Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 12, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | New Age Beverages Corp | ||
Entity Central Index Key | 1,579,823 | ||
Document Type | 10-K/A | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | true | ||
Amendment Description | New Age Beverages Corporation (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (the “Form 10-K/A”) to its Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on April 17, 2018 (the “Form 10-K”) to update Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Adjusted EBITDA Emphasis of Matter Other than with respect to the foregoing, this Form 10-K/A does not modify or update in any way the disclosures made in the Form 10-K. This Form 10-K/A speaks as of the original filing date of the Form 10-K and does not reflect events that may have occurred subsequent to such original filing date, other than as described above. In connection with the filing of this Form 10-K/A and pursuant to the rules of the Securities and Exchange Commission, we are including with this Form 10-K/A new certifications by our principal executive officer and principal financial officer as of the date of this filing. | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 11,176,213 | ||
Entity Common Stock, Shares Outstanding | 38,933,646 | ||
Trading Symbol | NBEV | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash | $ 285,245 | $ 529,088 |
Accounts receivable, net of allowance for doubtful accounts | 7,462,065 | 4,729,356 |
Inventories | 7,041,775 | 4,420,632 |
Prepaid expenses and other current assets | 1,435,058 | 326,846 |
Total current assets | 16,224,143 | 10,005,922 |
Prepaid expenses, long-term | 504,355 | 0 |
Property and equipment, net of accumulated depreciation | 1,894,820 | 7,286,201 |
Security deposit | 197,515 | 0 |
Right-of-use asset | 4,064,883 | 0 |
Goodwill | 21,230,212 | 4,895,241 |
Intangible assets, net of accumulated amortization | 23,556,251 | 4,538,674 |
Total assets | 67,672,179 | 26,726,038 |
CURRENT LIABILITIES: | ||
Accounts payable | 4,370,491 | 4,415,043 |
Accrued expenses | 2,276,638 | 2,465,526 |
Lease liability, current | 239,079 | 0 |
Current portion of notes payable | 3,427,051 | 4,562,179 |
Total current liabilities | 10,313,259 | 11,442,748 |
Notes payable, net of unamortized discounts and current portion | 0 | 10,374,675 |
Lease liability, net of current portion | 3,820,865 | 0 |
Contingent consideration | 800,000 | 0 |
Related party debt, net of unamortized discount | 0 | 29,961 |
Total liabilities | 14,934,124 | 21,847,384 |
COMMITMENTS AND CONTINGENCIES (Note 10) | ||
STOCKHOLDERS' EQUITY: | ||
Common stock, $0.001 par value, 50,000,000 shares authorized; 35,171,419 shares issued and outstanding at December 31, 2017 and 21,900,106 shares issued and outstanding at December 31, 2016 | 35,171 | 21,900 |
Additional paid-in capital | 63,203,598 | 11,821,176 |
Accumulated deficit | (10,500,883) | (6,964,957) |
Total stockholders' equity | 52,738,055 | 4,878,654 |
Total liabilities and stockholders' equity | 67,672,179 | 26,726,038 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, value | 0 | 250 |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, value | $ 169 | $ 285 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 50,000,000 | 50,000,000 |
Common Stock, shares issued | 35,171,419 | 21,900,106 |
Common Stock, shares outstanding | 35,171,419 | 21,900,106 |
Series A Preferred Stock [Member] | ||
Preferred Stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 250,000 | 250,000 |
Preferred Stock, shares issued | 0 | 250,000 |
Preferred Stock, shares outstanding | 0 | 250,000 |
Series B Preferred Stock [Member] | ||
Preferred Stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 300,000 | 300,000 |
Preferred Stock, shares issued | 169,234 | 284,807 |
Preferred Stock, shares outstanding | 169,234 | 284,807 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
REVENUES, net | $ 52,188,295 | $ 25,301,806 |
Cost of Goods Sold | 39,788,384 | 19,505,580 |
GROSS PROFIT | 12,399,911 | 5,796,226 |
OPERATING EXPENSES: | ||
Advertising, promotion and selling | 3,840,332 | 1,584,104 |
General and administrative | 13,940,583 | 6,367,606 |
Legal and professional | 668,049 | 1,471,273 |
Total operating expenses | 18,448,964 | 9,422,983 |
LOSS FROM OPERATIONS | (6,049,053) | (3,626,757) |
OTHER INCOME (EXPENSE): | ||
Interest expense | (228,039) | (299,080) |
Other expense | (698,899) | 0 |
Other income | 3,440,065 | 292,758 |
Total other income (expense), net | 2,513,127 | (6,322) |
NET LOSS | $ (3,535,926) | $ (3,633,079) |
NET LOSS PER SHARE – BASIC AND DILUTED | $ (0.12) | $ (0.19) |
Statement of Stockholders' Equi
Statement of Stockholders' Equity - USD ($) | Common Stock [Member] | Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance Beginning at Dec. 31, 2015 | $ 15,436 | $ 250 | $ 255 | $ 3,811,049 | $ (3,331,878) | $ 495,112 |
Balance Beginning, Shares at Dec. 31, 2015 | 15,435,651 | 250,000 | 254,807 | |||
Issuance of common stock in connection with Xing acquisition | $ 4,354 | 6,990,646 | 6,995,000 | |||
Issuance of common stock in connection with Xing acquisition, shares | 4,353,915 | |||||
Issuance of common stock in connection with services provided | $ 1,296 | $ 30 | 726,454 | 727,780 | ||
Issuance of common stock in connection with services provided, shares | 1,296,757 | 30,000 | ||||
Restricted stock awards issued to employees | $ 772 | 253,916 | 254,688 | |||
Restricted stock awards issued to employees, shares | 771,783 | |||||
Exercise of warrants | $ 42 | 20,958 | 21,000 | |||
Exercise of warrants, shares | 42,000 | |||||
Issuance of warrant | 18,153 | 18,153 | ||||
Net loss | (3,633,079) | (3,633,079) | ||||
Ending Balance at Dec. 31, 2016 | $ 21,900 | $ 250 | $ 285 | 11,821,176 | (6,964,957) | 4,878,654 |
Ending Balance, Shares at Dec. 31, 2016 | 21,900,106 | 250,000 | 284,807 | |||
Issuance of common stock in connection with public offering | $ 4,929 | 15,394,034 | 15,398,963 | |||
Issuance of common stock in connection with public offering, shares | 4,928,571 | |||||
Issuance of common stock in connection with the acquisition of Maverick Brands, LLC | $ 2,200 | 9,083,800 | 9,086,000 | |||
Issuance of common stock in connection with the acquisition of Maverick Brands, LLC, shares | 2,200,000 | |||||
Issuance of common stock in connection with the acquisition of Marley Beverages, LLC | $ 3,000 | 18,597,000 | 18,600,000 | |||
Issuance of common stock in connection with the acquisition of Marley Beverages, LLC, shares | 3,000,000 | |||||
Issuance of common stock in connection with the acquisition of Premier Micronutrient Corporation | $ 1,200 | 5,494,800 | 5,496,000 | |||
Issuance of common stock in connection with the acquisition of Premier Micronutrient Corporation, shares | 1,200,000 | |||||
Issuance of common stock in connection with services provided | $ 395 | 1,985,659 | 1,986,054 | |||
Issuance of common stock in connection with services provided, shares | 395,184 | |||||
Restricted stock awards issued to employees | $ 250 | 514,750 | 515,000 | |||
Restricted stock awards issued to employees, shares | 250,000 | |||||
Share-based compensation employee stock option plan | 162,374 | 162,374 | ||||
Recession of Series A Preferred Shares | $ (250) | 250 | 0 | |||
Recession of Series A Preferred Shares, shares | (250,000) | |||||
Conversion of of Series B Preferred Stock | $ 924 | $ (116) | (808) | 0 | ||
Conversion of of Series B Preferred Stock, shares | 924,584 | (115,573) | ||||
Exercise of warrants | $ 373 | 150,563 | 150,936 | |||
Exercise of warrants, shares | 372,974 | |||||
Net loss | (3,535,926) | (3,535,926) | ||||
Ending Balance at Dec. 31, 2017 | $ 35,171 | $ 0 | $ 169 | $ 63,203,598 | $ (10,500,883) | $ 52,738,055 |
Ending Balance, Shares at Dec. 31, 2017 | 35,171,419 | 0 | 169,234 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (3,535,926) | $ (3,633,079) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation expense | 577,895 | 183,622 |
Amortization of debt discount | 98,575 | 46,940 |
Amortization of intangible assets | 1,028,443 | 340,126 |
Share-based compensation | 1,731,240 | 982,468 |
Gain on sale from building | (3,272,653) | 0 |
Bad debt expense | 63,257 | 0 |
Accrued acquisition costs | 0 | 753,857 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,363,882) | 1,157,932 |
Inventories | (299,632) | 623,005 |
Prepaid expenses and other assets | (465,543) | 192,389 |
Net change in right-of-use leased asset | (4,939) | 0 |
Accounts payable | (1,778,723) | 327,916 |
Accrued expenses | (188,889) | 0 |
Net cash (used in) provided by operating activities | (8,410,777) | 975,176 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (562,570) | (47,198) |
Business acquisitions, net of cash received | (2,000,000) | (8,500,000) |
Proceeds from sale of the building | 8,789,991 | 0 |
Net cash provided by (used in) investment activities | 6,227,421 | (8,547,198) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Borrowings on notes payable and bank indebtedness | 2,000,000 | 10,700,000 |
Proceeds from convertible note payable | 0 | 200,000 |
Net factoring advances | 0 | (110,663) |
Exercise of stock warrant | 150,936 | 21,000 |
Issuance of common stock in connection with public offering | 15,398,963 | 0 |
Repayment of notes payable to related party | (29,961) | 0 |
Repayment of notes payable and capital lease obligations | (15,580,425) | (2,753,083) |
Net cash provided by financing activities | 1,939,513 | 8,057,254 |
NET CHANGE IN CASH | (243,843) | 485,232 |
CASH AT BEGINNING OF PERIOD | 529,088 | 43,856 |
CASH AT END OF PERIOD | $ 285,245 | $ 529,088 |
Nature of Operations, Basis of
Nature of Operations, Basis of Presentation and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Nature of Operations, Basis of Presentation and Significant Accounting Policies | On April 1, 2015, American Brewing acquired the assets of B&R Liquid Adventure, which included the brand, Búcha Live Kombucha. Prior to acquiring the Búcha Live Kombucha brand and business, we were a craft brewery operation. In April 2016, new management assumed daily operation of the business, and began the implementation of a new vision for the Company. In May 2016 we changed our name to Búcha, Inc. (“Búcha”), and then on June 30, 2016, we acquired the combined assets of “Xing” including Xing Beverage, LLC, New Age Beverages, LLC, Aspen Pure, LLC, and New Age Properties. We then shut down all California operations where Búcha was based, relocated the Company’s operational headquarters to Denver, Colorado, and changed our name to New Age Beverages Corporation. On October 1, 2015, we then sold American Brewing including their brewery, brewery assets and its related liabilities to focus exclusively on the healthy beverages. We recognized the sale of our brewery and brewery operations as a discontinued operation beginning in the third quarter of 2015, and ultimately concluded the transaction in February 2016. In February 2017, we uplisted onto The NASDAQ Capital Market. In March 2017, we acquired the assets of Maverick Brands, including their brand Coco-Libre. In June 2017, we acquired the assets of Premier Micronutrient Corporation (“PMC”), and also completed the acquisition of the Marley Beverage Company (“Marley”) including the brand licensing rights to all Marley brand ready to drink beverages. We have three wholly-owned subsidiaries, NABC, Inc., NABC Properties, LLC (“NABC Properties”), and New Age Health Sciences. NABC, Inc. is our Colorado-based operating company that consolidates performance and financial results of our divisions. NABC Properties incorporates all our buildings and warehouses, and New Age Health Sciences includes all our patents, and the operating performance in the medical and hospital channels. Reclassification Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income. Basis of Presentation The accompanying audited consolidated financial statements and related footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America (or U.S. GAAP) and with the Securities and Exchange Commission’s (or SEC) instructions for the Form 10-K. Principles of Consolidation Our consolidated financial statements include the accounts of all majority-owned subsidiary companies. All intercompany transactions and balances have been eliminated. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The more significant estimates and assumptions made by management include allowance for doubtful accounts, inventory valuation, provision for excess or expired inventory, depreciation of property and equipment, realizability of long-lived assets, allowance for sales returns and chargebacks, estimated cash flows in the acquisitions, and fair market value of equity instruments issued for goods or services. The current economic environment has increased the degree and uncertainty inherent in these estimates and assumptions. Cash and Cash Equivalents Cash and cash equivalents as of December 31, 2017 and 2016 included cash on-hand. Cash equivalents are considered all accounts with an original maturity date within 90 days. Accounts Receivable The Company’s accounts receivable primarily consists of trade receivables. The Company records an allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and the aging of the accounts receivable balances combined with management’s estimate of future potential recoverability. Receivables are written off against the allowance after all attempts to collect a receivable have failed. The Company’s allowance for doubtful accounts was $52,345 as of December 31, 2017 and $46,350 as of December 31, 2016. