Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 29, 2019 | Jun. 29, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | New Age Beverages Corp | ||
Entity Central Index Key | 0001579823 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | true | ||
EntityExTransitionPeriod | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 58,271,000 | ||
Entity Common Stock, Shares Outstanding | 75,357,742 | ||
Trading Symbol | NBEV | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash | $ 42,517 | $ 285 |
Accounts receivable, net of allowance of $134 and $52, respectively | 9,837 | 7,462 |
Inventories | 37,148 | 7,042 |
Prepaid expenses and other current assets | 6,473 | 1,435 |
Total current assets | 95,975 | 16,224 |
Identifiable intangible assets, net | 67,830 | 23,556 |
Property and equipment, net | 57,281 | 1,895 |
Goodwill | 31,514 | 21,230 |
Right-of-use lease assests and other | 18,489 | 4,065 |
Deferred income taxes | 8,908 | 0 |
Restricted cash and other | 6,935 | 702 |
Total assets | 286,932 | 67,672 |
CURRENT LIABILITIES: | ||
Accounts payable | 8,960 | 4,370 |
Accrued expenses | 34,019 | 2,394 |
Current portion of business combination liabilities | 8,718 | 0 |
Current maturities of long-term debt | 3,369 | 3,549 |
Total current liabilities | 55,066 | 10,313 |
Business combination liabilities, net of current portion | 43,412 | 800 |
Long-term debt, net of current maturities | 1,325 | 0 |
Right-of-use lease liability, net of current portion | 13,686 | 3,821 |
Deferred income taxes | 9,747 | 0 |
Other | 9,160 | 0 |
Total liabilities | 132,396 | 14,934 |
COMMITMENTS AND CONTINGENCIES (Note 11) | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, value | 0 | 0 |
Common Stock; $0.001 par value. Authorized 100,000 shares; issued and outstanding 75,067 and 35,172 shares as of December 31, 2018 and 2017, respectively | 75 | 35 |
Additional paid-in capital | 176,471 | 63,204 |
Accumulated other comprehensive income | 626 | 0 |
Accumulated deficit | (22,636) | (10,501) |
Total stockholders' equity | 154,536 | 52,738 |
Total liabilities and stockholders' equity | 286,932 | 67,672 |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, value | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 100,000 | 100,000 |
Common Stock, shares issued | 75,067 | 35,172 |
Common Stock, shares outstanding | 75,067 | 35,172 |
Series B Preferred Stock [Member] | ||
Preferred Stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 300 | 300 |
Preferred Stock, shares issued | 0 | 169 |
Preferred Stock, shares outstanding | 0 | 169 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
REVENUES, net | $ 52,160 | $ 52,188 |
Cost of Goods Sold | 42,865 | 39,788 |
GROSS PROFIT | 9,295 | 12,400 |
OPERATING EXPENSES: | ||
Commissions | 2,781 | 1,456 |
Selling, general and administrative | 20,288 | 15,387 |
Business combination expenses: | ||
Financial advisor and other transaction costs | 3,189 | 232 |
Change in fair value of earnout obligations | 100 | 0 |
Depreciation and amortization expense | 2,310 | 1,606 |
Total operating expenses | 28,668 | 18,681 |
LOSS FROM OPERATIONS | (19,373) | (6,281) |
OTHER INCOME (EXPENSE): | ||
Interest expense | (1,068) | (228) |
Loss from change in fair value of embedded derivatives | (470) | 0 |
Other expense | (151) | (300) |
Gain from sale of building | 0 | 3,273 |
Loss before income taxes | (21,062) | (3,536) |
Income tax benefit | 8,927 | 0 |
NET LOSS | (12,135) | (3,536) |
Other comprehensive income: | ||
Foreign currency translation adjustments, net of tax | 626 | 0 |
Comprehensive loss | $ (11,509) | $ (3,536) |
NET LOSS PER SHARE - BASIC AND DILUTED | $ (0.26) | $ (0.12) |
Weighted average number of shares of Common Stock outstanding (basic and diluted) | 46,448 | 30,617 |
Statement of Stockholders' Equi
Statement of Stockholders' Equity - USD ($) $ in Thousands | Series B Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] | Total |
Balance Beginning at Dec. 31, 2016 | $ 1 | $ 22 | $ 11,821 | $ 0 | $ (6,965) | $ 4,879 |
Balance Beginning, Shares at Dec. 31, 2016 | 535 | 21,900 | ||||
Issuance of common stock in connection with public offering | $ 5 | 15,394 | 15,399 | |||
Issuance of common stock in connection with public offering, shares | 4,929 | |||||
Issuance of common stock in connection with the acquisition of Maverick Brands, LLC | $ 2 | 9,084 | 9,086 | |||
Issuance of common stock in connection with the acquisition of Maverick Brands, LLC, shares | 2,200 | |||||
Issuance of common stock in connection with the acquisition of Marley Beverages, LLC | $ 3 | 18,597 | 18,600 | |||
Issuance of common stock in connection with the acquisition of Marley Beverages, LLC, shares | 3,000 | |||||
Issuance of common stock in connection with the acquisition of Premier Micronutrient Corporation | $ 1 | 5,495 | 5,496 | |||
Issuance of common stock in connection with the acquisition of Premier Micronutrient Corporation, shares | 1,200 | |||||
Restricted stock awards issued to employees | $ 1 | 2,501 | 2,502 | |||
Restricted stock awards issued to employees, shares | 645 | |||||
Share-based compensation employee stock option plan | 162 | 162 | ||||
Recession of Series A Preferred Shares, shares | (250) | |||||
Conversion of of Series B Preferred Stock | $ (1) | $ 1 | ||||
Conversion of of Series B Preferred Stock, shares | (116) | 925 | ||||
Exercise of warrants | 150 | 150 | ||||
Exercise of warrants, shares | 373 | |||||
Net loss | (3,536) | (3,536) | ||||
Ending Balance at Dec. 31, 2017 | $ 0 | $ 35 | 63,204 | 0 | (10,501) | 52,738 |
Ending Balance, Shares at Dec. 31, 2017 | 169 | 35,172 | ||||
Issuance of common stock in connection with public offering | $ 35 | 97,606 | 97,641 | |||
Issuance of common stock in connection with public offering, shares | 34,684 | |||||
Common Stock issued in business combination with Morinda | $ 2 | 10,968 | 10,970 | |||
Common Stock issued in business combination with Morinda, shares | 2,016 | |||||
Restricted stock awards issued to employees | 353 | 353 | ||||
Restricted stock awards issued to employees, shares | 158 | |||||
Share-based compensation employee stock option plan | 1,219 | 1,219 | ||||
Conversion of of Series B Preferred Stock | $ 0 | $ 1 | (1) | |||
Conversion of of Series B Preferred Stock, shares | (169) | 1,354 | ||||
Series C Preferred Stock converted to Common Stock | $ 7 | 7 | ||||
Series C Preferred Stock converted to Common Stock, shares | (7) | 6,900 | ||||
Common Stock exchanged for Series C Preferred Stock | $ (7) | (7) | ||||
Common Stock exchanged for Series C Preferred Stock, shares | 7 | (6,900) | ||||
Cashless exercise of stock options and warrants | $ 1 | (1) | ||||
Cashless exercise of stock options and warrants, shares | 449 | |||||
Transaction costs in business combination | 1,166 | 1,166 | ||||
Transaction costs in business combination, shares | 214 | |||||
Debt issuance costs | 470 | 470 | ||||
Debt issuance costs, shares | 226 | |||||
Conversion of Series B promissory notes | $ 1 | 1,487 | 1,488 | |||
Conversion of Series B promissory notes, shares | 794 | |||||
Net change in other comprehensive income | 626 | 626 | ||||
Net loss | (12,135) | (12,135) | ||||
Ending Balance at Dec. 31, 2018 | $ 0 | $ 75 | $ 176,471 | $ 626 | $ (22,636) | $ 154,536 |
Ending Balance, Shares at Dec. 31, 2018 | 0 | 75,067 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (12,135) | $ (3,536) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 2,310 | 1,606 |
Accretion and amortization of debt discount and issuance costs | 780 | 99 |
Change in fair value of earnout obligations | 100 | 0 |
Loss from change in fair value of embedded derivatives | 470 | 0 |
Share-based compensation | 2,533 | 1,731 |
Deferred income taxes | (8,927) | 0 |
Issuance of Common Stock for: | ||
Acquisition costs related to business combination | 1,166 | 0 |
Accrued interest | 61 | 0 |
Make-whole premium on early payment of Convertible Note | 176 | 0 |
Gain on sale from building | 0 | (3,273) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,286 | (2,301) |
Inventories | (3,374) | (299) |
Prepaid expenses and other assets | (1,838) | (470) |
Accounts payable | (3,583) | (1,779) |
Accrued expenses | (856) | (189) |
Net cash (used in) provided by operating activities | (21,831) | (8,411) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Payments for acquisition of businesses, net of cash, cash equivalents and restricted cash acquired | (28,694) | (2,000) |
Capital expenditures for property and equipment | (744) | (563) |
Proceeds from sale of the building | 0 | 8,790 |
Net cash provided by (used in) investment activities | (29,438) | 6,227 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net proceeds from issuance of Common Stock | 99,857 | 15,399 |
Payments for deferred offering costs | (2,217) | 0 |
Proceeds from borrowings | 9,526 | 2,000 |
Principal payments on borrowings | (9,955) | (15,610) |
Proceeds from exercise of Common Stock purchase warrant | 0 | 151 |
Debt issuance costs paid | (634) | 0 |
Make-whole premium on early payment of Convertible Note | (176) | 0 |
Net cash provided by financing activities | 96,401 | 1,940 |
Effect of foreign currency translation changes | 439 | 0 |
Net change in cash, cash equivalents and restricted cash | 45,571 | (244) |
Cash, cash equivalents and restricted cash at beginning of year | 285 | 529 |
Cash, cash equivalents and restricted cash at end of year | 42,517 | 285 |
SUMMARY OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | ||
Cash and cash equivalents at end of year | 42,517 | 285 |
Restricted cash at end of year | 3,339 | 0 |
Cash, cash equivalents and restricted cash at end of year | 42,517 | 285 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for interest | 386 | 228 |
Cash paid for income taxes | 0 | 0 |
Cash paid under right-of-use operating lease obligations | 2,080 | 644 |
Fair value of assets acquired: | ||
Identifiable assets, excluding cash, cash equivalents and restricted cash | 151,902 | 23,353 |
Goodwill | 10,284 | 16,335 |
Less liabilities assumed | (109,388) | (3,706) |
Net assets acquired | 52,798 | 35,982 |
Issuance of common stock in business combinations | (10,970) | (33,182) |
Liability for contingent consideration | (13,134) | (800) |
Cash paid, net of cash, cash equivalents and restricted cash acquired | 28,694 | 2,000 |
Other non-cash investing and financing activities: | ||
Exchange of 6,900,000 shares of Common Stock for 6,900 shares of Series C Preferred Stock | 0 | 0 |
Issuance of Common Stock for conversion of: Principal under Series B notes payable | 1,427 | 0 |
169,234 shares of Series B Preferred Stock | 0 | 0 |
6,900 shares of Series C Preferred Stock | 0 | 0 |
Restriced stock granted for prepaid compensation, net of forfeitures | 353 | 0 |
Debt issuance costs paid from proceeds of borrowings | 170 | 0 |
Issuance of Common Stock for debt discount | 470 | 0 |
Operating Right-of-use lease assets obtained in exchange for Right-of-use lease obligations | 1,569 | 4,274 |
Fair value of warrants issued with convertible debt | $ 0 | $ 18 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Nature of Operations and Basis of Presentation | Legal Structure and Nature of Operations 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. In April 2015, the Company acquired the assets of B&R Liquid Adventure (“B&R”), which included the brand Búcha® Live Kombucha. In June 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 entered into a business combination with Maverick Brands, LLC (“Maverick”), including acquisition of the Coco-Libre brand. In May 2017, the Company entered into a business combination with PMC Holdings, Inc. (“PMC”), and in June 2017, the Company completed a business combination with Marley Beverage Company, LLC (“Marley”) including the worldwide brand licensing rights to all Marley brand non-alcoholic ready-to-drink (“RTD”) beverages. On December 21, 2018, the Company completed a business combination with Morinda Holdings, Inc., a Utah corporation (“Morinda”), whereby Morinda became a wholly-owned subsidiary of the Company. For further information about the Company’s acquisitions in 2017 and 2018, please refer to Note 3. 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. Morinda is primarily engaged in the development, manufacturing, and marketing of Tahitian Noni® Juice, MAX and other noni beverages (Morinda’s primary products) as well as other nutritional, cosmetic and personal care products. The majority of Morinda’s products have a component of the Noni plant, Morinda Citrifolia (“Noni”) as a common element. Morinda primarily sells and distributes its products to independent product distributors through a direct to consumer selling network. Morinda is based in the United States and markets and sells its products in more than 60 countries throughout the world. The Company and its subsidiaries are subject to regulation from a number of governmental agencies, including the U.S. Food and Drug Administration; Federal Trade Commission; Consumer Product Safety Commission; federal, state, and local taxing agencies; and others. In addition, the Company and its subsidiaries are subject to regulations from a number of foreign government agencies. Basis of Presentation and Consolidation The Company has four wholly-owned subsidiaries, NABC, Inc., NABC Properties, LLC (“NABC Properties”), New Age Health Sciences Holdings, Inc., and Morinda. NABC, Inc. is a Colorado-based operating company that consolidates performance and financial results of the Company’s subsidiaries and divisions. NABC Properties manages leasing and ownership issues for the Company’s buildings and warehouses (except for those owned or leased by Morinda), and New Age Health Sciences owns the Company’s intellectual property, and manages operating performance in the medical and hospital channels. Due to the recent acquisition of Morinda, there have been no material changes to the operations of that subsidiary. The consolidated financial statements, which include the accounts of the Company and its four wholly-owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated. Emerging Growth Company The accompanying audited consolidated financial statements and related footnotes have been prepared in accordance with applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company previously elected to opt out of such extended transition period which means that the Company must adopt new or revised accounting standards at the same time public companies are required to adopt the new or revised standard. The Company currently expects to retain its status as an emerging growth company until the year ending December 31, 2021, but this status could end sooner under certain circumstances. Reclassifications Certain amounts in the 2017 financial statements have been reclassified to conform to the current period financial statement presentation. These reclassifications had no effect on the previously reported net loss, working capital, cash flows and stockholders’ equity. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Use of Estimates The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company’s significant accounting estimates include, but are not necessarily limited to, estimated useful lives for identifiable intangible assets and property and equipment, impairment of goodwill and long-lived assets, valuation assumptions for stock options, warrants and equity instruments issued for goods or services, the allowance for doubtful accounts receivable, inventory obsolescence, the allowance for sales returns and chargebacks, deferred income taxes and the related valuation allowances, and the evaluation and measurement of contingencies. To the extent there are material differences between the Company’s estimates and the actual results, the Company’s future consolidated results of operation will be affected. Risks and Uncertainties Inherent in the Company’s business are various risks and uncertainties, including its limited operating history in a rapidly changing industry. These risks include the Company’s ability to manage its rapid growth and its ability to attract new customers and expand sales to existing customers, risks related to litigation, as well as other risks and uncertainties. In the event that the Company does not successfully execute its business plan, certain assets may not be recoverable, certain liabilities may not be paid and investments in its capital stock may not be recoverable. The Company’s success depends upon the acceptance of its expertise in providing services, development of sales and distribution channels, and its ability to generate significant net revenue and cash flows from the use of this expertise. Segments The Company’s chief operating decision maker (the “CODM”), who is the Company’s Chief Executive Officer, allocates resources and assesses performance based on financial information of the Company. The CODM reviews financial information presented for each reporting segments for purposes of making operating decisions and assessing financial performance. Accordingly, the Company operates in two reportable segments as presented in Note 15. Cash and Cash Equivalents All highly liquid investments purchased with an original maturity of three months or less that are freely available for the Company’s immediate and general business use are classified as cash and cash equivalents. Cash and cash equivalents consist primarily of demand deposits with financial institutions. Allowance for Doubtful Accounts The Company records a provision for doubtful accounts based on historical experience and a detailed assessment of the collectability of its accounts receivable. In estimating the allowance for doubtful accounts, the Company considers, among other factors, the aging of the accounts receivable, its historical write-offs, the credit worthiness of customers, and general economic conditions. Account balances are charged against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may either be in excess or less than the estimated allowance. Recoveries of any accounts receivable previously written off are recorded as a reduction of expense when received. Inventories Inventories consist of the costs associated with the purchase of raw materials and the manufacturing and transportation of products. Inventories are stated at the lower of cost or net realizable value using the first-in, first-out method. Provisions for excess inventory are included in cost of goods sold and have historically been immaterial. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, as follows: Years Buildings and improvements 28-40 Machinery and equipment 3-7 Office furniture and equipment 3-10 Delivery vehicles 3-5 Leasehold improvements are amortized over the remaining lease term or the estimated useful life of the asset, whichever is shorter. As of December 31, 2018, leasehold improvements are being amortized over lives ranging from 1 to 10 years. Maintenance and repairs are expensed as incurred. Depreciation commences when assets are initially placed into service for their intended use. 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 more likely than not that the fair value of the reporting unit is greater than the carrying amount, further testing of goodwill for impairment is not required. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The Company performed a qualitative assessment and determined there was no impairment of goodwill for the years ended December 31, 2018 and 2017. Intangible assets acquired in business combinations are recorded at the estimated acquisition date fair value. Finite lived intangible assets are amortized over the shorter of the contractual life or their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the asset are expected to be generated. In connection with the Company’s business combinations, identifiable intangible assets were acquired that were recorded at estimated fair value on the date of acquisition. These assets are being amortized using the straight-line method over the amortization periods shown below: Number of Years Weighted Range Average License agreements China direct selling license 15 15.0 Other 15 (1) 42.0 Trade names 15 15.0 Manufacturing processes and recipes 15 15.0 Independent product consultants distribution network 10 10.0 Customer relationships 3-15 14.5 Patents 15 15.0 Non-compete agreements 3 3.0 _________________ (1) In order to more closely reflect the estimated economic life of the license agreement acquired in the June 2017 acquisition of Marley, the Company revised the estimated useful life from 42 years to 15 years during the fourth quarter of 2018. The carrying value of this license was approximately $5.7 million, and the impact of the change in estimate resulted in an additional $64,000 of amortization expense for the fourth quarter of 2018 whereby the change to earnings per share was immaterial. For the year ending December 31, 2019, total amortization expense related to this license agreement is expected to be approximately $0.4 million as compared to approximately $0.2 million that was recognized for the year ended December 31, 2018. Impairment of Long-lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists for property and equipment and other long-lived assets if the carrying amounts of such assets exceed the estimates of future net undiscounted cash flows expected to be generated by such assets. An impairment charge is recognized for the amount by which the carrying amount of the asset, or asset group, exceeds its fair value. No impairment of long-lived assets occurred in the years presented. Leases The Company determines if contractual arrangements are considered a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, whereas assets related to finance leases are included in property and equipment. The corresponding liabilities related to ROU assets and assets under financing leases are included in accrued liabilities and other long-term liabilities in the Company’s consolidated balance sheets, based on the related contractual maturities. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the related obligations to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. None of the Company’s leases provide an implicit interest rate, which requires use of the Company’s estimated incremental borrowing rate to determine the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. When lease terms include options to extend or terminate the lease that are reasonably certain to be exercised, the ROU calculations give effect to such options. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Some of the Company’s lease agreements contain lease and non-lease components, which are generally accounted for separately. However, for certain leases, the Company elects to account for the lease and non-lease components as a single lease component. Additionally, for certain equipment leases, the Company applies a portfolio approach to effectively account for the operating lease ROU assets and liabilities. Debt Issuance Costs and Discounts Debt issuance costs incurred to obtain new debt financing or modify existing debt financing consist of incremental direct costs incurred for professional fees and due diligence services, including reimbursement of similar costs incurred by the lenders. Amounts paid to the lenders when a financing is consummated are a reduction of the proceeds and are treated as a debt discount. Except for revolving lines of credit, debt issuance costs and discounts are presented in the accompanying consolidated balance sheets as a reduction in the carrying value of the debt and are accreted to interest expense using the effective interest method. Debt issuance costs related to revolving lines of credit are presented in the accompanying consolidated balance sheets as a long-term asset and are amortized using the straight-line method over the contractual term of the debt agreement. Unamortized deferred debt issuance costs are not charged to expense when the related debt becomes a demand obligation due to the violation of terms so long as it is probable that the lenders will either waive the violation or will agree to amend or restructure the terms of the indebtedness. If either circumstance is probable, the deferred debt issuance costs continue to be amortized over the remaining term of the initial amortization period. If it is not probable, the costs will be charged to expense. Deferred Offering Costs Commissions, legal fees and other costs that are directly associated with equity offerings are capitalized as deferred offering costs, pending a determination of the success of the offering. Deferred offering costs related to successful offerings are charged to additional paid-in capital in the period it is determined that the offering was successful. Deferred offering costs related to unsuccessful equity offerings are recorded as expense in the period when it is determined that an offering is unsuccessful. Revenue Recognition We recognize revenue when our performance obligations are satisfied. Our primary performance obligation (the distribution and sale of beverage products) is satisfied upon the shipment or delivery of products to our customers, which is also when control is transferred. Merchandising activities that are performed after a customer obtains control of the product, are accounted for as fulfillment of our performance obligation to ship or deliver product to our customers and are recorded in selling, general and administrative expenses. Merchandising activities are immaterial in the context of our contracts. The transfer of control of products to our customers is typically based on written sales terms that do not allow for a right of return. However, our policy for DSD and certain chilled products is to remove and replace damaged and out-of-date products from store shelves to ensure that consumers receive the product quality and freshness they expect. Similarly, our policy for certain warehouse-distributed products is to replace damaged and out-of-date products. As a result, we record reserves, based on estimates, for anticipated damaged and out-of-date products. Payments received for undelivered or back-ordered products are recorded as deferred revenue. The Company’s policy is to defer revenue related to distributor convention fees, payments received on products ordered in the current period but not delivered until the subsequent period, initial independent product consultants (“IPCs”) fees, IPC renewal fees and internet subscription fees until the products or services have been provided. Deferred revenue is included in accrued liabilities in the accompanying consolidated balance sheets. Customer Programs and Incentives The Company incurs customer program costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to revenue or as advertising, promotional and selling expenses, based on the nature of the expenditure. The Company accounts for volume rebates made to its independent product consultants (“IPCs”) and similar discounts and incentives as a reduction of revenue in the accompanying consolidated statements of operations. Sales and Marketing Expenses Advertising, promotional and selling expenses consisted of sales salaries, tap handles, media advertising costs, sales and marketing expenses, and promotional activity expenses and are recognized in the period incurred. The Company accrues expenses for incentive trips associated with Morinda’s direct sales marketing program, which rewards certain IPCs with paid attendance at its conventions, meetings, and retreats. Expenses associated with incentive trips are accrued over qualification periods as they are earned. The Company specifically analyzes incentive trip accruals based on historical and current sales trends as well as contractual obligations when evaluating the adequacy of the incentive trip accrual. Actual results could result in liabilities being more or less than the amounts recorded. Research and Development Research and development costs are primarily related to development of new product formulas. All research and development costs are expensed as incurred. Research and development costs were not material for the years ended December 31, 2018 and 2017 Stock-Based Compensation The Company measures the cost of employee and director services received in exchange for all equity awards granted, including stock options, based on the fair market value of the award as of the grant date. The Company computes the fair value of options using the Black-Scholes-Merton (“BSM”) option pricing model. The Company recognizes the cost of the equity awards over the period that services are provided to earn the award, usually the vesting period. For awards granted which contain a graded vesting schedule, and the only condition for vesting is a service condition, compensation cost is recognized as an expense on a straight-line basis over the requisite service period as if the award was, in substance, a single award. The Company recognizes the impact of forfeitures in the period that the forfeiture occurs, rather than estimating the number of awards that are not expected to vest in accounting for stock-based compensation. Derivatives The Company holds a derivative financial instrument in the form of an interest rate swap. The Company uses interest rate swaps to economically convert variable interest rate debt on a foreign mortgage to a fixed rate. The Company has not designated these derivatives as hedging instruments. The interest rate swaps are recorded in the accompanying consolidated financial statements at their fair value with the unrealized gains and losses recorded in interest expense. When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative instrument. The estimated fair value of the derivative feature is recorded separately from the carrying value of the host contract, with subsequent changes in the estimated fair value recorded as a non-operating gain or loss in the Company’s consolidated statements of operations. Income Taxes The Company accounts for income taxes under the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered or settled. Realization of deferred income tax assets is dependent upon future taxable income. A valuation allowance is recognized if it is more likely than not that some portion or all of a deferred income tax asset will not be realized based on the weight of available evidence, including expected future earnings. The Company recognizes an uncertain tax position in its financial statements when it concludes that a tax position is more likely than not to be sustained upon examination based solely on its technical merits. Only after a tax position passes the first step of recognition will measurement be required. Under the measurement step, the tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon effective settlement. This is determined on a cumulative probability basis. The full impact of any change in recognition or measurement is reflected in the period in which such change occurs. Interest and penalties related to income taxes are recognized in the provision for income taxes. Foreign Currency Translation The Company’s reporting currency is the U.S. Dollar, while the functional currencies of its foreign subsidiaries are their respective local currencies. A majority of Morinda’s business operations occur outside the United States. The local currency of each of the Morinda’s international subsidiaries and branches is used as its functional currency. All assets and liabilities are translated into U.S. dollars at exchange rates existing at the consolidated balance sheet date, and net revenue and expenses are translated at monthly average exchange rates. The resulting net foreign currency translation adjustments are recorded in accumulated other comprehensive income as a separate component of stockholders’ equity in the consolidated balance sheets. Gains and losses from foreign currency transactions and remeasurement gains (losses) on short-term intercompany borrowings, are recorded in other income and expense in the consolidated statements of operations and comprehensive loss. The tax effect has not been material to date. Loss Per Common Share Basic net loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding for each period presented. Diluted net loss per common share is computed by giving effect to all potential shares of Common Stock, including unvested restricted stock awards, stock options, convertible debt, Preferred Stock and warrants, to the extent dilutive. Recent Accounting Pronouncements Recently Adopted Standards. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows – Restricted Cash In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation: Scope of Modification Accounting Standards Required to be Adopted in Future Years. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Codification Improvements to Topic 326, Financial Instruments – Credit Losses. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2018 | |
Business combination expenses: | |
Business Combination | The Company completed business combinations with Morinda in December 2018, and Maverick, PMC and Marley during 2017. Each of these business combinations was accounted for using the acquisition method of accounting based on ASC 805, Business Combinations Fair Value Measurement Morinda Holdings, Inc. On December 2, 2018, the Company entered into a Plan of Merger (the “Merger Agreement”) with Morinda and New Age Health Sciences Holdings, Inc., a newly formed Utah corporation and wholly-owned subsidiary of the Company (“Merger Sub”). On December 21, 2018 (the “Closing Date”), the transactions contemplated by the Merger Agreement were completed. Merger Sub was merged with and into Morinda and Morinda became a wholly-owned subsidiary of the Company. This transaction is referred to herein as the “Merger.” Pursuant to the Merger Agreement, the Company paid to Morinda’s equity holders (i) $75.0 million in cash; (ii) 2,016,480 shares of the Company’s Common Stock with an estimated fair value on the closing Date of approximately $11.0 million, (iii) 43,804 shares of Series D Preferred Stock (the “Preferred Stock”) providing for the potential payment of up to $15 million contingent upon Morinda achieving certain post-closing milestones, as discussed below. Pursuant to the Certificate of Designations of Series D Preferred Stock (the “CoD”), the holders of the Preferred Stock are entitled to receive a dividend of up to an aggregate of $15.0 million (the “Milestone Dividend”) if the Adjusted EBITDA (as defined in the CoD) of Morinda is at least $20.0 million for the year ending December 31, 2019. The Milestone Dividend is payable on April 15, 2020. If the Adjusted EBITDA of Morinda is less than $20.0 million, the Milestone Dividend shall be reduced by applying a five-times multiple to the difference between the Adjusted EBITDA target of $20 million and actual Adjusted EBITDA for the year ending December 31, 2019. Accordingly, no Milestone Dividend is payable if actual Adjusted EBITDA is $17.0 million or lower. Additionally, the Company is required to pay quarterly dividends to the holders of the Preferred Stock at a rate of 1.5% per annum of the Milestone Dividend amount, payable on a pro rata basis. The Company may pay the Milestone Dividend and /or the annual dividend in cash or in kind, provided that if the Company chooses to pay in kind, the shares of Common Stock issued as payment therefore must be registered under the Securities Act of 1933, as amended (the “Securities Act”). The Preferred Stock shall terminate on April 15, 2020. Prior to the Merger, Morinda was an S corporation for U.S. federal and state income tax purposes. Accordingly, Morinda’s taxable earnings were reported on the individual income tax returns of the stockholders who were responsible for payment of the related income tax liabilities. In December 2018, Morinda agreed to distribute to its stockholders approximately $39.6 million of its previously-taxed S corporation earnings whereby distributions are payable (i) up to $25.0 million for which the timing and amount are subject to a future financing event, and (ii) approximately $14.6 million based on the calculation of excess working capital (“EWC”) as of the Closing Date. EWC is the amount by which Morinda’s actual working capital (as defined in the Merger Agreement) on the Closing Date exceeds $25.0 million. The Closing Date balance sheet of Morinda indicated that EWC was approximately $14.6 million as of the Closing Date. Under ASC 805, acquisition-related transaction costs (e.g., advisory, legal and other professional fees) are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred. In connection with the Merger, the Company incurred transaction costs of $3.2 million, including (i) payment of cash of $1.1 million and issuance of 214,250 shares of Common Stock with a fair value of $1.2 million to a financial advisor that assisted with the consummation of the Merger, and (ii) professional fees and other incremental and direct costs associated with the Merger of $0.9 million. Maverick Brands, LLC On March 31, 2017, the Company acquired all of the assets of Maverick. Maverick was engaged in the manufacturing and sale of coconut water and other beverages, and the acquisition helped the Company expand its capabilities and product offerings. The operating results of Maverick have been consolidated with those of the Company beginning April 1, 2017. Total purchase consideration consisted of (i) $2.0 million of cash and (ii) 2.2 million shares of Common Stock valued at the closing price on the date of the acquisition of $4.13 per share for a total of $9.1 million. All of the goodwill and intangible assets from the Maverick acquisition are deductible for income tax purposes and are included in the Company’s New Age segment. The fair value of the identifiable assets included (i) customer relationships using the income approach with a fair value of $1.0 million, and (ii) the trade name with a fair value of $4.9 million and recipes with a fair value of $0.8 million, both determined using the market approach. In connection with the acquisition of Maverick, the Company incurred transactional expenses totaling $0.2 million. Goodwill related to Maverick was recognized for the difference between the total consideration transferred to consummate the acquisition of $11.1 million and the fair value of net identifiable assets acquired of $5.9 million. PMC Holdings, Inc. On May 23, 2017, closing occurred pursuant to an Asset Purchase Agreement whereby the Company acquired substantially all of the operating assets of PMC, which was a company engaged in the business of developing, manufacturing, selling and marketing micronutrient products and formulations. The Company received substantially all of the operating assets of PMC, consisting of patents and equipment in exchange for consideration of 1.2 million shares of Common Stock with a fair value of $5.5 million based on a closing price of $4.58 per share. All of the goodwill and intangible assets from the PMC acquisition are deductible for income tax purposes and are included in the Company’s New Age segment. Fair value of the patents was determined using the market approach by an independent third-party valuation specialist. Goodwill related to PMC was recognized for the difference between the total consideration transferred to consummate the acquisition of $5.5 million and the fair value of net identifiable assets acquired of $3.7 million. 