UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

OR 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to __________

 

Commission file number 000-55181

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

46-3951742

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

4800 T-Rex Avenue, Suite 305

Boca Raton, Florida

 

 

33431

(Address of principal executive offices)

 

(Zip Code)

 

(561) 443-4301

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Securities registered pursuant to Section 12(g) of the Act: common stock, par value $0.001 per share

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). Yes ☑ No ☐

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to Form 10-K. ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): 

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

 

 

 

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

 

The aggregate market value of common stock held by non-affiliates of the registrant at June 30, 2018 was $22,058,281 (computed by reference to the high/low price on such date).

 

The number of shares of common stock, $0.001 par value, outstanding on April 15, 2019 was 255,643,828 shares.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Specified portions of the registrant’s definitive proxy statement for the 2019 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120 days after the end of the year covered by this report, are incorporated by reference into Part III of this report.

 

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TABLE OF CONTENTS

 

PART I

 

 

Item 1.

Business

5

Item 1A.

Risk Factors

13

Item 1B.

Unresolved Staff Comments

21

Item 2.

Properties

21

Item 3.

Legal Proceedings

22

Item 4.

Mine Safety Disclosures

22

 

 

 

PART II

 

 

Item 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

23

Item 6.

Selected Financial Data

23

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 8.

Financial Statements and Supplemental Data

29

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

29

Item 9A.

Controls and Procedures

29

Item 9B.

Other Information

30

 

 

 

PART III.

 

 

Item 10.

Directors, Executive Officers and Corporate Governance

31

Item 11.

Executive Compensation

31

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

31

Item 13.

Certain Relationships and Related Transactions, and Director Independence

31

Item 14.

Principal Accounting Fees and Services

31

 

 

 

PART IV

 

 

Item 15.

Exhibits and Financial Statements Schedules

32

Item 16.

Form 10-K Summary

42

 

 

 

SIGNATURES

 

43

 

2

 

 

PART I

 

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Statements in this Annual Report on Form 10-K ("Report" or "10-K") that are not descriptions of historical facts are forward-looking statements that are based on management's current expectations and assumptions and are subject to risks and uncertainties. If such risks or uncertainties materialize or such assumptions prove incorrect, our business, operating results, financial condition and stock price could be materially negatively affected. In some cases, you can identify forward-looking statements by terminology including "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "should," "will," "would" or the negative of these terms or other comparable terminology. Factors that could cause actual results to differ materially from those currently anticipated include those set forth in the section titled "Risk Factors" including, without limitation, risks relating to:

 

 

our need for substantial additional funds in order to continue our operations, and the uncertainty of whether we will be able to obtain the funding we need;

 

 

our ability to retain or hire key management personnel;

 

 

our ability to protect our intellectual property rights that are valuable to our business, including trademark and other intellectual property rights;

 

 

our dependence on third-party manufacturers, suppliers, distributors and other potential commercial partners;

 

 

our ability to obtain favorable credit terms from material suppliers and other commercial partners;

 

 

the size and growth of the potential markets for our products, and the rate and degree of market acceptance of any of our products;

 

 

competition in our industry;

 

 

regulatory developments in the United States and foreign countries;

 

 

consumer perception of our products due to adverse scientific research or findings, regulatory investigations, litigation, national media attention and other publicity regarding nutritional supplements;

 

 

potential slow or negative growth in the vitamin, mineral and supplement market;

 

 

increases in the cost of borrowings or unavailability of additional debt or equity capital, or both;

 

 

volatile conditions in the capital, credit and commodities markets and in the overall economy;

 

 

our dependency on retail stores for sales;

 

 

the loss of significant customers;

 

 

compliance with new and existing federal, state, local or foreign legislation or regulation, or adverse determination by regulators anywhere in the world (including the banning of products) and, in particular, Food and Drug Administration Good Manufacturing Practices ("cGMP"), Dietary Supplement Health and Education Act of 1994 ("DSHEA"), Food Safety Modernization Act ("FSMA") and California's Safe Drinking Water and Toxic Enforcement Act of 1986 ("Proposition 65") in the United States, the Natural Health Products Regulations in Canada, the Food Supplements Directive and Traditional Herbal Medicinal Products Directive (the "Herbal Products Directive") in Europe and greater enforcement by any such federal, state, local or foreign governmental entities;

 

 

material product liability claims and product recalls;

 

 

our inability to obtain or renew insurance, or to manage insurance costs;

 

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international market exposure and compliance with anti-corruption laws in the U.S. and foreign jurisdictions;

 

 

difficulty entering new international markets;

   

 

legal proceedings initiated by regulators in the U.S. or abroad;

 

 

unavailability of, or our inability to consummate, advantageous acquisitions in the future, or our inability to integrate acquisitions into our business;

 

 

loss of certain third-party suppliers;

 

 

the availability and pricing of raw materials;

 

 

disruptions in manufacturing operations that produce nutritional supplements and loss of manufacturing certifications;

 

 

increased competition and failure to compete effectively;

 

 

our inability to respond to changing consumer preferences;

 

 

interruption of business or negative impact on sales and earnings due to acts of God, acts of war, weather, sabotage, terrorism, bio-terrorism, civil unrest or disruption of delivery service;

 

 

work stoppages at our facilities or any supplier;

 

 

increased raw material, utility and fuel costs;

 

 

fluctuations in foreign currencies, including, in particular, the Euro, the Canadian Dollar and the Chinese Renminbi;

 

 

interruptions in information processing systems and management information technology, including system interruptions and security breaches;

 

 

our failure to maintain and/or upgrade our information technology systems;

 

 

our exposure to, and the expense of defending and resolving, product liability claims, intellectual property claims and other litigation;

 

 

our failure to maintain effective controls over financial reporting;

 

 

other factors disclosed in this Report; and

 

 

other factors beyond our control.

