuccessful. |
Restricted Cash | Restricted Cash 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. |
Revenue Recognition | Revenue Recognition Product sales are recognized when the Company satisfies its performance obligations and transfers control of the promised products to its customers, which generally occurs over a very short period of time. Performance obligations are typically satisfied by shipping or delivering products to customers, which is also the point when title transfers to customers. Revenue is measured as the amount of consideration expected to be received in exchange for transferring the related products. Revenue consists of the gross sales price, less estimated returns and allowances for which provisions are made at the time of sale, and less certain other discounts, allowances, and personal rebates that are accounted for as a reduction from gross revenue. Shipping and handling charges that are billed to customers are included as a component of revenue. Costs incurred by the Company for shipping and handling charges are included in cost of goods sold. Payments received for undelivered or back-ordered products are recorded as deferred revenue. The Company’s policy is to defer revenue related to distributor convention fees, payments received on products ordered in the current period but not delivered until the subsequent period, initial independent product consultants (“IPC”) fees, IPC renewal fees and internet subscription fees until the products or services have been provided. Deferred revenue is included in other accrued liabilities in the consolidated balance sheets and amounted to $1.4 million and $2.7 million for the years ended December 31, 2019 and 2018, respectively. |
Customer Programs and Incentives | Customer Programs and Incentives The Company incurs customer program costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to revenue or as advertising, promotional and selling expenses, based on the nature of the expenditure. The Company accounts for volume rebates made to its IPCs, and similar discounts and incentives, as a reduction of revenue in the accompanying consolidated statements of operations. |
Sales and Marketing Expenses | Sales and Marketing Expenses Advertising, promotional and selling expenses consisted of media advertising costs, sales and marketing expenses, and promotional activity expenses and are recognized in the period incurred. The Company accrues expenses for incentive trips associated with Morinda’s direct sales marketing program, which rewards certain IPCs with paid attendance at its conventions, meetings, and retreats. Expenses associated with incentive trips are accrued over qualification periods as they are earned. The Company specifically analyzes incentive trip accruals based on historical and current sales trends as well as contractual obligations when evaluating the adequacy of the incentive trip accrual. Actual results could result in liabilities being more or less than the amounts recorded. |
Research and Development | Research and Development Research and development costs are primarily related to development of new product formulas. All research and development costs are expensed as incurred and amounts incurred through December 31, 2019 have not been material. |
Loss and Gain Contingencies | Loss and Gain Contingencies The Company is subject to the possibility of various loss contingencies arising in the ordinary course of business. An estimated loss contingency is accrued when it is probable that an asset has been impaired, or a liability has been incurred, and the amount of loss can be reasonably estimated. If some amount within a range of loss appears to be a better estimate than any other amount within the range, the Company accrues that amount. Alternatively, when no amount within a range of loss appears to be a better estimate than any other amount, the Company accrues the lowest amount in the range. If the Company determines that a loss is reasonably possible and the range of the loss is estimable, then the Company discloses the range of the possible loss. If the Company cannot estimate the range of loss, it will disclose the reason why it cannot estimate the range of loss. The Company regularly evaluates current information available to it to determine whether an accrual is required, an accrual should be adjusted and if a range of possible loss should be disclosed. Legal fees related to contingencies are charged to general and administrative expense as incurred. Contingencies that may result in gains are not recognized until realization is assured, which typically requires collection in cash. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of employee and director services received in exchange for all equity awards granted, including stock options, based on the fair market value of the award as of the grant date. The Company computes the fair value of options using the Black-Scholes-Merton (“BSM”) option pricing model. The Company recognizes the cost of the equity awards over the period that services are provided to earn the award, usually the vesting period. For awards granted which contain a graded vesting schedule, and the only condition for vesting is a service condition, compensation cost is recognized as an expense on a straight-line basis over the requisite service period as if the award was, in substance, a single award. The Company recognizes the impact of forfeitures in the period that the forfeiture occurs, rather than estimating the number of awards that are not expected to vest in accounting for stock-based compensation. |
Derivatives | Derivatives The Company holds derivative financial instruments in the form of interest rate swaps. The Company uses interest rate swaps to economically convert variable interest rate debt to a fixed rate. The Company has not designated these derivatives as hedging instruments. The interest rate swaps are recorded in the accompanying consolidated balance sheets at fair value. When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative instrument. The estimated fair value of the derivative feature is recorded in the accompanying consolidated balance sheets separately from the carrying value of the host contract. Subsequent changes in the estimated fair value of derivatives are recorded as a non-operating gain or loss in the Company’s consolidated statements of operations. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes, under which deferred income taxes are recognized based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, the Company considers tax regulations of the jurisdictions in which the Company operates, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results, or the ability to implement tax-planning strategies vary, adjustments to the carrying value of deferred tax assets and liabilities may be required. A valuation allowance is recorded when it is more likely than not that a deferred tax asset will not be realized. The recorded valuation allowance is based on significant estimates and judgments and if the facts and circumstances change, the valuation allowance could materially change. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. |
Foreign Currency Translation | Foreign Currency Translation The Company’s reporting currency is the U.S. Dollar, while the functional currencies of its foreign subsidiaries are their respective local currencies. A majority of Morinda’s business operations occur outside the United States. The local currency of each of the Morinda’s international subsidiaries and branches is used as its functional currency. All assets and liabilities are translated into U.S. dollars at exchange rates existing at the consolidated balance sheet date, and net revenue and expenses are translated at monthly average exchange rates. The resulting net foreign currency translation adjustments are recorded in accumulated other comprehensive income as a separate component of shareholders’ equity in the consolidated balance sheets. Gains and losses from foreign currency transactions and remeasurement gains (losses) on short-term intercompany borrowings, are recorded in other income and expense in the consolidated statements of operations and comprehensive loss. The tax effect has not been material to date. |
Loss Per Common Share | Loss Per Common Share Basic net loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding for each period presented. Diluted net loss per common share is computed by giving effect to all potential shares of Common Stock, including unvested restricted stock awards, stock options, convertible debt, Preferred Stock, and warrants, to the extent dilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Standards. In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, Compensation—Stock Compensation: Scope of Modification Accounting In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. In June 2018, the FASB issued ASU 2018-07, Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Compensation—Stock Compensation In December 2019, the FASB issued ASU 2019-12 , Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes 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 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. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Identifiable Intangible Assets Estimated Useful Life | These assets are being amortized using the straight-line method over the estimated useful lives as follows: License agreements 15 Trade names 1-15 Manufacturing processes and recipes 15 IPC distributor sales force 10 Product distribution rights 16 Patents 15 Non-compete agreements 3 |
Property and Equipment Estimated Useful Life | Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, as follows: Years Buildings and improvements 28-40 Machinery and equipment 3-7 Office furniture and equipment 3-7 Delivery vehicles 3-5 Leasehold improvements 1-20 |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OtherInformationDisclosureTextBlock | |
Schedule of Purchase Consideration | Presented below is a summary of the total purchase consideration for the BWR and Morinda business combinations (in thousands): 2019 2018 BWR Morinda Pre-closing cash advance to BWR $ 1,000 $ - Cash paid to former owners 500 75,000 Fair value of: Common stock issued 453 10,970 Contingent consideration payable - 13,134 Total purchase consideration $ 1,953 $ 99,104 |
Summary of Purchase Price Allocation | Presented below is a summary of the purchase price allocations for the BWR and Morinda business combinations (in thousands): 2019 2018 BWR Morinda Identifiable assets acquired: Cash, cash equivalents and restricted cash $ 537 $ 46,306 Accounts receivable, net 1,293 4,250 Inventories 2,398 (1) 26,733 (1) Prepaid expenses and other assets 452 6,376 Identifiable intangible assets 1,530 (2) 45,886 (2) Right-of-use assets 708 13,268 Property and equipment 136 55,389 (3) Total identifiable assets acquired 7,054 198,208 Liabilities assumed: Accounts payable and accrued liabilities (4,071 ) (4) (41,194 ) (4) Liabilities to stockholders - (52,057 ) Mortgage and notes payable (2,353 ) (5) (2,869 ) Operating lease liabilities (708 ) (13,268 ) Net identifiable assets acquired (78 ) 88,820 Goodwill 2,031 (6) 10,284 (6) Total purchase price allocation $ 1,953 $ 99,104 (1) Based on the report of an independent valuation specialist, the fair value of work-in-process and finished goods inventories on the closing dates exceeded the historical carrying value by approximately $0.2 million for BWR and $2.2 million for Morinda. These amounts represent an element of built-in profit on the closing dates and were charged to cost of goods sold as the related inventories were subsequently 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 determined based on the reports 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) Fair value of Morinda’s real estate properties amounted to $44.4 million and was based upon real estate appraisals prepared by an independent firm, primarily using the “income approach”. Fair value of other property and equipment amounted to $10.9 million and was based primarily on the report of an independent valuation specialist with fair value determined using both the “cost approach” and the “market approach.” (4) BWR’s and Morinda’s U.S. operations were previously taxed on the owners’ individual income tax returns whereby no deferred income tax assets or liabilities had been recognized for U.S. federal and state income tax purposes. Accordingly, an adjustment of approximately $0.4 million for BWR and $9.9 million for Morinda 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) The Company assumed BWR’s obligations under its existing line of credit in connection with the business combination. Shortly after the closing date, the Company paid an aggregate of $2.5 million to terminate the line of credit and repay certain other liabilities. (6) Goodwill was recognized for the difference between the total purchase consideration transferred to consummate the business combinations and the fair value of the net identifiable assets acquired. Goodwill and intangible assets in connection with the BWR and Morinda business combinations are not expected to be deductible for income tax purposes. |
