Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 14, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | New Age Beverages Corp | |
Entity Central Index Key | 1,579,823 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Entity Common Stock, Shares Outstanding | 72,835,862 | |
Trading Symbol | NBEV | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash | $ 28,627,464 | $ 285,245 |
Accounts receivable, net of allowance for doubtful accounts | 7,550,558 | 7,462,065 |
Inventories | 9,996,684 | 7,041,775 |
Prepaid expenses and other current assets | 1,204,645 | 1,435,058 |
Total current assets | 47,379,351 | 16,224,143 |
Prepaid expenses, long-term | 292,075 | 504,355 |
Property and equipment, net of accumulated depreciation | 1,541,100 | 1,894,820 |
Security deposit | 195,420 | 197,515 |
Right to use asset | 4,135,964 | 4,064,883 |
Goodwill | 21,230,212 | 21,230,212 |
Intangible assets, net of accumulated amortization | 22,457,475 | 23,556,251 |
Total assets | 97,231,597 | 67,672,179 |
CURRENT LIABILITIES: | ||
Accounts payable | 1,962,747 | 4,370,491 |
Accrued expenses | 663,175 | 2,276,638 |
Lease liability, current | 399,614 | 239,079 |
Current portion of notes payable | 0 | 3,427,051 |
Total current liabilities | 3,025,536 | 10,313,259 |
Lease liability, net of current portion | 3,732,512 | 3,820,865 |
Contingent consideration | 900,000 | 800,000 |
Total liabilities | 7,658,048 | 14,934,124 |
COMMITMENTS AND CONTINGENCIES (Note 6) | ||
STOCKHOLDERS' EQUITY: | ||
Common stock | 49,514 | 35,171 |
Additional paid-in capital | 109,547,375 | 63,203,598 |
Accumulated deficit | (20,023,347) | (10,500,883) |
Total stockholders' equity | 89,573,549 | 52,738,055 |
Total liabilities and stockholders' equity | 97,231,597 | 67,672,179 |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock | 0 | 169 |
Series C Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock | $ 7 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 50,000,000 | 50,000,000 |
Common Stock, shares issued | 49,514,086 | 35,171,419 |
Common Stock, shares outstanding | 49,514,086 | 35,171,419 |
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 | |
Preferred Stock, shares outstanding | 169,234 | |
Series C Preferred Stock [Member] | ||
Preferred Stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 6,900 | 0 |
Preferred Stock, shares issued | 6,900 | 0 |
Preferred Stock, shares outstanding | 6,900 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
REVENUES, net | $ 13,242,821 | $ 15,049,382 | $ 38,163,432 | $ 40,941,978 |
Cost of Goods Sold | 11,543,623 | 11,103,265 | 32,088,762 | 31,169,687 |
GROSS PROFIT | 1,699,198 | 3,946,117 | 6,074,670 | 9,772,291 |
OPERATING EXPENSES: | ||||
Advertising, promotion and selling | 469,553 | 1,169,985 | 1,459,308 | 2,761,896 |
General and administrative | 4,494,635 | 2,968,383 | 13,076,148 | 7,757,235 |
Legal and professional | 146,122 | 222,441 | 683,555 | 427,876 |
Total operating expenses | 5,110,310 | 4,360,809 | 15,219,011 | 10,947,007 |
LOSS FROM OPERATIONS | (3,411,112) | (414,692) | (9,144,341) | (1,174,716) |
OTHER EXPENSE: | ||||
Interest expense | (44,428) | (46,642) | (225,126) | (172,713) |
Other income | 0 | 14,724 | 3,476 | 3,335,764 |
Other expense | (49,261) | (33,282) | (156,473) | (678,899) |
Total Other income / (expense) | (93,689) | (65,200) | (378,123) | 2,484,152 |
NET (LOSS)/INCOME | $ (3,504,801) | $ (479,892) | $ (9,522,464) | $ 1,309,436 |
NET (LOSS)/INCOME PER SHARE - BASIC | $ (0.08) | $ (.01) | $ (0.24) | $ 0.04 |
NET (LOSS)/INCOME PER SHARE - DILUTED | $ (0.08) | $ (.01) | $ (0.24) | $ 0.04 |
Weighted average shares outstanding: | ||||
BASIC | 43,346,175 | 35,171,419 | 39,492,335 | 30,138,372 |
DILUTED | 43,346,175 | 35,171,419 | 39,492,335 | 30,238,372 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss) income | $ (9,522,464) | $ 1,309,436 |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||
Depreciation and amortization | 1,453,603 | 718,223 |
Amortization of debt discount | 185,000 | 0 |
Provision for doubtful accounts | (51,183) | 63,258 |
Gain on sale from building | 0 | (3,272,653) |
Share-based compensation | 1,387,178 | 0 |
Change in fair value of contingent consideration | 100,000 | 0 |
Interest expense settled through the issuance of common stock | 61,001 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (185,332) | (3,063,559) |
Inventories | (2,954,909) | (3,420,136) |
Prepaid expenses and other current assets | 62,693 | (1,675,631) |
Accounts payable, accrued expenses and other current liabilities | (3,801,003) | (1,047,755) |
Net cash used in operating activities | (13,265,416) | (10,388,817) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sale of building | 0 | 8,900,000 |
Purchases of property and equipment | (72,188) | (610,371) |
Acquisition of assets of Maverick Brands, LLC | 0 | (2,000,000) |
Deposits | 2,095 | 0 |
Net cash (used in) provided by investment activities | (70,093) | 6,289,629 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Borrowings on notes payable and bank indebtedness | 0 | 1,570,952 |
Proceeds from convertible note payable | 4,565,000 | 0 |
Payment of Convertible note | (4,750,000) | 0 |
Payment on Line of Credit, net | (2,000,000) | (3,650,000) |
Issuance of common stock for cash, net of issuance costs | 43,862,728 | 15,638,232 |
Repayment of notes payable and capital lease obligations | 0 | (9,397,343) |
Net cash provided by (used by) financing activities | 41,677,728 | 4,161,841 |
NET CHANGE IN CASH | 28,342,219 | 62,653 |
CASH AT BEGINNING OF PERIOD | 285,245 | 529,088 |
CASH AT END OF PERIOD | $ 28,627,464 | $ 591,741 |
Nature of Operations, Basis of