 

We operate in a very competitive and rapidly changing environment and new risks emerge from time to time. As a result, it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements included in this Report speak only as of the date hereof, and except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Report to conform these statements to actual results or to changes in our expectations.

 

4

 

 

Item 1.

Business.

(All amounts presented in this Form 10-K are in thousands, except share, per share amounts, the number of employees, and the square feet of office space)

 

General Development of Business

 

Twinlab Consolidated Holdings, Inc. (references to “we”, “our”, “us”, the “company”, or “TCH”) was incorporated on October 24, 2013 under the laws of the State of Nevada.

 

In September 2014, TCH became a holding company with the completion of a Plan of Merger (“Merger”) between Twinlab Consolidation Corporation (“TCC”) and a subsidiary of TCH with TCC surviving the Merger as a wholly-owned subsidiary of TCH. Our operational focus redirected to TCC, which through its operating subsidiaries developed, manufactured and marketed high-quality, science-based nutritional supplements, as well as to our consolidation strategy of additional acquisitions and integration of acquired companies, as more fully described below under "Business Strategy." As part of such strategy, following the Merger, we focused significantly on successfully obtaining funding for and completing two acquisitions for which TCC had acquired options prior to the Merger, and which in combination with the TCC operating businesses acquired in the Merger form the foundation for our consolidation and growth strategy. The first was the acquisition of the customer relationships of Nutricap Labs, LLC ("Nutricap"), a provider of dietary supplement contract manufacturing services, into our subsidiary NutraScience Labs, Inc. ("NutraScience") on February 6, 2015, and the second was completed on October 5, 2015 with the acquisition of 100% of the equity interests of Organic Holdings, LLC ("Organic Holdings"), a market leader in the healthy aging and beauty from within categories and owner of the award-winning Reserveage™ Nutrition brand. In 2018, the Company introduced and developed new brands to bring natural health to the forefront; specifically, REAAL™ a line of products based on a patented blend of essential amino acids that have been studied in over 25 clinical and medical settings to help maintain lean muscle. Also, in December 2018 Twinlab announced it would be launching another new brand, Phytocab™, a legal CBD based product. This brand integrates well accepted dietary ingredients into hemp-derived full spectrum phytocannabinoids, which provide for overall health and wellbeing. The addition of innovated new brands and concepts is what ties together the TCC family of brands.

 

TCC was incorporated on October 1, 2013 in the state of Delaware. TCC was formed to affect a consolidation strategy in the fragmented vitamin, mineral, herbal and other nutritional supplements sectors of the health and wellness industry (the "H&W Industry"). Since TCC's formation we have executed on this strategy in an effort to capitalize on the opportunity for consolidation that we believe exists in the H&W Industry.

 

In August 2014, TCC acquired Idea Sphere Inc., a Michigan corporation ("Idea Sphere"), and its subsidiaries. Also, in August 2014, the name of Idea Sphere was changed to Twinlab Holdings, Inc. (“THI”), which is a holding company that owns and operates Twinlab Corporation, Inc., a marketer of high-quality, science-based nutritional supplements under a number of brand names.

 

THI was incorporated on April 10, 2001. In November 2005, THI completed the acquisition of Metabolife International, Inc. and its subsidiary Alpine Health Products, LLC. Through this acquisition, THI expanded its presence in the diet and energy category. In September 2006, THI acquired the assets of Cole Water Company, LLC ("Cole Water"), which owned an aquifer with a recharging spring of naturally calcium-enriched water. This transaction included the acquisition of real property at 51 Strawtown Pike, Peru, Indiana that holds the natural aquifer as well as a bottling facility. Cole Water has marketed calcium-enriched water under a number of brand names. In December 2013, THI discontinued operations of its water products line.

 

In November 2013, THI acquired certain assets of PatentHealth LLC, primarily the Trigosamine® brand, out of receivership, expanding THI's brand footprint to include the fast-growing joint support category in the mass market and drugstore channels. In February 2015, TCC’s NutraScience acquired the customer relationships of Nutricap, a provider of nutritional supplement contract manufacturing services. In October 2015, TCC acquired all the membership units of Organic Holdings, which, through its subsidiaries, is engaged in the business of developing and selling premium nutritional supplements, including the award-winning Reserveage™ Nutrition brand. With this acquisition, we significantly expanded our brand portfolio through the addition of a market leader for resveratrol and collagen supplements in the expanding healthy aging and beauty from within categories.

 

We maintain our principal executive offices at 4800 T-Rex Avenue, Suite 305, Boca Raton, Florida. TCC's wholly owned subsidiaries are THI, NutraScience, NutraScience Labs IP Corporation, and Organic Holdings. THI's wholly owned subsidiaries are Twinlab Corporation (sometimes referred to herein as "Twinlab"), which markets nutritional supplements under its own brands and for others, and ISI Brands, Inc. ("ISI"), which holds title to the intellectual property used in the manufacturing and marketing activities of Twinlab Corporation. Organic Holdings' wholly-owned operating subsidiaries are CocoaWell, LLC, Fembody, LLC, InnoVitamin Organics, LLC, Joie Essance, LLC, Organics Management LLC, Re-Body, LLC, Reserve Life Organics, LLC, ResVitale, LLC, Reserve Life Nutrition, L.L.C., and Innovita Specialty Distribution LLC.