Summary of Earnout Obligations | Presented below is a summary of earnout obligations related to the Morinda and Marley Beverage Company (“Marley”) business combinations and payables to the former stockholders of Morinda (in thousands): 2019 2018 Marley earnout obligation $ - (1) $ 900 (1) Payables to former Morinda stockholders, net of imputed interest discount: Excess Working Capital (“EWC”) payable in: April 2019 - (2) 986 (2) July 2019 - (2) 7,732 (2) July 2020 5,283 (2) 4,984 (2) Earnout under Series D preferred stock 225 (3) 13,134 (3) Contingent on financing event - (4) 24,394 (4) Total 5,508 52,130 Less current portion 5,508 8,718 Long-term portion $ - $ 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. Revenue for the Marley reporting unit is not currently expected to exceed the $15.0 million earnout threshold, which resulted in the elimination of the liability during 2019. The fair value of the Marley earnout as of December 31, 2018 was valued using the weighted average return on assets for a total of $0.9 million. Changes in fair value of the Marley earnout resulted in a gain of $0.9 million for the year ended December 31, 2019 and an expense of $0.1 million for the year ended December 31, 2018. (2) Interest was imputed on these obligations based on a credit and tax adjusted interest rate of 6.1% for the period from the Closing Date until the respective contractual or estimated payment dates. This discount is being accreted using the effective interest method. Accretion of discount related to these obligations amounted to an aggregate of $1.2 million for the year ended December 31, 2019, which is included in interest expense in the accompanying consolidated statement of operations. (3) As of December 31, 2018, the fair value of earnout consideration under the Series D Preferred Stock was determined by an independent valuation specialist using an option pricing model. Key inputs in the valuation included forecast annual EBITDA of Morinda, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.6%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 18.9%, and an estimated credit spread of 5.7%. As of December 31, 2019, it was determined that Morinda’s EBITDA for the year ended December 31, 2019 was less than $17.0 million and therefore no Milestone Dividend was payable. Accordingly, the fair value of the Morinda earnout of $0.2 million was solely attributable to the 1.5% dividend set forth in the Series D Preferred Stock. (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 the sale leaseback discussed in Note 7. Since this amount was only payable from the proceeds of a long-term financing, the net carrying value was classified in long-term liabilities as of December 31, 2018. |
Schedule of Net Revenue and Net Loss Related to Business Combinations | For the years ended December 31, 2019 and 2018, the accompanying consolidated statements of operations include net revenue and net loss for the post-acquisition results of operations of BWR and Morinda as follows (in thousands): 2019 2018 BWR Morinda Total Morinda Net revenue $ 4,938 $ 200,708 $ 205,646 $ 3,825 Net loss $ (5,460 ) $ (9,100 ) $ (14,560 ) $ (457 ) |
Schedule of Unaudited Pro Forma Disclosures | The following table summarizes on an unaudited pro forma basis, the Company’s results of operations for the years ended December 31, 2019 and 2018 (in thousands, except per share amounts): 2019 2018 Net revenue $ 262,232 $ 300,092 Net loss $ (91,234 ) $ (12,548 ) Net loss per share- basic and diluted $ (1.17 ) $ (0.26 ) Weighted average number of shares of common stock outstanding- basic and diluted 78,043 48,786 |
Other Financial Information (Ta
Other Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Inventories | Inventories consisted of the following as of December 31, 2019 and 2018 (in thousands): 2019 2018 Raw materials $ 12,848 $ 12,538 Work-in-process 872 907 Finished goods, net 22,998 23,703 Total inventories $ 36,718 $ 37,148 |
Schedule of Prepaid Expenses and Other Current Assets | As of December 31, 2019 and 2018, prepaid expenses and other current assets consisted of the following (in thousands): 2019 2018 Prepaid expenses and deposits $ 4,150 $ 4,982 Prepaid stock-based compensation 112 347 Supplier and other receivables 122 1,144 Total $ 4,384 $ 6,473 |
Schedule of Property and Equipment | As of December 31, 2019 and 2018, property and equipment consisted of the following (in thousands): 2019 2018 Land $ 37 $ 25,726 Buildings and improvements 16,686 19,822 Machinery and equipment 5,307 5,208 Leasehold improvements 5,019 4,398 Office furniture and equipment 3,964 2,087 Transportation equipment 1,733 1,727 Total property and equipment 32,746 58,968 Less accumulated depreciation (4,303 ) (1,687 ) Property and equipment, net $ 28,443 $ 57,281 |
Schedule of Other Accrued Liabilities | As of December 31, 2019 and 2018, other accrued liabilities consisted of the following (in thousands): 2019 2018 Accrued commissions $ 8,914 $ 9,731 Accrued compensation and benefits 5,868 4,715 Accrued marketing events 4,568 3,757 Deferred revenue 1,358 2,701 Income taxes payable 15,227 1,670 Current portion of operating lease liabilities 5,673 4,798 Other accrued liabilities 7,843 6,647 Total accrued liabilities $ 49,451 $ 34,019 |
Identifiable Intangible Asset_2
Identifiable Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | For the year ended December 31, 2019, the changes in the net carrying value of identifiable intangible assets and goodwill are as follows (in thousands): Balance Changes in Net Carrying Value Balance December 31, Amortization Impairment December 31, Intangible Asset 2018 Additions (1) Expense Write-Offs (2) 2019 Identifiable intangible assets: License agreements China direct selling license $ 20,380 $ - $ (1,361 ) $ - $ 19,019 Other 5,671 838 (529 ) (5,980 ) - Manufacturing processes and recipes 11,230 - (796 ) (2,909 ) 7,525 Trade names 11,717 300 (886 ) (4,191 ) 6,940 IPC distributor sales force 9,731 - (976 ) - 8,755 Customer relationships 5,250 420 (439 ) (5,231 ) - Patents 3,667 163 (274 ) (3,244 ) 312 Product distribution rights and other - 795 (25 ) - 770 Non-compete agreements 184 119 (72 ) (109 ) 122 Total identifiable intangible assets 67,830 2,635 (5,358 ) (21,664 ) 43,443 Goodwill 31,514 2,031 - (23,261 ) 10,284 Total intangible assets $ 99,344 $ 4,666 $ (5,358 ) $ (44,925 ) $ 53,727 (1) Additions include identifiable intangible assets of $1.5 million and goodwill of $2.0 million in connection with the BWR business combination in July 2019, as discussed in Note 4. Identifiable intangible assets of $0.8 million and goodwill of $2.0 million related to BWR are included in the impairment write-offs. (2) All impairment write-offs were attributable to the NewAge segment. |
Schedule of Identifiable Intangible Assets | As of December 31, 2019 and 2018, identifiable intangible assets consisted of the following (in thousands): December 31, 2019 December 31, 2018 Accumulated Net Book Accumulated Net Book Identifiable Intangible Asset Cost (1) Amortization (1) Value Cost Amortization Value License agreements China direct selling license $ 20,420 $ (1,401 ) $ 19,019 $ 20,420 $ (40 ) $ 20,380 Other - - - 5,989 (318 ) 5,671 Manufacturing processes and recipes 8,080 (555 ) 7,525 11,610 (380 ) 11,230 Trade names 7,485 (545 ) 6,940 12,301 (584 ) 11,717 IPC distributor sales force 9,760 (1,005 ) 8,755 9,760 (29 ) 9,731 Customer relationships - - - 6,444 (1,194 ) 5,250 Patents 312 - 312 4,100 (433 ) 3,667 Product distribution rights and other 795 (25 ) 770 - - - Non-compete agreements 186 (64 ) 122 186 (2 ) 184 Total identifiable intangible assets $ 47,038 $ (3,595 ) $ 43,443 $ 70,810 $ (2,980 ) $ 67,830 (1) Reflects cost and accumulated amortization balances after impairment write-downs totaling $21.7 million as shown in the table above. |
Schedule of Future Amortization Expenses of Intangible Assets | Assuming no future impairments or disposals, amortization expense for the above intangible assets for the next five years is set forth below: Year Ending December 31, 2020 $ 2,531 2021 2,531 2022 2,531 2023 2,531 2024 2,531 Thereafter 30,788 Total $ 43,443 |
Summary of Goodwill | Goodwill, net of impairment write-downs, consisted of the following by reporting unit as of December 31, 2019 and 2018: Reporting Unit 2019 2018 Noni by NewAge $ 10,284 $ 10,284 Marley - 9,418 Maverick - 5,149 Xing - 4,506 PMC - 1,768 B&R - 389 Total goodwill $ 10,284 $ 31,514 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Summary of Selling Price and Resulting Gain On Sale | Presented below is a summary of the selling price and resulting gain on sale calculation (in thousands): Gross selling price $ 57,129 Less commissions and other expenses (1,941 ) Less repair obligations (1,675 ) Net selling price 53,513 Cost of land and building sold (29,431 ) Total gain on sale 24,082 Portion of gain related to above-market rent concession (17,640 ) Recognized gain on sale $ 6,442 |
Summary of Carrying Value of Operating Lease ROU Assets | As of December 31, 2019 and 2018, the carrying value of ROU assets and the related operating lease obligations were as follows (in thousands): 2019 2018 Right-of-Use Assets $ 38,458 $ 18,489 Operating Lease Liabilities: Current $ 5,673 $ 4,798 Long-term 35,513 13,686 Total $ 41,186 $ 18,484 Deferred Lease Financing Obligation: Current $ 637 $ - Long-term 16,541 - Total $ 17,178 $ - |
Summary of Future Minimum Lease Payments | As of December 31, 2019, future payments under operating lease agreements are as follows (in thousands): Years Ending December 31, 2020 $ 8,357 2021 6,836 2022 5,490 2023 5,424 2024 5,275 Thereafter 28,648 Total operating lease payments 60,030 Less imputed interest (18,844 ) (1) Present value of operating lease payments $ 41,186 (1) Calculated based on the term of the respective leases using corporate borrowing rates ranging from 2.0% to 10.0%. |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Debt | As of December 31, 2019 and 2018, debt consisted of the following (in thousands): 2019 2018 EWB Credit Facility: Term loan, net of discount of $448 $ 14,302 $ - Revolver 9,700 - Installment notes payable 8 (1) 66 (1) Siena Revolver - 2,000 Mortgage payable to a foreign bank - 2,628 (2) Total 24,010 4,694 Less current maturities (11,208 ) (3,369 ) Long-term debt, less current maturities $ 12,802 $ 1,325 (1) Consists of various installment notes payable that are collateralized by equipment and that bear interest at 12.4% to 22.1%. (2) This mortgage note payable was collateralized by land and a building in Japan. Quarterly principal payments of $0.3 million plus interest was payable in Japanese Yen at TIBOR plus 0.7% (0.76% as of December 31, 2018). This debt was subject to an interest rate swap agreement that fixed the interest rate at approximately 2.0%. This mortgage was repaid in March 2019 in connection with the sale leaseback transaction discussed in Note 7. |
Summary Future Debt Maturities | As of December 31, 2019, the scheduled future maturities of long-term debt, exclusive of discount accretion, are as follows: Years Ending December 31, 2020 $ 11,206 2021 1,502 2022 1,500 2023 10,250 Total $ 24,458 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of Changes in Stockholders' Equity | Presented below is a summary of the shares of Common Stock issued and the net proceeds received for public offerings completed in 2019 and 2018: Number Gross Offering Costs Net Description Of Shares Proceeds Commissions Other Proceeds Year Ending December 31, 2019: ATM Offering 5,957 $ 20,724 $ (622 ) $ (579 ) $ 19,523 Year Ending December 31, 2018: April 2018 Offering 2,560 $ 4,480 $ (269 ) $ (448 ) $ 3,763 August 2018 Offering 9,200 11,776 (824 ) (647 ) 10,305 ATM Offering 8,089 37,533 (1,126 ) (603 ) 35,804 November 2018 Offering 14,835 51,922 (3,635 ) (518 ) 47,769 Total 34,684 $ 105,711 $ (5,854 ) $ (2,216 ) $ 97,641 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The following table sets forth stock option activity under the Equity Incentive Plans for the years ended December 31, 2019 and 2018 (shares in thousands): 2019 2018 Shares Price (1) Term (2) Shares Price (1) Term (2) Outstanding, beginning of year 2,786 $ 2.84 9.0 2,491 $ 1.93 9.4 Grants to: Employees 1,454 2.34 926 4.63 Non-employees 35 3.81 - - Forfeited (418 ) 3.40 (213 ) 2.00 Exercised (306) (3) 2.00 (418) (3) 1.79 Outstanding, end of year 3,551 (4) 2.65 8.7 2,786 (4) 2.84 9.0 Vested, end of year 1,365 (5) 2.46 7.7 943 (5) 1.94 8.4 (1) Represents the weighted average exercise price. (2) Represents the weighted average remaining contractual term until the stock options expire. (3) On the respective exercise dates, the aggregate intrinsic value of shares of Common Stock issued upon exercise of stock options amounted to $1.0 million and $1.4 million for the years ended December 31, 2019 and 2018, respectively. (4) As of December 31, 2019 and 2018, the aggregate intrinsic value of stock options outstanding was $19,000 and $6.6 million, respectively. (5) As of December 31, 2019 and 2018, the aggregate intrinsic value of vested stock options was $17,000 and $3.1 million, respectively. |
Summary of Stock Options Weighted-average Assumptions | For the year ended December 31, 2019, the valuation assumptions for stock options granted to employees and non-employees under the Equity Incentive Plans and the modified options discussed above were estimated on the date of grant or modification, as applicable, using the BSM option-pricing model with the following weighted-average assumptions: 2019 2018 Granted Modified Granted Grant or modification date closing price of Common Stock $ 2.38 $ 4.75 $ 4.63 Expected life (in years) 6.4 1.0 6.0 Volatility 107 % 138 % 121 % Dividend yield 0 % 0 % 0 % Risk-free interest rate 1.7 % 1.9 % 2.8 % |