Nature of Operations, Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Nature of Operations, Basis of Presentation and Significant Accounting Policies | Business New Age Beverages Corporation (the “Company”) was formed under the laws of the State of Washington on April 26, 2010 under the name American Brewing Company, Inc. On April 1, 2015, the Company acquired the assets of B&R Liquid Adventure, which included the brand Búcha® Live Kombucha. On June 30, 2016, the Company acquired the combined assets of Xing Beverage, LLC, Aspen Pure®, LLC, New Age Beverages, LLC, and New Age Properties, LLC and changed the Company’s name to New Age Beverages Corporation. In March 2017, the Company acquired the assets of Maverick Brands LLC (“Maverick”), including the Coco-Libre brand. In May 2017, the Company acquired the assets of Premier Micronutrient Corporation (“PMC”). In June 2017, the Company also completed the acquisition of the Marley Beverage Company (“Marley”) including the worldwide brand licensing rights to all Marley brand non-alcoholic ready-to-drink (RTD) beverages (see Note 2). The Company manufactures, markets and sells a portfolio of healthy beverage brands including XingTea, Marley, Aspen Pure®, Búcha® Live Kombucha, and Coco-Libre. The portfolio is distributed through the Company’s own Direct Store Distribution (DSD) network and a hybrid of other routes to market throughout the United States and in 15 countries around the world. The brands are sold in all channels of distribution including Hypermarkets, Supermarkets, Pharmacies, Convenience, Gas and other outlets. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements as of September 30, 2018 of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-KA filed with the SEC on August 17, 2018. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the unaudited condensed consolidated financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2017 as reported in the Form 10-K have been omitted. 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. As of September 30, 2018, three customers accounted for approximately 29.6% (10.5%, 10.4%, and 8.7%) of accounts receivables. As of December 31, 2017, three customers represented approximately 23.1%, (10.5%, 6.7% and 5.9%) of accounts receivables. For the nine months ended September 30, 2018, three customers represented approximately 22.4% (10.7%, 7.0%. and 4.7%) of revenue. For the nine months ended September 30, 2017, three customers represented approximately 27% (14.3%, 8.7% and 4.0%) of revenue. For the three months ended September 30, 2018, three customers accounted for 22.2% (10.9%, 6.3% and 5.0%) of revenue compared to 16.2% (8.6%, 5.1% and 2.5%) for the same period in 2017. 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 $1,161 as of September 30, 2018 and $52,345 as of December 31, 2017. 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 months ended 30, 2018 and 2017, respectively. Intangible assets are recorded at fair value as part of the acquisitions as described in Note 2. The balance as of September 30, 2018 and December 31, 2017 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. For the nine months ended September 30, 2018 and 2017 amortization expense totaled $1,098,776 and $293,941, respectively. As of September 30, 2018 and December 31, 2017, accumulated amortization was $2,467,344 and $1,368,568, respectively. Share-Based Compensation The Company accounts for share-based compensation to employees in accordance with Accounting Standard Codification (ASC) 718 Compensation—Stock Compensation. Equity-Based Payments to Nonemployees Included in prepaid expenses as of September 30, 2018 and December 31, 2017 are prepaid share-based compensation of approximately $620,000 and $1,000,000, of which approximately $292,000 and $409,000 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. Long-lived Assets Long-lived assets consisted of property and equipment, customer relationships, tradenames and patents and are reviewed for impairment in accordance with the guidance of the Financial Accounting Standards Board ("FASB") Topic ASC 360, Property, Plant, and Equipment Recently Issued Accounting Standards Recently Adopted Accounting Guidance In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The new standard 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. The new standard 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 leases 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. The Company adopted ASU 2016-02 as of December 31, 2017. Accounting Guidance Not Yet Adopted In January 2017, the FASB issued 2017-04, Intangibles - Goodwill and Other In August 2018, the FASB issued ASU 2018-13. “Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments in the standard apply to all entities that are required, under existing GAAP, to make disclosures about recurring or nonrecurring fair value measurements. ASU 2018-13 removes, modifies, and adds certain disclosure requirements in ASC 820, Fair Value Measurement. The standard is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of ASU 2018-13. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date. The Company is currently assessing the impact that ASU 2018-13 will have on its financial statements. Cash Flows Nine months ended September 30, 2018 Nine months ended September 30, 2017 CASH PAID DURING THE PERIODS FOR: Interest $ 253,212 $ 226,022 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 Common stock issued for settlement of note payable, including interest expense of $61,001 $ 1,488,052 $ - |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Maverick Brands, LLC. On March 31, 2017, the Company acquired all of the assets of Maverick Brands, LLC or Maverick. Maverick is engaged in the manufacturing and sale of coconut water and other beverages. The acquisition helped 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 price of the Company’s 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 as of March 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 whereby the Company acquired substantially all of the operating assets of Premier Micronutrient Corporation, a subsidiary of PMC Holdings, Inc. or PMC, which is a company engaged in the business of developing, manufacturing, selling and marketing micronutrient products and formulations. On May 23, 2017, the parties executed the Bill of Sale and Assignment and Assumption Agreement for the acquisition. Upon the closing of the acquisition, 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 issued pursuant to the acquisition are 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 Marley Beverage Company, LLC On March 23, 2017, the Company entered into an asset purchase agreement whereby the Company acquired substantially all of the operating assets of Marley Beverage Company, LLC or 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 asset purchase agreement on 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, intellectual property, and worldwide licensing rights in perpetuity to all non-alcoholic Marley RTD beverages in exchange for a purchase price of 3,000,000 shares of the Company’s common stock. The