 

For convenience in this report, the terms "Company," "we" and "us" may be used to refer to Twinlab Consolidated Holdings, Inc. and/or its subsidiaries, except where indicated otherwise, and the term "TCC" may be used to refer to Twinlab Consolidation Corporation and/or its subsidiaries.

   

5

 

 

Business Overview

 

General

 

We are a marketer, distributor and direct to consumer retailer of branded nutritional supplements and other natural products sold to and through domestic health and natural food stores, mass market retailers, specialty stores retailers, on-line retailers and websites. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers.

 

Through NutraScience Labs, we also provide contract manufacturing services for private label products. Our contract manufacturing services business involves the manufacture of custom products to the specifications of a customer who requires finished products under the customer’s own brand name. We do not market these private label products as our business is to sell the products to the customer, who then markets and sells the products to retailers or end consumers.

 

Business Strategy

 

We target consumers searching for high quality nutritional supplements and other natural products. We believe many of these consumers shop in sales channels that offer meaningful education, service and support to their customers.

 

The primary channel that offers this type of support to consumers in the United States has been the health and natural food channel ("HNF"). Our primary focus and strength have been and remain on this channel. This strategy has enabled us to benefit from the growth of the HNF channel. The HNF channel consists of approximately 35,500 retailers, including (i) independent health and natural food stores, (ii) health and natural food stores affiliated with local, regional and national health and natural food chains (including health and natural food store chains, such as Whole Foods Market, and vitamin store chains, such as The Vitamin Shoppe and Vitamin World) and (iii) GNC stores. The HNF channel principally caters to our primary target consumers: those who desire product education, service and high-quality nutritional supplements and other natural products.

 

We develop, market and distribute our branded products, particularly the Twinlab®, Alvita® and Metabolife® brands. We market our branded products through a combination of our own sales force and independent brokers dedicated to the HNF channel. We continue to seek out partners that have strong customer relationships, reach into our target channels and have acted to realign our independent broker network to gain market share. The key to the strength of our brands and market position is innovation, as we seek to be a market leader in the development of new and innovative products. We believe that we benefit from greater customer and product diversification than many of our competitors due to our research and development, manufacturing and sales and marketing capabilities.

 

We also believe that consumers seeking high quality products are also purchasing them through other channels, such as health care practitioners and direct to consumer channels and we continue to seek opportunities to reach our target consumers through these and additional channels.

 

An integral part of our business strategy has been to acquire, integrate and operate businesses in the natural products industry that manufacture, market and distribute branded nutritional supplements. We believe that the consolidation and integration of these acquired businesses provides ongoing financial and operational synergies through increased scale and market penetration, as well as strengthened customer relationships. Our near-term focus is on harnessing the respective strengths of our existing businesses, while continuing to seek longer-term opportunities that will either strengthen our product offering, and/or expand our distribution and geographic reach.

  

Industry

 

According to Nutrition Business Journal , the total retail natural products market (the "Natural Products Market") is fragmented and totaled approximately $207 billion in retail sales in 2017. The Natural Products Market is comprised of the following primary submarkets (with estimated 2017 sales indicated): (i) natural and organic functional foods, $144 billion, (ii) vitamins, minerals and supplements, $44 billion, and (iii) natural and organic personal care $20 billion. Historically, our primary focus has been on vitamins, minerals and supplements (the "VMS Market"). Our business plan includes expansion into other channels of the Natural Products Market: specifically, natural and organic personal care and natural and organic functional foods.

 

6

 

 

The total retail VMS Market is highly fragmented with estimated sales of $44 billion in 2017 increased from $41.2 billion in 2016. We believe that the VMS Market reached its present size due to a number of factors, including (i) interest in healthier lifestyles, living longer and living well, (ii) the publication of research findings supporting the positive health effects of certain nutritional supplements (iii) the growth of the wellness conscious millennial population, combined with the aging of the "Baby Boom" and Gen X generations making a mindful choice to purchase more nutritional supplements and natural foods.

 

Products

 

We formulate and market nutritional supplements. Our products include vitamins, minerals, specialty supplements and sports nutrition products primarily under the Twinlab® (including the Twinlab® Fuel brand of sports nutrition products), Reserveage™ and ResVitale® brands. We also market and sell diet and energy products under the Metabolife® and Re-Body® brands and a full line of herbal teas under the Alvita® brand. To accommodate consumer preferences, our products come in various formulations and delivery forms, including capsules, tablets, softgels, chewables, liquids, sprays, and powders.

 

We currently market our products through a multiple brand strategy to offer more customer choice and to encourage retailers to allocate additional shelf space to our brands. We have worked to enhance the strength of our brands by instituting business strategies that have included (i) consolidating our product assortment to focus on top selling, profitable products, (ii) engaging independent brokers to support sales across the United States, (iii) creating performance and growth-based incentives for sales representatives, (iv) conducting cost savings initiatives to identify opportunities for improved margin, (v) reviewing competitive product pricing to make recommendations for market pricing alignment and (vi) completing product certifications to increase our competitive position. We believe our current portfolio of products resonates well with target consumers and retailers and provides us with significant competitive differentiation.