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivables. The Company places its cash with high credit quality financial institutions. At times such amounts may exceed federally insured limits. For the year ended December 31, 2017, three customers represented approximately 21.4% (9.9%, 6.3% and 5.2%) of net revenues. For the year ended December 31, 2016, three customers represented approximately 27.5% (14.5%, 7.5% and 5.5%) of net revenues. As of December 31, 2017, three customers represented 23.1% (10.5%, 6.7% and 5.9%) of accounts receivables. As of December 31, 2016, three customers represented approximately 29.4% (12.3%, 8.9% and 8.2%) of accounts receivable. Fair Value of Financial Instruments The carrying amount of the financial instruments, which principally include cash, trade receivables, accounts payable and accrued expenses, approximates fair value due to the relative short maturity of such instruments. The carrying amount of the Company’s debt approximates its fair value as it bears interest at market rates of interest after taking into consideration the debt discounts. Accounting Standards Codification (ASC) 820 defines fair value, establishes a framework for measuring fair value under U.S. GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair-value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows: Level 1 Level 2 Level 3 The following tables set forth the fair value of the Company’s contingent provision as of December 31, 2017 and 2016: December 31, 2017 Level I Level II Level III Total (in thousands) Contingent Provision: Earn-out attributable to Marley acquisition $ - $ - $ 800 $ 800 Total contingent provision $ - $ - $ 800 $ 800 December 31, 2016 Level I Level II Level III Total (in thousands) Contingent Provision: Earn-out attributable to Marley acquisition $ - $ - $ - $ - Total contingent provision $ - $ - $ - $ - There were no transfers between levels within the fair value hierarchy during the periods presented. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill and other intangibles with indefinite useful lives are not amortized but tested for impairment annually 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 not more likely than not that the fair value of the reporting unit is less than the carrying amount, further testing of goodwill for impairment would not be 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. The Company performed a qualitative assessment and determined there was no impairment of goodwill for the years ended December 31, 2017 and 2016. Intangible assets are recorded at acquisition fair value as part of the acquisitions. The balance as of December 31, 2017 and 2016 is reflected net of accumulated amortization. Definite lived intangible assets are amortized over their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the asset are expected to be generated, typically 15 to 42 years. As of December 31, 2017 and 2016 accumulated amortization was $1,368,568 and $340,126, respectively. Amortization expense was $1,028,443 and $340,126 for the years ended December 31, 2017 and 2016, respectively. Long-lived Assets Long-lived assets consisted of property and equipment and customer relationships and are reviewed for impairment in accordance with the guidance of the ASC 360, Property, Plant, and Equipment. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. For the years ended December 31, 2017 and 2016, respectively, the Company had not experienced impairment losses on the long-lived assets as management determined that there were no indicators that the carrying amount of the asset may not be recoverable. Share-Based Compensation The Company accounts for share--based compensation to employees in accordance with ASC 718 Compensation—Stock Compensation. Share Included in prepaid expenses as of December 31, 2017 and 2016 are prepaid share-based compensation of approximately $1,000,000 and $-, of which approximately $500,000 and $- are presented as long-term on the consolidated balance sheets under the caption Prepaid Expenses, long-term. These amounts represent the prepaid compensation to employees and certain non-employees for services rendered. Inventories and Provision for Excess or Expired Inventory Inventories consist of tea ingredients, packaging and finished goods and are stated at the lower of cost (first-in, first-out basis) or market value. Provisions for excess inventory are included in cost of goods sold and have historically been immaterial but adequate to provide for losses on its raw materials. There was no reserve for obsolescence as of December 31, 2017 and December 31, 2016. Property and Equipment Property and equipment consists primarily of building, brewing equipment, vehicles and coolers and are stated at cost. Depreciation is computed using the straight-line method based upon the estimated useful lives of the underlying assets, generally five years. Major renewals and betterments that extend the life of the property are capitalized. Expenditures for repairs and maintenance are expensed as incurred. Revenue Recognition The Company’s products are distributed in major health and grocery chains throughout North America. Revenue is recognized upon delivery of goods to the customer. An allowance for estimated returns is provided at the time of the sale. In accordance with the guidance in FASB Topic ASC 605, Revenue Recognition Customer Programs and Incentives Customer programs and incentives, which include customer promotional discount programs and customer incentives, are a common practice in the beverage industry. 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 net revenue or as advertising, promotional and selling expenses in accordance with ASC Topic 605-50, Revenue Recognition—Customer Payments and Incentives Cost of Goods Sold Cost of goods sold mainly consisted of raw material costs, packaging costs and direct labor. Costs are recognized when the related revenue is recorded. Shipping and handling costs for all wholesale sales transactions are billed to the customer and are included in costs of goods sold for all periods presented. Advertising, Promotions and Sales Advertising, promotional and selling expenses consisted of sales salaries, tap handles, media advertising costs, sales and marketing expenses, and promotional activity expenses and are recognized when incurred in the accompanying consolidated statements of operations. Estimated Chargebacks Included in accrued expenses are estimated chargebacks which represent certain incentives including, but not limited to, cash discounts, funds for promotional and marketing activities, volume-based programs and for anticipated price differences. Amounts are based on estimated historical amounts. As of December 31 2017 and 2016, the total amount of chargebacks were $321,154 and $175,987. General and Administrative Expenses General and administrative expenses consisted of professional service fees, rent and utility expenses, meals, travel and entertainment expenses, and other general and administrative overhead costs. Expenses are recognized when incurred. Income Taxes The Company accounts for income taxes pursuant to the provisions of ASC 740, Income Taxes ASC 740 requires that the Company recognize in the consolidated financial statements the effect of a tax position that is more likely than not to be sustained upon examination based on the technical merits of the position. The first step is to determine whether or not a tax benefit should be recognized. A tax benefit will be recognized if the weight of available evidence indicates that the tax position is more likely than not to be sustained upon examination by the relevant tax authorities. The recognition and measurement of benefits related to our tax positions requires significant judgment as uncertainties often exist with respect to new laws, new interpretations of existing laws, and rulings by taxing authorities. Differences between actual results and our assumptions, or changes in our assumptions in future periods, are recorded in the period they become known. For tax liabilities, the Company recognizes accrued interest related to uncertain tax positions as a component of income tax expense, and penalties, if incurred, are recognized as a component of operating expense. Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average common shares outstanding. Diluted net income per share is calculated by dividing net income by the weighted-average common shares outstanding during the period using the treasury stock method or the two-class method, whichever is more dilutive. As the Company incurred net losses for the periods ended December 31, 2017 and 2016 no potentially dilutive securities were included in the calculation of diluted earnings per share as the impact would have been anti-dilutive. Therefore, basic and dilutive net income (loss) per share were the same. If the Company had net income, potential dilutive securities consist of warrants to purchase zero and 1,127,000 shares of common stock as of December 31, 2017 and December 31, 2016, respectively. Recently Issued Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as a new Topic, ASC Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of the new revenue standard for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date. This ASU must be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is considering the alternatives of adoption of this ASU and is conducting its review of the likely impact to the existing portfolio of customer contracts entered into prior to adoption. After completing its review, the Company will continue to evaluate the effect of adopting this guidance upon the Company results of operations, cash flows and financial position. Currently, the Company does not expect the adoption of this ASU to have a material impact on its financial statements except that there are significant additional reporting requirements under the new standard. In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. During the year ended December 31, 2017 management elected to early adopt the guidance under ASU 2016-02. Management’s decision was based on the stock price during the year would most likely result in the Company entering into and being designated an accelerated filer by June 30, 2019, which would result in management having to restate the financial statements to reflect the adoption of the new standard. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606). This ASU is related to reporting revenue gross versus net, or principal versus agent considerations. This ASU is meant to clarify the guidance in ASU 2014-09, Revenue from Contracts with Customers, as it pertains to principal versus agent considerations. Specifically, the guidance addresses how entities should identify goods and services being provided to a customer, the unit of account for a principal versus agent assessment, how to evaluate whether a good or service is controlled before being transferred to a customer, and how to assess whether an entity controls services performed by another party. This ASU has the same effective date as the new revenue standard, which is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company is evaluating the effect and methodology of adopting this new accounting guidance upon the Company results of operations, cash flows and financial position. The Company has begun to consider the alternatives of adoption of this ASU, and has started its review of the likely impact to the existing portfolio of customer contracts entered into prior to adoption. The Company will also continue to evaluate the effect of adopting this guidance upon its results of operations, cash flows and financial position. Currently, the Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements except that there are significant additional reporting requirements under the new standard. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718). This ASU is related to simplifications of employee share-based payment accounting. This pronouncement eliminates the APIC pool concept and requires that excess tax benefits and tax deficiencies be recorded in the income statement when awards are settled. The pronouncement also addresses simplifications related to statement of cash flows classification, accounting for forfeitures and minimum statutory tax withholding requirements. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. This ASU does not have a material impact on the Company’s consolidated financial statements based on management's conclusion. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This ASU is meant to clarify the guidance in FASB ASU 2014-09, Revenue from Contracts with Customers. Specifically, the guidance addresses an entity’s identification of its performance obligations in a contract, as well as an entity’s evaluation of the nature of its promise to grant a license of intellectual property and whether or not that revenue is recognized over time or at a point in time. This ASU has the same effective date as the new revenue standard, which is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company is considering the alternatives of adoption of this ASU and will continue to review the likely impact to the existing portfolio of customer contracts entered into prior to adoption. The Company will continue to evaluate the effect of adopting this guidance upon its results of operations, cash flows and financial position. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements except that there are significant additional reporting requirements under the new standard. In May 2016, the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. This ASU rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force (EITF) meeting. Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606: (1) Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2; (2) Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45-S99-1; (3) Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor’s Products), which is codified in paragraph 605-50-S99-1; and (4) Accounting for Gas-Balancing Arrangements (i.e., use of the “entitlements method”), which is codified in paragraph 932-10-S99-5. This ASU becomes effective upon adoption of ASU 2014-09, which is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company has not yet begun to consider the alternatives of adoption of this ASU or its impact on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. This ASU does not change the core principle of the guidance in Topic 606. Instead, the amendments provide clarifying guidance in a few narrow areas and add some practical expedients to the guidance. This ASU has the same effective date as the new revenue standard, which is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the impact of the pending adoption of this new standard on its consolidated financial statements. The Company is considering the alternatives of adoption of this ASU. Currently, the Company does not expect the adoption of this ASU to have a material impact on its financial statements except that there are significant additional reporting requirements under the new standard. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to reduce diversity in practice in how transactions are classified in the statement of cash flows. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and currently the Company has determined there to be no impact of this ASU on its financial statements and related disclosures. In January 2017, the FASB issued 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this ASU simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test and eliminating the requirement for a reporting unit with a zero or negative carrying amount to perform a qualitative assessment. Instead, under this pronouncement, an entity would perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and would recognize an impairment change for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized is not to exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects will be considered, if applicable. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures. |