Company agreed to 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 were granted 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 The following unaudited pro forma financial results reflects the historical operating results of the Company for the nine months ended September 30, 2017 and includes the pro forma results of operations as if Maverick, PMC and Marley were acquired on January 1, 2017. The unaudited pro forma financial information includes an adjustment to remove $231,925 of one-time transactional costs related to the Maverick acquisition that were expensed during the nine months ended September 30, 2017. These one-time costs were removed for pro forma purposes as the costs were non-recurring. No adjustments have been made for synergies that may result from the acquisition. These combined results are not necessarily 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 future operating results. Nine months ended September 30, 2017 (unaudited) Revenues $ 44,429,967 Net loss from continuing operations Net loss per share – Basic and diluted $ (0.09 ) Weighted average number of common shares outstanding – Basic and Dilutive 30,238,372 Adjustments to the fair values of the assets acquired, which are subject to change, could have a material impact on these pro forma combined results. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2018 | |
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: September 30, 2018 December 31, 2017 Finished goods $ 8,099,781 $ 6,302,265 Raw materials 1,896,903 739,510 $ 9,996,684 $ 7,041,775 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and equipment consisted of the following as of: September 30, 2018 December 31, 2017 Land and building $ 518,293 $ 518,293 Trucks and coolers 1,286,413 1,226,053 Other property and equipment 924,881 913,053 Less: accumulated depreciation (1,188,487 ) (762,579 ) $ 1,541,100 $ 1,894,820 Depreciation expense, computed on the basis of three-to-five year useful lives for all property and equipment, and a 40-year useful life on the building, was $425,908 and $434,282 for the nine months ended September 30, 2018 and 2017; respectively. |
Notes Payable and Convertible N
Notes Payable and Convertible Note Payable | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable and Convertible Note Payable | Notes payable consisted of the following as of: September 30, 2018 December 31, 2017 Revolving note payable due bank $ - $ 2,000,000 Series B note assumed from the Maverick Acquisition - 1,427,051 - 3,427,051 Less: current portion - (3,427,051 ) Long-term portion, net of unamortized discounts $ - $ - In connection with the acquisition of Maverick, the Company assumed Series B notes payable in the aggregate amount of $1,427,051. Monthly payments consisted of interest only payments at a rate of 10% per annum. The loans were due December 2018, but were extinguished during the nine months ended September 30, 2018. The Company entered into Exchange Agreements with the note holders whereby the Company issued an aggregate of 741,092 shares of its common stock to the Series B note holders in exchange for the extinguishment of the promissory notes in the principal amount of $1,427,051 and interest expense of $61,001. The fair value of the shares of common stock was $1.89 per share which represents the closing price on the date of executing the Exchange Agreements. On July 6, 2017, the Company entered into a revolving credit agreement with U.S. Bank National Association. Total borrowings under the revolving credit agreement was $2,000,000 and was subject to borrowing base requirements. The credit agreement bore interest at 2.5% plus Daily Reset LIBOR Rate. Interest only payments of approximately $7,000 were due monthly with the entire principal and outstanding interest payments were due on maturity on July 6, 2018. The revolving credit line was subject to a fixed charged ratio financial covenant. The Company needed to maintain a fixed charged coverage ratio of at least 1:15 to 1:00. During the period ended September 30, 2018 the revolving credit agreement was paid in full. On June 20, 2018, the Company entered into a Securities Purchase Agreement with an institutional investor pursuant to which the Company issued to the Investor for an aggregate purchase price payable in cash of $4,750,000, before reimbursement of expenses, a Senior Secured Convertible Promissory Note with a principal face amount of $4,750,000, which Convertible Note was, subject to certain conditions, convertible into shares of underlying common stock of the Company at a conversion price of $1.89 per share, subject to adjustment. The convertible note would have matured on June 20, 2019, unless earlier repurchased by the Company or converted pursuant to its terms. The Company issued to the Investor (i) 125,661 shares of Common Stock as a commitment fee; and (ii) 100,529 shares of Common Stock as payment of an additional exit fee to the Investor. The convertible note had a principal face amount of $4,750,000 and bore interest at a rate equal to 8% per annum, payable monthly. The convertible note had a maturity date of June 20, 2019. On August 24 2018 the Company repaid the entire convertible note by paying an aggregate of $4,992,778 which represented the optional redemption amount plus interest. The Company has no further obligations related to this convertible note. On August 10, 2018, the Company entered into a loan and security agreement with Siena Lending Group LLC, (which provides for a $12 million aggregate principal amount revolving credit facility which is subject to availability based on eligible accounts receivables and eligible inventory of the Company. The Loan and Security Agreement has a scheduled maturity date of August 10, 2021. Pursuant to the Loan and Security Agreement, the Company and its subsidiaries granted to the Lender a security interest in all assets of the Company and the Subsidiaries. In addition, pursuant to an intellectual property security agreement, the Company and New Age Health Sciences, Inc. granted to the Lender a continuing security interest in all of their respective intellectual property. In addition, pursuant to the Collateral Pledge Agreement, the Company granted the Lender a security interest in the equity interests of its subsidiaries. The Lender’s obligation to fund any loans under the Loan and Security Agreement is subject to the