Schedule of Restricted Stock Award Activity | The following table sets forth activity related to grants of restricted stock under the Equity Incentive Plans and non-plan awards for the years ended December 31, 2019 and 2018 (in thousands): Grants Under Equity Incentive Plans 2016 Non-Plan Grants Equity-Classified Awards Liability-Classified Awards (1) to Executive Officer Number of Unvested Number of Unvested Number of Unvested Shares Compensation Shares Compensation Shares Compensation Outstanding, December 31, 2017 613 $ 1,241 - $ - 1,240 $ 280 Shares issued to Board members 193 (2) 429 (2) - - - - Unvested awards granted to employees: Performance vesting criteria 216 (3) 1,000 (3) 318 (3) 1,651 (3) - - Service vesting criteria 539 (4) 2,491 (4) 156 (4) 815 (4) - - Unvested forfeitures (35 ) (76 ) - - - - Fair value adjustment and other - - - 23 (1) - - Vested shares and expense recognized (375 ) (5) (1,098 ) (5) - - (611 ) (5) (216 ) (5) Outstanding, December 31, 2018 1,151 3,987 474 2,489 629 64 Shares issued to Board members 91 (2) 500 (2) - - - - Unvested awards granted to employees with service vesting criteria 2,085 (4) 5,036 (4) - - - - Forfeitures (220 ) (1,019 ) (322 ) (1,693 ) - - Fair value adjustments and other - (27 ) - (519 ) (1) - - Vested shares and expense (984 ) (5) (3,872) (5) (115) (5) (210 ) (5) (629 ) (5) (64 ) (5) Outstanding, December 31, 2019 2,123 $ 4,605 37 $ 67 - $ - Intrinsic value, December 31, 2019 $ 3,865 (6) $ 67 (6) $ - (1) Certain awards granted to employees in China are not permitted to be settled in shares, which requires classification as a liability in the Company’s consolidated balance sheets. This liability is adjusted based on the closing price of the Company’s Common Stock at the end of each reporting period until these awards vest. As of December 31, 2019, the cumulative amount of compensation expense recognized is based on the progress toward vesting and the total fair value of the respective awards on that date. (2) Represents grants to members of the Board of Directors whereby the shares of Common Stock were issued with cliff vesting one year after the grant date. The shares were recorded at the closing price for the Company’s Common Stock on the respective grant dates. (3) Represents restricted stock awards that would have vested if Morinda achieved EBITDA of $20.0 million for the year ended December 31, 2019. All of the shares were forfeited as of December 31, 2019 with no compensation recognized. (4) Restricted stock awards that generally vest over three years with fair value determined based on the closing price of the Company’s Common Stock on the respective grant dates. (5) The “Number of Shares” column reflects shares that vested due to achievement of the service condition during the year. As of December 31, 2019, the vested shares include approximately 319,000 shares that are not issuable until March 2020. The “Unvested Compensation” column reflects the stock-based compensation expense recognized for vested and unvested awards during the year. (6) The intrinsic value is based on the closing price of the Company’s Common Stock of $1.82 per share on December 31, 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 years ended December 31, 2019 and 2018, and the unrecognized compensation expense as of December 31, 2019 and 2018 (in thousands): Expense Recognized Unrecognized Expense Year Ended December 31: as of December 31: 2019 2018 2019 2018 Plan-based stock options awards: Employees $ 2,218 $ 1,219 $ 4,716 $ 6,811 Non-employees 22 - 87 - Plan-based restricted stock awards: Equity-classified 3,872 1,314 4,605 557 Liability-classified 210 - 67 - Non-plan equity-classified restricted stock awards 64 - - - Warrants 2 - - - Total $ 6,388 $ 2,533 $ 9,475 $ 7,368 |
Schedule of Warrants | As of December 31, 2019, the Company had fully vested warrants outstanding for approximately 311,000 shares as follows (shares in thousands): Number Exercise Expiration Warrant Description of Shares Price Date Marley license extension 200 $ 5.14 March 2029 Former employee 8 1.83 December 2020 2017 underwriter warrants 103 4.38 February 2022 Total 311 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Loss Before Income Tax Expense | For the years ended December 31, 2019 and 2018, loss before income tax expense is as follows (in thousands): 2019 2018 Domestic $ (96,159 ) $ (20,529 ) International 18,992 (533 ) Loss before income taxes $ (77,167 ) $ (21,062 ) |
Schedule of Reconciliation of Income Tax Benefit | For the years ended December 31, 2019 and 2018, the reconciliation between the income tax benefit computed by applying the statutory U.S. federal income tax rate to the pre-tax loss before income taxes, and total income tax expense recognized in the financial statements is as follows (in thousands): 2019 2018 Income tax benefit at statutory U.S. federal rate $ 16,205 $ 4,423 Income tax benefit attributable to U.S. states 3,914 1,063 Stock-based compensation 774 1,367 Other 720 300 Code section 162(m) excess compensation (703 ) - Non-deductible expenses (725 ) (351 ) Change in fair value earnouts 2,900 - Benefit of foreign taxes 717 - Foreign deferred tax adjustments 2,194 - Foreign tax credit 6,146 - Foreign withholding/prior year tax (1,414 ) - Foreign rate differential (5,561 ) (27 ) Change in valuation allowance (37,835 ) 2,152 Total income tax benefit (expense) $ (12,668 ) $ 8,927 |
Schedule of Components of Income Tax Expense | For the years ended December 31, 2019 and 2018, the Company’s income tax benefit (expense) consisted of the following components (in thousands): 2019 2018 Current income tax expense: U.S. Federal $ - $ - U.S. States (5 ) - Foreign (17,563 ) - Total current income tax expense (17,568 ) - Deferred income tax benefit (expense): U.S. Federal (8,419 ) 7,891 U.S. States - 1,063 Foreign 13,319 (27 ) Net deferred income tax benefit 4,900 8,927 Total income tax benefit (expense) $ (12,668 ) $ 8,927 |
Schedule of Deferred Tax Assets and Liabilities | deferred income tax assets and liabilities are as follows (in thousands): 2019 2018 Deferred income tax assets: Foreign tax credits $ 14,079 $ - Net operating loss carryforwards 15,348 9,295 Accrued liabilities 8,670 3,456 Accrued pension 1,927 1,767 Operating lease liabilities 16,596 Above market lease 10,370 - Property and equipment, net 363 - Other 758 574 Gross deferred income tax assets 68,111 15,092 Valuation allowance for deferred income tax assets (43,465 ) - Net deferred income tax assets 24,646 15,092 Deferred income tax liabilities: Goodwill and identifiable intangible assets (5,117 ) (12,405 ) Operating lease, right-of-use assets (15,842 ) - Property and equipment, net - (3,200 ) Notes payable - (326 ) Total deferred income tax liabilities (20,959 ) (15,931 ) Net deferred income tax asset (liability) $ 3,687 $ (839 ) As of December 31, 2019 and 2018, the Company’s net deferred income tax asset (liability) consisted of the following components (in thousands): 2019 2018 Foreign deferred income tax assets $ 9,128 $ 8,908 Foreign deferred income tax liabilities (5,441 ) (9,747 ) Net deferred income tax asset (liability) $ 3,687 $ (839 ) |
Schedule of Unrecognized Tax Benefits | The following table summarizes changes in unrecognized tax benefits for the years ending December 31, 2019 and 2018 (in thousands): 2019 2018 Balance, beginning of year $ 430 $ 360 Increase related to: Prior tax positions 1,163 70 Current tax positions 22 - Decreases related to prior tax positions (46 ) - Settlements (24 ) - Balance, end of year $ 1,545 $ 430 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Loss Per Share | As of December 31, 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 Equity Incentive Plan awards: Stock options 3,551 2,786 Unissued and unvested restricted stock awards 2,069 1,229 Common stock purchase warrants 312 103 Total 5,932 4,118 |
Financial Instruments and Sig_2
Financial Instruments and Significant Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investments, All Other Investments [Abstract] | |
Schedule of Fair Value of Assets and Liabilities | Recurring measurements of the fair value of assets and liabilities as of December 31, 2019 and 2018 were as follows: As of December 31, 2019 As of December 31, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Business combination liabilities: Morinda earnout under Series D preferred stock $ - $ - $ 225 $ 225 $ - $ - $ 13,134 $ 13,134 Marley earnout obligation - - - - - - 900 900 Interest rate swap liability - 99 - 99 - - - - Embedded derivative liability - - - - - - 470 470 Total $ - $ 99 $ 225 $ 324 $ - $ - $ 14,504 $ 14,504 |
Segments and Geographic Informa
Segments and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Summary of Segment Reporting | Net revenue by reporting segment for the years ended December 31, 2019 and 2018, was as follows (in thousands): Segment 2019 2018 Noni by NewAge $ 200,708 $ 3,825 NewAge 53,000 48,335 Net revenue $ 253,708 $ 52,160 Gross profit by reporting segment for the years ended December 31, 2019 and 2018, was as follows (in thousands): Segment 2019 2018 Noni by NewAge $ 155,685 $ 2,915 NewAge (2,978 ) 6,380 Total gross profit $ 152,707 $ 9,295 Assets by reporting segment as of December 31, 2019 and 2018, were as follows (in thousands): Segment 2019 2018 Noni by NewAge $ 201,600 $ 206,222 NewAge 49,530 80,710 Total assets $ 251,130 $ 286,932 Depreciation and amortization expense by reporting segment for the years ended December 31, 2019 and 2018, was as follows (in thousands): Segment 2019 2018 Noni by NewAge $ 6,782 $ 193 NewAge 1,977 2,117 Total depreciation and amortization $ 8,759 $ 2,310 Cash payments for capital expenditures for property and equipment and identifiable intangible assets by reporting segment for the years ended December 31, 2019 and 2018, were as follows (in thousands): Segment 2019 2018 Noni by NewAge $ 4,204 $ 56,133 NewAge 1,153 93 Total capital expenditures $ 5,357 $ 56,226 |
Schedule of Net Revenue by Geographic Region | The Company attributes net revenue to geographic regions based on the location of its customers’ contracting entity. The following table presents net revenue by geographic region for the years ended December 31, 2019 and 2018 (in thousands): 2019 2018 United States of America $ 70,690 $ 48,460 International 183,018 3,700 Net revenue $ 253,708 $ 52,160 |
Schedule II Valuation and Qua_2
Schedule II Valuation and Qualifying Accounts (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule of Schedule II Valuation and Qualifying Accounts | SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (In Thousands) Additions Provisions Effect of Balance at Charged to Assumed in Amounts Foreign Balance at Beginning Costs and Business Written Currency End of Description of Year Expenses Combinations Off Translation Year Year Ended December 31, 2019: Allowance for doubtful accounts $ 134 $ 455 $ 114 $ (169 ) $ - $ 534 Allowance for sales returns 200 261 - - - 461 Income tax valuation allowance 5,197 38,682 - (433 ) 19 43,465 |
Nature of Operations (Details N
Nature of Operations (Details Narrative) | 12 Months Ended |
Dec. 31, 2019ft² | |
Accounting Policies [Abstract] | |
Number of segments | 2 |
Significant Accounting Polici_4
Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill impairment charge | $ 44,900 | |
Other Accrued Liabilities [Member] | ||
Deferred revenue | $ 1,400 | $ 2,700 |
Significant Accounting Polici_5
Significant Accounting Policies - Identifiable Intangible Assets Estimated Useful Life (Details) | 12 Months Ended |
Dec. 31, 2019 | |
License Agreements [Member] | |
Weighted Average number of years | 15 years |
Trade Names [Member] | Minimum [Member] | |
Weighted Average number of years | 1 year |
Trade Names [Member] | Maximum [Member] | |
Weighted Average number of years | 15 years |
Manufacturing Processes and Recipes [Member] | |
Weighted Average number of years | 15 years |
IPC Distributor Sales Force [Member] | |
Weighted Average number of years | 10 years |
Product Distribution Rights [Member] | |
Weighted Average number of years | 16 years |
Patents [Member] | |
Weighted Average number of years | 15 years |
Non-compete Agreements [Member] | |
Weighted Average number of years | 3 years |
Significant Accounting Polici_6
Significant Accounting Policies - Property and Equipment Estimated Useful Life (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Buildings and Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment, Useful Life | 28 years |
Buildings and Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment, Useful Life | 40 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment, Useful Life | 3 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment, Useful Life | 7 years |
Office Furniture and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment, Useful Life | 3 years |
Office Furniture and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment, Useful Life | 7 years |
Delivery Vehicles [Member] | Minimum [Member] | |
Property, Plant and Equipment, Useful Life | 3 years |
Delivery Vehicles [Member] | Maximum [Member] | |
Property, Plant and Equipment, Useful Life | 5 years |
Leasehold Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment, Useful Life | 1 year |
Leasehold Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment, Useful Life | 20 years |
Liquidity and Going Concern (De
Liquidity and Going Concern (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jun. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2020 | Jan. 31, 2020 | |