Going Concern and Management's
Going Concern and Management's Liquidity Plans | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern and Management's Liquidity Plans | The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. Since inception, the Company has financed its operations primarily through equity and debt financings. As of December 31, 2017 and 2016, the Company had an accumulated deficit of $10,500,883 and $6,964,957 (all of which was attributed to the losses of Búcha, Inc., and one-time expenses associated with the integration and up-listing onto the NASDAQ exchange and acquisitions of Maverick, PMC, Marley during the year ended December 31, 2017 and Xing during the year ended December 31, 2016). For the years ended December 31, 2017 and 2016, respectively, cash flows from operating activities were ($8,410,777) and $975,176. The 2017 acquisitions of Maverick, PMC and Marley (see Note 4) required significant cash outlays for integration and operations. Management continues to raise proceeds through the issuance of equity shares. See Note 18, Subsequent Events. With the additional proceeds received from the April 2018 equity financing, the Company believes that its current operations combined with its current cash at December 31, 2017 will be sufficient to meet the Company’s operating liquidity, capital expenditure and debt repayment requirements for at least the next one year from the date of issuance of these consolidated financial statements. |
Acquisition of Xing Beverage, L
Acquisition of Xing Beverage, LLC | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisition of Xing Beverage, LLC | On June 30, 2016, the Company acquired the assets of New Age Beverage, LLC, New Age Properties, LLC, Aspen Pure, LLC, and Xing Beverage, LLC (collectively, Xing). Xing is engaged in the manufacturing and sale of various teas and beverages, which will help the Company expand its capabilities and product offering. The operating results of Xing have been consolidated with those of the Company beginning July 1, 2016. Total purchase consideration paid was $19,995,000, which consisted of $8,500,000 of cash, a note payable for $4,500,000 and 4,353,915 shares of common stock. The common stock issued was valued at $1.61 per share, which was the volume weighted average closing stock for the thirty days preceding the acquisition. The purchase price was allocated to the net assets acquired based on their estimated fair values as follows: Cash $ 8,500,000 Seller’s note 4,500,000 Stock 6,995,000 Purchase price $ 19,995,000 Accounts receivable $ 5,627,669 Inventories 4,847,417 Prepaid expenses and other current assets 492,972 Property and equipment, net 7,418,789 Other intangible assets acquired (customer lists) 4,628,800 Assumption of accounts payable, accrued expenses, other current liabilities and mortgage note payable (7,526,874 ) 15,488,773 Goodwill 4,506,227 $ 19,995,000 The acquisition was consummated on June 30, 2016, and as such, the Company assessed the fair value of the various net assets acquired. The Company identified other intangible assets, such as customer lists that were recognized apart from goodwill, and recorded at fair value. The $4,506,227 of goodwill currently recognized is deductible for income tax purposes over the next fifteen years. In connection with the acquisition of Xing Beverage, LLC, the Company incurred transactional costs totaling $1,714,463, which has been recognized as expense as of December 31, 2016. Of these costs, $1,326,108 was included in legal and professional fee expense and $388,355 was included in general and administrative expenses. Legal and professional fee expense includes the Company issuing a total of 167,994 shares of common stock to several consultants for transactional services provided. The shares were fair valued at $1.61 per share. The balance represents legal and professional fees incurred that have or are going to be paid in cash. The general and administrative expense of $388,355 was pursuant to an employment agreement entered into during the first quarter of 2016, whereby an officer earned 1,078,763 shares of common stock upon the consummation of the Xing acquisition. These shares were fair valued at $0.36 per share, which is the Company’s traded stock price when entering into the employment agreement. |
2017 Acquisitions
2017 Acquisitions | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
2017 Acquisitions | Maverick Brands, LLC On March 31, 2017, the Company acquired all of the assets of Maverick Brands, LLC (“Maverick”). Maverick is engaged in the manufacturing and sale of coconut water and other beverages, which will help the Company expand its capabilities and product offering. The operating results of Maverick have been consolidated with those of the Company beginning April 1, 2017. Total purchase consideration paid was $11,086,000, which consisted of $2,000,000 of cash and 2,200,000 shares of common stock valued at $9,086,000. The common stock issued was valued at $4.13 per share, which was the closing stock on the date of the acquisition. The Acquisition was subject to customary closing conditions. All of the goodwill was assigned to the Company’s Brands segment. All of the goodwill and intangible assets recognized is expected to be deductible for income tax purposes. The fair value of the customer list was valued using the income approach, as the Company obtained an independent third-party valuation. In addition, the market approach was utilized to determine the fair value of the trade name and recipes. The purchase price was allocated to the net assets acquired based on their estimated fair values as follows: Cash $ 2,000,000 Stock 9,086,000 Purchase price $ 11,086,000 Accounts receivable $ 245,426 Inventories 1,523,413 Prepaid expenses and other current assets 211,213 Property and equipment, net 68,282 Other intangible assets acquired (trade names, recipes and customer lists) 6,660,441 Accounts payable and accrued expenses (1,345,155 ) Assumption of note payable (1,427,051 ) 5,936,569 Goodwill 5,149,431 $ 11,086,000 Goodwill is the excess of the purchase price over the preliminary fair value of the underlying net tangible and identifiable intangible assets. In accordance with applicable accounting standards, goodwill is not amortized but instead is tested for impairment at least annually or more frequently if certain indicators are present. In connection with the acquisition of Maverick, the Company incurred transactional costs totaling $231,925, which has been recognized as expense for the year ended December 31, 2017. These costs have been reflected in other expenses. PMC Holdings, Inc. On May 18, 2017, the Company entered into an Asset Purchase Agreement (the “Agreement”) whereby the Company acquired substantially all of the operating assets of Premier Micronutrient Corporation, a subsidiary of PMC Holdings, Inc. (“PMC”), which is a company engaged in the business of developing, manufacturing, selling and marketing micronutrient products and formulations (the “Acquisition”). On May 23, 2017 (the “Closing Date”), the parties executed the Bill of Sale and Assignment and Assumption Agreement for the Acquisition. Upon the Closing Date, the Company received substantially all of the operating assets of PMC, consisting of fixed assets and intellectual property in exchange for a purchase price of 1,200,000 shares of the Company’s common stock. The shares were fair valued at $4.58 per share. The Company also agreed to assume various accounts payable and accrued liabilities of PMC. The shares of Common Stock to be issued pursuant to the Acquisition will be restricted under Rule 144. The Acquisition was subject to customary closing conditions. All of the goodwill was assigned to the Company’s Brands segment. All of the goodwill and intangible assets recognized is expected to be deductible for income tax purposes. The fair value of the patents were valued using the market approach, as the Company obtained an independent third-party valuation. The purchase price was allocated to the net assets acquired based on their estimated fair values as follows: Stock $ 5,496,000 Purchase price $ 5,496,000 Prepaid expenses and other current assets 2,256 Property and equipment, net 55,023 Patents 4,100,000 Accounts payable (27,772 ) Assumption of notes payable (401,095 ) 3,728,412 Goodwill 1,767,588 $ 5,496,000 In connection with the acquisition of PMC, the Company incurred minimal transactional costs, which has been recognized as expense as of the closing date. Marley Beverage Company, LLC On March 23, 2017, the Company entered into an asset purchase agreement (the “APA”) whereby the Company agreed to acquire substantially all of the operating assets of Marley Beverage Company, LLC (“Marley”), which is a company engaged in the development, manufacturing, selling and marketing of nonalcoholic relaxation teas and sparkling waters, and ready to drink coffee drinks. The consideration for the Acquisition was amended pursuant to an Amendment to the APA dated June 9, 2017. The Acquisition closed on June 13, 2017. At closing, the Company received substantially all of the operating assets of Marley, consisting of inventory, accounts receivable, fixed assets and intellectual property in exchange for a purchase price of 3,000,000 shares of the Company’s common stock, as well as an earn out payment of $1,250,000 in cash if the gross revenues of the Marley business during any trailing twelve calendar month period after the closing are equal to or greater than $15,000,000. The earnout, if applicable, will be paid as $625,000 on or before the 15th day after the end of the first trailing twelve calendar month period in which the earnout condition is satisfied, $312,500 not later than the first anniversary of the initial earnout payment, and $312,500 not later than the second anniversary of the initial earnout payment. The fair value of the earnout was valued using the weighted average return on asset. The shares of Common Stock issued pursuant to the Acquisition have not been registered, but the holders have piggyback registration rights, as well as demand registration rights, with the demand registration rights beginning twelve months from the Closing Date. The Acquisition was subject to customary closing conditions. The shares were fair valued at $6.20 per share. All of the goodwill was assigned to the Company’s Brands segment. All of the goodwill and intangible assets recognized is expected to be deductible for income tax purposes. The fair value of the customer list was valued using the cost approach, as the Company obtained an independent third-party valuation. In addition, the market approach was utilized to determine the fair value of the trade name and recipes. The purchase price was allocated to the net assets acquired based on their estimated fair values as follows: Stock $ 18,600,000 Contingent consideration 800,000 Purchase price $ 19,400,000 Accounts receivable $ 186,658 Inventories 798,098 Prepaid expenses and other current assets 198,882 Property and equipment, net 22,191 Other intangible assets acquired (trade names, recipes and customer lists) 9,281,365 Accounts payable and accrued expenses (505,146 ) 9,982,048 Goodwill 9,417,952 $ 19,400,000 In connection with the acquisition of Marley, the Company incurred minimal transactional costs, which has been recognized as expense as of the closing date. Pro forma: The following unaudited pro forma financial results reflects the historical operating results of the Company, including the unaudited pro forma results of Xing Group, Maverick, PMC and Marley for the years ended December 31, 2017 and 2016, respectively, as if Xing Group, Maverick, PMC and Marley were acquired on January 1, 2016. No adjustments have been made for synergies that are resulting and planned from the acquisitions. These combined results are not indicative of the results that may have been achieved had the companies been combined as of such dates or periods, or of the Company’s consolidated future operating results. For the year ended December 31, 2017 For the year ended December 31, 2016 (unaudited) (unaudited) Revenues $ 56,144,428 $ 70,699,047 Net loss from continuing operations (7,497,397 ) (17,562,676 ) Net loss per share – Basic and diluted $ (0.22 ) $ (0.51 ) Weighted average number of common shares outstanding – Basic and Dilutive 34,330,520 34,330,520 The decline in revenues on a pro forma basis resulted from changes in strategic shifts by the former owners. Those changes in monetization resulted in declining revenues. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consist of brewing materials, tea ingredients, bulk packaging and finished goods. The cost elements of work in process and finished goods inventory consist of raw materials and direct labor. Provisions for excess inventory are included in cost of goods sold and have historically been immaterial but adequate to provide for losses on its raw materials. Inventories are stated at the lower of cost, determined on the first-in, first-out basis, or market. Inventories consisted of the following as of: December 31, 2017 December 31, 2016 Finished goods $ 6,302,265 $ 3,962,050 Raw materials 739,510 458,582 $ 7,041,775 $ 4,420,632 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | Intangible assets consisted of the following as of: December 31, 2017 December 31, 2016 Customer relationships $ 6,444,126 $ 4,878,800 Patents 4,100,000 - Recipes 3,530,000 - License agreements 5,990,252 - Trade name 4,860,441 - Less: accumulated amortization (1,368,568 ) (340,126 ) $ 23,556,251 $ 4,538,674 Amortization expense was $1,028,443 and $340,126 for the years ended December 31, 2017 and 2016, respectively. Intangible assets are recorded at their fair market value. Amortization expense is computed on a straight-line basis from 15 to 42 years, which was determined to be the useful life. As of December 31, 2017, amortization expense for the next five years for the above intangibles are as follows: Year Ended December 31, Amount 2018 $ 1,387,985 2019 1,387,985 2020 1,387,985 2021 1,387,985 2022 1,387,985 Thereafter 16,616,326 Total $ 23,556,251 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | The Company's property and equipment consisted of the following as of: December 31, 2017 December 31, 2016 Land and building $ 518,293 $ 6,070,000 Trucks and coolers 1,226,053 963,474 Other property and equipment 913,053 509,064 Less: accumulated depreciation (762,579 ) (256,337 ) $ 1,894,820 $ 7,286,201 Depreciation and amortization expense totaled $577,895 and $183,622 for the years ended December 31, 2017 and 2016, respectively. |
Notes Payable, Convertible Note
Notes Payable, Convertible Note Payable and Capital Leases | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable, Convertible Note Payable and Capital Leases | Notes payable consisted of the following as of: December 31, 2017 December 31, 2016 Revolving note payable due bank $ 2,000,000 $ 5,650,000 Series B notes assumed from the Maverick Acquisition 1,472,051 - Note payable due to bank – secured by building - 4,754,636 Seller’s note payable - 4,500,000 Note payable, net of unamortized discounts of $0 and $98,575 as of December 31, 2017 and 2016, respectively - 32,218 3,427,051 14,936,854 Less: current portion (3,427,051 ) (4,562,179 ) Long-term portion, net of unamortized discounts $ - $ 10,374,675 In connection with the Acquisition of Xing, the Company entered into several notes payable with a bank and received proceeds of $10.7 million. One note payable is for $4,800,000, bears interest at 4.04%, and is secured by the Company’s land and building. Principal and interest is payable in monthly installments of $25,495 through June 2021 at which time the unpaid principal balance is due. The other note payable is a revolving credit facility that allows borrows up to $5.9 million, bears interest payable monthly at LIBOR plus a margin ranging from 2.25% to 3.00% depending on the current ratio of payment obligations to earnings as defined in the agreement, and is secured by the Company’s assets. The amount that may be borrowed under the revolving credit facility is based on the Company’s eligible receivables, inventory and fixed assets, and is reduces by $50,000 each month beginning August 1, 2016 until the facility has been reduced down to $2,900,000. The revolving credit facility matures on June 30, 2018. As of December 31, 2017 and 2016, there are no available borrowings under the revolving credit facility. The Company also issued a $4,500,000 note payable to a selling shareholder of Xing. This seller’s note bears interest, payable monthly, at 1% per year, beginning after December 31, 2016. The loan matures on June 30, 2017. On March 19, 2016, the Company entered into a Securities Purchase Agreement with an unaffiliated third party, whereby the Company sold a Convertible Promissory Note in an amount of $200,000. The purchaser also received a three-year Warrant to purchase 100,000 shares at an exercise price of $0.40 per share. The Company has allocated the loan proceeds among the debt and the warrant based upon relative fair values. The relative fair value of the warrant was determined to be $18,153. In connection with the Acquisition of Maverick, the Company assumed Series B notes payable of $1,472,051. In addition, in connection with the public offering of common stock in February 2017, proceeds were used to reduce the previously outstanding note balances. Monthly payments consist of interest only payments, which approximate 10% per annum. The loans are due December 2018. On July 6, 2017 the Company entered into a revolving credit agreement with U.S. Bank National Association. Total borrowings were $2,000,000 and are subject to borrowing base requirements per the agreement. The credit agreement bears interest at 2.5% plus Daily Reset LIBOR Rate. Currently, interest only payments of approximately $7,000 monthly. The loan matures July 6, 2018 and the entire principal and outstanding interest payments are due. The revolving credit line is subject to a fixed charged ratio financial covenant. The Company must maintain a fixed charged coverage ratio of at least 1:15 to 1:00. As of and for the year ended December 31, 2017, the Company was in compliance with this financial covenant. |
Related Party Debt
Related Party Debt | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Debt | Related Party debt consisted of the following as of: December 31, 2017 December 31, 2016 Related party debt, net of unamortized discounts of $0 and $30,039 as of December 31, 2017 and 2016, respectively $ - $ 29,961 Less: current portion - - Long-term portion, net of unamortized discount $ - $ 29,961 In March 2015, the Company borrowed $60,000 from a member of management. The note bears interest at 10% per annum and is due and payable beginning June 30, 2015 maturing on March 31, 2020. Payments of interest are required quarterly. The note was issued in conjunction with an equity payment totaling 53,073 shares of Series B preferred stock that was issued with the debt. The Company has allocated the loan proceeds among the debt and the stock based upon relative fair values. The relative fair value of the stock was determined to be $42,742 and was recorded as a debt discount. The discount is being amortized over the life of the loan to interest expense. As of December 31, 2016, no principal payment has been made on this note (but has since been paid in full in February 2017). No amounts were outstanding as of December 31, 2017. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Operating Lease Commitments On June 30, 2016, the Company assumed the lease commitments for the New Age Beverage, LLC (NAB) and Xing Beverage, LLC (Xing) when it acquired those companies. The Colorado Springs property, previously leased by Xing, has a base rent of $14,000 per month plus common area expenses, with escalation clauses over time. On January 10, 2017, the Company entered into a Purchase and Sale Agreement with an unaffiliated third party. Pursuant to the agreement, the Company entered into a commitment to sell the property located at 1700 E 68th Avenue, Denver, CO 80229 for a purchase price of $8,900,000. The agreement contains a lease back provision, whereby the Company leases the property for an initial term of ten years, with an option to extend for two successive five-year periods. The Company recognized a gain on the sale of this property of $3,272,653 (as reflected on the Consolidated Statement of Operations under the caption “Other Income”) for the year ended December 31, 2017. The Company early adopted the provisions of ASU 2016-02. The lease cost is $52,000 per month for the initial year, with two percent annual increases. Management elected to early adopt ASU 2016-02, as a result, the Company recognized a Right-of-Use for the asset of approximately $4,500,000 and a corresponding liability of a similar amount. Future minimum lease payments under these facilities leases are approximately as follows: 2018 $ 968,073 2019 820,800 2020 830,640 2021 840,000 2022 845,000 Thereafter $ 4,304,513 Rent expense was $932,469 and $103,812 for the years ended December 31, 2017 and 2016, respectively. Legal In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such matters that are deemed material to the consolidated financial statements as of December 31, 2017. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Preferred Stock The Company is authorized to issue 1,000,000 shares of preferred stock, each having a par value of $0.001, with voting, distribution, dividend and redemption rights, and liquidation preferences and conversions as designated by the board of directors. The board of directors has designated 250,000 shares as Series A Preferred stock, par value $.001 per share (“Series A Preferred”). Each share of Series A Preferred shall have 500 votes for any election or other vote placed before the shareholders of the Company. During the year ended December 31, 2017, 250,000 shares of Series A Preferred stock was rescinded. As of December 31, 2017 and 2016, zero and 250,000 shares of Series A Preferred are issued and outstanding. The board of directors has designated 300,000 shares as Series B Preferred stock, par value $.001 per shares (“Series B Preferred”). The Series B Preferred is non-voting, not eligible for dividends and ranks equal to common stock and below Series A preferred stock. Each share of Series B Preferred has a conversion rate into eight shares of common stock. As of December 31, 2017 and 2016, 169,234 and 284,807 shares of Series B Preferred are issued and outstanding. In January 2018, all remaining 169,234 shares of Series B Preferred stock were converted into shares of common stock at a ratio of 8:1. Common Stock The Company is authorized to issue 50,000,000 shares of common stock, $0.001 par value. Common stock issued for services During the year ended December 31, 2017, shares of common stock were issued to employees and non-employees in connection with services rendered as follows: ● 250,000 shares were issued to employees for services rendered. The Company determined the fair market value (FMV) to be $1.61 to $2.11 per share at the time of issuance. Shares vest over a three year vesting period. ● 395,184 shares were issued to non-employees pursuant to services rendered. Shares were valued at $1,984,104. The Company determined the FMV to be the share price on the date of issuance, which ranged from $1.61 to $5.00. During the year ended December 31, 2016, the Company issued 50,000 shares of fully vested common stock to a consultant as partial consideration for professional services to be rendered. The shares were fair valued at $0.41 per share, which was the traded stock price of the Company’s common stock at the time of grant. The Company recognized legal and professional fees of $20,500 related to this grant. The Company also issued 42,000 shares of common stock in connection with a warrant being exercised (see Note 12). In connection with the acquisition of Xing, the Company issued a total of 5,600,672 shares of common stock as either purchase consideration or payment of transactional services that were provided (see Note 3). In connection with the acquisitions of Maverick, PMC and Marley, the Company issued a total of 6,400,000 shares of common stock as purchase consideration (see Note 4). In cluded in accrued expenses are estimated chargebacks which represent certain incentives including, but not limited to, cash discounts, funds for promotional and marketing activities, volume-based programs and for anticipated price differences. Amounts are based on estimated historical amounts. As of December 31 2017 and 2016, the total amount of chargebacks were $321,154 and $175,987. Long-term Incentive Plan: On August 3, 2016, the Company’s approved and implemented the New Age Beverages Corporation 2016-2017 Long-Term Incentive Plan (the “Plan”) pursuant to which the maximum number of shares that can be granted is 1,000,000 shares. Grants under the Plan include options awards. The purpose of the Plan is to provide such individuals with additional incentive and reward opportunities designed to enhance the profitable growth of the Company and its affiliates. The shares of common stock to be issued in connection with the Plan will not be registered under the Securities Act. As of December 31, 2017 and 2016, a total of 1,538,475 and 438,848 options were granted under the Plan. Employee stock option activities under the Incentive Plan for the years ended December 31, 2017 and 2016, and changes during the years then ended are presented below: Employee Stock Option Compensation Award Activity Shares Weighted- Average Grant Date Fair Value Non-vested options at January 1, 2016 - $ - Granted 438,848 $ 1.11 Vested - $ - Forfeited - $ - Non-vested options at December 31, 2016 438,848 $ 1.11 Non-vested options at January 1, 2017 438,848 $ 1.11 Granted 1,099,6 27 $ 1.22 Vested (161,449 ) $ 1.11 Forfeited - $ - Non-vested options at December 31, 2017 1,422,526 $ 1.11 The options were fair valued using the Black-Scholes Merton model and valued at $1.11 per share on the grant date. The following table presents the assumptions for the Black-Scholes option-pricing model used in determining the fair value of options granted to employees on the grant date: Exercise price $ 1.79 Dividend yield 0.0 % Risk-free interest rate 0.86 % Expected volatility 100 % Expected term (years) 3.0 Estimated forfeiture % rate 0.0 % |
Common Stock Warrants