 

Sales, Marketing and Promotion

 

Our marketing and sales efforts are directed to promote demand for our products by educating retailers, who in turn educate their customers, on the quality and attributes of our natural nutritional supplements and other products. Our branded products are sold globally, and our primary market is the United States where our key sales channel is HNF. We believe that our products are attractive to HNF retailers due to factors such as the strength of our brand names, the breadth of our product offerings, the quality and efficacy of our products and the availability of service, sales support and educational materials. We have developed numerous Internet sites (including www.alvita.com, www.metabolife.com, www.reserveage.com, www.resvitale.com, and www.twinlab.com) that provide information about our branded lines and the various products within each brand. We have included our Internet sites here and elsewhere only as an inactive textual reference. The information contained on the Internet site is not incorporated by reference into this Report.

 

Sales

 

We employ a sales force dedicated to each of the individual channels in which we sell our products. The dynamics and buying patterns of the various channels require strategic initiatives and tactics. Our sales strategy includes several models that are applied to best serve the respective channels where our products are sold:

 

(i)

Direct sales representatives regularly visit each assigned customer in their respective areas to assist in the procurement of orders for products, provide related product sales assistance and introduce new products to buyers.

 

(ii)

In addition to our field representatives, we dedicate a skilled sales force that maintains communication with customers based on their purchasing history.

 

(iii)

We also engage an independent broker network, where we leverage their particular expertise and relationships with customers.

 

(iv)

Additionally, our products are sold through the sales force of distributors who carry select product lines.

 

Marketing and Promotion

 

TCC markets to consumers shopping through numerous retail channels and online e-tailers. Each channel demands a different approach that meets its distinctive needs. The following is a brief overview of the channels in which we market our varied brands:

 

Sales Channel

 

Specifics

Health and Natural Foods (“HNF”)

 

Retailers who specialize in supplements (i.e., The Vitamin Shoppe, Vitamin World and GNC) and retailers ranging from Whole Foods to small health food stores and their associated online platforms

 

 

 

Performance

 

Retailers and e-tailers that focus on sports nutrition (i.e., Max Muscle Sports Nutrition and Bodybuilding.com)

 

 

 

Food, Drug and Mass Market (“FDM”)

 

Retailers ranging from national and regional grocery to ‘big box’ stores (such as Target) and their associated online platforms

 

 

 

Direct to Consumer (“DTC”) /Internet

 

Company owned and operated websites as well as online e-tailers ranging from Amazon to Vitacost, whose primary store is digital.

 

 

 

International  

 

Distributors found in the countries in which we currently do business

 

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Marketing Efforts by Brand

 

Reserveage™ Nutrition

 

Reserveage Nutrition uses consistent messaging to emphasize our use of premium and traceable ingredients that are backed by published clinical studies. The brand takes a 360-degree marketing approach to drive sales to our retail partners. The focus is to grow brand awareness and increase sales directed at both the retail community and our end consumers.

 

Marketing strategies for Reserveage Nutrition include two main initiatives: 1) introduce new users to our core categories – anti-aging and beauty from within – through innovation, product trial, advertising and promotional programs and 2) increase in-store education through dedicated brand ambassadors in strategic markets.

 

Marketing and promotional efforts for Reserveage Nutrition focus on both trade and consumer tactics:

 

Public Relations/Bloggers – Outreach to media and blogger influencers has resulted in features and reviews in online and print media channels. This channel is especially important in our beauty from within line of products, where online influencers can both positively and negatively affect the success of a product.

 

Sampling – Many products are immediately experiential either because of their taste or effect. We use samples and retail demo programs to allow for trial and education of our products. These are generally conducted in-store using our own brand ambassadors or third-party representatives.

 

Retail Activation – Utilizing on-shelf promotional tactics, including coupons and associate engagement tools, to generate awareness and differentiate our brand.

 

Consumer and Trade Print Ads – Print advertising is coordinated with product introductions.

 

Digital/Social Activation - Target and retarget prospective consumers through search engine optimization, search engine marketing, and social media campaigns.

 

Re-Body®

 

Re-Body® products are science-backed dietary supplements and foods that help consumers achieve their weight-loss goals and maintain a healthy weight. The Re-Body ® brand is primarily sold through the direct to consumer channel.

 

ResVitale ®

 

The ResVitale® brand of dietary supplements is marketed and sold exclusively to GNC. Marketing strategies for the ResVitale® brand include two main initiatives: 1) introduce new users to our core categories – anti-aging and beauty from within – through awareness campaigns and product trial and 2) increase in-store education through brand ambassadors in strategic markets.

 

Twinlab ® Brand Vitamins

 

Twinlab® is a heritage brand of vitamins that has been in the market for nearly 50 years and carries a great deal of brand awareness amongst health and natural food consumers. Since Twinlab® is a distributed brand (shipping to certain major retailers, but also to nationwide distributors who resell to smaller retailers), we deliver training to distributor sales teams and participate in distributor and retailer shows designed to reach retailers and store managers.

 

Marketing strategies for Twinlab® include two main initiatives: 1) awareness and trial of key existing products and 2) awareness, trial and education for new products.

 

8

 

 

Marketing and promotional efforts for Twinlab® focus on both trade and consumer tactics:

 

Public Relations and Bloggers – Outreach to media and blogger influencers has resulted in features and reviews in online and print media channels.

 

Retailer Promotions – In-store promotional programs can drive consumer awareness when they are making purchase decisions. Manufacturer charge-backs, which deduct the cost of these programs from retailer product purchases, are created for retailers to support product features and promotions throughout the year. These programs are designed to incentivize the retailer to display products in secondary placement (multiple store locations) and often provide a discount to create excitement and deliver incremental savings in order to drive consumer purchases.

 

Coupons – Coupons are incorporated into different communication vehicles when appropriate to drive product trial use and create excitement.

 

Consumer and Trade Print Ads – Print advertising is coordinated with product introductions.