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, which was a company engaged in the development, manufacturing, selling and marketing of nonalcoholic relaxation teas and sparkling waters, and ready-to-drink coffee drinks. Closing for the acquisition occurred on June 13, 2017. At closing, the Company received substantially all of the operating assets of Marley, consisting of inventory, accounts receivable, property and equipment, intellectual property, and worldwide licensing rights in perpetuity to all non-alcoholic Marley RTD beverages in exchange for consideration consisting of 3.0 million shares of Common Stock with a fair value of $18.6 million based on a closing price of $6.20 per share. In addition, the Company is obligated to make a single earnout payment of $1.25 million at such time that revenue for the Marley reporting unit is equal to or greater than $15.0 million during any trailing twelve calendar month period after the closing. Payment for 50% of the $1.25 million is due within 15 days after the month in which the earnout payment is triggered, 25% is payable one year after the first payment, and the remaining 25% is payable two years after the first payment. The fair value of the earnout was valued using the weighted average return on assets and amounted to $0.8 million on the closing date. As of December 31, 2018, the fair value of this earnout has increased to $0.9 million. All of the goodwill and intangible assets from the Marley acquisition are deductible for income tax purposes and are included in the Company’s New Age segment. The fair value of the identifiable assets included (i) customer relationships using the cost approach with a fair value of $0.6 million, and (ii) the license agreement with a fair value of $5.8 million and recipes with a fair value of $2.7 million, both determined using the market approach. Goodwill related to Marley was recognized for the difference between the total consideration transferred to consummate the acquisition of $19.4 million and the fair value of net identifiable assets acquired of $10.0 million. Summary of Purchase Consideration Presented below is a summary of the total purchase consideration for these business combinations (in thousands): 2018 2017 Morinda Maverick PMC Marley Total Purchase consideration: Cash paid $ 75,000 $ 2,000 $ - $ - $ 2,000 Fair value of: Common stock issued 10,970 (1) 9,086 5,496 18,600 33,182 Contingent consideration payable 13,134 (2) - - 800 800 Total purchase consideration $ 99,104 $ 11,086 $ 5,496 $ 19,400 $ 35,982 _________________ (1) Fair value was determined based on the closing price of the Company’s Common Stock on the Closing Date. (2) Earnout consideration represents the fair value of the Series D Preferred Stock based on the probability of achieving the Milestone Dividend, whereby the maximum Milestone Dividend is $15.0 million if the Adjusted EBITDA of Morinda is $20.0 million or more. The earnout consideration is expected to be finalized by the first quarter of 2020 and is required to be paid on April 30, 2020. The fair value of the earn-out was determined using an option pricing model. Purchase Price Allocations Presented below is a summary of the purchase price allocations for these business combinations (in thousands): 2018 2017 Morinda Maverick PMC Marley Total Current assets: Cash and cash equivalents $ 42,647 $ - $ - $ - $ - Accounts receivable 4,250 246 - 187 433 Inventories 26,733 (1) 1,523 - 798 2,321 Prepaid expenses and other 3,985 211 2 199 412 Total current assets acquired 77,615 1,980 2 1,184 3,166 Property and equipment 55,389 (2) 68 55 22 145 Identifiable intangible assets 45,886 (3) 6,661 4,100 9,281 20,042 Right-of-use lease asset and other 19,318 (4) - - - - Total identifiable assets acquired 198,208 8,709 4,157 10,487 23,353 Current liabilities assumed: Current maturities of notes payable (1,291 ) - (401 ) - (401 ) Stockholder payables - - - - Accounts payable, accrued liabilities and other (40,364 ) Long-term liabilities assumed: Notes payable, less current maturities (1,578 ) (1,427 ) - - (1,427 ) Stockholder payables (43,356 ) (5) - - - - Other long-term liabilities - - - - Net identifiable assets acquired 88,820 5,937 3,728 9,982 19,647 Goodwill 10,284 (6) 5,149 1,768 9,418 16,335 Total purchase price allocation $ 99,104 $ 11,086 $ 5,496 $ 19,400 $ 35,982 _________________ (1) Based on the report of an independent valuation specialist, the fair value of work-in-process and finished goods inventories on the Closing Date exceeded the historical carrying value by approximately $2.2 million. This amount represents an element of built-in profit on the Closing Date and will be charged to cost of goods sold as the related inventories are sold, which is expected to occur within approximately six months after the Closing Date. The fair value of inventories was determined using both the “cost approach” and the “market approach”. (2) Fair value of Morinda’s real estate properties amounted to $44.4 million and was based upon real estate appraisals prepared by an independent firm, primarily using the “income approach”. Fair value of other property and equipment amounted to $10.9 million and was based primarily on the report of an independent valuation specialist with fair value determined using both the “cost approach” and the “market approach”. (3) The fair value of identifiable intangible assets was $45.9 million and was determined based on the report of an independent valuation specialist, primarily using variations of the “income approach,” which is based on the present value of the future after-tax cash flows attributable to each identifiable intangible asset. (4) In order to conform with the Company’s accounting policies, Morinda adopted ASU No. 2016-02, Leases (5) Morinda’s U.S. operations were previously taxed as a subchapter S Corporation whereby no deferred income tax assets or liabilities had been recognized for U.S. federal and state income tax purposes. Upon consummation of the Merger, Morinda’s U.S. operations are included in the consolidated income tax returnsof the Company. Accordingly, an adjustment of approximately $9.9 million has been reflected for net deferred income tax liabilities that resulted from differences between the financial reporting basis and the income tax basis of such U.S. assets and liabilities. (6) Goodwill related to Morinda is recognized for the difference between the total consideration transferred to consummate the Merger of $99.1 million and the fair value of net identifiable assets acquired of $88.8 million. Goodwill and intangible assets in connection with the Morinda business combination are not expected to be deductible for income tax purposes. Business Combination Liabilities Presented below is a summary of earnout obligations related to the Marley and Morinda business combinations and payables to the former stockholders of Morinda (in thousands): 2018 Total Discount Accretion Net 2017 Marley earnout obligation $ 900 (1) $ - $ - $ 900 $ 800 Payables to former Morinda stockholders: EWC payable in April 2019 1,000 (2) (16) (5) 2 986 - EWC payable in July 2019 8,000 (2) (283) (5) 15 7,732 - EWC payable in July 2020 5,463 (2) (497) (5) 10 4,984 - Earnout under Series D preferred stock 13,134 (3) - - 13,134 - Contingent on financing event 25,000 (4) (644) (5) 46 24,394 - Total 53,497 (1,440) 73 52,130 800 Less current portion 9,000 (299) 17 8,718 - Long-term portion $ 44,497 $ (1,141) $ 56 $ 43,412 $ 800 _________________ (1) Revenue for the Marley reporting unit is not expected to exceed the $15.0 million earnout threshold during 2019. The fair value of the earnout was valued using the weighted average return on assets whereby the fair value increased from $0.8 million to $0.9 million during 2018. The increase in the fair value of the earnout of $0.1 million is recognized as an expense for the year ended December 31, 2018. (2) Pursuant to a separate agreement between the parties, EWC is payable to Morinda’s stockholders for $1.0 million in April 2019, $8.0 million in July 2019, and the remainder of $5.5 million is payable in July 2020. (3) The fair value of earnout consideration under the Series D Preferred Stock is based on the probability of achieving the Milestone Dividend, whereby the maximum Milestone Dividend is $15.0 million if the Adjusted EBITDA of Morinda is $20.0 million or more. The fair value of the earnout of $13.1 million was determined using an option pricing model and will continue to be adjusted to fair value each quarter during 2019 as additional information becomes available. (4) Pursuant to a separate agreement between the parties, Morinda agreed to pay its former stockholders up to $25.0 million from the net proceeds of a sale leaseback to be completed after the Closing Date. As discussed in Note 16, the closing for this transaction occurred on March 22, 2019. Accordingly, since this payment was made from the proceeds of a long-term financing, the net carrying value is classified as a long-term liability in the accompanying consolidated balance sheet as of December 31, 2018. (5) Interest was imputed on these obligations based on a credit and tax adjusted interest rate of 6.1% for the period from the Closing Date until the respective contractual or estimated payment dates. This discount is being accreted using the effective interest method. Pro Forma Disclosures The following unaudited pro forma financial results reflects the historical operating results of the Company, including the unaudited pro forma results of Morinda, Maverick, PMC and Marley for the years ended December 31, 2018 and 2017, respectively, as if each of these four business combinations had occurred as of January 1, 2017. The pro forma financial information set forth below reflects adjustments to the historical data of the Company to give effect to each of these acquisitions and the related equity issuances as if each had occurred on January 1, 2017. The pro forma information presented below does not purport to represent what the actual results of operations would have been for the periods indicated, nor does it purport to represent the Company’s future results of operations. The following table summarizes on an unaudited pro forma basis the Company’s results of operations for the years ended December 31, 2018 and 2017 (in thousands, except per share amounts): 2018 2017 Net revenue $ 287,119 $ 285,297 Net loss $ (10,210 ) $ (1,774 ) Net loss per share- basic and diluted $ (0.21 ) $ (0.05 ) Weighted average number of shares of common stock outstanding- basic and diluted 48,617 35,222 The calculations of pro forma net revenue and pro forma net loss give effect to the business combinations for the period from January 1, 2017 until the respective closing dates for (i) the historical net revenue and net income (loss), as applicable, of the acquired businesses, (ii) incremental depreciation and amortization for each business combination based on the fair value of property, equipment and identifiable intangible assets acquired and the related estimated useful lives, and (iii) recognition of accretion of discounts on obligations with extended payment terms that were assumed in the business combinations. |
Other Information
Other Information | 12 Months Ended |
Dec. 31, 2018 | |
Other Information | |
Other Information | Inventories Inventories consist of the following as of December 31, 2018 and 2017 (in thousands): 2018 2017 Raw materials $ 12,538 $ 6,302 Work-in-process 907 - Finished goods 23,703 740 Total inventories $ 37,148 $ 7,042 Prepaid Expenses and Other Current Assets As of December 31, 2018 and 2017, prepaid expenses and other current assets consist of the following (in thousands): 2018 2017 Prepaid expenses and deposits $ 4,982 $ 309 Prepaid stock-based compensation 347 963 Supplier and other receivables 1,144 163 Total $ 6,473 $ 1,435 Property and Equipment As of December 31, 2018 and 2017, property and equipment consisted of the following (in thousands): 2018 2017 Land $ 25,726 $ 37 Buildings and improvements 19,822 481 Leasehold improvements 4,398 858 Machinery and equipment 5,208 439 Office furniture and equipment 2,087 55 Transportation equipment 1,727 787 Total property and equipment 58,968 2,657 Less accumulated depreciation (1,687 ) (762 ) Property and equipment, net $ 57,281 $ 1,895 Depreciation and amortization expense related to property and equipment amounted to $0.7 million and $0.6 million for the years ended December 31, 2018 and 2017, respectively. Repairs and maintenance costs amounted to $0.8 million and $0.7 million for the years ended December 31, 2018 and 2017, respectively. Restricted Cash and Other As of December 31, 2018 and 2017, restricted cash and other long-term assets consist of the following (in thousands): 2018 2017 Restricted cash (1) $ 3,339 $ - Debt issuance costs, net 548 - Prepaid stock-based compensation 210 555 Deposits and other 2,838 147 Total $ 6,935 $ 702 (1) Restricted cash primarily represents long-term cash deposits held in a bank for a foreign governmental agency. This deposit is required to maintain the Company’s direct selling license to do business in China. Other Accrued Liabilities As of December 31, 2018 and 2017, other accrued liabilities consist of the following (in thousands): 2018 2017 Accrued commissions $ 9,731 $ 86 Current portion of right-of-use lease liability Accrued compensation and benefits 4,715 1,059 Accrued marketing events 3,757 (1) - Deferred revenue 2,701 - Income taxes payable 1,670 - Embedded derivative liability 470 - Other accrued liabilities 6,177 1,010 Total other accrued liabilities $ 34,019 $ 2,394 _________________ (1) Represents accruals for incentive trips associated with Morinda’s direct sales marketing program, which rewards certain IPCs with paid attendance at future conventions, meetings, and retreats. Expenses associated with incentive trips are accrued over qualification periods as they are earned. Incentive trip accruals are based on historical experience in relation to current sales trends in order to determine the related contractual obligations. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill Goodwill consists of the following by reporting unit as of December 31, 2018 and 2017 (in thousands): Reporting Unit 2018 2017 Morinda $ 10,284 $ - Marley Maverick 5,149 5,149 PMC 1,768 1,768 B&R 389 389 Total Goodwill $ 31,514 $ 21,230 Identifiable Intangible Assets As of December 31, 2018 and 2017, identifiable intangible assets consist of the following (in thousands): December 31, 2018 December 31, 2017 Accumulated Net Book Accumulated Net Book Identifiable Intangible Asset Cost Amortization Value Cost Amortization Value License agreements China direct selling license $ 20,420 $ 40 $ 20,380 $ - $ - $ - Other 6,089 418 5,671 5,990 74 5,916 Manufacturing processes and recipes 11,610 380 11,230 3,530 132 3,398 Trade names 12,301 584 11,717 4,861 243 4,618 IPC distributor sales force 9,760 29 9,731 - - - Customer relationships 6,444 1,194 5,250 6,444 760 5,684 Patents 4,100 433 3,667 4,100 160 3,940 Former Morinda shareholder non-compete agreements 186 2 184 - - - Total identifiable intangible assets $ 70,910 $ 3,080 $ 67,830 $ 24,925 $ 1,369 $ 23,556 Amortization expense related to identifiable intangible assets was $1.7 million and $1.0 million for the years ended December 31, 2018 and 2017, respectively. Assuming no future impairments or disposals, amortization expense for the above intangibles for the next five years is set forth below (in thousands): Year ending December 31: 2019 $ 4,785 2020 4,785 2021 4,783 2022 4,723 2023 4,723 Thereafter 44,031 Total $ 67,830 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Leases | The Company leases various office and warehouse facilities, vehicles and equipment under non-cancellable operating lease agreements that expire between January 2019 and May 2030. For the years ended December 31, 2018 and 2017, the Company had operating lease expense of $1.6 million and $0.7 million respectively. Balance Sheet Presentation As of December 31, 2018 and 2017, the carrying value of right-of-use (‘‘ROU’') lease assets and the related obligations were as follows (in thousands): December 31, 2018 Denver ROU Lease Additions in 2018 Ending December 31, Asset (1) Morinda (2) Other Balance 2017 (1) Right-of-Use Lease Assets: Cost basis $ 4,274 $ 13,369 $ 1,578 $ 19,221 $ 4,274 Accumulated amortization (449 ) (101 ) (182 ) (732 ) (209 ) Net $ 3,825 $ 13,268 $ 1,396 $ 18,489 $ 4,065 Right-of-Use Lease Liabilities: Current $ 277 $ 4,167 $ 354 $ 4,798 $ 239 Long-term 3,543 9,101 1,042 13,686 3,821 Total $ 3,820 $ 13,268 $ 1,396 $ 18,484 $ 4,060 _________________ (1) Solely consists of the ROU lease asset entered into in connection with the sale leaseback transaction discussed below. (2) Represents ROU lease asset and corresponding ROU lease liabilities assumed in the Merger with Morinda as discussed in Note 3. The present value of the ROU lease liabilities assumed in the Merger was based on the Company’s implicit borrowing rate of 6.1% on the Closing Date. As of December 31, 2018 and 2017, the weighted average remaining lease term under ROU leases was 5.9 and 9.2 years, respectively. As of December 31, 2018 and 2017, the weighted average discount rate for ROU lease liabilities was approximately 7% and 10%, respectively. Sale Leaseback On January 10, 2017, the Company entered into an agreement with an unaffiliated third party resulting in the sale for $8.9 million of the land and building that serves as the Company’s corporate headquarters in Denver, Colorado. Concurrently with the sale, the Company entered into a lease of this property for an initial term of ten years, with two options to extend for successive five-year periods. The monthly lease cost is $52,000 for the initial year, with 2% annual increases for each year thereafter. The Company determined that this transaction qualified as a sale under ASU 2016-02 (“ Leases Lease Commitments Future minimum lease payments under non-cancellable ROU operating lease agreements are as follows (in thousands): Year ending December 31: 2019 $ 6,328 2020 4,480 2021 3,040 2022 2,672 2023 2,261 Thereafter 5,611 Total minimum lease payments 24,392 Less imputed interest (5,908 ) Present value of minimum lease payments $ 18,484 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Siena Revolver On August 10, 2018 (the “Closing Date”), the Company entered into a loan and security agreement with Siena Lending Group LLC (“Siena”) that provides for a $12.0 million revolving credit facility (the “Siena Revolver”) with a scheduled maturity date of August 10, 2021 (the “Maturity Date”). Outstanding borrowings bear interest at the greater of (i) 7.5% or (ii) the prime rate plus 2.75%. As of December 31, 2018, the effective interest rate was 8.25%. Beginning on November 7, 2018, the Company was required to pay interest on a minimum of $2.0 million of borrowings, regardless of whether such funds had been borrowed. The Siena Revolver also provides for an unused line fee equal to 0.5% per annum of the undrawn portion of the $12.0 million commitment. The Siena Revolver is subject to availability based on eligible accounts receivables and eligible inventory of the Company. As of December 31, 2018, the borrowing base calculation permitted total borrowings of approximately $2.5 million. After deducting the outstanding principal balance of $2.0 million, the Company had excess borrowing availability of $0.5 million. Pursuant to the Siena Revolver, the Company granted a security interest in substantially all assets and intellectual property of the Company and its subsidiaries, except for such assets owned by Morinda. Siena’s obligation to fund loans was subject to the satisfaction of certain closing conditions, including the requirement to raise debt or equity which was satisfied during the fourth quarter of 2018. The Siena Revolver contains standard and customary events of default including, but not limited to, maintaining compliance with the financial and non-financial covenants set forth in the Siena Revolver. The financial covenants require maintenance of a fixed charge coverage ratio of no less than 1.1 if excess borrowing availability is less than $1.0 million, and to maintain minimum liquidity of $2.0 million. The fixed charge coverage ratio compares EBITDA, net of unfinanced capital expenditures, to fixed charges for the latest quarterly reporting period. As of December 31, 2018, the Company was in compliance with the financial covenants. The Siena Revolver also limits or prohibits the Company from paying dividends, incurring additional debt, selling significant assets, or merging with other entities without the consent of the lenders. The Siena Revolver also includes an event of default if Brent Willis ceases to be employed as chief executive officer or if Greg Gould ceases to be employed as the chief financial officer, unless a successor is appointed within 60 days and such successor is reasonably satisfactory to the Lender. In connection with the financing, the Company incurred a financial advisor fee, a closing fee and professional fees for a total of $0.4 million. This amount is being accounted for as debt issuance costs that is being amortized using the straight-line method over the three-year term of the Siena Revolver. The Siena Revolver includes a lockbox arrangement that requires the Company to direct its customers to remit payments to a restricted bank account, whereby all available funds are used to pay down the outstanding principal balance under the Siena Revolver. Accordingly, the entire outstanding principal balance of the Siena Revolver is classified as a current liability as of December 31, 2018. [As discussed in Note 16, the Siena Revolver was paid off and terminated on March 29, 2019.] Embedded Derivatives The Siena Revolver includes features that were determined to be embedded derivatives requiring bifurcation and accounting as separate financial instruments. The Company determined that embedded derivatives include the requirement to pay (i) an early termination premium if the Siena Revolver is terminated before the Maturity Date, and (ii) default interest at a 5.0% premium if events of default exist. An early termination premium is required to be paid if Siena’s commitment to make revolving loans is terminated prior to the Maturity Date. The fee is equal to 4.00%, 2.25% and 1.25% of the $12.0 million commitment if termination occurs during the first, second and third years after the Closing Date, respectively. These embedded derivatives are classified within Level 3 of the fair value hierarchy. Fair value was estimated using the “with” and “without” method. Accordingly, the Siena Revolver was first valued with the embedded derivatives (the “with” scenario) and subsequently valued without the embedded derivatives (the “without” scenario). The fair value of the embedded derivatives was estimated as the difference between these two scenarios. The fair values were determined using the income approach, specifically the yield method. As of December 31, 2018, key Level 3 assumptions and estimates used in the valuation of the embedded derivatives included an assessment of the probability of early termination of the Siena Revolver, the remaining term to maturity of approximately 2.6 years, probability of default of approximately 10%, and a discount rate of 6.1%. As of December 31, 2018, the embedded derivatives for the Siena Revolver have an aggregate fair value of approximately $0.5 million, which is included in accrued liabilities as of December 31, 2018. The Company recognized a loss on change in fair value of embedded derivatives of $0.5 million which is included in non-operating expenses for the year ended December 31, 2018. Summary of Debt As of December 31, 2018 and 2017, debt consists of the following (in thousands): 2018 2017 Siena Revolver $ 2,000 $ - Mortgage payable to a foreign bank 2,628 (1) - Installment notes payable 66 (2) 122 U.S. Bank Revolver - 2,000 (3) Series B notes assumed in Maverick business combination - 1,427 (4) Total 4,694 3,549 Less current maturities (3,369 ) (3,549 ) Long-term debt, less current maturities $ 1,325 $ - _________________ (1) This mortgage note payable is collateralized by land and a building in Japan. Quarterly principal payments of $0.3 million plus interest