Common Stock Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Common Stock Warrants | As of December 31, 2017 and 2016, the Company had a warrant to purchase 0 and 100,000 shares of common stock outstanding with an exercise of $0.40 per share. The warrant expires in March 2019. A summary of common stock warrants activity for the years ended December 31, 2017 and 2016 is as follows: Weighted Average Number Exercise Price Warrants outstanding December 31, 2015 1,127,000 $ 0.94 Granted 372,974 $ 0.40 Exercised (42,000 ) $ 0.50 Forfeited (1,085,000 ) $ 0.96 Warrants outstanding December 31, 2016 372,974 $ 0.40 Warrants exercisable as of December 31, 2016 372,974 $ 0.40 Warrants outstanding December 31, 2016 372,974 $ 0.40 Granted - $ - Exercised (372,974 ) $ 0.40 Forfeited - $ - Warrants outstanding December 31, 2017 - $ 0.40 Warrants exercisable as of December 31, 2017 - $ 0.40 During the year ended December 31, 2016, the Company issued a three year warrant to purchase 100,000 shares at an exercise price of $0.40 per share in connection with a $200,000 Convertible Promissory Note (see Note 8) which was exercised during the year. An additional 275,000 shares were issued during the year ended December 31, 2016 at an exercise price of $0.40 per share. During 2017 and 2016, warrants totaling 372,974 and 42,000 shares of common stock were exercised at $0.40 and $0.50 per share. |
Restricted Stock Awards
Restricted Stock Awards | 12 Months Ended |
Dec. 31, 2017 | |
Restricted Stock Awards | |
Restricted Stock Awards | Restricted stock award activity under the Incentive Plan for the years ended December 31, 2017 and 2016, and changes during the years then ended are presented below: Service Shares Restricted Stock-Based Compensation Award Activity Shares Weighted- Average Grant Date Fair Value Non-vested restricted stock awards at January 1, 2016 - $ - Granted 771,783 $ 0.33 Vested - $ - Forfeited - $ - Non-vested restricted stock awards at December 31, 2016 771,783 $ 0.33 Non-vested restricted stock awards January 1, 2017 771,783 $ 0.33 Granted 838,178 $ 2.11 Vested (740,439 ) 0.33 Forfeited - $ - Non-vested restricted stock awards at December 31, 2017 869,522 $ 0.71 The shares were fair valued using our closing stock price of $0.33 and $2.11 per share on the grant dates. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The Company files income tax returns in the U.S. Federal jurisdiction and various state jurisdictions. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company must assess the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent that it is more likely than not that such deferred tax assets will not be realized, the Company must establish a valuation allowance. As of December 31, 2017 and 2016, the Company has a valuation allowance against 100% of the deferred tax assets, which is primarily composed of net operating loss (or NOL In December 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted. The 2017 Tax Act includes a number of changes to existing U.S. tax laws that impact the Company, most notably a reduction of the U.S. corporate income tax rate from 35 percent to 21 percent for tax years beginning after December 31, 2017. The 2017 Tax Act also provides for a one-time transition tax on certain foreign earnings and the acceleration of depreciation for certain assets placed into service after September 27, 2017 as well as prospective changes beginning in 2018, including changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017. Specifically, the 2017 Tax Act limits the amount the Company is able to deduct for net operating loss carryforwards generated in taxable years beginning after December 31, 2017 to 80% of taxable income however these net operating loss carryforwards can be carried forward indefinitely, repeal of the domestic manufacturing deduction, acceleration of tax revenue recognition, capitalization of research and development expenditures, additional limitations on executive compensation and limitations on the deductibility of interest. The changes to existing U.S. tax laws as a result of the 2017 Tax Act, which the Company believes has the most significant impact on the Company’s federal income taxes are as follows: Reduction of the U.S. Corporate Income Tax Rate The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the Company’s deferred tax assets and liabilities were remeasured to reflect the reduction in the U.S. corporate income tax rate from 35 percent to 21 percent, resulting in a $1.4 million decrease in net deferred tax assets and a corresponding $1.4 million decrease in the valuation allowance as of December 31, 2017. For the years ended December 31, 2017 and December 31, 2016, there was no income tax expense recognized. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below: Net operating loss carry forwards $ 2,689,000 $ 2,139,000 Intangible asset amortization 128,000 34,000 Other 53,000 - Valuation allowance (2,870,000 ) (2,173,000 ) Total $ - $ - A reconciliation of income tax benefit based on the federal statutory rate to actual income tax expense (benefit) is as follows: Expected federal income tax benefit at 34% $ (1,202,000 ) $ (1,235,000 ) Expected state income tax benefit, net of federal benefit (108,000 ) (111,000 ) Non-deductible expenses 1,000 1,000 Change in prior year deferred taxes and other 2,055,000 (39,000 ) Change in federal and state statutory tax rates (1,443,000 ) (43,000 ) Change in valuation allowance 697,000 1,427,000 Total tax expense $ - $ - |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | The following table provides basic and diluted shares outstanding for the calculation of net loss per share. Series B preferred stock is included on an as-converted basis and warrants are included using the treasury stock method. For the years whereby we are reporting a net loss from continuing operations, securities to acquire common stock or securities that are convertible into shares of common stock are excluded from the computation of net loss per share as they would be anti-dilutive. Year ended Year ended December 31, 2017 December 31, 2016 Weighted average shares outstanding – Basic 30,616,506 18,889,608 Series B preferred stock - - Warrant to acquire common stock - - Weighted average shares outstanding – Diluted 30,616,506 18,889,608 |
Statements of Cash Flows
Statements of Cash Flows | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Statements of Cash Flows | Supplemental Disclosures Year ended December 31, 2017 Year ended December 31, 2016 CASH PAID DURING THE PERIODS FOR: Interest $ 228,039 $ 189,470 Income taxes $ - $ - NONCASH INVESTING AND FINANCING ACTIVITIES: Common stock issued for acquisition of Maverick Brands, LLC, Marley Beverages, LLC and Premier Micronutrient Corporation $ 33,182,000 $ - Warrants issued with convertible debt $ - $ 18,153 Common stock issued for acquisition of Xing Beverage, LLC $ - $ 6,995,000 Promissory note issued for acquisition of Xing Beverage, LLC $ - $ 4,500,000 Convertible debt and accrued interest converted into shares of Series B Preferred stock $ - $ 225,872 Conversion of Series B Preferred stock in common stock $ - $ - Supplemental cash flow information regarding the Company’s acquisitions in 2017 and 2016 are as follows: 2017 2016 Fair value of assets acquired $ 39,688,219 $ 27,521,874 Less liabilities assumed (4,506,219 ) (7,526,874 ) Net assets acquired 35,182,000 19,995,000 Less shares issued (35,182,000 ) (6,995,000 ) Less note payable (-) (4,500,000 ) Business acquisitions, net of cash acquired $ 2,000,000 $ 8,500,000 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | The Company follows segment reporting in accordance with FASB ASC Topic 280, Segment Reporting Management views its operations based on two distinct reporting segments: (1) the Direct Store Distributions (DSD) and (2) the Brands segment. Operations and net assets that are not associated with any of these operating segments are reported as “Corporate” when disclosing and discussing segment information. The DSD segment distributes beverages throughout Colorado and surrounding states, delivering to approximately 6,000 retail customers. The Brands segment sells beverages to wholesale distributors, broadliners, key account owned warehouses and international accounts using several distribution channels. Total revenues by reporting segment for the years presented are as follows: Years Ended December 31, (In thousands) 2017 2016 DSD $ 37,545 $ 18,211 Brands 14,643 7,091 Total revenues $ 52,188 $ 25,302 Total assets for each reporting segment as of December 31, 2017 and 2016 are as follows: December 31, (in thousands) (In thousands) 2017 2016 DSD $ 16,450 $ 17,274 Brands 51,222 9,452 Total Assets $ 67,672 $ 26,726 DSD A summary of the DSD segment’s revenues and cost of sales is as follows: Years Ended December 31, (in thousands) (In thousands) 2017 2016 Revenues $ 37,545 $ 18,211 Cost of sales (28,096 ) (14,926 ) Gross profit $ 9,449 $ 3,285 Brands A summary of the Brands segment’s revenues and cost of sales is as follows: Years Ended December 31, (in thousands) (In thousands) 2017 2016 Revenues $ 14,643 $ 7,091 Cost of sales (11,692 ) (4,580 ) Gross profit $ 2,951 $ 2,511 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | During February 2018 the Company converted its Series B Preferred Stock at a ratio of 8:1 into 1,353,872 shares of common stock. On March 12, 2018 the Company granted and issued a total of 122,640 shares to members of the board of directors for services rendered. On April 10, 2018, the Company, entered into an underwriting agreement (the “Underwriting Agreement”) with Euro Pacific Capital, Inc., doing business as A.G.P./Alliance Global Partners acting as representative of the several underwriters (the “Underwriters”), which provided for the issuance and sale by the Company in an underwritten public offering (the “Offering”) and the purchase by the Underwriters of 2,285,715 shares of the Company’s common stock, $0.001 par value per share. Subject to the terms and conditions contained in the Underwriting Agreement, the shares were sold to the Underwriters at a public offering price of $1.75 per share, less certain underwriting discounts and commissions. The Company also granted the Underwriters a 45 day option to purchase, severally and not jointly, up to 342,857 additional shares of the Company’s common stock on the same terms and conditions for the purpose of covering any over-allotments in connection with the Offering. The net offering proceeds to the Company from the Offering are estimated to be approximately $3.5 million, after deducting estimated underwriting discounts and commissions and other estimated offering expenses. The Company intends to use the net proceeds from the Offering for purchasing inventory for newly gained distribution and other general working capital purposes. |
Nature of Operations, Basis o25
Nature of Operations, Basis of Presentation and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Reclassification | Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income. |
Basis of Presentation | The accompanying audited consolidated financial statements and related footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America (or U.S. GAAP) and with the Securities and Exchange Commission’s (or SEC) instructions for the Form 10-K. |
Principles of Consolidation | Our consolidated financial statements include the accounts of all majority-owned subsidiary companies. All intercompany transactions and balances have been eliminated. |
Use of Estimates | The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The more significant estimates and assumptions made by management include allowance for doubtful accounts, inventory valuation, provision for excess or expired inventory, depreciation of property and equipment, realizability of long-lived assets, allowance for sales returns and chargebacks, estimated cash flows in the acquisitions, and fair market value of equity instruments issued for goods or services. The current economic environment has increased the degree and uncertainty inherent in these estimates and assumptions. |
Cash and Cash Equivalents | Cash and cash equivalents as of December 31, 2017 and 2016 included cash on-hand. Cash equivalents are considered all accounts with an original maturity date within 90 days. |
Accounts Receivable | The Company’s accounts receivable primarily consists of trade receivables. The Company records an allowance for doubtful accounts that is based on historical trends, customer knowledge, any known disputes, and the aging of the accounts receivable balances combined with management’s estimate of future potential recoverability. Receivables are written off against the allowance after all attempts to collect a receivable have failed. The Company’s allowance for doubtful accounts was $52,345 as of December 31, 2017 and $46,350 as of December 31, 2016. |
Concentrations of Credit Risk | Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivables. The Company places its cash with high credit quality financial institutions. At times such amounts may exceed federally insured limits. For the year ended December 31, 2017, three customers represented approximately 21.4% (9.9%, 6.3% and 5.2%) of net revenues. For the year ended December 31, 2016, three customers represented approximately 27.5% (14.5%, 7.5% and 5.5%) of net revenues. As of December 31, 2017, three customers represented 23.1% (10.5%, 6.7% and 5.9%) of accounts receivables. As of December 31, 2016, three customers represented approximately 29.4% (12.3%, 8.9% and 8.2%) of accounts receivable. |