satisfaction of certain closing conditions, including the requirement to raise debt or equity, as described in the Loan and Security Agreement. The Loan and Security Agreement contains standard and customary events of default including, but not limited to: ● failure to make payments of principal or interest when due; ● failure to comply with certain covenants; ● bankruptcy or insolvency. The Loan and Security Agreement also includes an event of default if Brent Willis ceases to be employed as chief executive officer or if Chuck Ence ceases to be employed as the chief financial officer/controller, unless a successor is appointed within 60 days and such successor is reasonably satisfactory to the Lender. If for any reason the Lender’s commitment to make revolving loans is terminated prior to the Maturity Date, in addition to the payment of any outstanding principal and interest, the Borrowers will be required to pay an early payment/termination premium consisting of the applicable percentage of the amount of the revolving loan commitment termination. The applicable percentage shall be (i) 4%, if such event occurs on or before the first anniversary of the Closing Date, (ii) 2.25% if such event occurs after the first anniversary of the Closing Date, but on or before the second anniversary of the Closing Date, or (iii) 1.25% if such event occurs after the second anniversary of the Closing Date but before the Maturity Date. In connection with the financing, pursuant to an advisory agreement between the Company and Alliance Global Partners, a licensed broker-dealer with FINRA, the Company paid the advisor a cash fee of $240,000 upon funding of the initial loan. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Operating Lease Commitments On June 30, 2016, the Company assumed the lease commitments for 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 April 14, 2017 the Company entered into the Second Lease Amendment whereby extending the lease term through August 31, 2020 and new monthly rental payments of $16,400, subject to rental escalation clauses. On January 10, 2017, the Company entered into a Purchase and Sale Agreement with an unaffiliated third party. Pursuant to the agreement, the Company sold the property located at 1700 E 68th Avenue, Denver, CO 80229 for a purchase price of $8,900,000 and entered into a lease back arrangement, 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 lease cost is $52,000 per month for the initial year, with two percent annual increases. The Company elected to early adopt ASU 2016-02 (‘ Leases Future minimum lease payments under these facilities leases are approximately as follows: Remaining of 2018 $ 245,685 2019 820,800 2020 830,640 2021 840,000 2022 845,000 Thereafter 4,050,696 Total $ 7,632,821 Rent expense was $756,992 and $608,966 for the nine months ended September 30, 2018 and 2017, 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 condensed consolidated unaudited interim financial statements as of September 30, 2018. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
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 from time to time. The board of directors designated 250,000 shares as Series A Preferred stock, par value $.001 per share, 300,000 shares as Series B Preferred stock and 7,000 shares of Series C Preferred stock, par value of $.001 per share. Series A Preferred Stock Each share of Series A Preferred has the right to vote on any matter with holders of common stock and shall each have 500 votes. As of December 31, 2016, 250,000 shares of Series A Preferred were issued and outstanding. As a result of the February 17, 2017 public offering, all shares of Series A Preferred stock were rescinded, resulting in an increase to additional paid in capital of $250. Series B Preferred Stock Our board of directors 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, 169,234 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. Series C Preferred Stock Pursuant to the Series C Designation, our board of directors designated 7,000 shares of the Company’s preferred stock as Series C Preferred Stock. Holders of the Series C Preferred Stock are entitled to receive dividends equal, on an as-if-converted basis, to and in the same form as dividends actually paid on shares of the Company’s common stock when, as and if paid on shares of Common Stock. Each holder of outstanding Series C Preferred Stock is entitled to vote equal to the number of whole shares of Common Stock into which each share of the Series C Preferred Stock is convertible. Holders of Series C Preferred Stock are entitled, upon liquidation of the Company, to receive the same amount that a holder of Series C Preferred Stock would receive if the Series C Preferred Stock were fully converted into Common Stock. On the date on which an amendment to the Company’s Articles of Incorporation, as amended, to increase the Corporation’s authorized shares of Common Stock has been filed with the Secretary of State of the State of Washington, each share of Series C Preferred Stock shall convert automatically into 1,000 shares of the Company’s Common Stock. Effective September 21, 2018, the Company entered into an Exchange Agreement with Brent Willis and Neil Fallon pursuant to which the officers exchanged an aggregate of 6,900,000 shares of common stock which they owned for an aggregate of 6,900 shares of the Company’s newly designated Series C Convertible Preferred Stock. Common Stock On February 17, 2017, the Company issued 4,285,714 shares of common stock in an underwritten public offering at an offering price of $3.50 per share. In addition, the underwriters exercised the over-allotment to purchase an additional 642,857 shares of common stock. Net proceeds to the Company were $15,638,232 before deducting underwriting discounts and commissions, and other offering expenses payable by the Company. During the nine months ended September 30, 2018 the Company issued common stock for the following: In January 2018 the Company issued 1,353,872 common shares for the conversion of preferred shares. In April 2018 the Company completed an underwritten public offering and issued 2,560,000 common shares. In June 2018 the Company issued 226,190 common shares to pay certain loan fees. In August 2018 the Company completed an underwritten public offering at $1.28 per share issuing 9,200,000 shares. In September 2018 the Company issued 6,900,000 common shares pursuant to the At The Market (ATM) Offering Agreement dated September 24, 2018 with Roth Capital Partners, LLC. Throughout the nine months ended September 30, 2018 the Company converted Series B Promissory Notes into an aggregate of 741,092 shares of common stock for the full payment of these notes and issued 261,513 common shares to directors, management and consultants for services rendered. |