Net loss | $ (89,835) | $ (12,135) | ||||
Net cash used in operating activities | (31,801) | (21,831) | ||||
Accumulated deficit | (112,471) | (22,636) | ||||
Contractual Obligation | 21,600 | |||||
Accounts payable | 13,259 | 8,960 | ||||
Operating lease payments | 800 | |||||
Inventories | 36,718 | 37,148 | ||||
Payments under certain employment agreements | 1,300 | |||||
Cash and cash equivalents | 60,842 | $ 42,517 | ||||
Working capital | 33,500 | |||||
ATM Offering Agreement [Member] | ||||||
Contractual Obligation | 21,600 | |||||
Restricted cash | 15,100 | |||||
EWB RevolverMember | ||||||
Debt instrument, face amount | 9,700 | |||||
EWB Credit Facility [Member] | ||||||
Principal and estimated interest payments | 2,800 | |||||
Restricted cash | 15,100 | |||||
EWB Credit Facility [Member] | ATM Offering Agreement [Member] | ||||||
Cumulative equity infusions | $ 30,000 | |||||
Debt Instrument, Maturity Date | Apr. 30, 2020 | |||||
EWB Credit Facility [Member] | Subsequent Event [Member] | ||||||
Restricted cash | $ 10,000 | $ 6,300 | ||||
Cumulative equity infusions | $ 20,000 | $ 30,000 | ||||
Former Stockholders of Morinda [Member] | ||||||
Accounts payable | $ 5,700 |
Business Combination - (Details
Business Combination - (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jun. 30, 2019 | May 30, 2019 | Dec. 02, 2018 | Dec. 31, 2018 | Nov. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Loan to related party amount | $ 963 | $ 28,694 | |||||
Working capital | 33,500 | ||||||
Sale leaseback transaction amount | $ 25,000 | ||||||
Milestone Dividend [Member] | |||||||
Dividend description | If the Adjusted EBITDA (as defined in the CoD) of Morinda was at least $20.0 million for the year ended December 31, 2019. If the Adjusted EBITDA of Morinda was less than $20.0 million, the Milestone Dividend was reduced by applying a five-times multiple to the difference between the Adjusted EBITDA target of $20 million and actual Adjusted EBITDA for the year ended December 31, 2019. Accordingly, no Milestone Dividend is payable if actual Adjusted EBITDA is $17.0 million or lower. Adjusted EBITDA of Morinda for the year ended December 31, 2019 was less than $17.0 million and, accordingly, no Milestone Dividend was payable to the holders of the Preferred Stock. | ||||||
Annual cash dividend payable period | Apr. 15, 2020 | ||||||
Maximum [Member] | Milestone Dividend [Member] | |||||||
Dividend amount | $ 15,000 | ||||||
Minimum [Member] | Milestone Dividend [Member] | |||||||
Expected EBITDA adjusted dividend amount | 20,000 | ||||||
Series D Preferred Stock [Member] | |||||||
Payment of potential amount | $ 15,000 | ||||||
BWR Acquisition Corp [Member] | |||||||
Loan to related party amount | $ 1,100 | ||||||
Number of shares issued | 214,250 | ||||||
Estimated fair value of shares | $ 1,200 | ||||||
Cash | $ 537 | ||||||
Transaction cost | 3,200 | ||||||
Professional fees, other incremental and direct costs | $ 900 | ||||||
Morinda Merger Agreement [Member] | |||||||
Number of shares issued | 2,016,480 | ||||||
Fair value of common stock | $ 11,000 | ||||||
Cash | $ 75,000 | ||||||
Stock rate percentage | 1.50% | ||||||
Agreed to distribute the stockholders equity | $ 39,600 | 39,600 | |||||
Sale leaseback transaction amount | $ 25,000 | $ 25,000 | |||||
Distributions payable description | (i) up to $25.0 million for which the timing and amount are subject to a future financing event, 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 exceeds $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] | |||||||
Number of shares issued | 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 | $ 500 | |||||
Number of shares issued | 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 |
Business Combination - Schedule
Business Combination - Schedule of Purchase Consideration (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
BWR [Member] | ||
Pre-closing cash advance to BWR | $ 1,000 | |
Cash paid to former owners of BWR at closing | 500 | |
Fair value of Common stock issued | 453 | |
Fair value of Contingent consideration payable | ||
Total purchase consideration | $ 1,953 | |
Morinda [Member] | ||
Pre-closing cash advance to BWR | ||
Cash paid to former owners of BWR at closing | 75,000 | |
Fair value of Common stock issued | 10,970 | |
Fair value of Contingent consideration payable | 13,134 | |
Total purchase consideration | $ 99,104 |
Business Combination - Summary
Business Combination - Summary of Purchase Price Allocation (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill | $ 10,284 | $ 31,514 | |
BWR [Member] | |||
Cash, cash equivalents and restricted cash | 537 | ||
Accounts receivable, net | 1,293 | ||
Inventories | [1] | 2,398 | |
Prepaid expenses and other assets | 452 | ||
Identifiable intangible assets | [2] | 1,530 | |
Right-of-use assets | 708 | ||
Property and equipment | 136 | ||
Total identifiable assets acquired | 7,054 | ||
Accounts payable and accrued liabilities | [3] | (4,071) | |
Liabilities to stockholders | |||
Mortgage and notes payable | [4] | (2,353) | |
Operating lease liabilities | (708) | ||
Net identifiable assets acquired | (78) | ||
Goodwill | [5] | ||
Total purchase price allocation | $ 1,953 | ||
Morinda [Member] | |||
Cash, cash equivalents and restricted cash | 46,306 | ||
Accounts receivable, net | 4,250 | ||
Inventories | [1] | 26,733 | |
Prepaid expenses and other assets | 6,376 | ||
Identifiable intangible assets | [2] | 45,886 | |
Right-of-use assets | 13,268 | ||
Property and equipment | [6] | 55,389 | |
Total identifiable assets acquired | 198,208 | ||
Accounts payable and accrued liabilities | [3] | (41,194) | |
Liabilities to stockholders | (52,057) | ||
Mortgage and notes payable | (2,869) | ||
Operating lease liabilities | (13,268) | ||
Net identifiable assets acquired | 88,820 | ||
Goodwill | [5] | 10,284 | |
Total purchase price allocation | $ 99,104 | ||
[1] | Based on the report of an independent valuation specialist, the fair value of work-in-process and finished goods inventories on the closing dates exceeded the historical carrying value by approximately $0.2 million for BWR and $2.2 million for Morinda. These amounts represent an element of built-in profit on the closing dates and were charged to cost of goods sold as the related inventories were subsequently 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 determined based on the reports 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] | BWRs and Morindas U.S. operations were previously taxed on the owners individual income tax returns whereby no deferred income tax assets or liabilities had been recognized for U.S. federal and state income tax purposes. Accordingly, an adjustment of approximately $0.4 million for BWR and $9.9 million for Morinda 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. | ||
[4] | The Company assumed BWR’s obligations under its existing line of credit in connection with the business combination. Shortly after the closing date, the Company paid an aggregate of $2.5 million to terminate the line of credit and repay certain other liabilities. | ||
[5] | Goodwill was recognized for the difference between the total purchase consideration transferred to consummate the business combinations and the fair value of the net identifiable assets acquired. Goodwill and intangible assets in connection with the BWR and Morinda business combinations are not expected to be deductible for income tax purposes. | ||
[6] | Fair value of Morinda’s real estate properties amounted to $44.4 million and was based upon real estate appraisals prepared by an independent firm, primarily using the “income approach”. Fair value of other property and equipment amounted to $10.9 million and was based primarily on the report of an independent valuation specialist with fair value determined using both the “cost approach” and the “market approach.” |
Business Combination - Schedu_2
Business Combination - Schedule of Purchase Price Allocation (Details) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
Net deferred income tax liabilities | $ 5,441 | $ 9,747 | |
BWR Acquisition Corp [Member] | |||
Line of credit | 2,500 | ||
Real Estate Properties [Member] | |||
Fair value of identifiable intangible assets | 44,400 | ||
Other Property and Equipment [Member] | |||
Fair value of identifiable intangible assets | 10,900 | ||
BWR [Member] | |||
Fair value inventories | 200 | ||
Fair value of identifiable intangible assets | [1] | 1,530 | |
Net deferred income tax liabilities | 400 | ||
Morinda [Member] | |||
Fair value inventories | 2,200 | ||
Fair value of identifiable intangible assets | [1] | $ 45,886 | |
Net deferred income tax liabilities | $ 9,900 | ||
[1] | The fair value of identifiable intangible assets was determined based on the reports 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. |
Business Combination - Summar_2
Business Combination - Summary of Earnout Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | |
Marley earnout obligation | [1] | $ 900 | |
Total | 5,508 | 52,130 | |
Less current portion | 5,508 | 8,718 | |
Long-term portion | 43,412 | ||
EWC payable in April 2019 [Member] | |||
Total | [2] | 986 | |
EWC payable in July 2019 [Member] | |||
Total | [2] | 7,732 | |
EWC payable in July 2020 [Member] | |||
Total | [2] | 5,283 | 4,984 |
Earnout under Series D Preferred Stock [Member] | |||
Total | [3] | 225 | 13,134 |
Contingent on financing event [Member] | |||
Total | [4] | $ 24,394 | |
[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. Revenue for the Marley reporting unit is not currently expected to exceed the $15.0 million earnout threshold, which resulted in the elimination of the liability during 2019. The fair value of the Marley earnout as of December 31, 2018 was valued using the weighted average return on assets for a total of $0.9 million. Changes in fair value of the Marley earnout resulted in a gain of $0.9 million for the year ended December 31, 2019 and an expense of $0.1 million for the year ended December 31, 2018. | ||
[2] | Interest was imputed on these obligations based on a credit and tax adjusted interest rate of 6.1% for the period from the Closing Date until the respective contractual or estimated payment dates. This discount is being accreted using the effective interest method. Accretion of discount related to these obligations amounted to an aggregate of $1.2 million for the year ended December 31, 2019, which is included in interest expense in the accompanying consolidated statement of operations. | ||
[3] | As of December 31, 2018, the fair value of earnout consideration under the Series D Preferred Stock was determined by an independent valuation specialist using an option pricing model. Key inputs in the valuation included forecast annual EBITDA of Morinda, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.6%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 18.9%, and an estimated credit spread of 5.7%. As of December 31, 2019, it was determined that Morinda’s EBITDA for the year ended December 31, 2019 was less than $17.0 million and therefore no Milestone Dividend was payable. Accordingly, the fair value of the Morinda earnout of $0.2 million was solely attributable to the 1.5% dividend set forth in the Series D Preferred Stock. | ||
[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 $25.0 million from the net proceeds of the sale leaseback discussed in Note 7. Since this amount was only payable from the proceeds of a long-term financing, the net carrying value was classified in long-term liabilities as of December 31, 2018. |
Business Combination - Summar_3
Business Combination - Summary of Earnout Obligations (Details) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Business Combinations [Abstract] | ||
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. Revenue for the Marley reporting unit is not currently expected to exceed the $15.0 million earnout threshold, which resulted in the elimination of the liability during 2019. | |
Asset fair value increased amount | $ 900 | $ 900 |
Fair value of earout recognized expense | $ (13,809) | $ 100 |
Obligations credit and tax interest rate | 6.10% | |
Obligations amount | $ 1,200 | |
Fair value of valuation methodology description | The fair value of earnout consideration under the Series D Preferred Stock was determined by an independent valuation specialist using an option pricing model. Key inputs in the valuation included forecast annual EBITDA of Morinda, expected volatility of forecast annual EBITDA of 10.0%, the risk-free interest rate of 2.6%, a discount rate applicable to forecast annual EBITDA of 21.5%, a risk premium of 18.9%, and an estimated credit spread of 5.7%. As of December 31, 2019, it was determined that Morinda's EBITDA for the year ended December 31, 2019 was less than $17.0 million and therefore no Milestone Dividend was payable. Accordingly, the fair value of the Morinda earnout of $0.2 million was solely attributable to the 1.5% dividend set forth in the Series D Preferred Stock. | |
Sale leaseback transaction amount | $ 25,000 |
Business Combination - Schedu_3
Business Combination - Schedule of Net Revenue and Net Loss Related to Business Combinations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net revenue | $ 205,646 | |
Net loss | (14,560) | |
BWR [Member] | ||
Net revenue | 4,938 | |
Net loss | (5,460) | |
Morinda [Member] | ||