Fair Value of Financial Instruments | The carrying amount of the financial instruments, which principally include cash, trade receivables, accounts payable and accrued expenses, approximates fair value due to the relative short maturity of such instruments. The carrying amount of the Company’s debt approximates its fair value as it bears interest at market rates of interest after taking into consideration the debt discounts. Accounting Standards Codification (ASC) 820 defines fair value, establishes a framework for measuring fair value under U.S. GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair-value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows: Level 1 Level 2 Level 3 The following tables set forth the fair value of the Company’s contingent provision as of December 31, 2017 and 2016: December 31, 2017 Level I Level II Level III Total (in thousands) Contingent Provision: Earn-out attributable to Marley acquisition $ - $ - $ 800 $ 800 Total contingent provision $ - $ - $ 800 $ 800 December 31, 2016 Level I Level II Level III Total (in thousands) Contingent Provision: Earn-out attributable to Marley acquisition $ - $ - $ - $ - Total contingent provision $ - $ - $ - $ - There were no transfers between levels within the fair value hierarchy during the periods presented. |
Goodwill and Intangible Assets | Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill and other intangibles with indefinite useful lives are not amortized but tested for impairment annually 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 not more likely than not that the fair value of the reporting unit is less than the carrying amount, further testing of goodwill for impairment would not be 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. The Company performed a qualitative assessment and determined there was no impairment of goodwill for the years ended December 31, 2017 and 2016. Intangible assets are recorded at acquisition fair value as part of the acquisitions. The balance as of December 31, 2017 and 2016 is reflected net of accumulated amortization. Definite lived intangible assets are amortized over their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the asset are expected to be generated, typically 15 to 42 years. As of December 31, 2017 and 2016 accumulated amortization was $1,368,568 and $340,126, respectively. Amortization expense was $1,028,443 and $340,126 for the years ended December 31, 2017 and 2016, respectively. |
Long-lived Assets | Long-lived assets consisted of property and equipment and customer relationships and are reviewed for impairment in accordance with the guidance of the ASC 360, Property, Plant, and Equipment. The Company tests for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. For the years ended December 31, 2017 and 2016, respectively, the Company had not experienced impairment losses on the long-lived assets as management determined that there were no indicators that the carrying amount of the asset may not be recoverable. |
Share-Based Compensation | The Company accounts for share--based compensation to employees in accordance with ASC 718 Compensation—Stock Compensation. Share Included in prepaid expenses as of December 31, 2017 and 2016 are prepaid share-based compensation of approximately $1,000,000 and $-, of which approximately $500,000 and $- are presented as long-term on the consolidated balance sheets under the caption Prepaid Expenses, long-term. These amounts represent the prepaid compensation to employees and certain non-employees for services rendered. |
Inventories and Provision for Excess or Expired Inventory | Inventories consist of tea ingredients, packaging and finished goods and are stated at the lower of cost (first-in, first-out basis) or market value. Provisions for excess inventory are included in cost of goods sold and have historically been immaterial but adequate to provide for losses on its raw materials. There was no reserve for obsolescence as of December 31, 2017 and December 31, 2016. |
Property and Equipment | Property and equipment consists primarily of building, brewing equipment, vehicles and coolers and are stated at cost. Depreciation is computed using the straight-line method based upon the estimated useful lives of the underlying assets, generally five years. Major renewals and betterments that extend the life of the property are capitalized. Expenditures for repairs and maintenance are expensed as incurred. |
Revenue Recognition | The Company’s products are distributed in major health and grocery chains throughout North America. Revenue is recognized upon delivery of goods to the customer. An allowance for estimated returns is provided at the time of the sale. In accordance with the guidance in FASB Topic ASC 605, Revenue Recognition |
Customer Programs and Incentives | Customer programs and incentives, which include customer promotional discount programs and customer incentives, are a common practice in the beverage industry. 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 net revenue or as advertising, promotional and selling expenses in accordance with ASC Topic 605-50, Revenue Recognition—Customer Payments and Incentives |
Cost of Goods Sold | Cost of goods sold mainly consisted of raw material costs, packaging costs and direct labor. Costs are recognized when the related revenue is recorded. Shipping and handling costs for all wholesale sales transactions are billed to the customer and are included in costs of goods sold for all periods presented. |
Advertising, Promotions and Sales | Advertising, promotional and selling expenses consisted of sales salaries, tap handles, media advertising costs, sales and marketing expenses, and promotional activity expenses and are recognized when incurred in the accompanying consolidated statements of operations. |
Estimated Chargebacks | Included in accrued expenses are estimated chargebacks which represent certain incentives including, but not limited to, cash discounts, funds for promotional and marketing activities, volume-based programs and for anticipated price differences. Amounts are based on estimated historical amounts. As of December 31 2017 and 2016, the total amount of chargebacks were $321,154 and $175,987. |
General and Administrative Expenses | General and administrative expenses consisted of professional service fees, rent and utility expenses, meals, travel and entertainment expenses, and other general and administrative overhead costs. Expenses are recognized when incurred. |
Income Taxes | The Company accounts for income taxes pursuant to the provisions of ASC 740, Income Taxes ASC 740 requires that the Company recognize in the consolidated financial statements the effect of a tax position that is more likely than not to be sustained upon examination based on the technical merits of the position. The first step is to determine whether or not a tax benefit should be recognized. A tax benefit will be recognized if the weight of available evidence indicates that the tax position is more likely than not to be sustained upon examination by the relevant tax authorities. The recognition and measurement of benefits related to our tax positions requires significant judgment as uncertainties often exist with respect to new laws, new interpretations of existing laws, and rulings by taxing authorities. Differences between actual results and our assumptions, or changes in our assumptions in future periods, are recorded in the period they become known. For tax liabilities, the Company recognizes accrued interest related to uncertain tax positions as a component of income tax expense, and penalties, if incurred, are recognized as a component of operating expense. |
Net Income (Loss) Per Share | Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average common shares outstanding. Diluted net income per share is calculated by dividing net income by the weighted-average common shares outstanding during the period using the treasury stock method or the two-class method, whichever is more dilutive. As the Company incurred net losses for the periods ended December 31, 2017 and 2016 no potentially dilutive securities were included in the calculation of diluted earnings per share as the impact would have been anti-dilutive. Therefore, basic and dilutive net income (loss) per share were the same. If the Company had net income, potential dilutive securities consist of warrants to purchase zero and 1,127,000 shares of common stock as of December 31, 2017 and December 31, 2016, respectively. |
Recently Issued Accounting Standards | In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as a new Topic, ASC Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, which deferred the effective date of the new revenue standard for periods beginning after December 15, 2016 to December 15, 2017, with early adoption permitted but not earlier than the original effective date. This ASU must be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is considering the alternatives of adoption of this ASU and is conducting its review of the likely impact to the existing portfolio of customer contracts entered into prior to adoption. After completing its review, the Company will continue to evaluate the effect of adopting this guidance upon the Company results of operations, cash flows and financial position. Currently, the Company does not expect the adoption of this ASU to have a material impact on its financial statements except that there are significant additional reporting requirements under the new standard. In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. During the year ended December 31, 2017 management elected to early adopt the guidance under ASU 2016-02. Management’s decision was based on the stock price during the year would most likely result in the Company entering into and being designated an accelerated filer by June 30, 2019, which would result in management having to restate the financial statements to reflect the adoption of the new standard. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606). This ASU is related to reporting revenue gross versus net, or principal versus agent considerations. This ASU is meant to clarify the guidance in ASU 2014-09, Revenue from Contracts with Customers, as it pertains to principal versus agent considerations. Specifically, the guidance addresses how entities should identify goods and services being provided to a customer, the unit of account for a principal versus agent assessment, how to evaluate whether a good or service is controlled before being transferred to a customer, and how to assess whether an entity controls services performed by another party. This ASU has the same effective date as the new revenue standard, which is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company is evaluating the effect and methodology of adopting this new accounting guidance upon the Company results of operations, cash flows and financial position. The Company has begun to consider the alternatives of adoption of this ASU, and has started its review of the likely impact to the existing portfolio of customer contracts entered into prior to adoption. The Company will also continue to evaluate the effect of adopting this guidance upon its results of operations, cash flows and financial position. Currently, the Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements except that there are significant additional reporting requirements under the new standard. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718). This ASU is related to simplifications of employee share-based payment accounting. This pronouncement eliminates the APIC pool concept and requires that excess tax benefits and tax deficiencies be recorded in the income statement when awards are settled. The pronouncement also addresses simplifications related to statement of cash flows classification, accounting for forfeitures and minimum statutory tax withholding requirements. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2016. This ASU does not have a material impact on the Company’s consolidated financial statements based on management's conclusion. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. This ASU is meant to clarify the guidance in FASB ASU 2014-09, Revenue from Contracts with Customers. Specifically, the guidance addresses an entity’s identification of its performance obligations in a contract, as well as an entity’s evaluation of the nature of its promise to grant a license of intellectual property and whether or not that revenue is recognized over time or at a point in time. This ASU has the same effective date as the new revenue standard, which is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company is considering the alternatives of adoption of this ASU and will continue to review the likely impact to the existing portfolio of customer contracts entered into prior to adoption. The Company will continue to evaluate the effect of adopting this guidance upon its results of operations, cash flows and financial position. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements except that there are significant additional reporting requirements under the new standard. In May 2016, the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. This ASU rescinds SEC paragraphs pursuant to two SEC Staff Announcements at the March 3, 2016 Emerging Issues Task Force (EITF) meeting. Specifically, registrants should not rely on the following SEC Staff Observer comments upon adoption of Topic 606: (1) Revenue and Expense Recognition for Freight Services in Process, which is codified in paragraph 605-20-S99-2; (2) Accounting for Shipping and Handling Fees and Costs, which is codified in paragraph 605-45-S99-1; (3) Accounting for Consideration Given by a Vendor to a Customer (including Reseller of the Vendor’s Products), which is codified in paragraph 605-50-S99-1; and (4) Accounting for Gas-Balancing Arrangements (i.e., use of the “entitlements method”), which is codified in paragraph 932-10-S99-5. This ASU becomes effective upon adoption of ASU 2014-09, which is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company has not yet begun to consider the alternatives of adoption of this ASU or its impact on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. This ASU does not change the core principle of the guidance in Topic 606. Instead, the amendments provide clarifying guidance in a few narrow areas and add some practical expedients to the guidance. This ASU has the same effective date as the new revenue standard, which is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently evaluating the impact of the pending adoption of this new standard on its consolidated financial statements. The Company is considering the alternatives of adoption of this ASU. Currently, the Company does not expect the adoption of this ASU to have a material impact on its financial statements except that there are significant additional reporting requirements under the new standard. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to reduce diversity in practice in how transactions are classified in the statement of cash flows. This ASU is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and currently the Company has determined there to be no impact of this ASU on its financial statements and related disclosures. In January 2017, the FASB issued 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this ASU simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test and eliminating the requirement for a reporting unit with a zero or negative carrying amount to perform a qualitative assessment. Instead, under this pronouncement, an entity would perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and would recognize an impairment change for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized is not to exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects will be considered, if applicable. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures. |