Common Stock Awards
Common Stock Awards | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Common Stock Awards | 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 pursuant to which the maximum number of shares that can be granted as of September 30, 2018 is 3,517,141 shares. Grants under the Plan include options and share 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 September 30, 2018 and December 31, 2017, a total of 1,117,014 and 292,565 options were outstanding under the plan. Employee stock option activities under the Incentive Plan for the nine-month period ended and year ended September 30, 2018 and December 31, 2017, and changes during the years then ended are presented below: Number of options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregated Intrinsic Value Outstanding December 31, 2017 1,611,475 $ 1.96 2.70 $ 5,462,900 Granted - - Exercised - - Forfeited (125,075 ) - Expired or Cancelled - - Outstanding September 30, 2018 1,486,400 $ 1.96 1.95 $ 5,038,896 Exercisable at September 30, 2018 539,243 $ 1.79 1.95 $ 1,919,705 Available for grant at September 30, 2018 2,030,741 The options granted in 2017 were fair valued using the Black-Scholes Merton model and valued at $1.33 and $0.83 per share on the grant date. The options granted in 2018 were fair valued using the BlackScholes Merton model and valued at $1.22 per share on the grant date. The following table presents the assumptions for the Black-Scholes option-pricing model used in determining the fair value of options granted to employees on the grant date: 2018 2017 Exercise price$ $ 2.04-2.09 2.04-2.09 Dividend yield 0.0 % 0.0 % Risk-free interest rate 2.01 % 2.01 % Expected volatility 100 % 100 % Expected term (years) 1.0-3.0 1.0-3.0 Estimated forfeiture % rate 0.0 % 0.0 % Restricted Stock Awards: Restricted stock award activity under the Incentive Plan for the nine months ended September 30, 2018 and for the year ended December 31, 2017, are presented below: Service Shares Restricted Stock-Based Compensation Award Activity Shares Weighted- Average Grant Date Fair Value Non-vested restricted stock awards at December 31, 2017 869,522 $ 0.71 Granted 153,300 $ 2.12 Vested (240,817 ) $ 2.11 Forfeited - $ - Non-vested restricted stock awards at September 30, 2018 782,005 $ 2.11 The shares were fair valued using our closing stock price of $2.11 in 2017 and $2.12 in 2018 per share on the grant dates. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | The following table provides basic and diluted shares outstanding for the calculation of net (loss) income per share. Series B preferred stock is included on an as-converted basis and warrants are included using the treasury stock method. For the periods whereby the Company is reporting a net loss from continuing operations, securities to acquire common stock or convertible into shares of common stock are excluded from the computation of net (loss) income per share as they would be anti-dilutive. Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Weighted average shares outstanding – Basic 43,346,175 35,171,419 39,492,335 30,138,372 Series B preferred stock - - - - Series C preferred stock - - - - Warrant to acquire common stock - - - 100,000 Weighted average shares outstanding – Diluted 43,346,175 35,171,419 39,492,335 30,238,372 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2018 | |
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. 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, broad-liners, key account owned warehouses and international accounts using several distribution channels. Total revenues by reporting segment for the periods presented are as follows: Three Months Ended September 30, (in thousands) (In thousands) 2018 2017 DSD $ 10,383 $ 11,066 Brands 2,860 3,983 Total revenues $ 13,243 $ 15,049 DSD A summary of the DSD segment’s revenues and cost of sales is as follows: Three Months Ended September 30, (in thousands) (In thousands) 2018 2017 Revenues $ 10,383 $ 11,066 Cost of sales (8,074 ) (7,628 ) Gross profit $ 2,309 $ 3,438 Brands A summary of the Brands segment’s revenues and cost of sales is as follows: Three Months Ended September 30 , (in thousands) (In thousands) 2018 2017 Revenues $ 2,860 $ 3,983 Cost of sales (3,470 ) (3,475 ) Gross profit $ (610 ) $ 508 Nine Months Ended September 30, (in thousands) (In thousands) 2018 2017 DSD $ 28,708 $ 29,338 Brands 9,455 11,604 Total revenues $ 38,163 $ 40,942 DSD A summary of the DSD segment’s revenues and cost of sales is as follows: Nine Months Ended September 30, (in thousands) (In thousands) 2018 2017 Revenues $ 28,708 $ 29,338 Cost of sales (22,414 ) (22,081 ) Gross profit $ 6,294 $ 7,258 Brands A summary of the Brands segment’s revenues and cost of sales is as follows: Nine Months Ended September 30 , (in thousands) (In thousands) 2018 2017 Revenues $ 9,455 $ 11,604 Cost of sales (9,674 ) (9,090 ) Gross profit $ (219 ) $ 2,514 Total assets for each reporting segment as of September 30, 2018 and December 31, 2017 are as follows: (in thousands) (In thousands) September 30, 2018 December 31, 2017 DSD $ 17,386 $ 16,630 Brands 79,846 51,042 Total Assets $ 97,232 $ 67,672 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | The Company has evaluated subsequent events through the date these condensed consolidated financial statements were available for issuance. On October 23, 2018, the Company filed an amendment to its Articles of Incorporation, as amended, pursuant to which the Company increased the authorized shares of common stock of the Company from 50,000,000 to 100,000,000. Since October 1, 2018, the Company has sold an aggregate of 1,188,565 shares of common stock for aggregate gross proceeds of approximately $5,347,349 under the At the Market Offering Agreement with Roth Capital Partners, LLC. The net proceeds were $5,186,914 and commissions totaled $160,435. On November 9, 2018, we entered into an underwriting agreement with Roth Capital Partners, LLC and A.G.P./Alliance Global Partners, acting as representatives of the several underwriters named on Schedule 1 thereto, which provided for the issuance and sale by the Company in an underwritten public offering and the purchase by the Underwriters of 12,900,000 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 $3.50 per share, less certain underwriting discounts and commissions. The Company also granted the Underwriters a 45-day option to purchase up to 1,935,000 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, which was exercised in full on November 13, 2018. The net offering proceeds to the Company from the Offering are estimated to be approximately $48.1 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 working capital and potential acquisitions. The Offering closed on November 14, 2018. |