Net revenue | 200,708 | $ 3,825 |
Net loss | $ (9,100) | $ (457) |
Business Combination - Schedu_4
Business Combination - Schedule of Unaudited Pro Forma Disclosures (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Business Combinations [Abstract] | ||
Net revenue | $ 262,232 | $ 300,092 |
Net loss | $ (91,234) | $ (12,548) |
Net loss per share- basic and diluted | $ (1.17) | $ (0.26) |
Weighted average number of shares of common stock outstanding- basic and diluted | 78,043 | 48,786 |
Other Financial Information (De
Other Financial Information (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Other Information | ||
Depreciation expense | $ 3,400 | $ 700 |
Repairs and maintenance costs | $ 2,200 | $ 700 |
Other Financial Information - S
Other Financial Information - Schedule of Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Other Information | ||
Raw materials | $ 12,848 | $ 12,538 |
Work-in-process | 872 | 907 |
Finished goods, net | 22,998 | 23,703 |
Total inventories | $ 36,718 | $ 37,148 |
Other Financial Information -_2
Other Financial Information - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Other Information | ||
Prepaid expenses and deposits | $ 4,150 | $ 4,982 |
Prepaid stock-based compensation | 112 | 347 |
Supplier and other receivables | 122 | 1,144 |
Total | $ 4,384 | $ 6,473 |
Other Financial Information -_3
Other Financial Information - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property and Equipment, Gross | $ 32,746 | $ 58,968 |
Less accumulated depreciation | (4,303) | (1,687) |
Property and Equipment, Net | 28,443 | 57,281 |
Land [Member] | ||
Property and Equipment, Gross | 37 | 25,726 |
Buildings and Improvements [Member] | ||
Property and Equipment, Gross | 16,686 | 19,822 |
Machinery and Equipment [Member] | ||
Property and Equipment, Gross | 5,307 | 5,208 |
Leasehold Improvements [Member] | ||
Property and Equipment, Gross | 5,019 | 4,398 |
Office Furniture and Equipment [Member] | ||
Property and Equipment, Gross | 3,964 | 2,087 |
Transportation Equipment [Member] | ||
Property and Equipment, Gross | $ 1,733 | $ 1,727 |
Other Financial Information -_4
Other Financial Information - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Other Information | ||
Accrued commissions | $ 8,914 | $ 9,731 |
Accrued compensation and benefits | 5,868 | 4,715 |
Accured marketing events | 4,568 | 3,757 |
Deferred revenue | 1,358 | 2,701 |
Income taxes payable | 15,227 | 1,670 |
Current portion of operating lease liabilities | 5,673 | 4,798 |
Other accrued liabilities | 7,843 | 6,647 |
Total other accrued liabilities | $ 49,451 | $ 34,019 |
Identifiable Intangible Asset_3
Identifiable Intangible Assets and Goodwill (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Mar. 28, 2019 | Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill and identifiable intangible assets carrying amount | $ 53,727 | $ 53,727 | $ 99,344 | ||
Goodwill and intangible assets impairment charge | 44,925 | [1] | |||
Amortization expense related to identifiable intangible assets | 5,358 | $ 1,700 | |||
Write-downs of goodwill | $ 23,300 | $ 23,261 | [1] | ||
Marley Merchandising LLC [Member] | License Agreement [Member] | |||||
Number of stock option shares, exercisable | 200,000 | ||||
Stock options exercise price | $ 5.14 | ||||
Marley Merchandising LLC [Member] | License Agreement [Member] | Expected Term [Member] | |||||
Intangible asset amortized term | 5 years | ||||
Marley Merchandising LLC [Member] | License Agreement [Member] | Price Volatility [Member] | |||||
Fair value of intangible measurement input | 116.00% | ||||
Marley Merchandising LLC [Member] | License Agreement [Member] | Risk Free Interest Rate [Member] | |||||
Fair value of intangible measurement input | 2.20% | ||||
[1] | All impairment write-offs were attributable to the NewAge segment. |
Identifiable Intangible Asset_4
Identifiable Intangible Assets and Goodwill - Schedule of Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |||
Intangible assets, gross | $ 43,443 | $ 43,443 | $ 67,830 | ||
Goodwill | 10,284 | 10,284 | 31,514 | ||
Intangible assets, net | 53,727 | 53,727 | 99,344 | ||
Intangible Asset, Additions | [1] | 2,635 | |||
Intangible Asset, Amortization Expense | (5,358) | (1,700) | |||
Intangible Asset, Impairment Write-Offs | 44,925 | [2] | |||
Goodwill, Additions | [1] | 2,031 | |||
Goodwill, Amortization Expense | |||||
Goodwill, Impairment Write-Offs | (23,300) | (23,261) | [2] | ||
Intangible Assets including goodwill, Additions | [1] | 4,666 | |||
Intangible Assets including goodwill, Amortization Expense | (5,358) | ||||
Intangible Assets including goodwill, Impairment Write-Offs | [2] | (44,925) | |||
China Direct Selling License [Member] | |||||
Intangible assets, gross | 19,019 | 19,019 | 20,380 | ||
Intangible Asset, Additions | [1] | ||||
Intangible Asset, Amortization Expense | (1,361) | ||||
Intangible Asset, Impairment Write-Offs | [2] | ||||
Other [Member] | |||||
Intangible assets, gross | 5,671 | ||||
Intangible Asset, Additions | [1] | 838 | |||
Intangible Asset, Amortization Expense | (529) | ||||
Intangible Asset, Impairment Write-Offs | [2] | (5,980) | |||
Manufacturing Processes and Recipes [Member] | |||||
Intangible assets, gross | 7,525 | 7,525 | 11,230 | ||
Intangible Asset, Additions | [1] | ||||
Intangible Asset, Amortization Expense | (796) | ||||
Intangible Asset, Impairment Write-Offs | [2] | (2,909) | |||
Trade Names [Member] | |||||
Intangible assets, gross | 6,940 | 6,940 | 11,717 | ||
Intangible Asset, Additions | [1] | 300 | |||
Intangible Asset, Amortization Expense | (886) | ||||
Intangible Asset, Impairment Write-Offs | [2] | (4,191) | |||
IPC Distributor Sales Force [Member] | |||||
Intangible assets, gross | 8,755 | 8,755 | 9,731 | ||
Intangible Asset, Additions | [1] | ||||
Intangible Asset, Amortization Expense | (976) | ||||
Intangible Asset, Impairment Write-Offs | [2] | ||||
Customer Relationships [Member] | |||||
Intangible assets, gross | 5,250 | ||||
Intangible Asset, Additions | [1] | 420 | |||
Intangible Asset, Amortization Expense | (439) | ||||
Intangible Asset, Impairment Write-Offs | [2] | (5,231) | |||
Patents [Member] | |||||
Intangible assets, gross | 312 | 312 | 3,667 | ||
Intangible Asset, Additions | [1] | 163 | |||
Intangible Asset, Amortization Expense | (274) | ||||
Intangible Asset, Impairment Write-Offs | [2] | (3,244) | |||
Product Distribution Rights and Other [Member] | |||||
Intangible assets, gross | 770 | 770 | |||
Intangible Asset, Additions | [1] | 795 | |||
Intangible Asset, Amortization Expense | (25) | ||||
Intangible Asset, Impairment Write-Offs | [2] | ||||
Non-compete Agreements [Member] | |||||
Intangible assets, gross | $ 122 | 122 | $ 184 | ||
Intangible Asset, Additions | [1] | 119 | |||
Intangible Asset, Amortization Expense | (72) | ||||
Intangible Asset, Impairment Write-Offs | [2] | $ (109) | |||
[1] | Additions include identifiable intangible assets of $1.5 million and goodwill of $2.0 million in connection with the BWR business combination in July 2019, as discussed in Note 4. Identifiable intangible assets of $0.8 million and goodwill of $2.0 million related to BWR are included in the impairment write-offs. | ||||
[2] | All impairment write-offs were attributable to the NewAge segment. |
Identifiable Intangible Asset_5
Identifiable Intangible Assets and Goodwill - Schedule of Identifiable Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | |
Identifiable Intangible Asset, Cost | $ 47,038 | [1] | $ 70,810 |
Less: Accumulated Amortization | (3,595) | [1] | (2,980) |
Identifiable Intangible Asset, Net | 43,443 | 67,830 | |
China Direct Selling License [Member] | |||
Identifiable Intangible Asset, Cost | 20,420 | [1] | 20,420 |
Less: Accumulated Amortization | (1,401) | [1] | (40) |
Identifiable Intangible Asset, Net | 19,019 | 20,380 | |
Other [Member] | |||
Identifiable Intangible Asset, Cost | [1] | 5,989 | |
Less: Accumulated Amortization | [1] | (318) | |
Identifiable Intangible Asset, Net | 5,671 | ||
Manufacturing Processes and Recipes [Member] | |||
Identifiable Intangible Asset, Cost | 8,080 | [1] | 11,610 |
Less: Accumulated Amortization | (555) | [1] | (380) |
Identifiable Intangible Asset, Net | 7,525 | 11,230 | |
Trade Names [Member] | |||
Identifiable Intangible Asset, Cost | 7,485 | [1] | 12,301 |
Less: Accumulated Amortization | (545) | [1] | (584) |
Identifiable Intangible Asset, Net | 6,940 | 11,717 | |
IPC Distributor Sales Force [Member] | |||
Identifiable Intangible Asset, Cost | 9,760 | [1] | 9,760 |
Less: Accumulated Amortization | (1,005) | [1] | (29) |
Identifiable Intangible Asset, Net | 8,755 | 9,731 | |
Customer Relationships [Member] | |||
Identifiable Intangible Asset, Cost | [1] | 6,444 | |
Less: Accumulated Amortization | [1] | (1,194) | |
Identifiable Intangible Asset, Net | 5,250 | ||
Patents [Member] | |||
Identifiable Intangible Asset, Cost | 312 | [1] | 4,100 |
Less: Accumulated Amortization | [1] | (433) | |
Identifiable Intangible Asset, Net | 312 | 3,667 | |
Product Distribution Rights and Other [Member] | |||
Identifiable Intangible Asset, Cost | 795 | [1] | |
Less: Accumulated Amortization | (25) | [1] | |
Identifiable Intangible Asset, Net | 770 | ||
Non-compete Agreements [Member] | |||
Identifiable Intangible Asset, Cost | 186 | [1] | 186 |
Less: Accumulated Amortization | (64) | [1] | (2) |
Identifiable Intangible Asset, Net | $ 122 | $ 184 | |
[1] | Reflects cost and accumulated amortization balances after impairment write-downs totaling $21.7 million as shown in the table above. |
Identifiable Intangible Asset_6
Identifiable Intangible Assets and Goodwill - Schedule of Identifiable Intangible Assets (Details) (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Jul. 31, 2019 | Dec. 31, 2018 |
Identifiable Intangible Asset, Net | $ 43,443 | $ 67,830 | |
Goodwill | 10,284 | $ 31,514 | |
BWR Acquisition Corp [Member] | |||
Identifiable Intangible Asset, Net | 800 | $ 1,500 | |
Goodwill | $ 2,000 | $ 2,000 |
Identifiable Intangible Asset_7
Identifiable Intangible Assets and Goodwill - Schedule of Future Amortization Expenses of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 | $ 2,531 | |
2021 | 2,531 | |
2022 | 2,531 | |
2023 | 2,531 | |
2024 | 2,531 | |
Thereafter | 30,788 | |
Total | $ 43,443 | $ 67,830 |
Identifiable Intangible Asset_8
Identifiable Intangible Assets and Goodwill - Summary of Goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Goodwill | $ 10,284 | $ 31,514 |
Noni by NewAge [Member] | ||
Goodwill | 10,284 | 10,284 |
Marley [Member] | ||
Goodwill | 9,418 | |
Maverick [Member] | ||
Goodwill | 5,149 | |
Xing [Member] | ||
Goodwill | 4,506 | |
PMC [Member] | ||
Goodwill | 1,768 | |
B&R [Member] | ||
Goodwill | $ 389 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | Mar. 22, 2019 | Jun. 30, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Operating lease expired | 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 Company leases various office and warehouse facilities, vehicles and equipment under non-cancellable operating lease agreements that expire between January 2020 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, to account for the lease and non-lease components as a single lease component. | ||
Operating lease expense | $ 10,600 | $ 1,600 | ||
Sale of land | $ 57,100 | |||
Lease term | 27 years | |||
Lease cost | 184 | |||
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 leaseback arrangement | $ 17,600 | |||
Gain on sale of property | 24,100 | 6,442 | ||
Remainder gain on properties | 6,400 | |||
Present lease payments | 25,000 | |||
Lease incentive concession amount | 17,600 | |||
Right of use asset | 7,400 | 38,458 | 18,489 | |
Operating lease liability | 7,400 | 41,186 | 18,484 | |
Impairment charges | $ 1,500 | 47,190 | ||
Addtional impairment of ROU asset | 800 | |||
Impairment of ROU asset | $ 2,300 | |||
Weighted average remaining lease term | 13 years 2 months 12 days | 5 years 10 months 25 days | ||
Weighted average discount lease | 5.60% | 6.60% | ||
Morinda's Stockholders [Member] | ||||
Payments of obligated | 25,000 | |||
Swap Agreement [Member] | ||||
Refundable security deposit | 1,800 | |||
Repayments of mortgage on building | $ 2,600 | |||
Japanese Real Estate [Member] | ||||
Lease term | 7 years | |||
Japanese Yen [Member] | ||||
Lease cost | $ 20,000 |
Leases - Summary of Selling Pri
Leases - Summary of Selling Price and Resulting Gain On Sale (Details) - USD ($) $ in Thousands | Mar. 22, 2019 | Dec. 31, 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 | |
Portion of gain related to above-market rent concession | (17,640) | |
Recognized gain on sale | $ 24,100 | $ 6,442 |
Leases - Summary of Carrying Va
Leases - Summary of Carrying Value of Operating Lease Rou Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Mar. 22, 2019 | Dec. 31, 2018 |
Leases [Abstract] | |||
Right-of-Use Assets | $ 38,458 | $ 7,400 | $ 18,489 |
Operating Lease Liabilities: Current | 5,673 | 4,798 | |
Operating Lease Liabilities: Long-term | 35,513 | 13,686 | |
Total | 41,186 | $ 7,400 | 18,484 |
Deferred Lease Financing Obligation: Current | 637 | ||
Deferred Lease Financing Obligation: Long-term | 16,541 | ||
Total | $ 17,178 |
Leases - Summary of Future Mini
Leases - Summary of Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Mar. 22, 2019 | Dec. 31, 2018 | |
Leases [Abstract] | ||||
2020 | $ 8,357 | |||
2021 | 6,836 | |||
2022 | 5,490 | |||
2023 | 5,424 | |||
2024 | 5,275 | |||
Thereafter | 28,648 | |||