 

Trade Shows – Retailer relations and new product launches are the main areas of focus during trade shows. Display and promotion of products at several industry trade shows annually is a key component of support for Twinlab®.

  

Twinlab ® Fuel and REAAL

 

Marketing and promotional efforts for Twinlab® Fuel and REAAL focus on consumer tactics:

 

Promotions - Promotional activity, including branded gear, helps keep consumers interested in the brand dynamic.

 

International Marketing - Internationally, we partner with our top distributors who follow a similar strategy at a local level, helping to create awareness, interest and drive sales. 

 

Social Media - Instagram and Facebook are mainstays for our digital strategy, with exploration into new “Live” video options offered by each platform, allowing us to deepen our connection with our consumers. 

 

Alvita ® Teas

 

Started in 1922, Alvita® Teas is an herbal therapeutic tea line with a rich history and loyal customer base. The herb alfalfa, long known for its beneficial nutrients, was packaged in tea bags and sold to an emerging health food market. This product became known as Alvita®. Over 90 years later, Alvita® has become the oldest herbal tea brand. Today, Alvita® has more than 40 single ingredient high potency teas, each with distinct health benefits. Each tea is committed to third party certifications and offers the purity standards of Organic, Gluten-free, non-GMO, caffeine free and Kosher certifications.

 

Marketing tactics for Alvita® include retailer promotions, coupons and trade show participation.

 

NutraScience Labs, Inc.

 

NutraScience Labs helps dietary supplement companies bring high-quality formulations to the market by delivering best-in-class, turnkey manufacturing, packaging design, and fulfillment services “under one roof”. Marketing activities for NutraScience Labs focuses on promoting the services it offers with a focus on acquiring new customers through digital marketing and trade media and not advertising of products.

    

Research and Development; Quality Control

 

We have a commitment to research and development (“R&D”) and to introducing innovative products to correspond with consumer trends and scientific research. We believe that product quality and innovation are fundamental to our long-term growth and success. Through our R&D efforts, we seek to (i) test the safety, purity and potency of products, (ii) develop testing methods for ensuring and verifying the consistency of the dosage of ingredients included in our products, (iii) develop new, more effective product delivery forms and (iv) develop new products either by combining existing ingredients used in nutritional supplements or identifying new ingredients that can be used in nutritional supplements. Our efforts are designed to lead not only to the development of new and improved products, but also to ensure effective manufacturing quality control measures.

 

We conduct R&D in-house and also work with outside firms to perform testing and other aspects of R&D. We currently employ various professionals in R&D and quality control with expertise in, among other things, chemistry, microbiology and engineering. In addition, we retain the services of outside laboratories to validate our product standards and manufacturing protocols.

 

9

 

 

Our quality control and safety programs seek to ensure the safety and superior quality of our products and that they are manufactured in accordance with current Good Manufacturing Practices (“cGMPs”). We have always had a focus on safety, quality, efficacy and compliance with law. Our processing methods are monitored closely to ensure that only quality ingredients are used and to ensure product purity.

 

Significant Customers

 

Sales to our top three customers aggregated to approximately 26% and 30% of total consolidated sales in 2018 and 2017, respectively. Sales to the largest one of those customers were approximately 12% of total sales in 2018 and 2017. Accounts receivable from these customers were approximately 22% and 36% of total accounts receivable as of December 31, 2018 and 2017, respectively. A single customer represents 14% of total accounts receivable. The decrease in sales to these customers was primarily caused by product demand being far greater than our supplies of inventory during 2018, complicated by the Utah facility transition, which further limited our ability to service these significant customers. As we increase inventory to levels to meet demand, we will continue to strategically diversify our offerings and channels to lessen dependence upon any one customer or group of customers.

 

Manufacturing

 

Our products are manufactured by highly qualified third-party providers located primarily in the U.S. These contract manufacturers do business with us under both short- and long-term contracts depending on our needs. We do not manufacture any of the basic materials used in packaging (bottles, boxes, shipping cartons, caps, tamper resistant films, etc.). We believe that increasing manufacturing capabilities through our contract manufacturer partners, provides us with competitive advantages.

 

In 2018, we transitioned out of manufacturing in the Company’s Utah facility and leveraged the supply chain of the Company’s successful subsidiary, NutraScience Labs, and third-party logistics providers. This allows us to utilize exclusive technologies and processes that contribute to product innovation, while still providing the high-quality products our customers know us for.

 

Materials and Suppliers

 

We employ a supply chain staff that works with marketing, product development, formulations and quality control personnel to oversee contract manufacturers and source raw materials for products as well as other items purchased by us. Raw materials are sourced by a variety of domestically and internationally approved suppliers principally from the United States, Europe and China. We believe our relationships with our principal suppliers, are good. Our top two suppliers accounted for 42% of our purchases for the year ended December 31, 2018. Whenever possible we have adopted dual sourcing for raw materials to mitigate the impact of raw materials shortages that happen from time to time.

  

Government Regulation

 

The formulation, manufacturing, packaging, labeling, advertising, distribution and sale of our products are subject to regulation by a number of federal agencies, including the Food and Drug Administration ("FDA"), the Federal Trade Commission ("FTC"), the Consumer Product Safety Commission ("CPSC"), the United States Department of Agriculture (“USDA”), Department of Labor Occupational Safety and Health Agency (“OSHA”), Department of Homeland Security Customs and Boarder Protection (“CBP”), Department of Transportation (“DOT”), and the Environmental Protection Agency (“EPA”), by various governmental agencies for the states and localities in which our products are sold, and by governmental agencies in countries outside the United States in which our products are sold.