is payable in Japanese Yen at TIBOR plus 0.7% (0.76% as of December 31, 2018). The maturity date is in December 2020. This debt is subject to the interest rate swap agreement discussed below, which essentially fixes the interest rate on this loan at approximately 2.0%. (2) Consists of various installment notes payable that are collateralized by equipment and that bear interest at 12.4% to 22.1%. (3) On July 6, 2017, the Company entered into a revolving credit agreement with U.S. Bank National Association (the “U.S. Bank Revolver”). Maximum borrowings were $2,000,000, subject to borrowing base requirements under the agreement. The credit agreement provided for interest at 2.5% plus the Daily Reset LIBOR Rate (4.6% as of December 31, 2017). The maturity date was in July 2018 and the entire balance plus accrued interest was repaid in June 2018. (4) In connection with the acquisition of Maverick, the Company assumed Maverick’s Series B notes payable that provided for interest at approximately 10.0% per annum. Monthly payments of interest only were due until the maturity date in December 2018. The principal balance plus accrued interest of $0.1 million was converted to an aggregate of 0.8 million shares of Common Stock in 2018. Interest Rate Swap Agreement The amount of unrealized loss from interest rate swaps at December 31, 2018, was approximately $36,000, and is included in other long-term liabilities in the accompanying consolidated balance sheet. At December 31, 2018, the Company had one contract for an interest rate swap with a total notional amount of approximately $2.6 million. Future Debt Maturities As of December 31, 2018, the scheduled future maturities of long-term debt are as follows (in thousands): Year Ending December 31, 2019 $ 3,369 2020 1,322 2021 3 Total $ 4,694 Convertible Note On June 20, 2018, the Company issued a Senior Secured Convertible Promissory Note (the “Convertible Note”) with a principal balance of $4.75 million and a maturity date of June 20, 2019. The Convertible Note provided for monthly payments of interest only at 8.0% per annum, and was collateralized by certain equipment, general intangibles, inventory, and a security interest in all of the Company’s trademarks, copyrights and patents. The Convertible Note was convertible into shares of Common Stock at a conversion price of $1.89 per share. After payment of the lender’s expenses of $0.2 million, the Company received net proceeds of $4.6 million. The Company also issued to the lender an aggregate of 226,190 shares of Common Stock with a fair value of approximately $0.4 million. These amounts were accounted for as an aggregate discount of $0.6 million that was accreted to interest expense using the effective interest method. On August 24, 2018, the Company repaid the entire convertible note by paying an aggregate of approximately $5.0 million, which consisted of the principal balance of $4.75 million plus a make-whole penalty for early prepayment of $0.2 million. Due to the early extinguishment of the Convertible Note, the Company recognized accretion for all of the debt discount and issuance costs of $0.6 million for the year ended December 31, 2018. The Company has no further obligations related to this convertible note. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Common Stock On October 23, 2018, the Company amended its Articles of Incorporation to increase the authorized shares of its Common Stock, with a par value of $0.001 per share, from 50,000,000 to 100,000,000. Holders of the Company’s Common Stock are entitled to one vote for each share. Preferred Stock The Company is authorized to issue 1,000,000 shares of preferred stock in one or more series, each having a par value of $0.001 per share. The Board of Directors is authorized to establish the voting rights, if any, designations, powers, preferences, special rights, and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Through December 31, 2018, the Board of Directors had designated four series of Preferred Stock as discussed below. Series A Preferred The Board of Directors previously designated 250,000 shares as Series A Preferred stock (“Series A Preferred”). Each share of Series A Preferred was entitled to 500 votes in matters voted on by the common stockholders of the Company. In February 2017, 250,000 shares of Series A Preferred stock were voluntarily rescinded by a director of the Company for no consideration. Accordingly, no Series A Preferred shares are designated for issuance as of December 31, 2018 and 2017. Series B Preferred The Board of Directors previously designated 300,000 shares as Series B Preferred Stock (“Series B Preferred”). The Series B Preferred was non-voting, not eligible for dividends and ranked equal to Common Stock and below Series A Preferred in liquidation. Each share of Series B Preferred was convertible into eight shares of Common Stock. The Company issued 300,000 shares of Series B Preferred in 2016 and the holder converted 15,193, 115,573 and 169,234 shares of Series B Preferred into shares of Common Stock for the years ended December 31, 2018, 2017 and 2016, respectively. Accordingly, no shares of Series B Preferred are outstanding or designated for future issuance as of December 31, 2018. Series C Preferred In September 2018, the Board of Directors designated 7,000 shares as Series C Preferred Stock (“Series C Preferred”). Each share of Series C Preferred converts automatically into 1,000 shares of the Company’s Common Stock when the Company files an amendment to its Articles of Incorporation to increase the authorized number of shares of Common Stock to 100,000,000. Holders of the Series C Preferred were entitled to receive dividends declared to holders of Common Stock on an as converted basis. In addition, each holder of outstanding Series C Preferred was entitled to vote and had liquidation rights on an as converted basis with the Company’s Common Stock. In September 2018, the Company entered into an agreement with two members of the Board of Directors whereby the directors exchanged an aggregate of 6,900,000 shares of Common Stock owned by them for an aggregate of 6,900 shares of the Company’s Series C Preferred. In October 2018, the Company amended its Articles of Incorporation to increase the authorized number of shares of Common Stock to 100,000,000 and, accordingly, all outstanding shares of Series C Preferred converted to 6,900,000 shares of Common Stock. As of December 31, 2018, no shares of Series C Preferred are outstanding. Accordingly, no shares of Series C Preferred are outstanding and none are designated for future issuance as of December 31, 2018. Series D Preferred In November 2018, the Board of Directors designated 44 shares as Series D Preferred Stock. As discussed in Note 3, the Series D Preferred provides for the potential payment of up to $15.0 million contingent upon Morinda achieving certain post-closing milestones. As of December 31, 2018, the Series D Preferred is classified as a liability since it provides for the issuance of a variable number of shares of Common Stock if the Company elects to settle in shares rather than pay the cash redemption value. Please refer to Note 3 for additional information on the consideration issued in the Morinda business combination and the valuation and carrying value of the Series D Preferred. Summary of Preferred Stock Activity The Company’s Series A, Series B and Series C Preferred Stock were classified within stockholders’ equity in the Company’s consolidated balance sheets. Presented below is a summary of activity for each equity classified series of Preferred Stock for the years ended December 31, 2018 and 2017: Equity Classified Preferred Stock Series A Series B Preferred Series C Preferred Total Shares Shares Conversion Shares Conversion Preferred Conversion Issued Issued Ratio (1) Issued Ratio (2) Shares Ratio Balances, December 31, 2016 250,000 284,807 2,278,456 - - 534,807 2,278,456 Recission of Series A shares for no consideration (250,000 ) - - - - (250,000 ) - Conversion of Series B Preferred Stock to Common Stock - (115,573 ) (924,584 ) - - (115,573 ) (924,584 ) Balances, December 31, 2017 - 169,234 1,353,872 - - 169,234 1,353,872 Conversion of Series B Preferred Stock to Common Stock - (169,234 ) (1,353,872 ) - - (169,234 ) (1,353,872 ) Issuance of Series C Preferred Stock - - - 6,900 6,900,000 6,900 6,900,000 Conversion of Series C Preferred Stock to Common Stock - - - (6,900 ) (6,900,000 ) (6,900 ) (6,900,000 ) Balances, December 31, 2018 - - - - - - - _________________ (1) Represents the number of shares of Common Stock issuable based on the conversion ratio of 8 shares of Common Stock for each outstanding share of Series B Preferred Stock. (2) Represents the number of shares of Common Stock issuable based on the conversion ratio of 1,000 shares of Common Stock for each outstanding share of Series C Preferred Stock. Public Offerings of Common Stock In February 2017, the Company issued approximately 4.9 million shares of Common Stock in an underwritten public offering at $3.50 per share for net proceeds of approximately $15.4 million. In April 2018, the Company completed an underwritten public offering and issued approximately 2.6 million shares of Common Stock for net proceeds of approximately $3.8 million. In August 2018, the Company completed an underwritten public offering of 9.2 million shares of Common Stock at $1.28 per share for net proceeds of approximately $9.7 million. In September 2018, pursuant to an At the Market (“ATM”) Offering Agreement with Roth Capital Partners, LLC, the Company commenced an offering that resulted in the issuance of an aggregate of 8.1 million shares of Common Stock for net proceeds of approximately $35.8 million. In November 2018, the Company issued approximately 14.8 million shares of Common Stock in an underwritten public offering at $3.50 per share for net proceeds of approximately $47.8 million. Presented below is a summary of the shares of Common Stock issued and the net proceeds received for public offerings completed in 2018 (in thousands): Number Gross Offering Costs Net Description of Shares Proceeds Commissions Other Proceeds April 2018 Offering 2,560 $ 4,480 $ (269 ) $ (448 ) $ 3,763 August 2018 Offering 9,200 11,776 (824 ) (647 ) 10,305 ATM Offering 8,089 37,533 (1,126 ) (603 ) 35,804 November 2018 Offering 14,835 51,922 (3,635 ) (518 ) 47,769 Total 34,684 $ 105,711 $ (5,854 ) $ (2,216 ) $ 97,641 |
Stock Options And Warrants
Stock Options And Warrants | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options And Warrants | Stock Options On August 3, 2016, the Company’s approved and implemented the New Age Beverages Corporation 2016-2017 Long Term Incentive Plan (the “LTI Plan”). The LTI Plan provides for stock options to be granted to employees, directors and consultants at an exercise price not less than 100% of the fair value of the Company’s Common Stock on the grant date. The options granted generally have a maximum term of 10 years from the grant date and are exercisable upon vesting. Option grants generally vest over a period between one and three years after the grant date of such award. As of December 31, 2018, approximately 0.2 million shares were available for future grants of stock options, restricted stock and similar instruments under the LTI Plan. The number of shares reserved for grants is adjusted annually on the first day of January whereby a maximum of 10% of the Company’s outstanding shares of Common Stock are available for grant under the LTI Plan. Accordingly, as of January 1, 2019, an additional 4.0 million shares of Common Stock became available for future grants under the LTI Plan. The following table sets forth the summary of stock option activity under the Company’s Stock Plans for the years ended December 31, 2018 and 2017 (shares in thousands): 2018 2017 Shares Price (1) Term (2) Shares Price (1) Term (2) Outstanding, beginning of year 2,491 $ 1.93 9.4 1,019 $ 1.79 9.6 Granted 926 $ 4.63 1,472 2.02 Forfeited (213 ) 2.00 - - Exercised (418 ) 1.79 - - Outstanding, end of year (3) 2,786 2.84 9.0 2,491 1.93 9.4 Vested, end of year (4) 943 $ 1.94 8.4 343 1.79 8.6 _________________ (1) Represents the weighted average exercise price. (2) Represents the weighted average remaining contractual term until the stock options expire. (3) As of December 31, 2018 and 2017, the aggregate intrinsic value of stock options outstanding was $6.6 million and $0.6 million, respectively. (4) As of December 31, 2018 and 2017, the aggregate intrinsic value of vested stock options was $3.1 million and $0.1 million, respectively. The fair value of each stock option granted under the LTI Plan was estimated on the date of grant using the BSM option-pricing model, with the following weighted-average assumptions for the years ended December 31, 2018 and 2017: Year Ended December 31, 2018 2017 Grant date fair value of common stock (exercise price) $ 4.63 $ 1.79 Expected life (in years) 6.0 3.0 Volatility 121 % 100 % Dividend yield 0 % 0 % Risk-free interest rate 2.8 % 0.9 % Based on the assumptions set forth above, the weighted-average grant date fair value per share of employee options during the years ended December 31, 2018 and 2017 was $4.05 and $1.11, respectively. The BSM model requires various highly subjective assumptions that represent management’s best estimates of the fair value of the Company’s Common Stock, volatility, risk-free interest rates, expected term, and dividend yield. The expected term represents the weighted-average period that options granted are expected to be outstanding giving consideration to vesting schedules. Since the Company does not have an extended history of actual exercises, the Company has estimated the expected term using a simplified method which calculates the expected term as the average of the time-to-vesting and the contractual life of the awards. The Company has never declared or paid cash dividends and does not plan to pay cash dividends in the foreseeable future; therefore, the Company used an expected dividend yield of zero. The risk-free interest rate is based on U.S. Treasury rates in effect during the expected term of the grant. The expected volatility is based on the historical volatility of the Company’s Common Stock for the period beginning in August 2016 when its shares were first publicly traded through the grant date of the respective stock options. Restricted Stock The following table sets forth a summary of restricted stock award activity under the Company’s LTI Plan for the years ended December 31, 2018 and 2017 (in thousands): 2018 2017 Number of Unvested Number of Unvested Shares Compensation Shares Compensation Outstanding, beginning of year 1,823 $ 1,518 1,876 $ 534 Restricted shares issued 193 (1) 429 588 (2) 1,339 Forfeited (35 ) (76 ) - - Vested (963 ) (1,314 ) (641 ) (355 ) Outstanding, end of year (2) 1,018 $ 557 (3) 1,823 $ 1,518 (4) Intrinsic value, end of year $ 5,294 (4) $ 3,956 (4) Balance sheet classification of unvested compensation cost: Prepaid expenses- current $ 347 $ 963 Prepaid expenses- long-term 210 555 Total $ 557 $ 1,518 _________________ (1) The weighted average fair value was $2.22 per share based on the closing price of the Company’s Common Stock on the grant date. (2) The weighted average fair value was $2.28 per share based on the closing price of the Company’s Common Stock on the grant date. (3) Unvested compensation as of December 31, 2018 will be recognized over a weighted average remaining term of 1.6 years. (4) The intrinsic value at the end of the year was based on the closing price of the Company’s common stock of $5.20 per share on December 31, 2018 and $2.17 per share on December 31, 2017. In connection with the business combination with Morinda, the Company made restricted stock award grants for an aggregate of 1.2 million shares of the Company’s common stock. No shares will be issued until a vesting event occurs. Due to Morinda’s foreign operations, upon vesting the awards will be settled in (i) cash where regulatory requirement prohibit settlement in shares, (ii) shares of Common Stock, or (iii) a combination of shares and cash at the Company’s election for certain awards. The awards that must be settled in cash will be presented as a liability in the Company’s consolidated balance sheet as discussed below. Due to the grants that were effective at the end of December 2018, no compensation was recognized for these awards. The following table sets forth a summary of restricted stock award activity under related to the Morinda grants as of December 31, 2018 (in thousands): Number of Shares Unvested Compensation (6) Only Cash or Only Only Cash or Only Cash (4) Shares (5) Shares (5) Total Cash Shares Shares Total Performance grants (1) - 216 - 216 $ - $ 1,123 $ - $ 1,123 Service-based grants: - One-year vesting(2) - 319 555 874 - 1,659 2,886 4,545 Three-year vesting (3) 43 96 - 139 224 499 - 723 Total 43 631 555 1,229 $ 224 $ 3,281 $ 2,886 $ 6,391 _________________ (1) Restricted stock grants vest if Morinda achieves EBITDA of $20.0 million for the year ending December 31, 2019. (2) Restricted stock grants were provided to certain key employees of Morinda and provide for vesting of 100% of the shares if the employee continues to be employed through December 31, 2019. (3) Restricted stock grants vest ratably for one-third of the shares on each anniversary of the grant date. (4) Awards that may only be settled in cash will be classified as liabilities in the Company’s consolidated balance sheets. Accordingly, at the end of each future reporting period this liability will be adjusted based on changes in the fair value of the Company’s Common Stock with a corresponding charge to stock-based compensation expense over the vesting period. (5) Awards that may be settled in cash or shares of the Company’s Common Stock will be classified as equity in the Company’s consolidated balance sheets. Accordingly, a charge to stock-based compensation expense will be recognized over the vesting period. (6) Unvested compensation represents the product of the number of shares granted times the closing price of the Company’s Common Stock of $5.20 per shares as of December 31, 2018. Unvested compensation will be recognized as described above. The impact of any forfeitures will be recognized as a reduction of stock-based compensation expense in the period in which employees terminate. As of December 31, 2018, the remaining unrecognized costs are expected to be recognized on a straight-line basis over a weighted-average period of approximately 2.6 years for stock options and 1.6 years for restricted stock awards. Stock-based Compensation Expense Stock-based compensation expense is included in general and administrative expenses in the accompanying consolidated statements of operations. The table below summarizes stock-based compensation expense related to stock options and restricted stock awards for the years ended December 31, 2018 and 2017, and the unrecognized compensation expense as of December 31, 2018 and 2017 (in thousands): Expense Recognized Unrecognized Expense Year Ended December 31: as of December 31: 2018 2017 2018 2017 Stock options $ 1,219 $ 162 $ 6,811 $ 3,035 Restricted stock awards 1,314 1,569 557 1,442 Total $ 2,533 $ 1,731 $ 7,368 $ 4,477 Warrants As of December 31, 2016, the Company had warrants outstanding for 372,974 shares of Common Stock with an exercise price of $0.40 per share. For the year ended December 31, 2017, these warrants were exercised for proceeds of approximately $150,000. No warrants were granted for the years ended December 31, 2018 and 2017, and no warrants are outstanding as of December 31, 2018 and 2017. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The Tax Act In December 2017, the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Act”) was enacted into law which significantly revises the Internal Revenue Code of 1986, as amended. The newly enacted federal income tax law, among other things, contains significant changes to corporate taxation, including a flat corporate tax rate of 21%, limitation of the tax deduction for interest expense to 30% of adjusted taxable income, limitation of the deduction for newly generated net operating losses to 80% of current year taxable income and elimination of net operating loss (“NOL”) carrybacks, future taxation of certain classes of offshore earnings regardless of whether they are repatriated, immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits beginning in 2018. As of December 31, 2018, the Company has continued its position to return all foreign earnings to the U.S. parent company and has recorded deferred tax liabilities of $850,000 for foreign withholding taxes associated with foreign retained earnings and cross-border payments. As a result of the Tax Act, the corporate tax rate decreased from a top marginal rate of 35% that was effective through December 31, 2017 to a flat rate of 21% effective January 1, 2018. Accordingly, a decrease of $1.4 million in the Company’s domestic deferred income tax assets was recognized as of December 31, 2017, and this amount was fully offset by a corresponding decrease in the valuation allowance. Morinda Business Combination Before the Company acquired Morinda on December 21, 2018, Morinda’s net earnings taxed for the U.S. and various state jurisdictions were payable personally by the shareholders pursuant to an election under Subchapter S of the Internal Revenue Code. The Subchapter S election terminated upon closing of the business combination with the Company. Accordingly, the Company recognized net deferred income tax liabilities of approximately $9.9 million for differences between the income tax basis of the assets and liabilities and the related balances for financial reporting purposes. The Company is required to pay taxes to the appropriate governmental entities on profits derived from Morinda’s international operations, including foreign withholding taxes imposed on the remittance of earnings of Morinda’s foreign subsidiaries and withholding taxes imposed on royalty payments. The Company has recorded income tax liabilities for foreign withholding on distributed earnings. As of December 31, 2018, the Company has no undistributed earnings from foreign subsidiaries that are indefinitely reinvested. The Company is also responsible for state income taxes and other taxes assessed at the Company level. The Company’s provision for income taxes includes such taxes. Income Tax Expense For the years ended December 31, 2018 and 2017, loss before income taxes is as follows (in thousands): 2018 2017 Domestic $ (20,529 ) $ (3,536 ) International (533 ) - Loss before income taxes $ (21,062 ) $ (3,536 ) For the years ended December 31, 2018 and 2017, the reconciliation between the income tax benefit computed by applying the statutory U.S. federal income tax rate to the pre-tax loss before income taxes, and total income tax expense recognized in the financial statements is as follows (in thousands): 2018 2017 Income tax benefit at statutory U.S. federal rate $ 4,423 $ 1,202 Income tax benefit attributable to U.S. states 1,063 108 Stock -based compensation 1,367 - Non-deductible expenses (351 ) (1 ) Change in prior year deferred taxes and other 300 Foreign rate differential (27 ) - Change in valuation allowance 2,152 (1,309 ) Total income tax benefit $ 8,927 $ - For the years ended December 31, 2018 and 2017, the Company did not recognize any current income tax expense. D 2018 2017 U.S. Federal $ 7,891 $ - U.S. States 1,063 - Foreign (27 ) - Total deferred income tax benefit $ 8,927 $ - Deferred Income Tax Assets and Liabilities As of December 31, 2018 and 2017, the income tax effects of temporary differences that give rise to significant deferred income tax assets and liabilities are as follows (in thousands): 2018 2017 Deferred income tax assets: Identifiable intangible assets $ - $ 128 Accrued liabilities 5,224 53 Embedded derivative liabilities 112 - Other 26 - Stock-based compensation 435 - Net operating loss carryforwards 9,295 2,689 Gross deferred income tax assets 15,092 2,870 Valuation allowance for deferred income tax assets - (2,870 ) Net deferred income tax assets 15,092 - Deferred income tax liabilities: Goodwill and identifiable intangible assets (12,405 ) - Property and equipment, net (3,200 ) - Notes payable (326 ) - Gross deferred income tax liabilities (15,931 ) - Net deferred income tax liability $ (839 ) $ - Deferred income tax assets and liabilities as of December 31, 2018 and 2017, are presented in the accompanying consolidated balance sheets as follows (in thousands): 2018 2017 Deferred income tax assets $ 8,908 $ - Deferred income tax liabilities (9,747 ) - Net deferred income tax liability $ (839 ) $ - For the year ended December 31, 2017 the valuation allowance increased by $0.7 million, primarily as a result of the increase in net operating losses. For the year ended December 31, 2018, the net decrease in the valuation allowance amounted to $2.9 million since net operating loss carryforwards were considered to be realizable due to net deferred tax liabilities related to purchase accounting. In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. NOL Carryforwards and Other Matters At December 31, 2018, the Company has federal NOL carryforwards of approximately $36.3 million, of which $24.9 million does not expire and $11.4 million will begin to expire in 2023. Additionally, the Company has varying amounts of NOL carryforwards in the U.S. states in which it does business that start to expire in 2023. Federal and state laws impose substantial restrictions on the utilization of NOL and tax credit carryforwards in the event of an ownership change for income tax purposes, as defined in Section 382 of the Internal Revenue Code. Pursuant to Internal Revenue Code (“IRC”) Section 382, annual use of the Company’s net operating loss carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has not completed an IRC Section 382 analysis regarding the limitation of net operating loss carryforwards. The Company’s ability to use its remaining net operating loss carryforwards may be further limited if the Company experiences a Section 382 ownership change in connection with future changes in the Company’s stock ownership. As discussed above, the imposition of the one-time Transition Tax may reduce or eliminate U.S. federal deferred income taxes on the unremitted earnings of the Company’s foreign subsidiaries. However, the Company may still be liable for withholding taxes or other income taxes that might be incurred upon the repatriation of foreign earnings. The Company has made a provision for additional income taxes on undistributed earnings of its foreign subsidiaries because the Company does not intend to permanently reinvest these earnings outside the United States. The Company files income tax returns in the U.S. federal, and various states as well as the following foreign jurisdictions: Australia, Austria, Canada, Chile, China, Colombia, Germany, Hong Kong, Hungary, Indonesia, Italy, Japan, Korea, Malaysia, Mexico, New Zealand, Norway, Peru, Poland, Russia, Singapore, Sweden, Switzerland, Thailand, Tahiti, Taiwan, the UK and Vietnam. The Company’s federal and state tax years for 2015 and forward are subject to examination by taxing authorities, due to unutilized NOL’s. All foreign jurisdictions tax years are also subject to examination based on the relative statute of limitations. The total outstanding balance for liabilities related to unrecognized tax benefits at December 31, 2018 was $0.4 million, which would favorably impact the effective tax rate if recognized. There were no unrecognized tax benefits as of December 31, 2017. The increase in 2018 relates to tax audits in foreign jurisdictions, transfer pricing adjustments, and state tax expense. We account for interest expense and penalties for unrecognized tax benefits as part of our income tax provision. The Company does not anticipate that unrecognized tax benefits will significantly increase or decrease within the next twelve months. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Executive Deferred Compensation Plan Morinda’s Board of Directors implemented an unfunded executive deferred compensation plan in 2009 for certain executives of Morinda. All financial performance targets under the plan were achieved as of December 31, 2018, and a long-term liability of $4.1 million is included in the accompanying consolidated balance sheets. After the executives retire, the deferred compensation obligation is payable over a period up to 20 years. 401(k) Plan Morinda has a defined contribution employee benefit plan under section 401(k) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan covers all eligible U.S. employees of Morinda who are entitled to participate at the beginning of the first full quarter following commencement of employment. Morinda matches contributions up to 3% of the participating employee’s compensation. Morinda’s matching contributions vest over four years with 0% vested through the end of the first year of service and 33% vesting upon completion of each of the next three years of service. Total contributions by Morinda to the 401(k) Plan were insignificant for the period from December 21, 2018 through December 31, 2018. Effective January 1, 2019, the Company extended the right to participate in the 401(k) Plan to all of the Company’s eligible employees. Foreign Benefit Plans Morinda has an unfunded retirement benefit plan for the Company’s Japanese branch that entitles substantially all employees in Japan, other than directors, to retirement payments. Morinda also has an unfunded retirement benefit plan in Indonesia that entitles all permanent employees to retirement payments. Upon termination of employment, the Morinda employees of the Japanese branch are generally entitled to retirement benefits determined by reference to basic rates of pay at the time of termination, years of service, and conditions under which the termination occurs. If the termination is involuntary or caused by retirement at the mandatory retirement age of 65, the employee is entitled to a greater payment than in the case of voluntary termination. Morinda employees in Indonesia whose service is terminated are generally entitled to retirement benefits determined by reference to basic rates of pay at the time of termination, years of service and conditions under which the termination occurs. The unfunded benefit obligation for these defined benefit pension plans was approximately $3.0 million as of December 31, 2018. Of this amount, approximately $2.9 million is included in other long-term liabilities in the accompanying consolidated balance sheet as of December 31, 2018. Morinda also makes contributions to employee benefit plans in various other countries in which it operates. Total contributions by Morinda to foreign employee benefit plans were insignificant for the period from December 21, 2018 through December 31, 2018. Contingencies The Company’s operations are subject to numerous governmental rules and regulations in each of the countries it does business. These rules and regulations include a complex array of tax and customs regulations as well as restrictions on product ingredients and claims, the commissions paid to the Company’s IPCs, labeling and packaging of products, conducting business as a direct-selling business, and other facets of manufacturing and selling products. In some instances, the rules and regulations may not be fully defined under the law or are otherwise unclear in their application. Additionally, laws and regulations can change from time to time, as can their interpretation by the courts, administrative bodies, and the tax and customs authorities in each country. The Company actively seeks to be in compliance, in all material respects, with the laws of each of the countries in which it does business and expects its IPCs to do the same. The Company’s operations are often subject to review by local country tax and customs authorities and inquiries from other governmental agencies. No assurance can be given that the Company’s compliance with governmental rules and regulations will not be challenged by the authorities or that such challenges will not result in assessments or required changes in the Company’s business that could have a material impact on its business, consolidated financial statements and cash flow. The Company has various non-income tax contingencies in several countries. Such exposure could be material depending upon the ultimate resolution of each situation. As of December 31, 2018, the Company has recorded a current liability under Accounting Standards Codification (ASC) 450, Contingencies From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. Guarantee Deposits Morinda has deposits in Korea for collateral on IPC returns dictated by law, and collateral to credit card companies for guarantee of IPC payments. As of December 31, 2018, approximately $0.8 million of guarantee deposits are included in other long-term assets in the accompanying consolidated balance sheet. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | In March 2015, the Company borrowed $60,000 from a member of management. The note provided for interest at 10% per annum and matured on March 31, 2020. Payments of interest were required quarterly. This note was repaid in full in February 2017. As discussed in Note 8, 250,000 shares of Series A Preferred stock were voluntarily rescinded by a director of the Company for no consideration in February 2017. As discussed in Note 8, the Company entered into an agreement with two members of the Board of Directors in September 2018 whereby the directors exchanged an aggregate of 6,900,000 shares of Common Stock owned by them for an aggregate of 6,900 shares of the Company’s Series C Preferred. In October 2018, the shares of Series C Preferred Stock automatically converted into 6,900,000 shares of Common Stock upon receipt of shareholder approval to increase the authorized number of shares of Common Stock to 100,000,000 shares. |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net loss per share is computed by dividing loss attributable to common stockholders by the weighted average number of common shares outstanding during the year. The calculation of diluted net loss per share includes dilutive stock options, unvested restricted stock awards, and other Common Stock equivalents computed using the treasury stock method, in order to compute the weighted average number of shares outstanding. For the years ended December 31, 2018 and 2017, basic and diluted net loss per share were the same since all Common Stock equivalents were anti-dilutive. As of December 31, 2018 and 2017, the following potential Common Stock equivalents were excluded from the computation of diluted net loss per share since the impact of inclusion was anti-dilutive (in thousands): 2018 2017 Series B Preferred Stock - 1,354 Stock options 2,786 2,491 Restricted stock awards under LTI Plan: Unvested shares of Common Stock issued 1,018 1,823 Unissued and unvested awards to Morinda employees 1,229 - Total 5,033 5,668 |
Financial Instruments and Signf
Financial Instruments and Signficant Concentrations | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Financial Instruments and Signficant Concentrations | Fair Value Measurements Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair measurement: Level 1—Quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date Level 2—Other than quoted prices included in Level 1 that are observable for the asset and liability, either directly or indirectly through market collaboration, for substantially the full term of the asset or liability Level 3—Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any market activity for the asset or liability at measurement date The fair value of the Company’s cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities, payables to former Morinda shareholders, and notes payable approximate their carrying values as of December 31, 2018 and 2017. The contingent consideration obligations incurred in the business combinations with Marley and Morinda are recorded at estimated fair value as of December 31, 2018 and 2017. In addition, the net assets acquired in the business combinations discussed in Note 3 were generally recorded at fair market value on the date of closing. The Company did not have any other nonrecurring assets and liabilities measured at fair value as of December 31, 2018 and 2017. The Company’s interest rate swap and embedded derivative liability are the only liabilities that have been carried at fair value on a recurring basis. The Company’s interest rate swap is recorded at fair market value and has been classified within Level 2 of the fair value hierarchy. The Company’s embedded derivative liability is recorded at fair market value and has been classified within Level 3 of the fair value hierarchy. Details of the interest rate swap and the embedded derivative liabilities, including valuation methodology and key assumptions and estimates used, are disclosed in Note 7. The Company’s policy is to recognize asset or liability transfers among Level 1, Level 2 and Level 3 as of the actual date of the events or change in circumstances that caused the transfer. During the years ended December 31, 2018 and 2017, the Company had no transfers of its assets or liabilities between levels of the fair value hierarchy. Significant Concentrations For the years ended December 31, 2018 and 2017, one customer comprised approximately 11% and 10%, respectively, of the Company’s consolidated net revenue. A substantial portion of the business acquired from Morinda is conducted in foreign markets, exposing the Company to the risks of trade or foreign exchange restrictions, increased tariffs, foreign currency fluctuations and similar risks associated with foreign operations. Approximately 70% of the Company’s consolidated net revenue and 90% of Morinda’s net revenue for 2019 is expected to be generated outside the United States, primarily in the Asia Pacific market. Morinda’s Tahitian Noni® Juice, MAX and other noni-based beverage products are expected to comprise over 85% of Morinda’s net revenue for 2019. However, if consumer demand for these products decreases significantly or if the Company ceases to offer these products without a suitable replacement, the Company’s consolidated financial condition and operating results would be adversely affected. The Company purchases fruit and other Noni-based raw materials from French Polynesia, but these purchases of materials are from a wide variety of individual suppliers with no single supplier accounting for more than 10% of its raw material purchases during 2018. However, as the majority of the raw materials are consolidated and processed at the Company’s plant in Tahiti, the Company could be negatively affected by certain governmental actions or natural disasters if they occurred in that region of the world. Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. The Company maintains its cash, cash equivalents and restricted cash at high-quality financial institutions. Cash deposits, including those held in foreign branches of global banks often exceed the amount of insurance, if any provided on such deposits. As of December 31, 2018, the Company had cash and cash equivalents with a single financial institution in the United States with a balance of $6.5 million, and two financial institutions in China with balances of $14.5 million and $8.0 million. The Company also had $3.2 million of restricted cash in China as of December 31, 2018. The Company has never experienced any losses related to its investments in cash, cash equivalents and restricted cash. Generally, credit risk with respect to accounts receivable is diversified due to the number of entities comprising the Company’s customer base and their dispersion across different geographies and industries. The Company performs ongoing credit evaluations on certain customers and generally does not require collateral on accounts receivable. The Company maintains reserves for potential bad debts and historically such losses have been insignificant. As of December 31, 2017, one customer comprised approximately 11% of accounts receivable, net. |
Segments and Geographic Concent