Acquisition of Xing Beverage,26
Acquisition of Xing Beverage, LLC (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Summary of Estimated Fair Values of Purchase Price | Cash $ 8,500,000 Seller’s note 4,500,000 Stock 6,995,000 Purchase price $ 19,995,000 Accounts receivable $ 5,627,669 Inventories 4,847,417 Prepaid expenses and other current assets 492,972 Property and equipment, net 7,418,789 Other intangible assets acquired (customer lists) 4,628,800 Assumption of accounts payable, accrued expenses, other current liabilities and mortgage note payable (7,526,874 ) 15,488,773 Goodwill 4,506,227 $ 19,995,000 |
2017 Acquisitions (Tables)
2017 Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Acquisition Of Assets Of Br Liquid Adventure Llc Tables | |
Schedule of Net Assets Acquired and Recorded as Goodwill | Maverick Brands, LLC Cash $ 2,000,000 Stock 9,086,000 Purchase price $ 11,086,000 Accounts receivable $ 245,426 Inventories 1,523,413 Prepaid expenses and other current assets 211,213 Property and equipment, net 68,282 Other intangible assets acquired (trade names, recipes and customer lists) 6,660,441 Accounts payable and accrued expenses (1,345,155 ) Assumption of note payable (1,427,051 ) 5,936,569 Goodwill 5,149,431 $ 11,086,000 PMC Holdings, Inc. Stock $ 5,496,000 Purchase price $ 5,496,000 Prepaid expenses and other current assets 2,256 Property and equipment, net 55,023 Patents 4,100,000 Accounts payable (27,772 ) Assumption of notes payable (401,095 ) 3,728,412 Goodwill 1,767,588 $ 5,496,000 Marley Beverage Company, LLC Stock $ 18,600,000 Contingent consideration 800,000 Purchase price $ 19,400,000 Accounts receivable $ 186,658 Inventories 798,098 Prepaid expenses and other current assets 198,882 Property and equipment, net 22,191 Other intangible assets acquired (trade names, recipes and customer lists) 9,281,365 Accounts payable and accrued expenses (505,146 ) 9,982,048 Goodwill 9,417,952 $ 19,400,000 |
Pro forma | For the year ended December 31, 2017 For the year ended December 31, 2016 (unaudited) (unaudited) Revenues $ 56,144,428 $ 70,699,047 Net loss from continuing operations (7,497,397 ) (17,562,676 ) Net loss per share – Basic and diluted $ (0.22 ) $ (0.51 ) Weighted average number of common shares outstanding – Basic and Dilutive 34,330,520 34,330,520 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | December 31, 2017 December 31, 2016 Finished goods $ 6,302,265 $ 3,962,050 Raw materials 739,510 458,582 $ 7,041,775 $ 4,420,632 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | December 31, 2017 December 31, 2016 Customer relationships $ 6,444,126 $ 4,878,800 Patents 4,100,000 - Recipes 3,530,000 - License agreements 5,990,252 - Trade name 4,860,441 - Less: accumulated amortization (1,368,568 ) (340,126 ) $ 23,556,251 $ 4,538,674 |
Schedule of Remaining Amortization of Customer Relationships | Year Ended December 31, Amount 2018 $ 1,387,985 2019 1,387,985 2020 1,387,985 2021 1,387,985 2022 1,387,985 Thereafter 16,616,326 Total $ 23,556,251 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | December 31, 2017 December 31, 2016 Land and building $ 518,293 $ 6,070,000 Trucks and coolers 1,226,053 963,474 Other property and equipment 913,053 509,064 Less: accumulated depreciation (762,579 ) (256,337 ) $ 1,894,820 $ 7,286,201 |
Notes Payable, Convertible No31
Notes Payable, Convertible Note Payable and Capital Leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | December 31, 2017 December 31, 2016 Revolving note payable due bank $ 2,000,000 $ 5,650,000 Series B notes assumed from the Maverick Acquisition 1,472,051 - Note payable due to bank – secured by building - 4,754,636 Seller’s note payable - 4,500,000 Note payable, net of unamortized discounts of $0 and $98,575 as of December 31, 2017 and 2016, respectively - 32,218 3,427,051 14,936,854 Less: current portion (3,427,051 ) (4,562,179 ) Long-term portion, net of unamortized discounts $ - $ 10,374,675 |
Related Party Debt (Tables)
Related Party Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | December 31, 2017 December 31, 2016 Related party debt, net of unamortized discounts of $0 and $30,039 as of December 31, 2017 and 2016, respectively $ - $ 29,961 Less: current portion - - Long-term portion, net of unamortized discount $ - $ 29,961 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Operating Lease Payments | 2018 $ 968,073 2019 820,800 2020 830,640 2021 840,000 2022 845,000 Thereafter $ 4,304,513 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Schedule of Stock Option Activity | Employee Stock Option Compensation Award Activity Shares Weighted- Average Grant Date Fair Value Non-vested options at January 1, 2016 - $ - Granted 438,848 $ 1.11 Vested - $ - Forfeited - $ - Non-vested options at December 31, 2016 438,848 $ 1.11 Non-vested options at January 1, 2017 438,848 $ 1.11 Granted 1,099,62 7 $ 1.22 Vested (161,449 ) $ 1.11 Forfeited - $ - Non-vested options at December 31, 2017 1,422,526 $ 1.11 |
Schedule of Assumptions Used | Exercise price $ 1.79 Dividend yield 0.0 % Risk-free interest rate 0.86 % Expected volatility 100 % Expected term (years) 3.0 Estimated forfeiture % rate 0.0 % |
Common Stock Warrants (Tables)
Common Stock Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Common Stock Warrants Tables Abstract | |
Summary of Common Stock Warrants Activity | Weighted Average Number Exercise Price Warrants outstanding December 31, 2015 1,127,000 $ 0.94 Granted 372,974 $ 0.40 Exercised (42,000 ) $ 0.50 Forfeited (1,085,000 ) $ 0.96 Warrants outstanding December 31, 2016 372,974 $ 0.40 Warrants exercisable as of December 31, 2016 372,974 $ 0.40 Warrants outstanding December 31, 2016 372,974 $ 0.40 Granted - $ - Exercised (372,974 ) $ 0.40 Forfeited - $ - Warrants outstanding December 31, 2017 - $ 0.40 Warrants exercisable as of December 31, 2017 - $ 0.40 |
Restricted Stock Awards (Tables
Restricted Stock Awards (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Restricted Stock Awards Tables Abstract | |
Restricted stock award activity | Service Shares Restricted Stock-Based Compensation Award Activity Shares Weighted- Average Grant Date Fair Value Non-vested restricted stock awards at January 1, 2016 - $ - Granted 771,783 $ 0.33 Vested - $ - Forfeited - $ - Non-vested restricted stock awards at December 31, 2016 771,783 $ 0.33 Non-vested restricted stock awards January 1, 2017 771,783 $ 0.33 Granted 838,178 $ 2.11 Vested (740,439 ) 0.33 Forfeited - $ - Non-vested restricted stock awards at December 31, 2017 869,522 $ 0.71 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets And Liabilities | Net operating loss carry forwards $ 2,689,000 $ 2,139,000 Intangible asset amortization 128,000 34,000 Other 53,000 - Valuation allowance (2,870,000 ) (2,173,000 ) Total $ - $ - |
Reconciliation of Income Tax Benefit | Expected federal income tax benefit at 34% $ (1,202,000 ) $ (1,235,000 ) Expected state income tax benefit, net of federal benefit (108,000 ) (111,000 ) Non-deductible expenses 1,000 1,000 Change in prior year deferred taxes and other 2,055,000 (39,000 ) Change in federal and state statutory tax rates (1,443,000 ) (43,000 ) Change in valuation allowance 697,000 1,427,000 Total tax expense $ - $ - |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Net Loss Per Share | Year ended Year ended December 31, 2017 December 31, 2016 Weighted average shares outstanding – Basic 30,616,506 18,889,608 Series B preferred stock - - Warrant to acquire common stock - - Weighted average shares outstanding – Diluted 30,616,506 18,889,608 |
Statements of Cash Flows (Table
Statements of Cash Flows (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Cash Flow Supplemental Disclosures | Year ended December 31, 2017 Year ended December 31, 2016 CASH PAID DURING THE PERIODS FOR: Interest $ 228,039 $ 189,470 Income taxes $ - $ - NONCASH INVESTING AND FINANCING ACTIVITIES: Common stock issued for acquisition of Maverick Brands, LLC, Marley Beverages, LLC and Premier Micronutrient Corporation $ 33,182,000 $ - Warrants issued with convertible debt $ - $ 18,153 Common stock issued for acquisition of Xing Beverage, LLC $ - $ 6,995,000 Promissory note issued for acquisition of Xing Beverage, LLC $ - $ 4,500,000 Convertible debt and accrued interest converted into shares of Series B Preferred stock $ - $ 225,872 Conversion of Series B Preferred stock in common stock $ - $ - Supplemental cash flow information regarding the Company’s acquisitions in 2017 and 2016 are as follows: 2017 2016 Fair value of assets acquired $ 39,688,219 $ 27,521,874 Less liabilities assumed (4,506,219 ) (7,526,874 ) Net assets acquired 35,182,000 19,995,000 Less shares issued (35,182,000 ) (6,995,000 ) Less note payable (-) (4,500,000 ) Business acquisitions, net of cash acquired $ 2,000,000 $ 8,500,000 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Information Tables Abstract | |
Segment Information | Total revenues by reporting segment for the years presented are as follows: Years Ended December 31, (In thousands) 2017 2016 DSD $ 37,545 $ 18,211 Brands 14,643 7,091 Total revenues $ 52,188 $ 25,302 Total assets for each reporting segment as of December 31, 2017 and 2016 are as follows: December 31, (in thousands) (In thousands) 2017 2016 DSD $ 16,450 $ 17,274 Brands 51,222 9,452 Total Assets $ 67,672 $ 26,726 DSD A summary of the DSD segment’s revenues and cost of sales is as follows: Years Ended December 31, (in thousands) (In thousands) 2017 2016 Revenues $ 37,545 $ 18,211 Cost of sales (28,096 ) (14,926 ) Gross profit $ 9,449 $ 3,285 Brands A summary of the Brands segment’s revenues and cost of sales is as follows: Years Ended December 31, (in thousands) (In thousands) 2017 2016 Revenues $ 14,643 $ 7,091 Cost of sales (11,692 ) (4,580 ) Gross profit $ 2,951 $ 2,511 |
Nature of Operations, Basis o41
Nature of Operations, Basis of Presentation and Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Contingent provision | $ 800,000 | $ 0 |
Level 1 | ||
Contingent provision | 0 | 0 |
Level 2 | ||
Contingent provision | 0 | 0 |
Level 3 | ||
Contingent provision | 800,000 | 0 |
Earn-out attributable to Marley acquisition | ||
Contingent provision | 800,000 | 0 |
Earn-out attributable to Marley acquisition | Level 1 | ||
Contingent provision | 0 | 0 |
Earn-out attributable to Marley acquisition | Level 2 | ||
Contingent provision | 0 | 0 |
Earn-out attributable to Marley acquisition | Level 3 | ||
Contingent provision | $ 800,000 | $ 0 |
Nature of Operations, Basis o42
Nature of Operations, Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for doubtful accounts | $ 52,345 | $ 46,350 |
Accumulated amortization | 1,368,568 | 340,126 |
Amortization expense | $ 1,028,443 | $ 340,126 |
Potential dilutive securities | 1,127,000 | 1,127,000 |
Sales Revenue [Member] | ||
Concentration risk percentage | 21.40% | 27.50% |
Sales Revenue [Member] | Customer One [Member] | ||
Concentration risk percentage | 9.90% | 14.50% |
Sales Revenue [Member] | Customer Two [Member] | ||
Concentration risk percentage | 6.30% | 7.50% |
Sales Revenue [Member] | Customer Three [Member] | ||
Concentration risk percentage | 5.20% | 5.50% |
Accounts Receivable [Member] | ||
Concentration risk percentage | 23.10% | 29.40% |
Accounts Receivable [Member] | Customer One [Member] | ||
Concentration risk percentage | 10.50% | 12.30% |
Accounts Receivable [Member] | Customer Two [Member] | ||
Concentration risk percentage | 6.70% | 8.90% |
Accounts Receivable [Member] | Customer Three [Member] | ||
Concentration risk percentage | 5.90% | 8.20% |
Going Concern and Management'43
Going Concern and Management's Liquidity Plans (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ 10,500,883 | $ 6,964,957 |
Cash flows from operating activities | $ (8,410,777) | $ 975,176 |
Acquisition of Xing Beverage,44
Acquisition of Xing Beverage, LLC (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Total assets and liabilities assumed | $ 35,182,000 | $ 19,995,000 |
Xing Beverage LLC [Member] | ||
Cash | 8,500,000 | |
Seller's note | 4,500,000 | |
Stock | 6,995,000 | |
Purchase price | 19,995,000 | |
Accounts receivable | 5,627,669 | |
Inventories | 4,847,417 | |
Prepaid expenses and other current assets | 492,972 | |
Property and equipment, net | 7,418,789 | |
Other intangible assets acquired (customer lists) | 4,628,800 | |
Assumption of accounts payable, accrued expenses, other current liabilities and mortgage note payable | (7,526,874) | |
Total assets and liabilities assumed | 15,488,773 | |
Goodwill | 4,506,227 | |
Total purchase price | $ 19,995,000 |
Acquisition of Xing Beverage,45
Acquisition of Xing Beverage, LLC (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