 

The FDA regulates the formulation, manufacturing, packaging, labeling, distribution and sale of food, including dietary supplements, cosmetics, and over-the-counter ("OTC") drugs. The FTC regulates the advertising of these products. Federal agencies, primarily the FDA and the FTC, have a variety of procedures and enforcement remedies available to them, including initiating investigations, issuing warning letters and cease-and-desist orders, requiring corrective labeling or advertising, requiring consumer redress, seeking injunctive relief or product seizures, imposing civil penalties or commencing criminal prosecution. In addition, certain state agencies have similar authority.

 

The Dietary Supplement Health and Education Act (“DSHEA”) was enacted in 1994, amending the Federal Food, Drug, and Cosmetic Act (“FDCA”). Dietary ingredients marketed in the United States before October 15, 1994 may be marketed without the submission of a "new dietary ingredient" premarket notification to the FDA. New dietary ingredients, with exception, not marketed in the United States before October 15, 1994, are required to be submitted to the FDA at least seventy-five days before marketing. Among other things, DSHEA prevents the FDA from regulating dietary ingredients in dietary supplements as "food additives" and allows the use of statements of structure function claims on product labels and in labeling, so long as those statements do not constitute disease claims and are truthful and sufficiently substantiated. Some of our products are also regulated as conventional foods under the Nutrition Labeling and Education Act of 1990 (“NLEA”).

 

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The FDA issued a Final Rule on GMPs (Good Manufacturing Practices) for dietary supplements in June 2007. The GMPs cover manufacturers, packagers, labelers, distributors, and holders of finished dietary supplement products, including dietary supplement products manufactured outside the United States that are imported for sale into the United States. Among other things, these GMPs require identity testing on all incoming dietary ingredients, call for a "scientifically valid system" for ensuring finished products meet all specifications, include requirements related to process controls such as statistical sampling of finished batches for testing and requirements for written procedures and require extensive recordkeeping.

 

The Dietary Supplement and Nonprescription Drug Consumer Protection Act went into effect in December 2007. The law requires, among other things, that companies that manufacture or distribute nonprescription drugs or dietary supplements report serious adverse events allegedly associated with their products to the FDA and institute recordkeeping requirements for all adverse events (serious and non-serious).

 

The Consumer Product Safety Improvement Act of 2008 ("CPSIA") primarily addresses children's product safety but also improves the administrative process of the CPSC. Among other things, the CPSC/CPSIA impact on dietary supplements is principally in requirements for use of child resistant closures, performance validation of such closures, and requirements for packaging and labeling of iron-containing products. The CPSIA also requires testing and certification of certain products and enhances the CPSC's authority to order recalls. 

 

The FDA Food Safety Modernization Act ("FSMA"), enacted in January 2011, amended the FDCA to significantly enhance the FDA's authority over various aspects of food regulation. The FSMA granted the FDA mandatory recall authority when the FDA determines there is a reasonable probability that a food is adulterated or misbranded and that the use of, or exposure to, the food will cause serious adverse health consequences or death to humans or animals. Other changes include, but are not limited to, the FDA's expanded access to records; the authority to suspend food facility registrations and require high risk imported food to be accompanied by a certification; stronger authority to administratively detain food; the authority to refuse admission of an imported food if it is from a foreign establishment to which a U.S. inspector is refused entry for an inspection; and the requirement that importers verify that the foods they import meet domestic standards.

 

Although dietary supplement facilities are exempt from preventive controls requirements, dietary ingredient facilities might not qualify for the exemption. FDA's proposed preventative controls regulations would require that facilities develop and implement preventive controls to assure that identified hazards are significantly minimized or prevented, monitor the effectiveness of the preventive controls, and maintain numerous records related to those controls. 

 

California Proposition 65 (“Prop 65”) is particularly impactful and imposing among state regulations. Its impact on product formulations, testing, and labeling are extensive and significant. Because of national brand distribution, the impact of Prop 65 is far reaching. TCC has several Prop 65 consent agreements which afford compliance protections.

  

The sale of our products in countries outside the United States is regulated by the governments of those countries. Our plans to commence or expand sales in those countries may be prevented or delayed or even suspended by such regulations or regulators in those countries. In countries in which we have distributors, compliance with such regulations is generally undertaken by our distributors, but even in these cases we often cooperate by providing information to distributors. In the case of Canada, TCC complies with Health Canada’s Natural Health Products Directorate (“NHPD”) with “site licensing” of the TCC manufacturing plant and registration of products.

 

Competition

 

Health and Natural Foods

 

The Natural Products Market and the VMS Market are highly competitive. Our principal competitors in the VMS market that sell to the health and natural foods channel include a number of large, nationally-known brands (such as Bluebonnet, Country Life, Enzymatic Therapy, Garden of Life, Jarrow Formulas, Natural Factors, Nature's Plus, Nature's Way, Nordic Naturals, Now Foods, New Chapter and Solgar) and many smaller brands, manufacturers and distributors of nutritional supplements. Because both the health and natural foods market and the VMS Market generally have low barriers to entry, additional competitors enter the market regularly.

 

Private label products of our customers also provide competition to our products. Whole Foods Market, The Vitamin Shoppe, Sprouts Farmers Market, Natural Grocers and many health and natural food stores also sell a portion of their offerings under their own private labels. Private label products are often sold at a discount to branded products.