Segments and Geographic Concentrations | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segments and Geographic Concentrations | Reportable Segments The Company follows segment reporting in accordance with ASC Topic 280, Segment Reporting The New Age segment distributes beverages to retail customers throughout Colorado and surrounding states, and sells beverages to wholesale distributors, broad-liners, key account owned warehouses and international accounts using several distribution channels. Morinda is a healthy lifestyles and beverage company with operations in more than 60 countries around the world, and manufacturing operations in Tahiti, Germany, Japan, the US, and China. Morinda is primarily a direct-to-consumer and e-commerce business with over 70% of its business generated in the key Asia Pacific markets of Japan, China, Korea, Taiwan, and Indonesia. Net revenue by reporting segment for the years ended December 31, 2018 and 2017, is as follows (in thousands): 2018 2017 New Age $ 48,335 $ 52,188 Morinda 3,825 - Total Revenue $ 52,160 $ 52,188 Gross profit by reporting segment for the years ended December 31, 2018 and 2017, is as follows (in thousands): 2018 2017 New Age $ 6,380 $ 12,400 Morinda 2,915 - Total gross profit $ 9,295 $ 12,400 Assets by reporting segment as of December 31, 2018 and 2017, are as follows (in thousands): 2018 2017 New Age $ 61,265 $ 61,646 Morinda 206,222 - Other 19,445 6,026 Total assets $ 286,932 $ 67,672 Capital expenditures by reporting segment for the years ended December 31, 2018 and 2017, are as follows (in thousands): 2018 2017 New Age $ 81 $ 666 Morinda 56,133 (1) - General corporate 12 - Total capital expenditures $ 56,226 $ 666 _________________ (1) Consists of property and equipment of $55.4 million acquired in the business combination with Morinda and post-closing additions of $0.7 million. Geographic Concentrations The following table presents net revenue by geographic region for the years ended December 31, 2018 and 2017 (in thousands): Year Ended December 31, 2018 2017 United States of America $ 48,460 $ 52,188 International 3,700 - Total revenue $ 52,160 $ 52,188 As of December 31, 2018, the net carrying value of the Company’s property and equipment located outside of the United States amounted to approximately $50.6 million, including approximately $30.7 million located in Japan. As of December 31, 2017, substantially all of the Company’s assets and operations were located in the United States. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Loan Agreement On March 29, 2019, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with East West Bank (“EWB”). The Loan Agreement matures on March 29, 2023 and provides for (i) a term loan in the aggregate principal amount of $15.0 million, which may be increase to $25.0 subject to the satisfaction of certain conditions (the “Term Loan”) and (ii) a $10.0 million revolving loan facility (the “Revolving Loan Facility”). At the closing, EWB funded $25.0 million to the Company consisting of the $15.0 million Term Loan and $10.0 as an advance under the Revolving Loan Facility. The obligations of the Company under the Loan Agreement are secured by substantially all assets of the Company and guaranteed by certain subsidiaries of the Company Borrowings outstanding under the Loan Agreement bear interest at the Prime Rate plus 0.25%. However, if the Total Leverage Ratio (as defined in the Loan Agreement) is equal to or greater than 1.50 to 1.00, borrowings will bear interest at the Prime Rate plus 0.50%. The Company may voluntarily prepay amounts outstanding under the Revolving Loan Facility on ten business days’ prior notice to EWB without prepayment charges. In the event the Revolving Loan Facility is terminated prior to its maturity, the Company would be required to pay an early termination fee in the amount of 0.50% of the revolving line. Additional borrowing requests under the Revolving Loan Facility are subject to various customary conditions precedent, including satisfaction of a borrowing base test as more fully described in the Loan Agreement. The Revolving Loan Facility also provides for an unused line fee equal to 0.5% per annum of the undrawn portion. The Loan Agreement includes a lockbox arrangement where the Company is required to direct its customers to remit payments to a restricted bank account, whereby all available funds are used to pay down the outstanding principal balance under the Revolving Loan Facility. Payments under the Term Loan are interest-only for the first six months and are followed by principal and interest payments amortized over the remaining term of the Term Loan. The Company may elect to prepay the Term Loan before its maturity on 10 business days’ notice to EWB subject to a prepayment fee of 2% for the first year of the Term Loan and 1% for the second year of the Term Loan. No later than 120 days after the end of each fiscal year, commencing with the fiscal year ending December 31, 2019, the Company is required to make a payment towards the outstanding principal amount of the Term Loan in an amount equal to 35% of the Excess Cash Flow (as defined in the Loan Agreement), if the Total Leverage Ratio is less than 1.50 to 1.00 or (i) 50% of the Excess Cash Flow if the Total Leverage Ratio is greater than or equal to 1.50 to 1.00. Also on March 29, 2019, the Company repaid all outstanding amounts and terminated the Siena Revolver discussed in Note 7, whereby a prepayment fee of $0.5 million was incurred. Sale Leaseback On March 22, 2019, the Company entered into an agreement with a major Japanese real estate company resulting in the sale for approximately $55 million of the land and building in Tokyo that serves as the corporate headquarters of Morinda’s Japanese subsidiary. Concurrently with the sale, the Company entered into a lease of this property for an initial noncancelable term of seven years, with an option at the Company’s discretion to extend the lease term for 20 additional years. The monthly lease cost is ¥20 million (approximately $181,000 as of March 22, 2019) for the initial seven-year term. In connection with this transaction, the Company repaid the $2.9 million mortgage on the building discussed in Note 7, cancelled the related interest rate swap agreement discussed in Note 7, and is obligated to pay $25.0 million to the former stockholders of Morinda to eliminate the contingent financing liability discussed in Note 3. After these payments, income taxes, post-closing repair obligations, and transaction costs, the net proceeds from the sale leaseback are expected to be between $9.0 million and $12.0 million. The net carrying value of this property was approximately $29.0 million, resulting in a gain of approximately $26.0 million. The Company is evaluating whether this transaction qualifies as a sale under ASU 2016-02 (“ Leases” Other Transactions On January 14, 2019, the Company entered into an agreement with Docklight LLC for the exclusive licensing rights in the United States for the manufacturing, sale, distribution, marketing and advertising of certain products which include shelf-stable, ready to drink, non-alcoholic, consumer beverages infused with Cannabidiol derived from hemp-based or synthetic sources. The licensed property includes the name, image, likeness, caricature, signature and biography of Bob Marley, the trademarks MARLEY and BOB MARLEY for use in connection with the Company’s existing licensed marks. The initial term of the Agreement expires in January 2024, unless extended or earlier terminated as provided in the agreement. As consideration for the license, the Company agreed to pay a fee equal to fifty percent of the gross margin, as defined in the Agreement, on future sales of approved licensed products, which fee shall be reviewed annually by the parties. On January 21, 2019, the Company entered into a lease for approximately 79,600 square feet of office space in the downtown area of Denver, Colorado. The monthly obligation for base rent will average approximately $33,000 per month over the lease term which expires in December 2029. The Company has options to terminate the lease after 90 months as well as the option to extend the lease for an additional period of five years. On March 12, 2019, the Company granted restricted stock awards to members of the Board of Directors for an aggregate of 90,910 shares of Common Stock. The fair value of these shares was $0.5 million based on the closing price of the Company’s Common Stock on the grant date. Compensation expense will be recognized until the restricted stock awards vest on March 12, 2020. During the first quarter of 2019, the Company entered into operating lease obligations for transportation equipment. These leases provide for fixed minimum payments of approximately $17,000 per month over the eight-year lease term for an aggregate commitment of $1.7 million. The present value of these obligations of $1.3 million will be recorded as an ROU lease asset and ROU lease liability for the first quarter of 2019. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates | The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances, to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company’s significant accounting estimates include, but are not necessarily limited to, estimated useful lives for identifiable intangible assets and property and equipment, impairment of goodwill and long-lived assets, valuation assumptions for stock options, warrants and equity instruments issued for goods or services, the allowance for doubtful accounts receivable, inventory obsolescence, the allowance for sales returns and chargebacks, deferred income taxes and the related valuation allowances, and the evaluation and measurement of contingencies. To the extent there are material differences between the Company’s estimates and the actual results, the Company’s future consolidated results of operation will be affected. |
Risks and Uncertainties | Inherent in the Company’s business are various risks and uncertainties, including its limited operating history in a rapidly changing industry. These risks include the Company’s ability to manage its rapid growth and its ability to attract new customers and expand sales to existing customers, risks related to litigation, as well as other risks and uncertainties. In the event that the Company does not successfully execute its business plan, certain assets may not be recoverable, certain liabilities may not be paid and investments in its capital stock may not be recoverable. The Company’s success depends upon the acceptance of its expertise in providing services, development of sales and distribution channels, and its ability to generate significant net revenue and cash flows from the use of this expertise. |
Segments | The Company’s chief operating decision maker (the “CODM”), who is the Company’s Chief Executive Officer, allocates resources and assesses performance based on financial information of the Company. The CODM reviews financial information presented for each reporting segments for purposes of making operating decisions and assessing financial performance. Accordingly, the Company operates in two reportable segments as presented in Note 15. |
Cash and Cash Equivalents | All highly liquid investments purchased with an original maturity of three months or less that are freely available for the Company’s immediate and general business use are classified as cash and cash equivalents. Cash and cash equivalents consist primarily of demand deposits with financial institutions. |
Allowance for Doubtful Accounts | The Company records a provision for doubtful accounts based on historical experience and a detailed assessment of the collectability of its accounts receivable. In estimating the allowance for doubtful accounts, the Company considers, among other factors, the aging of the accounts receivable, its historical write-offs, the credit worthiness of customers, and general economic conditions. Account balances are charged against the allowance when the Company believes that it is probable that the receivable will not be recovered. Actual write-offs may either be in excess or less than the estimated allowance. Recoveries of any accounts receivable previously written off are recorded as a reduction of expense when received. |
Inventories | Inventories consist of the costs associated with the purchase of raw materials and the manufacturing and transportation of products. Inventories are stated at the lower of cost or net realizable value using the first-in, first-out method. Provisions for excess inventory are included in cost of goods sold and have historically been immaterial. |
Property and Equipment | Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, as follows: Years Buildings and improvements 28-40 Machinery and equipment 3-7 Office furniture and equipment 3-10 Delivery vehicles 3-5 Leasehold improvements are amortized over the remaining lease term or the estimated useful life of the asset, whichever is shorter. As of December 31, 2018, leasehold improvements are being amortized over lives ranging from 1 to 10 years. Maintenance and repairs are expensed as incurred. Depreciation commences when assets are initially placed into service for their intended use. |
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 more likely than not that the fair value of the reporting unit is greater than the carrying amount, further testing of goodwill for impairment is not required. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The Company performed a qualitative assessment and determined there was no impairment of goodwill for the years ended December 31, 2018 and 2017. Intangible assets acquired in business combinations are recorded at the estimated acquisition date fair value. Finite lived intangible assets are amortized over the shorter of the contractual life or their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the asset are expected to be generated. In connection with the Company’s business combinations, identifiable intangible assets were acquired that were recorded at estimated fair value on the date of acquisition. These assets are being amortized using the straight-line method over the amortization periods shown below: Number of Years Weighted Range Average License agreements China direct selling license 15 15.0 Other 15 (1) 42.0 Trade names 15 15.0 Manufacturing processes and recipes 15 15.0 Independent product consultants distribuion network 10 10.0 Customer relationships 3-15 14.5 Patents 15 15.0 Non-compete agreements 3 3.0 _________________ (1) In order to more closely reflect the estimated economic life of the license agreement acquired in the June 2017 acquisition of Marley, the Company revised the estimated useful life from 42 years to 15 years during the fourth quarter of 2018. The carrying value of this license was approximately $5.7 million, and the impact of the change in estimate resulted in an additional $64,000 of amortization expense for the fourth quarter of 2018 whereby the change to earnings per share was immaterial. For the year ending December 31, 2019, total amortization expense related to this license agreement is expected to be approximately $0.4 million as compared to approximately $0.2 million that was recognized for the year ended December 31, 2018. |
Long-lived Assets | Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Impairment exists for property and equipment and other long-lived assets if the carrying amounts of such assets exceed the estimates of future net undiscounted cash flows expected to be generated by such assets.. An impairment charge is recognized for the amount by which the carrying amount of the asset, or asset group, exceeds its fair value. No impairment of long-lived assets occurred in the years presented. |
Leases | The Company determines if contractual arrangements are considered a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, whereas assets related to finance leases are included in property and equipment. The corresponding liabilities related to ROU assets and assets under financing leases are included in accrued liabilities and other long-term liabilities in the Company’s consolidated balance sheets, based on the related contractual maturities. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the related obligations to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. None of the Company’s leases provide an implicit interest rate, which requires use of the Company’s estimated incremental borrowing rate to determine the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. When lease terms include options to extend or terminate the lease that are reasonably certain to be exercised, the ROU calculations give effect to such options. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Some of the Company’s lease agreements contain lease and non-lease components, which are generally accounted for separately. However, for certain leases, the Company elects to account for the lease and non-lease components as a single lease component. Additionally, for certain equipment leases, the Company applies a portfolio approach to effectively account for the operating lease ROU assets and liabilities. |
Debt Issuance Costs and Discounts | Debt issuance costs incurred to obtain new debt financing or modify existing debt financing consist of incremental direct costs incurred for professional fees and due diligence services, including reimbursement of similar costs incurred by the lenders. Amounts paid to the lenders when a financing is consummated are a reduction of the proceeds and are treated as a debt discount. Except for revolving lines of credit, debt issuance costs and discounts are presented in the accompanying consolidated balance sheets as a reduction in the carrying value of the debt and are accreted to interest expense using the effective interest method. Debt issuance costs related to revolving lines of credit are presented in the accompanying consolidated balance sheets as a long-term asset and are amortized using the straight-line method over the contractual term of the debt agreement. Unamortized deferred debt issuance costs are not charged to expense when the related debt becomes a demand obligation due to the violation of terms so long as it is probable that the lenders will either waive the violation or will agree to amend or restructure the terms of the indebtedness. If either circumstance is probable, the deferred debt issuance costs continue to be amortized over the remaining term of the initial amortization period. If it is not probable, the costs will be charged to expense. |
Deferred Offering Costs | Commissions, legal fees and other costs that are directly associated with equity offerings are capitalized as deferred offering costs, pending a determination of the success of the offering. Deferred offering costs related to successful offerings are charged to additional paid-in capital in the period it is determined that the offering was successful. Deferred offering costs related to unsuccessful equity offerings are recorded as expense in the period when it is determined that an offering is unsuccessful. |
Revenue Recognition | Revenue Recognition We recognize revenue when our performance obligations are satisfied. Our primary performance obligation (the distribution and sale of beverage products) is satisfied upon the shipment or delivery of products to our customers, which is also when control is transferred. Merchandising activities that are performed after a customer obtains control of the product, are accounted for as fulfillment of our performance obligation to ship or deliver product to our customers and are recorded in selling, general and administrative expenses. Merchandising activities are immaterial in the context of our contracts. The transfer of control of products to our customers is typically based on written sales terms that do not allow for a right of return. However, our policy for DSD and certain chilled products is to remove and replace damaged and out-of-date products from store shelves to ensure that consumers receive the product quality and freshness they expect. Similarly, our policy for certain warehouse-distributed products is to replace damaged and out-of-date products. As a result, we record reserves, based on estimates, for anticipated damaged and out-of-date products. Payments received for undelivered or back-ordered products are recorded as deferred revenue. The Company’s policy is to defer revenue related to distributor convention fees, payments received on products ordered in the current period but not delivered until the subsequent period, initial independent product consultants (“IPCs”) fees, IPC renewal fees and internet subscription fees until the products or services have been provided. Deferred revenue is included in accrued liabilities in the accompanying consolidated balance sheets. |
Customer Programs and Incentives | The Company incurs customer program costs to promote sales of products and to maintain competitive pricing. Amounts paid in connection with customer programs and incentives are recorded as reductions to revenue or as advertising, promotional and selling expenses, based on the nature of the expenditure. The Company accounts for volume rebates made to its independent product consultants (“IPCs”) and similar discounts and incentives as a reduction of revenue in the accompanying consolidated statements of operations. |
Sales and Marketing Expenses | Advertising, promotional and selling expenses consisted of sales salaries, tap handles, media advertising costs, sales and marketing expenses, and promotional activity expenses and are recognized in the period incurred. The Company accrues expenses for incentive trips associated with Morinda’s direct sales marketing program, which rewards certain IPCs with paid attendance at its conventions, meetings, and retreats. Expenses associated with incentive trips are accrued over qualification periods as they are earned. The Company specifically analyzes incentive trip accruals based on historical and current sales trends as well as contractual obligations when evaluating the adequacy of the incentive trip accrual. Actual results could result in liabilities being more or less than the amounts recorded. |
Research and Development | Research and development costs are primarily related to development of new product formulas. All research and development costs are expensed as incurred. Research and development costs were not material for the years ended December 31, 2018 and 2017 |
Share-Based Compensation | The Company measures the cost of employee and director services received in exchange for all equity awards granted, including stock options, based on the fair market value of the award as of the grant date. The Company computes the fair value of options using the Black-Scholes-Merton (“BSM”) option pricing model. The Company recognizes the cost of the equity awards over the period that services are provided to earn the award, usually the vesting period. For awards granted which contain a graded vesting schedule, and the only condition for vesting is a service condition, compensation cost is recognized as an expense on a straight-line basis over the requisite service period as if the award was, in substance, a single award. The Company recognizes the impact of forfeitures in the period that the forfeiture occurs, rather than estimating the number of awards that are not expected to vest in accounting for stock-based compensation. |