General and administrative expenses | $ 13,940,583 | $ 6,367,606 |
Sale of stock price per share | $ .40 | $ .50 |
Xing Beverage LLC [Member] | ||
Purchase consideration paid | $ 19,995,000 | |
Purchase consideration paid cash | 8,500,000 | |
Notes payable | $ 4,500,000 | |
Number of common stock shares acquisition during the period | 4,353,915 | |
Equity issuance price per share | $ 1.61 | |
Goodwill deductible from tax | $ 4,506,227 | |
Incurred transactional costs | $ 1,714,463 | |
Legal and professional fee | 1,326,108 | |
General and administrative expenses | $ 388,355 | |
Common stock issued for services, shares | 167,994 | |
Share based compensation to officer | 1,078,763 | |
Sale of stock price per share | $ .36 |
2017 Acquisitions (Details)
2017 Acquisitions (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Total assets and liabilities assumed | $ 35,182,000 | $ 19,995,000 |
Maverick Brands | ||
Cash | 2,000,000 | |
Stock | 9,086,000 | |
Purchase price | 11,086,000 | |
Accounts receivable | 245,426 | |
Inventories | 1,523,413 | |
Prepaid expenses and other current assets | 211,213 | |
Property and equipment, net | 68,282 | |
Intangible assets acquired | 6,660,441 | |
Accounts payable and accrued expenses | (1,345,155) | |
Assumption of notes payable | (1,427,051) | |
Total assets and liabilities assumed | 5,936,569 | |
Goodwill | 5,149,431 | |
Total purchase price | 11,086,000 | |
PMC | ||
Stock | 5,496,000 | |
Purchase price | 5,496,000 | |
Prepaid expenses and other current assets | 2,256 | |
Property and equipment, net | 55,023 | |
Intangible assets acquired | 4,100,000 | |
Accounts payable and accrued expenses | (27,772) | |
Assumption of notes payable | (401,095) | |
Total assets and liabilities assumed | 3,728,412 | |
Goodwill | 1,767,588 | |
Total purchase price | 5,496,000 | |
Marley | ||
Stock | 18,600,000 | |
Contingent consideration | 800,000 | |
Purchase price | 19,400,000 | |
Accounts receivable | 186,658 | |
Inventories | 798,098 | |
Prepaid expenses and other current assets | 198,882 | |
Property and equipment, net | 22,191 | |
Intangible assets acquired | 9,281,365 | |
Accounts payable and accrued expenses | (505,146) | |
Total assets and liabilities assumed | 9,982,048 | |
Goodwill | 9,417,952 | |
Total purchase price | $ 19,400,000 |
2017 Acquisitions (Details 1)
2017 Acquisitions (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Revenues | $ 56,144,428 | $ 70,699,047 |
Net loss from continuing operations | $ (7,497,397) | $ (17,562,676) |
Net loss per share – Basic and diluted | $ (.22) | $ (.51) |
Weighted average number of common shares outstanding - Basic and Dilutive | 34,330,520 | 34,330,520 |
2017 Acquisitions (Details Narr
2017 Acquisitions (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($)$ / sharesshares | |
Maverick Brands | |
Purchase consideration paid | $ 11,086,000 |
Purchase consideration paid cash | $ 2,000,000 |
Number of common stock shares acquisition during the period | shares | 2,200,000 |
Equity issuance price per share | $ / shares | $ 4.13 |
Incurred transactional costs | $ 231,925 |
PMC | |
Number of common stock shares acquisition during the period | shares | 1,200,000 |
Equity issuance price per share | $ / shares | $ 4.58 |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 6,302,265 | $ 3,962,050 |
Raw materials | 739,510 | 458,582 |
Total Inventory | $ 7,041,775 | $ 4,420,632 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Intangible Assets | ||
Customer relationships | $ 6,444,126 | $ 4,878,800 |
Patents | 4,100,000 | 0 |
Recipes | 3,530,000 | 0 |
License agreements | 5,990,252 | 0 |
Trade name | 4,860,441 | 0 |
Less: accumulated amortization | (1,368,568) | (340,126) |
Total | $ 23,556,251 | $ 4,538,674 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Customer Relationships - Schedule Of Remaining Amortization Of Customer Relationships Details | ||
2,018 | $ 1,387,985 | |
2,019 | 1,387,985 | |
2,020 | 1,387,985 | |
2,021 | 1,387,985 | |
2,022 | 1,387,985 | |
Thereafter | 16,616,326 | |
Total | $ 23,556,251 | $ 4,538,674 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Customer Relationships Details Narrative 10k Abstract | ||
Amortization expense | $ 1,028,443 | $ 340,126 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Less accumulated depreciation | $ (762,579) | $ (256,337) |
Property and Equipment, Net | 1,894,820 | 7,286,201 |
Land and Building [Member] | ||
Property and Equipment, Gross | 518,293 | 6,070,000 |
Trucks and Coolers [Member] | ||
Property and Equipment, Gross | 1,226,053 | 963,474 |
Other Property and Equipment [Member] | ||
Property and Equipment, Gross | $ 913,053 | $ 509,064 |
Property and Equipment (Detai54
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 577,895 | $ 183,622 |
Notes Payable, Convertible No55
Notes Payable, Convertible Note Payable and Capital Leases (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Notes payable, net of unamortized discounts of $98,575 and $121,069 as of December 31, 2016 and 2015, respectively | $ 3,427,051 | $ 14,936,854 |
Less: current portion | (3,427,051) | (4,562,179) |
Long-term portion, net of unamortized discounts | 0 | 10,374,675 |
Revolving Note Payable Due Bank [Member] | ||
Notes payable, net of unamortized discounts of $98,575 and $121,069 as of December 31, 2016 and 2015, respectively | 2,000,000 | 5,650,000 |
Series B note assumed from the Maverick Acquisition [Member] | ||
Notes payable, net of unamortized discounts of $98,575 and $121,069 as of December 31, 2016 and 2015, respectively | 1,472,051 | 0 |
Note Payable Due To Bank [Member] | ||
Notes payable, net of unamortized discounts of $98,575 and $121,069 as of December 31, 2016 and 2015, respectively | 0 | 4,754,636 |
Sellers Note Payable [Member] | ||
Notes payable, net of unamortized discounts of $98,575 and $121,069 as of December 31, 2016 and 2015, respectively | 0 | 4,500,000 |
Note Payable [Member] | ||
Notes payable, net of unamortized discounts of $98,575 and $121,069 as of December 31, 2016 and 2015, respectively | $ 0 | $ 32,218 |
Related Party Debt (Details)
Related Party Debt (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Related Party Transactions [Abstract] | ||
Related party debt, net of unamortized discounts of $0 and $30,039 as of December 31, 2017 and 2016, respectively | $ 0 | $ 29,961 |
Less: current portion | 0 | 0 |
Long-term portion, net of unamortized discount | $ 0 | $ 29,961 |
Commitments and Contingencies57
Commitments and Contingencies (Details) | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 968,073 |
2,019 | 820,800 |
2,020 | 830,640 |
2,021 | 840,000 |
2,022 | 845,000 |
Total | $ 4,304,513 |
Commitments and Contingencies58
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expenses | $ 932,469 | $ 103,812 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Stockholders Equity | ||
Non-vested options Outstanding, Beginning Balance | 438,848 | 0 |
Non-vested options, Granted | 1,099,627 | 438,848 |
Non-vested options, Vested | (161,449) | 0 |
Non-vested options, Forfeited | 0 | 0 |
Non-vested options Outstanding, Ending Balance | 1,422,526 | 438,848 |
Weighted average grant date fair value Outstanding, Beginning Balance | $ 1.11 | $ 0 |
Weighted average grant date fair value, Granted | 1.12 | 1.11 |
Weighted average grant date fair value, Vested | 1.11 | .00 |
Weighted average grant date fair value, Forfeited | .00 | .00 |
Weighted average grant date fair value Outstanding, Ending Balance | $ 1.11 | $ 1.11 |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) | 12 Months Ended |
Dec. 31, 2017$ / shares | |
Stockholders Equity Details 1Abstract | |
Exercise price | $ 1.79 |
Dividend yield | 0.00% |
Risk-free interest rate | 0.86% |
Expected volatility | 100.00% |
Expected term (years) | 3 years |
Estimated forfeiture % rate | 0.00% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Common stock share authorized | 50,000,000 | 50,000,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Series A Preferred Stock [Member] | ||
Preferred stock shares authorized | 250,000 | 250,000 |
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares issued | 0 | 250,000 |
Preferred stock shares outstanding | 0 | 250,000 |
Series B Preferred Stock [Member] | ||
Preferred stock shares authorized | 300,000 | 300,000 |
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares issued | 169,234 | 284,807 |
Preferred stock shares outstanding | 169,234 | 284,807 |
Common Stock [Member] | ||
Restricted stock awards issued to employees, shares | 250,000 | |
Issuance of common stock in connection with services provided, shares | 395,184 |
Common Stock Warrants (Details)
Common Stock Warrants (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Number of shares Outstanding, Beginning Balance | 372,974 | 1,127,000 |
Number of shares, Granted | 0 | 372,974 |
Number of shares, Exercised | (372,974) | (42,000) |
Number of shares, Forfeited | 0 | (1,085,000) |
Number of shares Outstanding, Ending Balance | 0 | 372,974 |
Number of shares, Exercisable | 0 | 372,974 |
Weighted Average Exercise Price Outstanding, Beginning Balance | $ .40 | $ .94 |
Weighted Average Exercise Price, Granted | .00 | .40 |
Weighted Average Exercise Price, Exercised | .40 | .50 |
Weighted Average Exercise Price, Forfeited | .00 | .96 |
Weighted Average Exercise Price Outstanding, Ending Balance | .40 | .40 |
Weighted Average Exercise Price, Exercisable | $ .40 | $ .40 |
Common Stock Warrants (Details
Common Stock Warrants (Details Narrative) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Issuance of warrants to purchase of stock | 0 | 100,000 |
Warrants exercise price per share | $ .40 | $ .40 |
Common stock shares exercised | 372,974 | 42,000 |
Sale of stock price per share | $ .40 | $ .50 |
Restricted Stock Awards (Detail
Restricted Stock Awards (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of shares Outstanding, Beginning Balance | 372,974 | |
Number of shares, Granted | 0 | 372,974 |
Number of shares, Vested | (372,974) | (42,000) |
Number of shares, Forfeited | 0 | 1,085,000 |
Number of shares Outstanding, Ending Balance | 0 | 372,974 |
Weighted Average Exercise Price Outstanding, Beginning Balance | $ .40 | $ .94 |
Weighted Average Exercise Price, Granted | .00 | .40 |
Weighted Average Exercise Price, Vested | .40 | .50 |
Weighted Average Exercise Price, Forfeited | .00 | .96 |
Weighted Average Exercise Price Outstanding, Ending Balance | $ .40 | $ .40 |
Restricted Stock | Service Shares | ||
Number of shares Outstanding, Beginning Balance | 771,783 | 0 |
Number of shares, Granted | 838,178 | 771,783 |
Number of shares, Vested | (740,439) | 0 |
Number of shares, Forfeited | 0 | 0 |
Number of shares Outstanding, Ending Balance | 869,522 | 771,783 |
Weighted Average Exercise Price Outstanding, Beginning Balance | $ .33 | $ .00 |
Weighted Average Exercise Price, Granted | 2.11 | .33 |
Weighted Average Exercise Price, Vested | .33 | .00 |
Weighted Average Exercise Price, Forfeited | .00 | .00 |
Weighted Average Exercise Price Outstanding, Ending Balance | $ .90 | $ .33 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Taxes Details Narrative | ||
Net operating loss carry forwards | $ 2,689,000 | $ 2,139,000 |
Intangible amortization difference | 128,000 | 34,000 |
Other | 53,000 | 0 |
Less valuation allowance | (2,870,000) | (2,173,000) |
Net deferred tax asset | $ 0 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes Details 1Abstract | ||
Expected federal income tax benefit at 34% | $ (1,202,000) | $ (1,235,000) |
Expected state income tax benefit, net of federal benefit | (108,000) | (111,000) |
Non-deductible expenses | 1,000 | 1,000 |
Change in prior year deferred taxes and other | 2,055,000 | (39,000) |
Change in federal and state statutory tax rates | (1,443,000) | (43,000) |
Change in valuation allowance | 697,000 | 1,427,000 |
Total tax expense | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Income Taxes Details Narrative | |
NOL carryforwards | $ 10,900,000 |
NOL carryforwards expiration date | Dec. 31, 2037 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Weighted average shares outstanding - Basic | 30,616,506 | 18,889,608 |
Series B preferred stock | 0 | 0 |
Warrant to acquire common stock | 0 | 0 |
Weighted average shares outstanding - Diluted | 60,616,506 | 18,889,608 |
Statements of Cash Flows (Detai
Statements of Cash Flows (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | ||
Interest | $ 228,039 | $ 189,470 |
Income taxes | 0 | 0 |
Common stock issued for acquisition of Maverick Brands, LLC, Marley Beverages, LLC and Premier Micronutrient Corporation | 33,182,000 | 0 |
Warrants issued to with convertible debt | 0 | 18,153 |
Common stock issued for acquisition of Xing Beverage, LLC | 0 | 6,995,000 |
Promissory note issued for acquisition of Xing Beverage, LLC | 0 | 4,500,000 |
Convertible debt and accrued interest converted into shares of Series B Preferred stock | 0 | 225,872 |
Conversion of Series B Preferred stock in common stock | 0 | 0 |
Fair value of assets acquired | 39,688,219 | 27,521,874 |
Less liabilities assumed | (4,506,219) | (7,526,874) |
Net assets acquired | 35,182,000 | 19,995,000 |
Less shares issued | (33,182,000) | (6,995,000) |
Less note payable | 0 | (4,500,000) |
Business acquisitions, net of cash acquired | $ 2,000,000 | $ 8,500,000 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Total revenues | $ 52,188 | $ 25,302 |
Total Assets | 67,672 | 26,726 |
DSD | ||
Total revenues | 37,545 | 18,211 |
Total Assets | 16,450 | 17,274 |
Brands | ||
Total revenues | 14,643 | 7,091 |
Total Assets | $ 51,222 | $ 9,452 |
Segment Information (Details 1)
Segment Information (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | $ 52,188,000 | $ 25,302,000 |
Gross profit | 12,399,911 | 5,796,226 |
DSD | ||
Revenues | 37,545,000 | 18,211,000 |
Cost of sales | (28,096,000) | (14,926,000) |
Gross profit | 9,449,000 | 3,285,000 |
Brands | ||
Revenues | 14,643,000 | 7,091,000 |
Cost of sales | (11,692,000) | (4,580,000) |
Gross profit | $ 2,951,000 | $ 2,511,000 |