 

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We believe that stores in the HNF channel are increasingly likely to align themselves with those companies that offer a wide variety of high-quality products, have a loyal consumer base, support their brands with strong marketing and education programs and provide consistently high levels of customer service. We believe that we compete favorably with other nutritional supplement companies because of our comprehensive line of products and brands, premium brand names, commitment to quality, ability to rapidly introduce innovative products, competitive pricing, strong and effective sales force, distribution strategy and sophisticated marketing and promotional support. The wide variety and diversity of the forms, potencies and categories of our products are important points of differentiation between us and many of our competitors.

  

Mass Market

 

Metabolife® is our primary focus in the Mass Market retail channel. It is possible that as an increasing numbers of companies (or brands) sell nutritional supplement products and other natural products in the mass market channels, such as Pharmavite (Nature Made), KKR & Co. L.P. (Nature's Bounty), Reckitt Benckiser Group (Schiff), Hain Celestial and Church & Dwight, our mass market brands will be negatively impacted. In addition, several major pharmaceutical companies continue to offer nutritional supplement lines in the mass market channel, including Pfizer (Centrum) and Bayer (One-A-Day).

 

Performance

 

The performance channel is primarily made up of independent retailers that focus their product mix on performance products, as well as gyms, health clubs and other health and fitness locations that house small stores to cater to the needs of their clients. There is also a small vibrant market serviced by bicycle shops and other specialty sports equipment retailers, and even larger sporting goods stores, like Dick’s Sporting Goods, which are testing sports nutrition sets in their stores. The retail performance channel is supplied by a specialty distributor that focuses exclusively on this channel. In recent years the performance channel has become dominated by several online retailers (www.allstarhealth.com, www.bodybuilding.com, www.dpsnutrition.com, www.muscleandstrength.com, www.netrition.com, and www.supplementwarehouse.com) that have the advantage of broad selection and aggressive pricing.

 

Competition in this channel is intense. The character of the target customer makes the barriers to entry in sports nutrition extremely low as consumers look for the next great product that will help them optimize their workout. As a result, competition for Twinlab includes the somewhat large stable core brands (BSN, CytoSport, Five Star, Met-Rx, MHP, MRI, MusclePharm, Optimum Nutrition, VPX, etc.) as well as a secondary level of innovative, small companies with niche products focused on this specific targeted customer.

 

Intellectual Property

 

We own numerous trademarks that have been registered with the United States Patent and Trademark Office and have filed applications to register additional trademarks. In addition, we claim domestic trademark and service mark rights in numerous additional marks that we use. We own a number of trademark registrations in countries outside the United States. Federally registered trademarks in the United States have a perpetual life, as long as they are maintained and renewed on a timely basis and used properly as trademarks, subject to the rights of third parties to seek cancellation of the trademarks if they claim priority or confusion of usage. Most foreign trademark offices use similar trademark renewal processes. Additionally, we hold several patents that have been registered with the United States Patent and Trademark Office and may file additional applications. We regard our trademarks, patents and other proprietary rights as valuable assets and believe they make a significant positive contribution to the marketing of our products.

 

We protect our legal rights concerning our intellectual property by appropriate legal action. We rely on common law trademark rights to protect our unregistered trademarks. Common law trademark rights do not provide us with the same level of protection as afforded by a United States federal registration of a trademark. In addition, common law trademark rights are limited to the geographic area in which the trademark is actually used. We have registered and intend to register certain trademarks in certain limited jurisdictions outside the United States where our products are sold, but we may not register all or even some of our trademarks in every country in which we conduct business or intend to conduct business.

 

We sell many products that include patented ingredients. We purchase these ingredients from parties that we believe are licensed by the patent owner to sell and manufacture goods with the patent ingredients. However, there are a large number of patents that have been granted or applied for in the dietary supplement industry, and there may be an increased possibility that third parties will seek to compel us and our competitors to purchase their patented ingredients directly from them under threat that patent ingredient we properly obtain, infringes on their patent rights. We generally obtain indemnification from the patent owner through separate end user licensing agreements to increase our protection from these third parties or “non-practicing entities,” should they try to enforce such claim through litigation. The cost of these patented ingredients is typically higher than the cost of non-patented ingredients.

 

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Employees

 

As of April 15, 2019, we had 85 full-time employees and 2 part-time employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We consider our relationship with our employees to be good.

 

Item 1A.

Risk Factors

 

Our business, financial condition, results of operations, cash flows, prospects, and the prevailing market price and performance of our common stock may be adversely affected by a number of factors, including the matters discussed below. Certain statements and information set forth in this Annual Report on Form 10-K, including without limitation statements regarding our strategic initiatives and expectations for the future performance of our business, as well as other written or oral statements made from time to time by us, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact, including statements that describe our objectives, plans, or goals, are, or may be deemed to be, forward-looking statements. Known and unknown risks, uncertainties, and other factors may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these statements. The risks, uncertainties, and other factors that our stockholders and prospective investors should consider include the following:

 

Regulatory, Product Liability and Insurance Risks

 

Our products are subject to government regulation, both in the United States and abroad, which could increase our costs significantly and limit or prevent the sale of our products.