Nature of Operations, Basis o_2
Nature of Operations, Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited interim condensed consolidated financial statements as of September 30, 2018 of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-KA filed with the SEC on August 17, 2018. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the unaudited condensed consolidated financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2017 as reported in the Form 10-K have been omitted. |
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. As of September 30, 2018, three customers accounted for approximately 29.6% (10.5%, 10.4%, and 8.7%) of accounts receivables. As of December 31, 2017, three customers represented approximately 23.1%, (10.5%, 6.7% and 5.9%) of accounts receivables. For the nine months ended September 30, 2018, three customers represented approximately 22.4% (10.7%, 7.0%. and 4.7%) of revenue. For the nine months ended September 30, 2017, three customers represented approximately 27% (14.3%, 8.7% and 4.0%) of revenue. For the three months ended September 30, 2018, three customers accounted for 22.2% (10.9%, 6.3% and 5.0%) of revenue compared to 16.2% (8.6%, 5.1% and 2.5%) for the same period in 2017. |
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 $1,161 as of September 30, 2018 and $52,345 as of December 31, 2017. |
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 months ended 30, 2018 and 2017, respectively. Intangible assets are recorded at fair value as part of the acquisitions as described in Note 2. The balance as of September 30, 2018 and December 31, 2017 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. For the nine months ended September 30, 2018 and 2017 amortization expense totaled $1,098,776 and $293,941, respectively. As of September 30, 2018 and December 31, 2017, accumulated amortization was $2,467,344 and $1,368,568, respectively. |
Share-Based Compensation | The Company accounts for share-based compensation to employees in accordance with Accounting Standard Codification (ASC) 718 Compensation—Stock Compensation. Equity-Based Payments to Nonemployees Included in prepaid expenses as of September 30, 2018 and December 31, 2017 are prepaid share-based compensation of approximately $620,000 and $1,000,000, of which approximately $292,000 and $409,000 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. |
Long-Lived Assets | Long-lived assets consisted of property and equipment, customer relationships, tradenames and patents and are reviewed for impairment in accordance with the guidance of the Financial Accounting Standards Board ("FASB") Topic ASC 360, Property, Plant, and Equipment |
Recently Issued Accounting Standards | Recently Adopted Accounting Guidance In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The new standard 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. The new standard 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 leases 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. The Company adopted ASU 2016-02 as of December 31, 2017. Accounting Guidance Not Yet Adopted In January 2017, the FASB issued 2017-04, Intangibles - Goodwill and Other In August 2018, the FASB issued ASU 2018-13. “Fair Value Measurement (Topic 820) Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” The amendments in the standard apply to all entities that are required, under existing GAAP, to make disclosures about recurring or nonrecurring fair value measurements. ASU 2018-13 removes, modifies, and adds certain disclosure requirements in ASC 820, Fair Value Measurement. The standard is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of ASU 2018-13. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date. The Company is currently assessing the impact that ASU 2018-13 will have on its financial statements. |
Cash Flows | Nine months ended September 30, 2018 Nine months ended September 30, 2017 CASH PAID DURING THE PERIODS FOR: Interest $ 253,212 $ 226,022 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 Common stock issued for settlement of note payable, including interest expense of $61,001 $ 1,488,052 $ - |
Nature of Operations, Basis o_3
Nature of Operations, Basis of Presentation and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Cash Flow, Supplemental Disclosures | Nine months ended September 30, 2018 Nine months ended September 30, 2017 CASH PAID DURING THE PERIODS FOR: Interest $ 253,212 $ 226,022 Income taxes $ - $ - NONCASH INVESTING AND FINANCING ACTIVITIES: |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Maverick Brands, LLC [Member] | |
Summary of Estimated Fair Values of Purchase Price | 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 [Member] | |
Summary of Estimated Fair Values of Purchase Price | 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 [Member] | |
Summary of Estimated Fair Values of Purchase Price | 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 |
Schedule of Unaudited Pro Forma | Nine months ended September 30, 2017 (unaudited) Revenues $ 44,429,967 Net loss from continuing operations Net loss per share – Basic and diluted $ (0.09 ) Weighted average number of common shares outstanding – Basic and Dilutive 30,238,372 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | September 30, 2018 December 31, 2017 Finished goods $ 8,099,781 $ 6,302,265 Raw materials 1,896,903 739,510 $ 9,996,684 $ 7,041,775 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | September 30, 2018 December 31, 2017 Land and building $ 518,293 $ 518,293 Trucks and coolers 1,286,413 1,226,053 Other property and equipment 924,881 913,053 Less: accumulated depreciation (1,188,487 ) (762,579 ) $ 1,541,100 $ 1,894,820 |