Total minimum lease payments | 60,030 | |||
Less imputed interest | [1] | (18,844) | ||
Present value of minimum lease payments | $ 41,186 | $ 7,400 | $ 18,484 | |
[1] | Calculated based on the term of the respective leases using corporate borrowing rates ranging from 2.0% to 10.0%. |
Leases - Summary of Future Mi_2
Leases - Summary of Future Minimum Lease Payments (Details) (Parenthetical) | 12 Months Ended |
Dec. 31, 2019 | |
Minimum [Member] | |
Lease corporate borrowing rates | 2.00% |
Maximum [Member] | |
Lease corporate borrowing rates | 10.00% |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jan. 02, 2020 | Oct. 09, 2019 | Jul. 31, 2019 | Mar. 29, 2019 | Aug. 24, 2018 | Aug. 10, 2018 | Jun. 20, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Interest expense | $ 3,677 | $ 1,068 | |||||||
Gain (loss) on change in fair value of embedded derivatives | 371 | (470) | |||||||
Number of shares issued, value | 97,641 | ||||||||
EWB RevolverMember | |||||||||
Aggregate principal amount | $ 9,700 | ||||||||
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 EWB 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 | ||||||||
Convertible Note [Member] | |||||||||
Debt maturity date | Jun. 20, 2019 | ||||||||
Aggregate principal amount | $ 47,500 | $ 47,500 | |||||||
Interest rate percentage | 8.00% | ||||||||
Debt conversion price per share | $ 1.89 | ||||||||
Lender expenses | $ 200 | ||||||||
Proceeds from convertible note | 4,600 | ||||||||
Repayment of convertible note | 5,000 | ||||||||
Prepayment of debt | $ 200 | ||||||||
Debt issuance cost | $ 600 | ||||||||
Convertible Note [Member] | Lender [Member] | |||||||||
Interest expense | $ 600 | ||||||||
Number of shares issued | 226,190 | ||||||||
Number of shares issued, value | $ 400 | ||||||||
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 | The Company entered into a second amendment to the EWB Credit Facility. 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 ensuring 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 EWB 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. See Note 16 for discussion of the Third Amendment to the EWB Credit Facility. | (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 "EWB 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 EWB Term Loan and $10.0 million as an advance under the EWB Revolver. | |||||||
Interest rate percentage | 3.00% | ||||||||
Outstanding borrowing credit facility, percentage | 5.75% | ||||||||
Loan and Security Agreement [Member] | Siena Lending Group LLC [Member] | |||||||||
Debt maturity date | Aug. 10, 2021 | ||||||||
Revolving loan facility | $ 12,000 | ||||||||
Debt description | Siena Revolver is terminated before the stated maturity date, and (ii) default interest at a 5.0% premium if events of default existed. An early termination premium was required to be paid if Siena's commitment to make revolving loans was terminated prior to the stated maturity date. The fee was equal to 4.00% of the $12.0 million commitment if termination occurred during the first year after the closing date. | ||||||||
Interest rate percentage | 7.50% | ||||||||
Effective interest rate | 10.00% | 8.25% | |||||||
Permitted total borrowings amount | $ 2,000 | ||||||||
Unamortized debt issuance costs | $ 500 | ||||||||
Interest expense | $ 500 | ||||||||
Debt instrument term | 2 years 7 months 6 days | ||||||||
Discount rate | 6.10% | ||||||||
Fair value of embedded derivatives | $ 500 | 500 | |||||||
Gain (loss) on change in fair value of embedded derivatives | $ 500 | 500 | |||||||
Loan and Security Agreement [Member] | Term Loan [Member] | |||||||||
Debt description | The Company may elect to prepay the EWB Term Loan before the stated 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 ended December 31, 2019, the Company is required to make a payment towards the outstanding principal amount of the EWB Term Loan in an amount equal to 35% of the Excess Cash Flow (as defined in the EWB Credit Facility), if the Total Leverage Ratio is less than 1.50 to 1.00, or 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% | 4.75% | |||||||
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 | ||||||||
Interest rate percentage | 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 | $ 36 | ||||||||
Interest Rate Swap Agreement [Member] | Prime Rate [Member] | |||||||||
Interest rate percentage | 0.50% |
Debt - Summary of Debt (Details
Debt - Summary of Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | ||
Total | $ 24,010 | $ 4,694 | ||
Less current maturities | (11,208) | (3,369) | ||
Long-term debt, less current maturities | 12,802 | 1,325 | ||
EWB Credit Facility Term Loan [Member] | ||||
Total | 14,302 | |||
EWB Credit Facility Revolver [Member] | ||||
Total | 9,700 | |||
Installment Notes Payable [Member] | ||||
Total | [1] | 8 | 66 | |
Siena Revolver [Member] | ||||
Total | 2,000 | |||
Mortgage Payable to a Foreign Bank [Member] | ||||
Total | $ 2,628 | [2] | ||
[1] | Consists of various installment notes payable that are collateralized by equipment and that bear interest at 12.4% to 22.1%. | |||
[2] | This mortgage note payable was collateralized by land and a building in Japan. Quarterly principal payments of $0.3 million plus interest was payable in Japanese Yen at TIBOR plus 0.7% (0.76% as of December 31, 2018). This debt was subject to an interest rate swap agreement that fixed the interest rate at approximately 2.0%. This mortgage was repaid in March 2019 in connection with the sale leaseback transaction discussed in Note 7. |
Debt - Summary of Debt (Detai_2
Debt - Summary of Debt (Details) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2019 | |
Mortgage Payable to a Foreign Bank [Member] | ||
Debt bear interest percentage | 0.76% | |
Principal payments amount | $ 300 | |
Debt maturity date | Dec. 31, 2020 | |
Mortgage Payable to a Foreign Bank [Member] | TIBOR Plus [Member] | ||
Debt bear interest percentage | 0.70% | |
Equipment [Member] | Minimum [Member] | ||
Debt bear interest percentage | 12.40% | |
Equipment [Member] | Maximum [Member] | ||
Debt bear interest percentage | 22.10% |
Debt - Summary Future Debt Matu
Debt - Summary Future Debt Maturities (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 11,206 |
2021 | 1,502 |
2022 | 1,500 |
2023 | 10,250 |
Total | $ 24,458 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Apr. 30, 2019 | Nov. 30, 2018 | Sep. 30, 2018 | Aug. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | May 30, 2019 | Oct. 31, 2018 |
Common stock, shares authorized | 50,000,000 | 200,000,000 | 200,000,000 | 200,000,000 | 200,000,000 | 100,000,000 | |||||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | |||||||||
Preffered stock, par value | $ 0.001 | $ 0.001 | |||||||||
Stock issued during the period, value | $ 97,641 | ||||||||||
ATM Offering Agreement [Member] | |||||||||||
Number of shares issued | 8,100,000 | ||||||||||
Stock issued during the period, value | $ 35,800 | ||||||||||
Underwritten Public Offering [Member] | |||||||||||
Number of shares issued | 14,800,000 | 9,200,000 | 2,600,000 | ||||||||
Stock issued during the period, value | $ 47,800 | $ 9,700 | $ 3,800 | ||||||||
Shares issued price per share | $ 3.50 | $ 1.28 | |||||||||
Placement Shares [Member] | ATM Offering Agreement [Member] | |||||||||||
Number of shares issued | 6,000,000 | ||||||||||
Stock issued during the period, value | $ 100,000 | $ 20,700 | |||||||||
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. | ||||||||||
Commission and fees on sale of shares | $ 600 | ||||||||||
Other offering costs | $ 600 | ||||||||||
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% | ||||||||||
Common Stock [Member] | |||||||||||
Number of shares issued | 34,684,000 | ||||||||||
Stock issued during the period, value | $ 35 | ||||||||||
Series A Preferred Stock [Member] | |||||||||||
Preferred stock, shares authorized | 250,000 | 250,000 | 250,000 | ||||||||
Preferred stock, voting rights | Each share of Series A Preferred was entitled to 500 votes in matters voted on by the common stockholders of the Company. | ||||||||||
Series B Preferred Stock [Member] | |||||||||||
Preferred stock, shares authorized | 300,000 | 300,000 | 300,000 | ||||||||
Number of shares issued | 284,807 | ||||||||||
Number of shares converted | 169,234 | 115,573 | |||||||||
Number of shares issued on conversion | 1,353,872 | 924,584 | |||||||||
Series C Preferred Stock [Member] | |||||||||||
Preferred stock, shares authorized | 7,000 | 100 | 100 | 100 | 100,000,000 | ||||||
Number of shares exchanged | 6,900 | ||||||||||
Preferred stock conversion, description | The Certificate of Designation for the Series C Preferred provided for the automatic conversion into 1,000 shares of the Company's Common Stock when the Company filed an amendment to its Articles of Incorporation to increase the authorized number of shares of Common Stock to 100 million shares. | ||||||||||
Preferred stock, shares outstanding | |||||||||||
Series C Preferred Stock [Member] | Common Stock [Member] | |||||||||||
Number of shares exchanged | 6,900,000 | ||||||||||
Series D Preferred Stock [Member] | |||||||||||
Preferred stock, shares authorized | 44,000 | ||||||||||
Number of shares issued for buniness combination | 43,804 | ||||||||||
Preffered stock, dividend rate | 1.50% | ||||||||||
Payment of potential amount | $ 15,000 | ||||||||||
Preferred stock, value | $ 200 | $ 200 | $ 13,100 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Changes in Stockholders' Equity (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net proceeds | $ 20,102 | $ 99,857 |
Common Stock [Member] | ||
Number of shares issued | 34,684,000 | |
Gross proceeds | $ 105,711 | |
Offering costs, commissions | (5,854) | |
Offering costs, other | (2,216) | |
Net proceeds | $ 97,641 | |
ATM Offering [Member] | Common Stock [Member] | ||
Number of shares issued | 5,957,000 | 8,089,000 |
Gross proceeds | $ 20,724 | $ 37,533 |
Offering costs, commissions | (622) | (1,126) |
Offering costs, other | (579) | (603) |
Net proceeds | $ 19,523 | $ 35,804 |
April 2018 Offering [Member] | Common Stock [Member] | ||
Number of shares issued | 2,560,000 | |
Gross proceeds | $ 4,480 | |
Offering costs, commissions | (269) | |
Offering costs, other | (448) | |
Net proceeds | $ 3,763 | |
August 2018 Offering [Member] | Common Stock [Member] | ||
Number of shares issued | 9,200,000 | |
Gross proceeds | $ 11,776 | |
Offering costs, commissions | (824) | |
Offering costs, other | (647) | |
Net proceeds | $ 10,305 | |
November 2018 Offering [Member] | Common Stock [Member] | ||
Number of shares issued | 14,835,000 | |
Gross proceeds | $ 51,922 | |
Offering costs, commissions | (3,635) | |
Offering costs, other | (518) | |
Net proceeds | $ 47,769 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | May 30, 2019 | Jul. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation expense | $ 6,388 | $ 2,533 | |||
Warrants outstanding | 311,000 | ||||
Modification Agreement [Member] | |||||
Number of outstanding options, shares | 292,000 | ||||
Fair value of stock option | $ 500 | ||||
Stock-based compensation expense | $ 500 | ||||
Weighted-average grant date fair value | $ 1.80 | $ 1.99 | $ 4.05 | ||
Stock Options [Member] | |||||
Unrecognized stock-based compensation, weighted-average period | 2 years 3 months 19 days | ||||
Equity-Classified Restricted Stock Awards [Member] | |||||
Unrecognized stock-based compensation, weighted-average period | 2 years 3 months 19 days | ||||
Liability-Classified Restricted Stock Awards [Member] | |||||
Unrecognized stock-based compensation, weighted-average period | 2 years | ||||
2019 Plan [Member] | |||||
Number of shares issued | 10,000,000 | ||||
Plan termination date | 2029-04 | ||||
2019 Plan [Member] | Stock Options, Restricted Stock and Similar Instruments [Member] | |||||
Shares available for future grants | 8,000,000 | ||||
LTI Plan [Member] | |||||
Number of outstanding options, shares | [1] | 2,786,000 | |||
LTI Plan [Member] | Maximum [Member] | |||||
Shares available for future grants | 1,500,000 | ||||
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 December 31, 2019 and 2018, the aggregate intrinsic value of stock options outstanding was $19,000 and $6.6 million, respectively. |
Stock Options and Warrants - Sc
Stock Options and Warrants - Schedule of Stock Option Activity (Details) - Equity Incentive Plans [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
Options outstanding, beginning of period | 2,491,000 | ||
Options, forfeited | (418,000) | (213,000) | |
Options, exercised | [1] | (306,000) | (418,000) |
Options outstanding, ending of period | [2] | 3,551,000 | |
Options vested, end of period | [3] | 1,365,000 | 943,000 |
Weighted average grant date fair value outstanding, beginning balance | [4] | $ 2.84 | $ 1.93 |
Weighted average grant date fair value, forfeited | [4] | 3.40 | 2 |
Weighted average grant date fair value, exercised | [4] | 2 | 1.79 |
Weighted average grant date fair value outstanding, ending balance | [4] | 2.65 | 2.84 |
Weighted average grant date fair value vested, end of period | [4] | $ 2.46 | $ 1.94 |
Weighted average remaining contractual term, beginning balance | [5] | 9 years | 9 years 4 months 24 days |
Weighted average remaining contractual term, ending balance | [5] | 8 years 8 months 12 days | 9 years |
Weighted average contractual term vested, end of period | [5] | 7 years 8 months 12 days | 8 years 4 months 24 days |
Employees [Member] | |||