Derivatives | The Company holds a derivative financial instrument in the form of an interest rate swap. The Company uses interest rate swaps to economically convert variable interest rate debt on a foreign mortgage to a fixed rate. The Company has not designated these derivatives as hedging instruments. The interest rate swaps are recorded in the accompanying consolidated financial statements at their fair value with the unrealized gains and losses recorded in interest expense. When the Company enters into a financial instrument such as a debt or equity agreement (the “host contract”), the Company assesses whether the economic characteristics of any embedded features are clearly and closely related to the primary economic characteristics of the remainder of the host contract. When it is determined that (i) an embedded feature possesses economic characteristics that are not clearly and closely related to the primary economic characteristics of the host contract, and (ii) a separate, stand-alone instrument with the same terms would meet the definition of a financial derivative instrument, then the embedded feature is bifurcated from the host contract and accounted for as a derivative instrument. The estimated fair value of the derivative feature is recorded separately from the carrying value of the host contract, with subsequent changes in the estimated fair value recorded as a non-operating gain or loss in the Company’s consolidated statements of operations. |
Income Taxes | The Company accounts for income taxes under the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered or settled. Realization of deferred income tax assets is dependent upon future taxable income. A valuation allowance is recognized if it is more likely than not that some portion or all of a deferred income tax asset will not be realized based on the weight of available evidence, including expected future earnings. The Company recognizes an uncertain tax position in its financial statements when it concludes that a tax position is more likely than not to be sustained upon examination based solely on its technical merits. Only after a tax position passes the first step of recognition will measurement be required. Under the measurement step, the tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon effective settlement. This is determined on a cumulative probability basis. The full impact of any change in recognition or measurement is reflected in the period in which such change occurs. Interest and penalties related to income taxes are recognized in the provision for income taxes. |
Foreign Currency Translation | The Company’s reporting currency is the U.S. Dollar, while the functional currencies of its foreign subsidiaries are their respective local currencies. A majority of Morinda’s business operations occur outside the United States. The local currency of each of the Morinda’s international subsidiaries and branches is used as its functional currency. All assets and liabilities are translated into U.S. dollars at exchange rates existing at the consolidated balance sheet date, and net revenue and expenses are translated at monthly average exchange rates. The resulting net foreign currency translation adjustments are recorded in accumulated other comprehensive income as a separate component of stockholders’ equity in the consolidated balance sheets. Gains and losses from foreign currency transactions and remeasurement gains (losses) on short-term intercompany borrowings, are recorded in other income and expense in the consolidated statements of operations and comprehensive loss. The tax effect has not been material to date. |
Net Income (Loss) Per Share | Basic net loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding for each period presented. Diluted net loss per common share is computed by giving effect to all potential shares of Common Stock, including unvested restricted stock awards, stock options, convertible debt, Preferred Stock and warrants, to the extent dilutive. |
Recently Issued Accounting Standards | Recently Adopted Standards. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows – Restricted Cash In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation: Scope of Modification Accounting Standards Required to be Adopted in Future Years. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Codification Improvements to Topic 326, Financial Instruments – Credit Losses. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies Tables Abstract | |
Estimated useful lives of the assets | Years Buildings and improvements 28-40 Machinery and equipment 3-7 Office furniture and equipment 3-10 Delivery vehicles 3-5 |
Estimated useful life of intangible assets | Number of Years Weighted Range Average License agreements China direct selling license 15 15.0 Other 15 (1) 42.0 Trade names 15 15.0 Manufacturing processes and recipes 15 15.0 Independent product consultants distribution network 10 10.0 Customer relationships 3-15 14.5 Patents 15 15.0 Non-compete agreements 3 3.0 |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Acquisition Of Assets Of Br Liquid Adventure Llc Tables | |
Schedule of Net Assets Acquired and Recorded as Goodwill | Presented below is a summary of the total purchase consideration for these business combinations (in thousands): 2018 2017 Morinda Maverick PMC Marley Total Purchase consideration: Cash paid $ 75,000 $ 2,000 $ - $ - $ 2,000 Fair value of: Common stock issued 10,970 (1) 9,086 5,496 18,600 33,182 Contingent consideration payable 13,134 (2) - - 800 800 Total purchase consideration $ 99,104 $ 11,086 $ 5,496 $ 19,400 $ 35,982 Presented below is a summary of the purchase price allocations for these business combinations (in thousands): 2018 2017 Morinda Maverick PMC Marley Total Current assets: Cash and cash equivalents $ 42,647 $ - $ - $ - $ - Accounts receivable 4,250 246 - 187 433 Inventories 26,733 (1) 1,523 - 798 2,321 Prepaid expenses and other 3,985 211 2 199 412 Total current assets acquired 77,615 1,980 2 1,184 3,166 Property and equipment 55,389 (2) 68 55 22 145 Identifiable intangible assets 45,886 (3) 6,661 4,100 9,281 20,042 Right-of-use lease asset and other 19,318 (4) - - - - Total identifiable assets acquired 198,208 8,709 4,157 10,487 23,353 Current liabilities assumed: Current maturities of notes payable (1,291 ) - (401 ) - (401 ) Stockholder payables - - - - Accounts payable, accrued liabilities and other (40,364 ) Long-term liabilities assumed: Notes payable, less current maturities (1,578 ) (1,427 ) - - (1,427 ) Stockholder payables (43,356 ) (5) - - - - Other long-term liabilities - - - - Net identifiable assets acquired 88,820 5,937 3,728 9,982 19,647 Goodwill 10,284 (6) 5,149 1,768 9,418 16,335 Total purchase price allocation $ 99,104 $ 11,086 $ 5,496 $ 19,400 $ 35,982 |
Summary of earnout obligations | 2018 Total Discount Accretion Net 2017 Marley earnout obligation $ 900 (1) $ - $ - $ 900 $ 800 Payables to former Morinda stockholders: EWC payable in April 2019 1,000 (2) (16) (5) 2 986 - EWC payable in July 2019 8,000 (2) (283) (5) 15 7,732 - EWC payable in July 2020 5,463 (2) (497) (5) 10 4,984 - Earnout under Series D preferred stock 13,134 (3) - - 13,134 - Contingent on financing event 25,000 (4) (644) (5) 46 24,394 - Total 53,497 (1,440) 73 52,130 800 Less current portion 9,000 (299) 17 8,718 - Long-term portion $ 44,497 $ (1,141) $ 56 $ 43,412 $ 800 |
Pro forma | 2018 2017 Net revenue $ 287,119 $ 285,297 Net loss $ (10,210 ) $ (1,774 ) Net loss per share- basic and diluted $ (0.21 ) $ (0.05 ) Weighted average number of shares of common stock outstanding- basic and diluted 48,617 35,222 |
Schedule of Inventories | 2018 2017 Raw materials $ 12,538 $ 6,302 Work-in-process 907 - Finished goods 23,703 740 Total inventories $ 37,148 $ 7,042 |
Prepaid Expenses and Other Current Assets | 2018 2017 Prepaid expenses and deposits $ 4,982 $ 309 Prepaid stock-based compensation 347 963 Supplier and other receivables 1,144 163 Total $ 6,473 $ 1,435 |
Schedule of Property and Equipment | 2018 2017 Land $ 25,726 $ 37 Buildings and improvements 19,822 481 Leasehold improvements 4,398 858 Machinery and equipment 5,208 439 Office furniture and equipment 2,087 55 Transportation equipment 1,727 787 Total property and equipment 58,968 2,657 Less accumulated depreciation (1,687 ) (762 ) Property and equipment, net $ 57,281 $ 1,895 |
Restricted cash and other | 2018 2017 Restricted cash (1) $ 3,339 $ - Debt issuance costs, net 548 - Prepaid stock-based compensation 210 555 Deposits and other 2,838 147 Total $ 6,935 $ 702 |
Other Accrued Liabilities | 2018 2017 Accrued commissions $ 9,731 $ 86 Current portion of right-of-use lease liability 4,798 239 Accrued compensation and benefits 4,715 1,059 Accrued marketing events 3,757 (1) - Deferred revenue 2,701 - Income taxes payable 1,670 - Embedded derivative liability 470 - Other accrued liabilities 6,177 1,010 Total other accrued liabilities $ 34,019 $ 2,394 |
Other Information (Tables)
Other Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Information Tables Abstract | |
Schedule of Inventories | 2018 2017 Raw materials $ 12,538 $ 6,302 Work-in-process 907 - Finished goods 23,703 740 Total inventories $ 37,148 $ 7,042 |
Prepaid Expenses and Other Current Assets | 2018 2017 Prepaid expenses and deposits $ 4,982 $ 309 Prepaid stock-based compensation 347 963 Supplier and other receivables 1,144 163 Total $ 6,473 $ 1,435 |
Schedule of Property and Equipment | 2018 2017 Land $ 25,726 $ 37 Buildings and improvements 19,822 481 Leasehold improvements 4,398 858 Machinery and equipment 5,208 439 Office furniture and equipment 2,087 55 Transportation equipment 1,727 787 Total property and equipment 58,968 2,657 Less accumulated depreciation (1,687 ) (762 ) Property and equipment, net $ 57,281 $ 1,895 |
Lease right of use and other | 2018 2017 Restricted cash (1) $ 3,339 $ - Debt issuance costs, net 548 - Prepaid stock-based compensation 210 555 Deposits and other 2,838 147 Total $ 6,935 $ 702 |
Other Accrued Liabilities | 2018 2017 Accrued commissions $ 9,731 $ 86 Current portion of right-of-use lease liability 4,798 239 Accrued compensation and benefits 4,715 1,059 Accrued marketing events 3,757 (1) - Deferred revenue 2,701 - Income taxes payable 1,670 - Embedded derivative liability 470 - Other accrued liabilities 6,177 1,010 Total other accrued liabilities $ 34,019 $ 2,394 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Goodwill | Reporting Unit 2018 2017 Morinda $ 10,284 $ - Marley Maverick 5,149 5,149 PMC 1,768 1,768 B&R 389 389 Total Goodwill $ 31,514 $ 21,230 |
Schedule of Intangible Assets | December 31, 2018 December 31, 2017 Accumulated Net Book Accumulated Net Book Identifiable Intangible Asset Cost Amortization Value Cost Amortization Value License agreements China direct selling license $ 20,420 $ 40 $ 20,380 $ - $ - $ - Other 6,089 418 5,671 5,990 74 5,916 Manufacturing processes and recipes 11,610 380 11,230 3,530 132 3,398 Trade names 12,301 584 11,717 4,861 243 4,618 IPC distributor sales force 9,760 29 9,731 - - - Customer relationships 6,444 1,194 5,250 6,444 760 5,684 Patents 4,100 433 3,667 4,100 160 3,940 Former Morinda shareholder non-compete agreements 186 2 184 - - - Total identifiable intangible assets $ 70,910 $ 3,080 $ 67,830 $ 24,925 $ 1,369 $ 23,556 |
Schedule of Remaining Amortization of Customer Relationships | Year ending December 31: 2019 $ 4,785 2020 4,785 2021 4,783 2022 4,723 2023 4,723 Thereafter 44,031 Total $ 67,830 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Carrying value of operating lease ROU assets | December 31, 2018 Denver ROU Lease Additions in 2018 Ending December 31, Asset (1) Morinda (2) Other Balance 2017 (1) Right-of-Use Lease Assets: Cost basis $ 4,274 $ 13,369 $ 1,578 $ 19,221 $ 4,274 Accumulated amortization (449 ) (101 ) (182 ) (732 ) (209 ) Net $ 3,825 $ 13,268 $ 1,396 $ 18,489 $ 4,065 Right-of-Use Lease Liabilities: Current $ 277 $ 4,167 $ 354 $ 4,798 $ 239 Long-term 3,543 9,101 1,042 13,686 3,821 Total $ 3,820 $ 13,268 $ 1,396 $ 18,484 $ 4,060 |
Future minimum lease payments | Year ending December 31: 2019 $ 6,328 2020 4,480 2021 3,040 2022 2,672 2023 2,261 Thereafter 5,611 Total minimum lease payments 24,392 Less imputed interest (5,908 ) Present value of minimum lease payments $ 18,484 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Summary of Debt | 2018 2017 Siena Revolver $ 2,000 $ - Mortgage payable to a foreign bank 2,628 (1) - Installment notes payable 66 (2) 122 U.S. Bank Revolver - 2,000 (3) Series B notes assumed in Maverick business combination - 1,427 (4) Total 4,694 3,549 Less current maturities (3,369 ) (3,549 ) Long-term debt, less current maturities $ 1,325 $ - |
Future Debt Maturities | Year Ending December 31, 2019 $ 3,369 2020 1,322 2021 3 Total $ 4,694 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Attributable to Parent [Abstract] | |
Summary of Preferred Stock Activity | Equity Classified Preferred Stock Series A Series B Preferred Series C Preferred Total Shares Shares Conversion Shares Conversion Preferred Conversion Issued Issued Ratio (1) Issued Ratio (2) Shares Ratio Balances, December 31, 2016 250,000 284,807 2,278,456 - - 534,807 2,278,456 Recission of Series A shares for no consideration (250,000 ) - - - - (250,000 ) - Conversion of Series B Preferred Stock to Common Stock - (115,573 ) (924,584 ) - - (115,573 ) (924,584 ) Balances, December 31, 2017 - 169,234 1,353,872 - - 169,234 1,353,872 Conversion of Series B Preferred Stock to Common Stock - (169,234 ) (1,353,872 ) - - (169,234 ) (1,353,872 ) Issuance of Series C Preferred Stock - - - 6,900 6,900,000 6,900 6,900,000 Conversion of Series C Preferred Stock to Common Stock - - - (6,900 ) (6,900,000 ) (6,900 ) (6,900,000 ) Balances, December 31, 2018 - - - - - - - |
Public Offerings of Common Stock | Number Gross Offering Costs Net Description of Shares Proceeds Commissions Other Proceeds April 2018 Offering 2,560 $ 4,480 $ (269 ) $ (448 ) $ 3,763 August 2018 Offering 9,200 11,776 (824 ) (647 ) 10,305 ATM Offering 8,089 37,533 (1,126 ) (603 ) 35,804 November 2018 Offering 14,835 51,922 (3,635 ) (518 ) 47,769 Total 34,684 $ 105,711 $ (5,854 ) $ (2,216 ) $ 97,641 |
Stock Options And Warrants (Tab
Stock Options And Warrants (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Promissory note issued for acquisition of Xing Beverage, LLC | |
Schedule of Stock Option Activity | 2018 2017 Shares Price (1) Term (2) Shares Price (1) Term (2) Outstanding, beginning of year 2,491 $ 1.93 9.4 1,019 $ 1.79 9.6 Granted 926 $ 4.63 1,472 2.02 Forfeited (213 ) 2.00 - - Exercised (418 ) 1.79 - - Outstanding, end of year (3) 2,786 2.84 9.0 2,491 1.93 9.4 Vested, end of year (4) 943 $ 1.94 8.4 343 1.79 8.6 |
Schedule of Assumptions Used | Year Ended December 31, 2018 2017 Grant date fair value of common stock (exercise price) $ 4.63 $ 1.79 Expected life (in years) 6.0 3.0 Volatility 121 % 100 % Dividend yield 0 % 0 % Risk-free interest rate 2.8 % 0.9 % |
Restricted stock award activity | 2018 2017 Number of Unvested Number of Unvested Shares Compensation Shares Compensation Outstanding, beginning of year 1,823 $ 1,518 1,876 $ 534 Restricted shares issued 193 (1) 429 588 (2) 1,339 Forfeited (35 ) (76 ) - - Vested (963 ) (1,314 ) (641 ) (355 ) Outstanding, end of year (2) 1,018 $ 557 (3) 1,823 $ 1,518 (4) Intrinsic value, end of year $ 5,294 (4) $ 3,956 (4) Balance sheet classification of unvested compensation cost: Prepaid expenses- current $ 347 $ 963 Prepaid expenses- long-term 210 555 Total $ 557 $ 1,518 |
Restricted stock award activity related to the Morinda grants | Number of Shares Unvested Compensation (6) Only Cash or Only Only Cash or Only Cash (4) Shares (5) Shares (5) Total Cash Shares Shares Total Performance grants (1) - 216 - 216 $ - $ 1,123 $ - $ 1,123 Service-based grants: - One-year vesting(2) - 319 555 874 - 1,659 2,886 4,545 Three-year vesting (3) 43 96 - 139 224 499 - 723 Total 43 631 555 1,229 $ 224 $ 3,281 $ 2,886 $ 6,391 |
Stock-based Compensation Expense | Expense Recognized Unrecognized Expense Year Ended December 31: as of December 31: 2018 2017 2018 2017 Stock options $ 1,219 $ 162 $ 6,811 $ 3,035 Restricted stock awards 1,314 1,569 557 1,442 Total $ 2,533 $ 1,731 $ 7,368 $ 4,477 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Loss before income tax expense | 2018 2017 Domestic $ (20,529 ) $ (3,536 ) International (533 ) - Loss before income taxes $ (21,062 ) $ (3,536 ) |
Reconciliation of Income Tax Benefit | 2018 2017 Income tax benefit at statutory U.S. federal rate $ 4,423 $ 1,202 Income tax benefit attributable to U.S. states 1,063 108 Stock -based compensation 1,367 - Non-deductible expenses (351 ) (1 ) Change in prior year deferred taxes and other 300 Foreign rate differential (27 ) - Change in valuation allowance 2,152 (1,309 ) Total income tax benefit $ 8,927 $ - |
Components of Income Tax Expense | 2018 2017 U.S. Federal $ 7,891 $ - U.S. States 1,063 - Foreign (27 ) - Total deferred income tax benefit $ 8,927 $ - |
Schedule of Deferred Tax Assets And Liabilities | 2018 2017 Deferred income tax assets: Identifiable intangible assets $ - $ 128 Accrued liabilities 5,224 53 Embedded derivative liabilities 112 - Other 26 - Stock-based compensation 435 - Net operating loss carryforwards 9,295 2,689 Gross deferred income tax assets 15,092 2,870 Valuation allowance for deferred income tax assets - (2,870 ) Net deferred income tax assets 15,092 - Deferred income tax liabilities: Goodwill and identifiable intangible assets (12,405 ) - Property and equipment, net (3,200 ) - Notes payable (326 ) - Gross deferred income tax liabilities (15,931 ) - Net deferred income tax liability $ (839 ) $ - Deferred income tax assets and liabilities as of December 31, 2018 and 2017, are presented in the accompanying consolidated balance sheets as follows (in thousands): 2018 2017 Deferred income tax assets $ 8,908 $ - Deferred income tax liabilities (9,747 ) - Net deferred income tax liability $ (839 ) $ - |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Net Loss Per Share | 2018 2017 Series B Preferred Stock - 1,354 Stock options 2,786 2,491 Restricted stock awards under LTI Plan: Unvested shares of Common Stock issued 1,018 1,823 Unissued and unvested awards to Morinda employees 1,229 - Total 5,033 5,668 |
Segments and Geographic Conce_2
Segments and Geographic Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segments And Geographic Concentrations | |
Segment Information | Net revenue by reporting segment for the years ended December 31, 2018 and 2017, is as follows (in thousands): 2018 2017 New Age $ 48,335 $ 52,188 Morinda 3,825 - Total Revenue $ 52,160 $ 52,188 Gross profit by reporting segment for the years ended December 31, 2018 and 2017, is as follows (in thousands): 2018 2017 New Age $ 6,380 $ 12,400 Morinda 2,915 - Total gross profit $ 9,295 $ 12,400 Assets by reporting segment as of December 31, 2018 and 2017, are as follows (in thousands): 2018 2017 New Age $ 61,265 $ 61,646 Morinda 206,222 - Other 19,445 6,026 Total assets $ 286,932 $ 67,672 Capital expenditures by reporting segment for the years ended December 31, 2018 and 2017, are as follows (in thousands): 2018 2017 New Age $ 81 $ 666 Morinda 56,133 (1) - General corporate 12 - Total capital expenditures $ 56,226 $ 666 _________________ (1) Consists of property and equipment of $55.4 million acquired in the business combination with Morinda and post-closing additions of $0.7 million. |
Net revenue by geographic region | Year Ended December 31, 2018 2017 United States of America $ 48,460 $ 52,188 International 3,700 - Total revenue $ 52,160 $ 52,188 |
Significant Accounting Polici_4
Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Buildings and improvements | |
Estimated useful life | 28-40 years |
Machinery and equipment | |
Estimated useful life | 3-7 years |
Office furniture and equipment | |
Estimated useful life | 3-10 years |
Delivery vehicles | |
Estimated useful life | 3-5 years |
Significant Accounting Polici_5
Significant Accounting Policies (Details 1) | 12 Months Ended |
Dec. 31, 2018 | |
License agreements - China direct selling license | |
Number of Years, Range | 15 |
Weighted Average number of years | 15 years |
License agreements - Other | |
Number of Years, Range | 15 |
Weighted Average number of years | 42 years |
Trade names | |
Number of Years, Range | 15 |
Weighted Average number of years | 15 years |
Manufacturing processes and recipes | |
Number of Years, Range | 15 |
Weighted Average number of years | 15 years |
IPC distributor sales force | |
Number of Years, Range | 10 |
Weighted Average number of years | 10 years |
Xing's Customer Relatioships [Member] | |
Number of Years, Range | 3-15 |
Weighted Average number of years | 14 years 6 months |
Patents | |
Number of Years, Range | 15 |
Weighted Average number of years | 15 years |
Former Morinda shareholder non-compete agreements | |
Number of Years, Range | 3 |
Weighted Average number of years | 3 years |
Business Combination (Details)
Business Combination (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Cash | $ 2,000 |
Stock | 33,182 |
Contingent consideration | 800 |