Notes Payable and Convertible_2
Notes Payable and Convertible Note Payable (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | September 30, 2018 December 31, 2017 Revolving note payable due bank $ - $ 2,000,000 Series B note assumed from the Maverick Acquisition - 1,427,051 - 3,427,051 Less: current portion - (3,427,051 ) Long-term portion, net of unamortized discounts $ - $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Operating Lease Payments | Remaining of 2018 $ 245,685 2019 820,800 2020 830,640 2021 840,000 2022 845,000 Thereafter 4,050,696 Total $ 7,632,821 |
Common Stock Awards (Tables)
Common Stock Awards (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of employee stock option activity | Number of options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregated Intrinsic Value Outstanding December 31, 2017 1,611,475 $ 1.96 2.70 $ 5,462,900 Granted - - Exercised - - Forfeited (125,075 ) - Expired or Cancelled - - Outstanding September 30, 2018 1,486,400 $ 1.96 1.95 $ 5,038,896 Exercisable at September 30, 2018 539,243 $ 1.79 1.95 $ 1,919,705 Available for grant at September 30, 2018 2,030,741 |
Fair value of options granted | 2018 2017 Exercise price$ $ 2.04-2.09 2.04-2.09 Dividend yield 0.0 % 0.0 % Risk-free interest rate 2.01 % 2.01 % Expected volatility 100 % 100 % Expected term (years) 1.0-3.0 1.0-3.0 Estimated forfeiture % rate 0.0 % 0.0 % |
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 December 31, 2017 869,522 $ 0.71 Granted 153,300 $ 2.12 Vested (240,817 ) $ 2.11 Forfeited - $ - Non-vested restricted stock awards at September 30, 2018 782,005 $ 2.11 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Loss Per Share | Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended September 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017 Weighted average shares outstanding – Basic 43,346,175 35,171,419 39,492,335 30,138,372 Series B preferred stock - - - - Series C preferred stock - - - - Warrant to acquire common stock - - - 100,000 Weighted average shares outstanding – Diluted 43,346,175 35,171,419 39,492,335 30,238,372 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Summary of segment reporting | Three Months Ended September 30, (in thousands) (In thousands) 2018 2017 DSD $ 10,383 $ 11,066 Brands 2,860 3,983 Total revenues $ 13,243 $ 15,049 Three Months Ended September 30, (in thousands) (In thousands) 2018 2017 Revenues $ 10,383 $ 11,066 Cost of sales (8,074 ) (7,628 ) Gross profit $ 2,309 $ 3,438 Three Months Ended September 30 , (in thousands) (In thousands) 2018 2017 Revenues $ 2,860 $ 3,983 Cost of sales (3,470 ) (3,475 ) Gross profit $ (610 ) $ 508 Nine Months Ended September 30, (in thousands) (In thousands) 2018 2017 DSD $ 28,708 $ 29,338 Brands 9,455 11,604 Total revenues $ 38,163 $ 40,942 Nine Months Ended September 30, (in thousands) (In thousands) 2018 2017 Revenues $ 28,708 $ 29,338 Cost of sales (22,414 ) (22,081 ) Gross profit $ 6,294 $ 7,258 Nine Months Ended September 30 , (in thousands) (In thousands) 2018 2017 Revenues $ 9,455 $ 11,604 Cost of sales (9,674 ) (9,090 ) Gross profit $ (219 ) $ 2,514 (in thousands) (In thousands) September 30, 2018 December 31, 2017 DSD $ 17,386 $ 16,630 Brands 79,846 51,042 Total Assets $ 97,232 $ 67,672 |
Nature of Operations, Basis o_4
Nature of Operations, Basis of Presentation and Significant Accounting Policies (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Accounting Policies [Abstract] | ||
Interest | $ 253,212 | $ 226,022 |
Income taxes | 0 | 0 |
Common stock issued for acquisition of Maverick Brands, LLC, Marley Beverages, LLC and Premier Micronutrient Corporation | 0 | 33,182,000 |
Common stock issued for settlement of note payable, including interest expense of $61,001 | $ 1,488,052 | $ 0 |
Nature of Operations, Basis o_5
Nature of Operations, Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Allowance for doubtful accounts | $ 1,161 | $ 1,161 | $ 52,345 | ||
Amortization expense | 1,098,776 | $ 293,941 | |||
Accumulated amortization | $ 2,467,344 | $ 2,467,344 | $ 1,368,568 | ||
Accounts Receivable [Member] | |||||
Concentration credit risk percentage | 29.60% | 23.10% | |||
Accounts Receivable [Member] | Customer One [Member] | |||||
Concentration credit risk percentage | 10.50% | 10.50% | |||
Accounts Receivable [Member] | Customer Two [Member] | |||||
Concentration credit risk percentage | 10.40% | 6.70% | |||
Accounts Receivable [Member] | Customer Three [Member] | |||||
Concentration credit risk percentage | 8.70% | 5.90% | |||
Revenues [Member] | |||||
Concentration credit risk percentage | 22.20% | 16.20% | 22.40% | 27.00% | |
Revenues [Member] | Customer One [Member] | |||||
Concentration credit risk percentage | 10.90% | 8.60% | 10.70% | 14.30% | |
Revenues [Member] | Customer Two [Member] | |||||
Concentration credit risk percentage | 6.30% | 5.10% | 7.00% | 8.70% | |
Revenues [Member] | Customer Three [Member] | |||||
Concentration credit risk percentage | 5.00% | 2.50% | 4.70% | 4.00% |
Going Concern and Management's
Going Concern and Management's Liquidity Plans (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accumulated deficit | $ 20,023,347 | $ 10,500,883 | |
Cash flows used in operating activities | $ (13,265,416) | $ (10,388,817) |
Acquisitions (Details)
Acquisitions (Details) | Sep. 30, 2018USD ($) |
Maverick Brands, LLC [Member] | |
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) |
Total Assets and Liabilities assumed | 5,936,569 |
Goodwill | 5,149,431 |
Total Purchase Price | 11,086,000 |
PMC Holding [Member] | |
Stock | 5,496,000 |
Purchase price | 5,496,000 |
Prepaid expenses and other current assets | 2,256 |
Property and equipment, net | 55,023 |
Other intangible assets acquired (trade names, recipes and customer lists) | 4,100,000 |
Accounts payable and accrued expenses | (27,772) |
Assumption of note payable | (401,095) |
Total Assets and Liabilities assumed | 3,728,412 |
Goodwill | 1,767,588 |
Total Purchase Price | 5,496,000 |
Marley Beverage Company, LLC [Member] | |
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) |
Total Assets and Liabilities assumed | 9,982,048 |
Goodwill | 9,417,952 |
Total Purchase Price | $ 19,400,000 |
Acquisitions (Details 1)
Acquisitions (Details 1) | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Business Combinations [Abstract] | |