Options, granted | 1,454,000 | 926,000 | |
Weighted average grant date fair value, granted | [4] | $ 2.34 | $ 4.63 |
Non-Employees [Member] | |||
Options, granted | 35,000 | ||
Weighted average grant date fair value, granted | [4] | $ 3.81 | |
[1] | On the respective exercise dates, the aggregate intrinsic value of shares of Common Stock issued upon exercise of stock options amounted to $1.0 million and $1.4 million for the years ended December 31, 2019 and 2018, respectively. | ||
[2] | As of December 31, 2019 and 2018, the aggregate intrinsic value of stock options outstanding was $19,000 and $6.6 million, respectively. | ||
[3] | As of December 31, 2019 and 2018, the aggregate intrinsic value of vested stock options was $17,000 and $3.1 million, respectively. | ||
[4] | Represents the weighted average exercise price. | ||
[5] | Represents the weighted average remaining contractual term until the stock options expire. |
Stock Options and Warrants - Su
Stock Options and Warrants - Summary of Stock Option Activity (Details) (Parenthetical) - Equity Incentive Plans [Member] - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Aggregate intrinsic value of common stock issued upon exercise of stock options | $ 1,000 | $ 1,400 |
Aggregate intrinsic value of stock options outstanding | 19 | 6,600 |
Aggregate intrinsic value of vested stock options outstanding | $ 17 | $ 3,100 |
Stock Options and Warrants - _2
Stock Options and Warrants - Summary of Stock Options Weighted-Average Assumptions (Details) - Equity Incentive Plans [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Grant or modification date closing price of Common Stock | $ 2.38 | $ 4.63 |
Expected life (in years) | 6 years 4 months 24 days | 6 years |
Volatility | 107.00% | 121.00% |
Dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 1.70% | 2.80% |
Modified [Member] | ||
Grant or modification date closing price of Common Stock | $ 4.75 | |
Expected life (in years) | 1 year | |
Volatility | 138.00% | |
Dividend yield | 0.00% | |
Risk-free interest rate | 1.90% |
Stock Options and Warrants - _3
Stock Options and Warrants - Schedule of Restricted Stock Award Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | ||||
Equity Incentive Plans Equity Awards [Member] | |||||
Number of shares, outstanding, beginning of period | 1,151,000 | 613,000 | |||
Number of shares, shares issued to board members | [1] | 91,000 | 193,000 | ||
Number of shares, Unvested awards granted to employees with Performance vesting criteria | [2] | 216,000 | |||
Number of shares, Unvested awards granted to employees with service vesting criteria | [3] | 2,085,000 | 539,000 | ||
Number of shares,Unvested forfeitures | (220,000) | (35,000) | |||
Number of shares, Fair value adjustment and other | |||||
Number of shares, vested shares and expense recognized | [4] | (984,000) | (375,000) | ||
Number of shares, outstanding, end of period | 2,123,000 | 1,151,000 | |||
Number of shares, Intrinsic value, end of period | [5] | $ 3,865,000 | |||
Unvested compensation, outstanding, beginning of period | 3,987 | $ 1,241 | |||
Unvested compensation, shares issued to Board members | [1] | 500 | 429 | ||
Unvested compensation, Unvested awards granted to employees with Performance vesting criteria | [2] | 1,000 | |||
Unvested compensation, Unvested awards granted to employees with service vesting criteria | [3] | 5,036 | 2,491 | ||
Unvested compensation, Forfeitures | (1,019) | (76) | |||
Unvested compensation, Fair value adjustments and other | (27) | ||||
Unvested compensation, vested shares and expense | [4] | (3,872) | (1,098) | ||
Unvested compensation, outstanding, end of period | $ 4,605 | $ 3,987 | |||
Equity Incentive Plans Liability-Classified Awards [Member] | |||||
Number of shares, outstanding, beginning of period | [6] | 474,000 | |||
Number of shares, shares issued to board members | [6] | ||||
Number of shares, Unvested awards granted to employees with Performance vesting criteria | [2],[6] | 318,000 | |||
Number of shares, Unvested awards granted to employees with service vesting criteria | [6] | 156,000 | [3] | ||
Number of shares,Unvested forfeitures | [6] | (322,000) | |||
Number of shares, Fair value adjustment and other | [6] | ||||
Number of shares, vested shares and expense recognized | [6] | (115,000) | [4] | ||
Number of shares, outstanding, end of period | [6] | 37,000 | 474,000 | ||
Number of shares, Intrinsic value, end of period | [5],[6] | $ 67,000 | |||
Unvested compensation, outstanding, beginning of period | [6] | 2,489 | |||
Unvested compensation, shares issued to Board members | [6] | ||||
Unvested compensation, Unvested awards granted to employees with Performance vesting criteria | [2],[6] | 1,651 | |||
Unvested compensation, Unvested awards granted to employees with service vesting criteria | [6] | 815,000 | [3] | ||
Unvested compensation, Forfeitures | [6] | (1,693) | |||
Unvested compensation, Fair value adjustments and other | [6] | (519) | 23 | ||
Unvested compensation, vested shares and expense | [6] | (210) | [4] | ||
Unvested compensation, outstanding, end of period | [6] | $ 67 | $ 2,489 | ||
Non-Plan Awards [Member] | |||||
Number of shares, outstanding, beginning of period | 629,000 | 1,240,000 | |||
Number of shares, shares issued to board members | |||||
Number of shares, Unvested awards granted to employees with Performance vesting criteria | |||||
Number of shares, Unvested awards granted to employees with service vesting criteria | |||||
Number of shares,Unvested forfeitures | |||||
Number of shares, Fair value adjustment and other | |||||
Number of shares, vested shares and expense recognized | [4] | (629,000) | (611,000) | ||
Number of shares, outstanding, end of period | 629,000 | ||||
Number of shares, Intrinsic value, end of period | |||||
Unvested compensation, outstanding, beginning of period | 64 | $ 280 | |||
Unvested compensation, shares issued to Board members | |||||
Unvested compensation, Unvested awards granted to employees with Performance vesting criteria | |||||
Unvested compensation, Unvested awards granted to employees with service vesting criteria | |||||
Unvested compensation, Forfeitures | |||||
Unvested compensation, Fair value adjustments and other | |||||
Unvested compensation, vested shares and expense | [4] | (64) | (216) | ||
Unvested compensation, outstanding, end of period | $ 64 | ||||
[1] | Represents grants to members of the Board of Directors whereby the shares of Common Stock were issued with cliff vesting one year after the grant date. The shares were recorded at the closing price for the Company’s Common Stock on the respective grant dates. | ||||
[2] | Represents restricted stock awards that would have vested if Morinda achieved EBITDA of $20.0 million for the year ended December 31, 2019. All of the shares were forfeited as of December 31, 2019 with no compensation recognized. | ||||
[3] | Restricted stock awards that generally vest over three years with fair value determined based on the closing price of the Company’s Common Stock on the respective grant dates. | ||||
[4] | The “Number of Shares” column reflects shares that vested due to achievement of the service condition during the year. As of December 31, 2019, the vested shares include approximately 319,000 shares that are not issuable until March 2020. The “Unvested Compensation” column reflects the stock-based compensation expense recognized for vested and unvested awards during the year. | ||||
[5] | The intrinsic value is based on the closing price of the Company’s Common Stock of $1.82 per share on December 31, 2019. | ||||
[6] | Certain awards granted to employees in China are not permitted to be settled in shares, which requires classification as a liability in the Company’s consolidated balance sheets. This liability is adjusted based on the closing price of the Company’s Common Stock at the end of each reporting period until these awards vest. As of December 31, 2019, the cumulative amount of compensation expense recognized is based on the progress toward vesting and the total fair value of the respective awards on that date. |
Stock Options and Warrants - _4
Stock Options and Warrants - Schedule of Restricted Stock Award Activity (Details) (Parenthetical) | 12 Months Ended |
Dec. 31, 2019$ / shares | |
Equity Incentive Plans Equity Awards [Member] | |
Stock options, forfeitures, description | Restricted stock awards that would have vested if Morinda achieved EBITDA of $20.0 million for the year ended December 31, 2019. All of the shares were forfeited as of December 31, 2019 with no compensation recognized. |
Vested shares description | The vested shares include approximately 319,000 shares that are not issuable until March 2020 |
Closing price of common stock | $ 1.82 |
Equity Incentive Plans Liability-Classified Awards [Member] | |
Stock options, forfeitures, description | Restricted stock awards that would have vested if Morinda achieved EBITDA of $20.0 million for the year ended December 31, 2019. All of the shares were forfeited as of December 31, 2019 with no compensation recognized. |
Closing price of common stock | $ 1.82 |
Non-Plan Awards [Member] | |
Vested shares description | The vested shares include approximately 319,000 shares that are not issuable until March 2020 |
Stock Options and Warrants - _5
Stock Options and Warrants - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation expense | $ 6,388 | $ 2,533 |
Unrecognized compensation expense | 9,475 | 7,368 |
Stock Options Awards [Member] | Employees [Member] | ||
Stock-based compensation expense | 2,218 | 1,219 |
Unrecognized compensation expense | 4,716 | 6,811 |
Stock Options Awards [Member] | Non-Employees [Member] | ||
Stock-based compensation expense | 22 | |
Unrecognized compensation expense | 87 | |
Restricted Stock Awards [Member] | Equity Classified [Member] | ||
Stock-based compensation expense | 3,872 | 1,314 |
Unrecognized compensation expense | 4,605 | 557 |
Restricted Stock Awards [Member] | Liability Classified [Member] | ||
Stock-based compensation expense | 210 | |
Unrecognized compensation expense | 67 | |
Restricted Stock Awards [Member] | Non-Plan Equity-Classified [Member] | ||
Stock-based compensation expense | 64 | |
Unrecognized compensation expense | ||
Warrants [Member] | ||
Stock-based compensation expense | 2 | |
Unrecognized compensation expense |
Stock Options and Warrants - _6
Stock Options and Warrants - Schedule of Warrants (Details) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Number of shares | 311,000 |
Warrant One [Member] | |
Warrant Description | Marley license extension |
Number of shares | 200,000 |
Exercise price | $ / shares | $ 5.14 |
Expiration date | March 2029 |
Warrant Two [Member] | |
Warrant Description | Former employee |
Number of shares | 8,000 |
Exercise price | $ / shares | $ 1.83 |
Expiration date | December 2020 |
Warrant Three [Member] | |
Warrant Description | 2017 underwriter warrants |
Number of shares | 103,000 |
Exercise price | $ / shares | $ 4.38 |
Expiration date | February 2022 |
Warrant [Member] | |
Number of shares | 311,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 21, 2018 | Dec. 31, 2017 | |
Deferred tax liabilities | $ 500 | |||
Deferred tax assets, valuation allowance | 37,800 | $ 2,200 | ||
NOL Operating loss carryforwards | $ 62,400 | |||
NOL Operating loss carryforwards, description | The NOLs will expire at various dates from 2020 through 2039, with the exception of those in some foreign jurisdictions where there is no expiration. The U.S. NOLs have a full valuation allowance recorded against them. Of the $26.3 million foreign NOLs, all but $2.3 million have a valuation allowance recorded against them. | |||
Unrecognized income tax benefits | $ 1,545 | $ 430 | $ 360 | |
Unrecognized income tax benefit description | Unrecognized tax benefits of $0.8 million, if recognized, would affect the effective tax rate. Unrecognized tax benefits of $0.7 million, if recognized, would not affect the Company's effective tax rate since the tax benefits would increase a deferred tax asset that is currently fully offset by a full valuation allowance. The Company accounts for interest expense and penalties associated with unrecognized tax benefits as part of its income tax expense. The unrecognized tax benefit as of December 31, 2019 includes an aggregate of approximately $0.2 million for interest and penalties, all of which was recognized for the year ended December 31, 2019. | |||
Unrecognized income tax benefits, interest and penalties | $ 200 | |||
United States [Member] | ||||
NOL Operating loss carryforwards | 26,300 | |||
Foreign Subsidiaries [Member] | ||||
NOL Operating loss carryforwards | $ 36,100 | |||
Morinda [Member] | ||||
Recognized net deferred income tax liabilities | $ 10,000 |
Income Taxes - Schedule of Loss
Income Taxes - Schedule of Loss Before Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ (96,159) | $ (20,529) |
International | 18,992 | (533) |
Loss before income taxes | $ (77,167) | $ (21,062) |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Income Tax Benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit at statutory U.S. federal rate | $ 16,205 | $ 4,423 |
Income tax benefit attributable to U.S. states | 3,914 | 1,063 |
Stock-based compensation | 774 | 1,367 |
Other | 720 | 300 |
Code section 162(m) excess compensation | (703) | |
Non-deductible expenses | (725) | (351) |
Change in fair value earnouts | 2,900 | |
Benefit of foreign taxes | 717 | |