Purchase price | 35,982 |
Cash and cash equivalents | 0 |
Accounts receivable | 433 |
Inventories | 2,321 |
Prepaid expenses and other current assets | 412 |
Total current assets acquired | 3,166 |
Property and equipment, net | 145 |
Intangible assets acquired | 20,042 |
Right-of-use lease asset and other | 0 |
Total identifiable assets acquired | 23,353 |
Current liabilities assumed: | |
Current maturities of notes payable | (401) |
Stockholder payables | 0 |
Accounts payable, accrued liabilities and other | (1,878) |
Long-term liabilities assumed: | |
Notes payable, less current maturities | (1,427) |
Othe long-term liabilities | 0 |
Total assets and liabilities assumed | 19,647 |
Goodwill | 16,335 |
Total purchase price | 35,982 |
Morinda | |
Cash | 75,000 |
Stock | 10,970 |
Contingent consideration | 13,134 |
Purchase price | 99,104 |
Cash and cash equivalents | 42,647 |
Accounts receivable | 4,250 |
Inventories | 26,733 |
Prepaid expenses and other current assets | 3,985 |
Total current assets acquired | 77,615 |
Property and equipment, net | 55,389 |
Intangible assets acquired | 45,886 |
Right-of-use lease asset and other | 19,318 |
Total identifiable assets acquired | 198,208 |
Current liabilities assumed: | |
Current maturities of notes payable | (1,291) |
Stockholder payables | (8,701) |
Accounts payable, accrued liabilities and other | (40,364) |
Long-term liabilities assumed: | |
Notes payable, less current maturities | (1,578) |
Stockholder payables | (43,356) |
Othe long-term liabilities | (14,098) |
Total assets and liabilities assumed | 88,820 |
Goodwill | 10,284 |
Total purchase price | 99,104 |
Maverick Brands | |
Cash | 2,000 |
Stock | 9,086 |
Contingent consideration | 0 |
Purchase price | 11,086 |
Cash and cash equivalents | 0 |
Accounts receivable | 246 |
Inventories | 1,523 |
Prepaid expenses and other current assets | 211 |
Total current assets acquired | 1,980 |
Property and equipment, net | 68 |
Intangible assets acquired | 6,661 |
Right-of-use lease asset and other | 0 |
Total identifiable assets acquired | 8,709 |
Current liabilities assumed: | |
Current maturities of notes payable | 0 |
Stockholder payables | 0 |
Accounts payable, accrued liabilities and other | (1,345) |
Long-term liabilities assumed: | |
Notes payable, less current maturities | (1,427) |
Othe long-term liabilities | 0 |
Total assets and liabilities assumed | 5,937 |
Goodwill | 5,149 |
Total purchase price | 11,086 |
PMC | |
Cash | 0 |
Stock | 5,496 |
Contingent consideration | 0 |
Purchase price | 5,496 |
Cash and cash equivalents | 0 |
Accounts receivable | 0 |
Inventories | 0 |
Prepaid expenses and other current assets | 2 |
Total current assets acquired | 2 |
Property and equipment, net | 55 |
Intangible assets acquired | 4,100 |
Right-of-use lease asset and other | 0 |
Total identifiable assets acquired | 4,157 |
Current liabilities assumed: | |
Current maturities of notes payable | (401) |
Stockholder payables | 0 |
Accounts payable, accrued liabilities and other | (28) |
Long-term liabilities assumed: | |
Notes payable, less current maturities | 0 |
Othe long-term liabilities | 0 |
Total assets and liabilities assumed | 3,728 |
Goodwill | 1,768 |
Total purchase price | 5,496 |
Marley | |
Cash | 0 |
Stock | 18,600 |
Contingent consideration | 800 |
Purchase price | 19,400 |
Cash and cash equivalents | 0 |
Accounts receivable | 187 |
Inventories | 798 |
Prepaid expenses and other current assets | 199 |
Total current assets acquired | 1,184 |
Property and equipment, net | 22 |
Intangible assets acquired | 9,281 |
Right-of-use lease asset and other | 0 |
Total identifiable assets acquired | 10,487 |
Current liabilities assumed: | |
Current maturities of notes payable | 0 |
Stockholder payables | 0 |
Accounts payable, accrued liabilities and other | (505) |
Long-term liabilities assumed: | |
Notes payable, less current maturities | 0 |
Othe long-term liabilities | 0 |
Total assets and liabilities assumed | 9,982 |
Goodwill | 9,418 |
Total purchase price | $ 19,400 |
Business Combination (Details 1
Business Combination (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Total | $ 53,497 | ||
Discount | (1,440) | ||
Accretion | 73 | ||
Contingent provision | 52,130 | $ 800 | |
Less current portion | 8,718 | 0 | |
Long-term portion | 43,412 | 800 | |
Earn-out attributable to Marley acquisition | |||
Total | 900 | ||
Discount | 0 | ||
Accretion | 0 | ||
Contingent provision | 900 | 800 | |
EWC payable in April 2019 - Morinda | |||
Total | 1,000 | ||
Discount | (16) | ||
Accretion | 2 | ||
Contingent provision | 986 | 0 | |
EWC payable in July 2019 - Morinda | |||
Total | 8,000 | ||
Discount | (283) | ||
Accretion | 15 | ||
Contingent provision | 7,732 | 0 | |
EWC payable in July 2020 - Morinda | |||
Total | 5,463 | ||
Discount | (497) | ||
Accretion | 10 | ||
Contingent provision | 4,984 | $ 0 | |
Earnout under Series D preferred stock | |||
Total | 13,134 | ||
Discount | 0 | ||
Accretion | 0 | ||
Contingent provision | 13,134 | 0 | |
Contingent on financing event | |||
Total | 25,000 | ||
Discount | (644) | ||
Accretion | 46 | ||
Contingent provision | $ 24,394 | $ 0 |
Business Combination (Details 2
Business Combination (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business combination expenses: | ||
Revenues | $ 287,119 | $ 285,297 |
Net loss from continuing operations | $ (10,210) | $ (1,774) |
Net loss per share – Basic and diluted | $ (0.21) | $ (0.05) |
Weighted average number of common shares outstanding - Basic and Dilutive | 48,617 | 35,222 |
Other Information (Details)
Other Information (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 12,538 | $ 6,302 |
Work-in-process | 907 | 0 |
Finished goods | 23,703 | 740 |
Total Inventory | $ 37,148 | $ 7,042 |
Other Information (Details 1)
Other Information (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Acquisition Of Assets Of Br Liquid Adventure Llc Tables | ||
Prepaid expenses and deposits | $ 4,982 | $ 309 |
Prepaid stock-based compensation | 347 | 963 |
Supplier and other receivables | 1,144 | 163 |
Total | $ 6,473 | $ 1,435 |
Other Information (Details 2)
Other Information (Details 2) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property and Equipment, Gross | $ 58,968 | $ 2,657 |
Less accumulated depreciation | (1,687) | (762) |
Property and Equipment, Net | 57,281 | 1,895 |
Land [Member] | ||
Property and Equipment, Gross | 25,726 | 37 |
Buildings and improvements [Member] | ||
Property and Equipment, Gross | 19,822 | 481 |
Leasehold improvements [Member] | ||
Property and Equipment, Gross | 4,398 | 858 |
Machinery and equipment [Member] | ||
Property and Equipment, Gross | 5,208 | 439 |
Office furniture and equipment [Member] | ||
Property and Equipment, Gross | 2,087 | 55 |
Transportation equipment [Member] | ||
Property and Equipment, Gross | $ 1,727 | $ 787 |
Other Information (Details 3)
Other Information (Details 3) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Other Assets [Abstract] | ||
Restricted cash | $ 3,339 | $ 0 |
Debt issuance costs, net | 548 | 0 |
Prepaid stock-based compensation | 210 | 555 |
Deposits and other | 2,838 | 147 |
Total | $ 6,935 | $ 702 |
Other Information (Details 4)
Other Information (Details 4) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Accrued commissions | $ 9,731 | $ 86 |
Current portion of right-of-use lease liability | 4,798 | 239 |
Accrued compensation and benefits | 4,715 | 1,059 |
Accrued marketing events | 3,757 | 0 |
Deferred revenue | 2,701 | 0 |
Income taxes payable | 1,670 | 0 |
Embedded derivative liability | 470 | 0 |
Other accrued liabilities | 6,177 | 1,010 |
Total other accrued liabilities | $ 34,019 | $ 2,394 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill | $ 31,514 | $ 21,230 |
Morinda | ||
Goodwill | 10,284 | 0 |
Marley | ||
Goodwill | 9,418 | 9,418 |
Maverick Brands | ||
Goodwill | 5,149 | 5,149 |
Goodwill | 4,506 | 4,506 |
PMC | ||
Goodwill | 1,768 | 1,768 |
B&R | ||
Goodwill | $ 389 | $ 389 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details 1) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Identifiable Intangible Asset, cost | $ 70,910 | $ 24,925 |
Less: accumulated amortization | 3,080 | 1,369 |
Identifiable Intangible Asset, net | 67,830 | 23,556 |
License agreements - China direct selling license | ||
Identifiable Intangible Asset, cost | 20,420 | 0 |
Less: accumulated amortization | 40 | 0 |
Identifiable Intangible Asset, net | 20,380 | 0 |
License agreements - Other | ||
Identifiable Intangible Asset, cost | 6,089 | 5,990 |
Less: accumulated amortization | 418 | 74 |
Identifiable Intangible Asset, net | 5,671 | 5,916 |
Manufacturing processes and recipes | ||
Identifiable Intangible Asset, cost | 11,610 | 3,530 |
Less: accumulated amortization | 380 | 132 |
Identifiable Intangible Asset, net | 11,230 | 3,398 |
Trade names | ||
Identifiable Intangible Asset, cost | 12,301 | 4,861 |
Less: accumulated amortization | 584 | 243 |
Identifiable Intangible Asset, net | 11,717 | 4,618 |
IPC distributor sales force | ||
Identifiable Intangible Asset, cost | 9,760 | 0 |
Less: accumulated amortization | 29 | 0 |
Identifiable Intangible Asset, net | 9,731 | 0 |
Customer relationships | ||
Identifiable Intangible Asset, cost | 6,444 | 6,444 |
Less: accumulated amortization | 1,194 | 760 |
Identifiable Intangible Asset, net | 5,250 | 5,684 |
Patents | ||
Identifiable Intangible Asset, cost | 4,100 | 4,100 |
Less: accumulated amortization | 433 | 160 |
Identifiable Intangible Asset, net | 3,667 | 3,940 |
Former Morinda shareholder non-compete agreements | ||
Identifiable Intangible Asset, cost | 186 | 0 |
Less: accumulated amortization | 2 | 0 |
Identifiable Intangible Asset, net | $ 184 | $ 0 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details 2) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Customer Relationships - Schedule Of Remaining Amortization Of Customer Relationships Details | ||
2019 | $ 4,785 | |
2020 | 4,785 | |
2021 | 4,783 | |
2022 | 4,723 | |
2023 | 4,723 | |
Thereafter | 44,031 | |
Total | $ 67,830 | $ 23,556 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
LP Funding LLC [Member] | ||
Amortization expense | $ 17,000 | $ 10,000 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Right of Use Assets: | ||
Cost basis | $ 19,221 | $ 4,274 |
Accumulated amortization | (732) | (209) |
Net | 18,489 | 4,065 |
Right of Use Liabilities: | ||
Current | 4,798 | 239 |
Long-term | 13,686 | 3,821 |
Total | 18,484 | $ 4,060 |
Denver ROU Asset | ||
Right of Use Assets: | ||
Cost basis | 4,274 | |
Accumulated amortization | (449) | |
Net | 3,825 | |
Right of Use Liabilities: | ||
Current | 277 | |
Long-term | 3,543 | |
Total | 3,820 | |
Morinda Additions | ||
Right of Use Assets: | ||
Cost basis | 13,369 | |
Accumulated amortization | (101) | |
Net | 13,268 | |
Right of Use Liabilities: | ||
Current | 4,167 | |
Long-term | 9,101 | |
Total | 13,268 | |
Other Additions | ||
Right of Use Assets: | ||
Cost basis | 1,578 | |
Accumulated amortization | (182) | |
Net | 1,396 | |
Right of Use Liabilities: | ||
Current | 354 | |
Long-term | 1,042 | |
Total | $ 1,393 |
Leases (Details 1)
Leases (Details 1) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 6,328 |
2020 | 4,480 |
2021 | 3,040 |
2022 | 2,672 |
2023 | 2,261 |
Thereafter | 5,611 |
Total | 24,392 |
Less imputed interest | (5,908) |
Present value of minimum lease payments | $ 18,484 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Notes payable, net of unamortized discounts of $98,575 and $121,069 as of December 31, 2016 and 2015, respectively | $ 4,694 | $ 3,549 |
Less: current portion | (3,369) | (3,549) |
Long-term portion, net of unamortized discounts | 1,325 | 0 |
Siena Revolver [Member] | ||
Notes payable, net of unamortized discounts of $98,575 and $121,069 as of December 31, 2016 and 2015, respectively | 2,000 | 0 |
Mortgage payable to a foreign bank [Member] | ||
Notes payable, net of unamortized discounts of $98,575 and $121,069 as of December 31, 2016 and 2015, respectively | 2,628 | 0 |
Installment notes payable [Member] | ||
Notes payable, net of unamortized discounts of $98,575 and $121,069 as of December 31, 2016 and 2015, respectively | 66 | 122 |
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 | 2,000 |
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 | $ 0 | $ 1,427 |
Debt (Details 2)
Debt (Details 2) $ in Thousands | Dec. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2019 | $ 3,369 |
2020 | 1,322 |
2021 | 3 |
Total | $ 4,694 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($)shares | |
Number of Shares | shares | 34,684 |
Gross Proceeds | $ 105,711 |
Offering Costs - Commission | (5,854) |
Offering Costs - Other | (2,216) |
Net Proceeds | $ 97,641 |
April 2018 Offering | |
Number of Shares | shares | 2,560 |
Gross Proceeds | $ 4,480 |
Offering Costs - Commission | (269) |
Offering Costs - Other | (448) |
Net Proceeds | $ 3,763 |
August 2018 Offering | |
Number of Shares | shares | 9,200 |
Gross Proceeds | $ 11,776 |
Offering Costs - Commission | (824) |
Offering Costs - Other | (647) |
Net Proceeds | $ 10,305 |
ATM Offering | |
Number of Shares | shares | 8,089 |
Gross Proceeds | $ 37,533 |
Offering Costs - Commission | (1,126) |
Offering Costs - Other | (603) |
Net Proceeds | $ 35,804 |
November 2018 Offering | |
Number of Shares | shares | 14,835 |
Gross Proceeds | $ 51,922 |
Offering Costs - Commission | (3,635) |
Offering Costs - Other | (518) |
Net Proceeds | $ 47,769 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Common stock share authorized | 100,000 | 100,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Series B Preferred Stock [Member] | ||
Preferred stock shares authorized | 300 | 300 |
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares issued | 0 | 169 |
Preferred stock shares outstanding | 0 | 169 |
Stock Options And Warrants (Det
Stock Options And Warrants (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stockholders Equity Details Abstract | ||
Options Outstanding, Beginning Balance | 2,491 | 1,019 |
Options, Granted | 926 | 1,472 |
Options, Forfeited | (213) | 0 |
Options, Vested | (418) | 0 |
Non-vested options Outstanding, Ending Balance | 2,786 | 2,491 |
Vested Options at the end of the year | 943 | 343 |
Weighted average grant date fair value Outstanding, Beginning Balance | $ 1.93 | $ 1.79 |
Weighted average grant date fair value, Granted | 4.63 | 2.02 |
Weighted average grant date fair value, Vested | 2 | 0 |
Weighted average grant date fair value, Forfeited | 1.79 | 0 |
Weighted average grant date fair value Outstanding, Ending Balance | 2.84 | 1.93 |
Vested Options weighted average fair value | $ 1.94 | $ 1.79 |
Weighted Average Remaining Contractual Life, Beginning | 9 years 4 months 24 days | 7 months 6 days |
Weighted Average Remaining Contractual Life, Ending | 9 years | 9 years 4 months 24 days |
Stock Options And Warrants (D_2
Stock Options And Warrants (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stockholders Equity Details 1Abstract | ||
Exercise price | $ 4.63 | $ 1.79 |
Expected term (years) | 6 years | 3 years |
Expected volatility | 121.00% | 100.00% |
Dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 2.80% | 0.90% |
Stock Options And Warrants (D_3
Stock Options And Warrants (Details 2) - Restricted Stock - Service Shares - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Number of shares Outstanding, Beginning Balance | 1,823 | 1,876 | ||
Restricted shares issued | 193 | 588 | ||
Number of shares, Forfeited | (35) | 0 | ||
Number of shares, Vested | (963) | (641) | ||
Number of shares Outstanding, Ending Balance | 1,018 | 1,823 | ||
Intrinsic value, end of year | $ 5,294 | $ 3,956 | ||
Unvested Compensation, Beginning Balance | 1,518 | 534 | ||
Shares issued, Unvested Compensation | 429 | 1,339 | ||
Shares Forfeited, Unvested Compensation | (76) | 0 | ||
Shares, Vested, Unvested Compensation | (1,314) | (355) | ||
Unvested Compensation, Ending Balance | 557 | 1,518 | ||
Unvested compensation cost: | ||||
Prepaid expenses- current | $ 347 | $ 963 | ||
Prepaid expenses- long-term | 210 | 555 | ||
Total | $ 1,518 | $ 1,518 | $ 557 | $ 1,518 |
Stock Options And Warrants (D_4
Stock Options And Warrants (Details 3) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($)shares | |
Only Cash | shares | 43 |
Cash or Shares | shares | 631 |
Only Shares | shares | 555 |
Total Restricted Stock Grants | shares | 1,229 |
Only Cash, Unvested Compensation | $ | $ 224 |
Cash or Shares, Unvested Compensation | $ | 3,281 |
Only Shares, Unvested Compensation | $ | 2,886 |
Tota Unvested Compensation | $ | $ 6,391 |
Performance grants | |
Only Cash | shares | 0 |
Cash or Shares | shares | 216 |
Only Shares | shares | 0 |
Total Restricted Stock Grants | shares | 216 |
Only Cash, Unvested Compensation | $ | $ 0 |
Cash or Shares, Unvested Compensation | $ | 1,123 |
Only Shares, Unvested Compensation | $ | 0 |
Tota Unvested Compensation | $ | $ 1,123 |
Service-based grants - 1 year vesting | |
Only Cash | shares | 0 |
Cash or Shares | shares | 319 |
Only Shares | shares | 555 |
Total Restricted Stock Grants | shares | 874 |
Only Cash, Unvested Compensation | $ | $ 0 |
Cash or Shares, Unvested Compensation | $ | 1,659 |
Only Shares, Unvested Compensation | $ | 2,886 |
Tota Unvested Compensation | $ | $ 4,545 |
Service-based grants - 3 year vesting | |
Only Cash | shares | 43 |
Cash or Shares | shares | 96 |
Only Shares | shares | 0 |
Total Restricted Stock Grants | shares | 139 |
Only Cash, Unvested Compensation | $ | $ 224 |
Cash or Shares, Unvested Compensation | $ | 499 |
Only Shares, Unvested Compensation | $ | 0 |
Tota Unvested Compensation | $ | $ 723 |
Stock Options And Warrants (D_5
Stock Options And Warrants (Details 4) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Promissory note issued for acquisition of Xing Beverage, LLC | ||
Stock options | $ 1,219 | $ 162 |
Restricted stock awards | 1,314 | 1,569 |
Total share based compensation | 2,533 | 1,731 |
Stock options,unrecognized | 6,811 | 3,035 |
Restricted stock awards,unrecognized | 557 | 1,442 |
Total, unrecognized compensation | $ 7,368 | $ 4,477 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ (20,529) | $ (3,536) |
International | (533) | 0 |
Loss before income taxes | $ (21,062) | $ (3,536) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes Details 1Abstract | ||
Income tax benefit at statutory U.S. federal rate | $ 4,423 | $ 1,202 |
Income tax benefit attributable to U.S. states | 1,063 | 108 |
Stock-based compensation | 1,367 | 0 |
Non-deductible expenses | (351) | (1) |
Change in prior year deferred taxes and other | 300 | 0 |
Foreign rate differential | (27) | 0 |
Change in valuation allowance | 2,152 | (1,309) |
Total tax expense | $ (8,927) | $ 0 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
U.S. Federal | $ 7,891 | $ 0 |
U.S. States | 1,063 | 0 |
Foreign | (27) | 0 |
Total deferred income tax benefit | $ 8,927 | $ 0 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred income tax assets: | ||
Intangible amortization difference | $ 0 | $ 128 |
Accrued liabilities | 5,224 | 53 |
Embedded derivative liabilities | 112 | 0 |
Other | 26 | 0 |
Stock-based compensation | 435 | 0 |
Net operating loss carry forwards | 9,295 | 2,689 |
Gross deferred income tax assets | 15,092 | 2,870 |
Valuation allowance for deferred income tax assets | 0 | (2,870) |
Net deferred tax asset | 15,092 | 0 |
Deferred income tax liabilities: | ||
Goodwill and identifiable intangible assets | (12,405) | 0 |
Property and equipment, net | (3,200) | 0 |
Notes payable | (326) | 0 |
Gross deferred income tax liabilties | (15,931) | |
Net deferred income tax liability | (839) | 0 |
Deferred income tax assets | 8,908 | 0 |
Deferred income tax liabilities | $ (9,747) | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) $ in Thousands | Dec. 31, 2018USD ($) |
Income Taxes Details Narrative | |
NOL carryforwards | $ 363,000 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Series B preferred stock | 0 | 1,354 |
Stock options | 2,796 | 2,491 |
Unvested shares issued | 1,018 | 1,823 |
Unissued and unvested awards to Morinda employees | 1,229 | 0 |
Weighted average shares outstanding - Diluted | 5,033 | 5,668 |
Segments and Geographic Conce_3
Segments and Geographic Concentrations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Total revenues | $ 52,160 | $ 52,188 |
Gross profit | 9,295 | 12,400 |
Total Assets | 286,932 | 67,672 |
Capital expenditures | 56,226 | 666 |
New Age | ||
Total revenues | 48,335 | 52,188 |
Gross profit | 6,780 | 12,400 |
Total Assets | 61,265 | 61,646 |
Capital expenditures | 81 | 666 |
Morinda | ||
Total revenues | 3,825 | 0 |
Gross profit | 2,915 | 0 |
Total Assets | 206,222 | 0 |
Capital expenditures | 56,133 | 0 |
Other | ||
Total revenues | 52,160 | 52,188 |
Gross profit | 9,295 | 12,400 |
General corporate | ||
Capital expenditures | 12 | 0 |
Gross Sales | ||
Total revenues | 55,237 | 56,528 |
Eliminations | ||
Total revenues | (3,077) | (4,340) |
Other | ||
Total Assets | $ 19,445 | $ 6,026 |
Segments and Geographic Conce_4
Segments and Geographic Concentrations (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 52,160 | $ 52,188 |
United States of America | ||
Revenues | 48,460 | 52,188 |
International | ||
Revenues | $ 3,700 | $ 0 |