Revenues | $ | $ 44,429,967 |
Net loss per share - Basic and diluted | $ / shares | $ (0.09) |
Weighted average number of common shares outstanding - Basic and Dilutive | shares | 30,238,372 |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 8,099,781 | $ 6,302,265 |
Raw materials | 1,896,903 | 739,510 |
Total Inventory | $ 9,996,684 | $ 7,041,775 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Less accumulated depreciation | $ (1,188,487) | $ (762,579) |
Property and Equipment, Net | 1,541,100 | 1,894,820 |
Land and Building [Member] | ||
Property and Equipment, Gross | 518,293 | 518,293 |
Trucks and Coolers [Member] | ||
Property and Equipment, Gross | 1,286,413 | 1,226,053 |
Other Property and Equipment [Member] | ||
Property and Equipment, Gross | $ 924,881 | $ 913,053 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 425,908 | $ 434,282 |
Notes Payable and Convertible_3
Notes Payable and Convertible Note Payable (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Note payable, net of unamortized discount of $- and $98,575 | $ 0 | $ 3,427,051 |
Less: current portion | 0 | (3,427,051) |
Long-term portion, net of unamortized discounts | 0 | 0 |
Note Payable [Member] | ||
Note payable, net of unamortized discount of $- and $98,575 | 0 | |
Revolving Note Payable Due Bank [Member] | ||
Note payable, net of unamortized discount of $- and $98,575 | 0 | 2,000,000 |
Series B Note Payable [Member] | ||
Note payable, net of unamortized discount of $- and $98,575 | $ 0 | $ 1,427,051 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Sep. 30, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remaining of 2018 | $ 245,685 |
2,019 | 820,800 |
2,020 | 830,640 |
2,021 | 840,000 |
2,022 | 845,000 |
Thereafter | 4,050,696 |
Total | $ 7,632,821 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Commitments And Contingencies | ||
Rent expenses | $ 756,992 | $ 608,966 |
Common Stock Awards (Details)
Common Stock Awards (Details) | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Non-vested options Outstanding, Beginning Balance | shares | 1,611,475 |
Non-vested options Granted | shares | 0 |
Non-vested options Vested | shares | 0 |
Non-vested options Forfeited | shares | (125,075) |
Non-vested options Outstanding, Ending Balance | shares | 1,486,400 |
Exercisable at September 30, 2018 | shares | 539,243 |
Available for grant at September 30, 2018 | shares | 2,030,741 |
Weighted Average Exercise Price Outstanding, Beginning Balance | $ / shares | $ 1.96 |
Weighted Average Exercise Price, Granted | $ / shares | 0 |
Weighted Average Exercise Price, Vested | $ / shares | 0 |
Weighted Average Exercise Price, Forfeited | $ / shares | 0 |
Weighted Average Exercise Price, Expired or Cancelled | $ / shares | 0 |
Weighted Average Exercise Price Outstanding, Ending Balance | $ / shares | 1.96 |
Weighted Average Exercise Price Exercisable | $ / shares | $ 1.79 |
Weighted Average Remaining Contractual Life, Beginning | 2 years 8 months 12 days |
Weighted Average Remaining Contractual Life, Ending | 1 year 11 months 12 days |
Weighted Average Remaining Contractual Life Exercisable | 1 year 11 months 12 days |
Aggregate Intrinsic Value Outstanding, Beginning | $ | $ 5,462,900 |
Aggregate Intrinsic Value Outstanding, Ending | $ | 5,038,896 |
Aggregate Intrinsic Value Exercisable | $ | $ 1,919,705 |
Common Stock Awards (Details 1)
Common Stock Awards (Details 1) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 2.01% | 2.01% |
Expected volatility | 100.00% | 100.00% |
Estimated forfeiture % rate | 0.00% | 0.00% |
Minimum [Member] | ||
Exercise price | $ 2.04 | $ 2.04 |
Expected term (years) | 1 year | 1 year |
Maximum [Member] | ||
Exercise price | $ 2.09 | $ 2.09 |
Expected term (years) | 3 years | 3 years |
Common Stock Awards (Details 2)
Common Stock Awards (Details 2) | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Number of shares, Granted | shares | 0 |
Number of shares, Forfeited | shares | 125,075 |
Weighted Average Exercise Price Outstanding, Beginning Balance | $ 1.96 |
Weighted Average Exercise Price, Granted | 0 |
Weighted Average Exercise Price, Forfeited | 0 |
Weighted Average Exercise Price Outstanding, Ending Balance | $ 1.96 |
Restricted Stock | Service Shares | |
Number of shares Outstanding, Beginning Balance | shares | 869,522 |
Number of shares, Granted | shares | 153,300 |
Number of shares, Vested | shares | (240,817) |
Number of shares, Forfeited | shares | 0 |
Number of shares Outstanding, Ending Balance | shares | 782,005 |
Weighted Average Exercise Price Outstanding, Beginning Balance | $ 0.71 |
Weighted Average Exercise Price, Granted | 2.12 |
Weighted Average Exercise Price, Vested | 2.11 |
Weighted Average Exercise Price, Forfeited | 0 |
Weighted Average Exercise Price Outstanding, Ending Balance | $ 2.11 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Weighted average shares outstanding - Basic | 43,346,175 | 35,171,419 | 39,492,335 | 30,138,372 |
Series B preferred stock | 0 | 0 | 0 | 0 |
Series C preferred stock | 0 | 0 | 0 | 0 |
Warrant to acquire common stock | 0 | 0 | 0 | 100,000 |
Weighted average shares outstanding - Diluted | 43,346,175 | 35,171,419 | 39,492,335 | 30,238,372 |
Segment Information (Details)
Segment Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Total revenues | $ 13,242,821 | $ 15,049,382 | $ 38,163,432 | $ 40,941,978 | |
Total Assets | 97,231,597 | 97,231,597 | $ 67,672,179 | ||
DSD | |||||
Total revenues | 10,383,000 | 11,066,000 | 28,708,000 | 29,338,000 | |
Total Assets | 17,386,000 | 17,386,000 | 16,630,000 | ||
Brands | |||||
Total revenues | 2,860,000 | $ 3,983,000 | 9,455,000 | $ 11,604,000 | |
Total Assets | $ 79,846,000 | $ 79,846,000 | $ 51,042,000 |
Segment Information (Details 1)
Segment Information (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | $ 13,242,821 | $ 15,049,382 | $ 38,163,432 | $ 40,941,978 |
Gross profit | 1,699,198 | 3,946,117 | 6,074,670 | 9,772,291 |
DSD | ||||
Revenues | 10,383,000 | 11,066,000 | 28,708,000 | 29,338,000 |
Cost of sales | (8,074,000) | (7,628,000) | (22,414,000) | (22,081,000) |
Gross profit | 2,309,000 | 3,438,000 | 6,294,000 | 7,258,000 |
Brands | ||||
Revenues | 2,860,000 | 3,983,000 | 9,455,000 | 11,604,000 |
Cost of sales | (3,470,000) | (3,475,000) | (9,674,000) | (9,090,000) |
Gross profit | $ (610,000) | $ 508,000 | $ (219,000) | $ 2,514,000 |