Foreign deferred tax adjustments | 2,194 | |
Foreign tax credit | 6,146 | |
Foreign withholding/prior year tax | (1,414) | |
Foreign rate differential | (5,561) | (27) |
Change in valuation allowance | (37,835) | 2,152 |
Total income tax benefit (expense) | $ 12,668 | $ (8,927) |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Current income tax expense: U.S. Federal | ||
Current income tax expense: U.S. States | (5) | |
Current income tax expense: Foreign | (17,563) | |
Total current income tax expense | (17,568) | |
Deferred income tax benefit (expense): U.S. Federal | (8,419) | 7,891 |
Deferred income tax benefit (expense): U.S. States | 1,063 | |
Deferred income tax benefit (expense): Foreign | 13,319 | (27) |
Net deferred income tax benefit | 4,900 | 8,927 |
Total income tax benefit (expense) | $ 12,668 | $ (8,927) |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Deferred income tax assets: Foreign tax credits | $ 14,079 | |
Deferred income tax assets: Net operating loss carryforwards | 15,348 | 9,295 |
Deferred income tax assets: Accrued liabilities | 8,670 | 3,456 |
Deferred income tax assets: Accrued pension | 1,927 | 1,767 |
Deferred income tax liabilities: Operating lease liabilities | 16,596 | |
Deferred income tax assets: Above market lease | 10,370 | |
Deferred income tax assets: Property and equipment, net | 363 | |
Deferred income tax assets: Other | 758 | 574 |
Gross deferred income tax assets | 68,111 | 15,092 |
Valuation allowance for deferred income tax assets | (43,465) | |
Net deferred income tax assets | 24,646 | 15,092 |
Deferred income tax liabilities: Goodwill and identifiable intangible assets | (5,117) | (12,405) |
Deferred income tax assets: Operating lease, right of use asset | (15,842) | |
Deferred income tax liabilities: Property and equipment, net | (3,200) | |
Deferred income tax liabilities: Notes payable | (326) | |
Total deferred income tax liabilities | (20,959) | (15,931) |
Net deferred income tax asset (liability) | 3,687 | (839) |
Foreign deferred income tax assets | 9,128 | 8,908 |
Foreign deferred income tax liabilities | $ (5,441) | $ (9,747) |
Income Taxes - Schedule of Unre
Income Taxes - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Balance, beginning of year in unrecognized tax benefits | $ 430 | $ 360 |
Increase related to: Prior tax positions | 1,163 | 70 |
Increase related to: Current tax positions | 22 | |
Decreases related to prior tax positions | (46) | |
Settlements | (24) | |
Balance, end of year in unrecognized tax benefits | $ 1,545 | $ 430 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Other long-term liabilities | $ 9,132 | $ 9,160 |
Other accrued current liabilities | 7,843 | 6,647 |
Gross profit | 152,707 | 9,295 |
ASU 450 [Member] | ||
Current liability under (ASU) 450, contingencies | $ 900 | 800 |
401 (K) Plan [Member] | ||
Defined contribution plan, description | The Company has had a defined contribution employee benefit plan under section 401(k) of the 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. | |
Defined contribution plan, cost | $ 700 | |
Foreign Benefit Plans [Member] | ||
Other long-term liabilities | $ 3,400 | 2,900 |
Defined contribution plan, description | Upon termination of employment, the Noni by NewAge segment 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. | |
Defined contribution plan, cost | $ 3,500 | 3,000 |
First 12 Consecutive Months [Member] | ||
Fair value of common stock | 1,500 | |
Gross profit | 10,000 | |
First 24 Consecutive Months [Member] | ||
Fair value of common stock | 1,500 | |
Gross profit | 20,000 | |
First 36 Consecutive Months [Member] | ||
Fair value of common stock | 2,000 | |
Gross profit | 35,000 | |
Executive Deferred Compensation Plan [Member] | ||
Other long-term liabilities | 3,800 | $ 4,100 |
Other accrued current liabilities | $ 300 | |
Executive Deferred Compensation Plan [Member] | Maximum [Member] | ||
Deferred compensation obligation, period | 20 years | |
Consulting Agreement [Member] | ||
Consulting agreement transaction description | The ICA provides for an initial term that expires in June 2022 with an option by either party to renew on an annual basis thereafter. Under the ICA, the Company was required to (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 shares of restricted common stock | 100,000 | |
Pay base compensation amount | $ 350 |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Loss Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Antidilutive securities excluded from computation of earnings per share | 5,932,000 | 4,118,000 |
Stock Options [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 3,551,000 | |
Unissued and Unvested Restricted Stock Awards [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 2,069,000 | 1,229,000 |
Common Stock Purchase Warrants [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 312,000 | 103,000 |
Stock Options [Member] | ||
Antidilutive securities excluded from computation of earnings per share | 2,786,000 |
Financial Instruments and Sig_3
Financial Instruments and Significant Concentrations (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Concentration risk, percentage | 80.00% | |
Cash and cash equivalents | $ 60,842 | $ 42,517 |
United States [Member] | ||
Concentration risk, percentage | 72.00% | |
United States [Member] | Financial Institution One [Member] | ||
Cash and cash equivalents | $ 22,200 | 6,500 |
United States [Member] | Financial Institution Two [Member] | ||
Cash and cash equivalents | 1,400 | |
China [Mmeber] | Financial Institution One [Member] | ||
Cash and cash equivalents | 6,600 | 14,500 |
China [Mmeber] | Financial Institution Two [Member] | ||
Cash and cash equivalents | $ 3,600 | $ 8,000 |
Max and Other Noni-Based Beverage Products [Member] | ||
Concentration risk, percentage | 80.00% | |
No Single Supplier [Member] | ||
Concentration risk, percentage | 10.00% | |
One Customer [Member] | ||
Concentration risk, percentage | 11.00% |
Financial Instruments and Sig_4
Financial Instruments and Significant Concentrations - Schedule of Fair Value of Assets and Liabilities (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Business combination liabilities: Morinda earnout under Series D preferred stock | $ 225 | $ 13,134 |
Business combination liabilities: Marley earnout obligation | 900 | |
Interest rate swap liability | 99 | |
Embedded derivative liability | 470 | |
Total | 324 | 14,504 |
Level 1 [Member] | ||
Business combination liabilities: Morinda earnout under Series D preferred stock | ||
Business combination liabilities: Marley earnout obligation | ||
Interest rate swap liability | ||
Embedded derivative liability | ||
Total | ||
Level 2 [Member] | ||
Business combination liabilities: Morinda earnout under Series D preferred stock | ||
Business combination liabilities: Marley earnout obligation | ||
Interest rate swap liability | 99 | |
Embedded derivative liability | ||
Total | 99 | |
Level 3 [Member] | ||
Business combination liabilities: Morinda earnout under Series D preferred stock | 225 | 13,134 |
Business combination liabilities: Marley earnout obligation | 900 | |
Interest rate swap liability | ||
Embedded derivative liability | 470 | |
Total | $ 225 | $ 14,504 |
Segments and Geographic Conce_2
Segments and Geographic Concentrations (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Concentration risk, percentage | 80.00% | |
Property and equipment, net carrying value | $ 28,443 | $ 57,281 |
United States [Member] | ||
Concentration risk, percentage | 72.00% | |
Property and equipment, net carrying value | $ 22,100 | 50,600 |
Japan [Member] | ||
Property and equipment, net carrying value | $ 30,700 |
Segments and Geographic Conce_3
Segments and Geographic Concentrations - Summary of Segment Reporting (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net revenue | $ 253,708 | $ 52,160 |
Total gross profit | 152,707 | 9,295 |
Total assets | 251,130 | 286,932 |
Total depreciation and amortization | 8,759 | 2,310 |
Total capital expenditures | 5,357 | 56,226 |
Noni by NewAge [Member] | ||
Net revenue | 200,708 | 3,825 |
Total gross profit | 155,685 | 2,915 |
Total assets | 201,600 | 206,222 |
Total depreciation and amortization | 6,782 | 193 |
Total capital expenditures | 4,204 | 56,133 |
NewAge [Member] | ||
Net revenue | 53,000 | 48,335 |
Total gross profit | (2,978) | 6,380 |
Total assets | 49,530 | 80,710 |
Total depreciation and amortization | 1,977 | 2,117 |
Total capital expenditures | $ 1,153 | $ 93 |
Segments and Geographic Conce_4
Segments and Geographic Concentrations - Schedule of Net Revenue by Geographic Region (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Total revenue | $ 253,708 | $ 52,160 |
United States [Member] | ||
Total revenue | 70,690 | 48,460 |
International [Member] | ||
Total revenue | $ 183,018 | $ 3,700 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) $ in Thousands | Mar. 13, 2020 | Jan. 13, 2020 | Jan. 02, 2020 | Jan. 31, 2020 | Jan. 23, 2020 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Net proceed from common stock | $ 20,102 | $ 99,857 | |||||||
EWB Credit Facility [Member] | Forecast [Member] | |||||||||
Equity infusions amount | $ 30,000 | ||||||||
EWB Credit Facility [Member] | Minimum [Member] | Forecast [Member] | |||||||||
Equity infusions amount | $ 15,000 | ||||||||
Subsequent Event [Member] | ATM Offering Agreement [Member] | |||||||||
Sale of common stock | $ 3,500 | ||||||||
Net proceed from common stock | $ 6,300 | ||||||||
Subsequent Event [Member] | Employment Agreement [Member] | |||||||||
Annual base salary | $ 550 | ||||||||
Debt description | The employment agreement provides for "at will" employment terminable by either party on 15 days' notice. Mr. Vanderveen received an annual long-term incentive award equal to 50% of his base salary in the form of the Company's restricted stock and stock options. As a sign-on incentive, Mr. Vanderveen also received a cash payment of $100,000, the grant of 125,000 stock options, one third of which will vest on each anniversary of the grant date, and the grant of 125,000 shares of restricted stock, one third of which will vest on each anniversary of the grant date. In the event of a change of control or significant change in the Company's financial circumstances, 100% of Mr. Vanderveen's equity awards will immediately vest. | ||||||||
Cash payments | $ 100 | ||||||||
Number of stock options granted | 125,000 | ||||||||
Number of shares restricted stock grant | $ 125,000 | ||||||||
Subsequent Event [Member] | Minimum [Member] | Employment Agreement [Member] | |||||||||
Cash bonus percentage | 50.00% | ||||||||
Subsequent Event [Member] | Maximum [Member] | Employment Agreement [Member] | |||||||||
Cash bonus percentage | 200.00% | ||||||||
Subsequent Event [Member] | EWB Credit Facility [Member] | |||||||||
Restricted cash accounts designated | $ 15,100 | ||||||||
Leverage ratio description | The Company subsequently complies for two consecutive fiscal quarters with both the maximum total leverage ratio and the fixed charge coverage ratio, the interest rate will be reduced to 0.50% in excess of the prime rate (assuming that the Company's total leverage ratio is less than 1.50 to 1.00). | ||||||||
Financial covenants amount, each calendar year thereafter. | $ 10,000 | ||||||||
Equity infusions amount | $ 6,300 | ||||||||
Subsequent Event [Member] | EWB Credit Facility [Member] | Minimum [Member] | |||||||||
Financial covenants amount, December 31, 2020 | $ 5,000 | ||||||||
Subsequent Event [Member] | EWB Credit Facility [Member] | Minimum [Member] | Prime Rate [Member] | |||||||||
Interest rate | 0.50% | ||||||||
Subsequent Event [Member] | EWB Credit Facility [Member] | Maximum [Member] | |||||||||
Financial covenants amount, December 31, 2020 | $ 15,000 | ||||||||
Subsequent Event [Member] | EWB Credit Facility [Member] | Maximum [Member] | Prime Rate [Member] | |||||||||
Interest rate | 2.00% | ||||||||
Subsequent Event [Member] | EWB Revolver [Member] | |||||||||
Voluntary prepayment of related party | $ 9,700 |
Schedule II Valuation and Qua_3
Schedule II Valuation and Qualifying Accounts - Schedule of Schedule II Valuation and Qualifying Accounts (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Allowance for doubtful accounts, Balance at Beginning of Year | $ 134 |
Allowance for doubtful accounts, Additions Charged to Costs and Expenses | 455 |
Allowance for doubtful accounts, Provisions Assumed in Business Combinations | 114 |
Allowance for doubtful accounts, Amounts Written Off | (169) |
Allowance for doubtful accounts, Effect of Foreign Translation | |
Allowance for doubtful accounts, Balance at End of Year | 535 |
Allowance for sales returns, Balance at Beginning of Year | 200 |
Allowance for sales returns, Additions Charged to Costs and Expenses | 261 |
Allowance for sales returns, Provisions Assumed in Business Combinations | |
Allowance for sales returns, Amounts Written Off | |
Allowance for sales returns, Effect of Foreign Translation | |
Allowance for sales returns, Balance at End of Year | 461 |
Income tax valuation allowance, Balance at Beginning of Year | 5,197 |
Income tax valuation allowance, Additions Charged to Costs and Expenses | 38,682 |
Income tax valuation allowance, Provisions Assumed in Business Combinations | |
Income tax valuation allowance, Amounts Written Off | (433) |
Income tax valuation allowance, Effect of Foreign Translation | 19 |
Income tax valuation allowance, Balance at End of Year | $ 43,465 |