 

The manufacture, packaging, labeling, advertising, promotion, distribution and sale of our products are subject to regulation by numerous national and local governmental agencies in the United States and other countries. The primary regulatory bodies in the United States are the FDA and FTC, and we are also subject to similar regulatory bodies in all the countries in which we do business. Failure to comply with regulatory requirements may result in various types of penalties or fines. These types of penalties include injunctions, product withdrawals, recalls, product seizures, fines and criminal prosecutions. Individual U.S. states also regulate nutritional supplements. A state may seek to interpret claims or products presumptively valid under federal law as illegal under that state's regulations. For example, in February 2015, the New York Attorney General issued cease and desist letters to several national retailers regarding certain herbal supplements and since that time both the New York Attorney General and Attorneys General from other states have engaged in inquiries regarding the manufacture and sale of various supplements. Pursuant to such inquiries, states Attorneys General could seek to take actions against industry participants or amend applicable regulations in their State. In markets outside the United States, we are usually required to obtain approvals, licenses, or certifications from a country's ministry of health or comparable agency, as well as labeling and packaging regulations, all of which vary from country to country. Approvals or licensing may be conditioned on reformulation of products or may be unavailable with respect to certain products or product ingredients. Any of these government agencies, as well as legislative bodies, can change existing regulations, or impose new regulations, or could take aggressive measures, causing or contributing to a variety of negative consequences, including:

 

 

 requirements for the reformulation of certain or all products to meet new standards,

 

the recall or discontinuance of certain or all products,

 

additional record keeping,

 

expanded documentation of the properties of certain or all products,

 

expanded or different labeling,

 

adverse event tracking and reporting, and

 

additional scientific substantiation.

 

Any or all of these requirements could have a material adverse effect on us. There can be no assurance that the regulatory environment in which we operate will not change or that such regulatory environment, or any specific action taken against us, will not result in a material adverse effect on us.

 

If we experience regulatory investigations or product recalls, we may incur significant and unexpected costs, and our business reputation could be adversely affected.

 

We may be exposed to regulatory investigations or product recalls and adverse public relations if our products are alleged to cause injury or illness, or if we are alleged to have violated governmental regulations. A regulatory investigation or product recall could result in substantial and unexpected expenditures, which would reduce operating profit and cash flow. In addition, a regulatory investigation or product recall may require significant management attention. Regulatory investigations and product recalls may hurt the value of our brands and lead to decreased demand for our products. Regulatory investigations or product recalls also may lead to increased scrutiny by federal, state or international regulatory agencies of our operations and increased litigation and could have a material adverse effect on our business, results of operations, financial condition and cash flows. Regulatory investigations or product recalls could also result in our incurring substantial costs, losing revenues and implementing a change in the design, manufacturing process or the indications for which our products may be used, each of which could harm our business.

 

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We may experience product liability claims and litigation to prosecute such claims, and although we maintain product liability insurance, which we believe to be adequate for our needs, there can be no assurance that our insurance coverage will be adequate or that we will be able to obtain adequate insurance coverage in the future. In addition, we may be subject to consumer fraud claims, including consumer class action claims regarding product labeling and advertising, and litigation to prosecute such claims; these claims are generally not covered by insurance.

 

As a distributor of products for human consumption, we experience from time to time product liability claims and litigation to prosecute such claims. Additionally, the sale and distribution of these products involves the risk of injury to consumers as a result of tampering by unauthorized third parties or product contamination. We carry insurance coverage in the types and amounts that we consider reasonably adequate to cover the risks we face from product liability claims. If insurance coverage is inadequate or unavailable or premium costs continue to rise, we may face additional claims not covered by insurance, and claims that exceed coverage limits or that are not covered could have a material adverse effect on us. Moreover, liability claims arising from a serious adverse event may in addition to increasing our costs through higher insurance premiums and deductibles, may make it more difficult to secure adequate insurance coverage in the future. In addition, consumer fraud claims, including consumer class action claims regarding product labeling and advertising, are increasingly common as to food and dietary supplement products. Because insurance is generally hard to obtain for such claims, these types of claims could have a material adverse effect on us. A product liability claim, regardless of its merit or ultimate outcome, could result in:

 

 

injury to our reputation,

 

decreased demand for our products,

 

diversion of management’s attention,

 

a change in the design, manufacturing process or the indications for which our marketed products may be used,

 

loss of revenue, and

 

an inability to commercialize product candidates.

 

We may be required to indemnify our contract manufacturing and/or retailer customers, the payment of which could have a material adverse effect on our business, financial condition and operating results.

 

We provide certain rights of indemnification to our contract manufacturing customers. In the past, we have had a claim tendered to us to defend approximately forty putative class actions alleging primarily that two products failed to contain sufficient active ingredients to meet label claims. We accepted such tender subject to a reservation of various rights and vigorously defended these cases.  The matter culminated in a confidential settlement with the plaintiffs, which did not have a material adverse effect on our financial condition/results of operations or cash flows or liquidity at that time; however, any litigation involves risk and is inherently unpredictable. If any plaintiff is successful in certifying a class and thereafter prevailing on the merits of their complaint, such an adverse result could have a material adverse effect on us. In addition, due to the nature and scope of the indemnity and defense we will likely need to provide, the legal fees associated with such indemnification could be significant enough to have a material adverse effect on our cash flows until such matters are fully and finally resolved.

  

We may experience Lanham Act claims by competitors and litigation to prosecute such claims.

 

The Lanham Act empowers competitors to file suit regarding any promotional statements that the competitor believes to be false or misleading. If a competitor prevails, it could obtain monetary damages (including potentially treble damages and attorneys' fees). A court can also order corrective advertising, or even a product recall if the offending claims are found on the product's packaging and labeling. If we experience a Lanham Act claim filed against us, this could have a material adverse effect on us and on our products' reputation.

 

Market and Channel Risks

 

Our success is linked to the size and growth rate of the vitamin, mineral and supplement market and an adverse change in the size or growth rate of that market could have a material adverse effect on us.

 

An adverse change in size or growth rate of the vitamin, mineral and supplement market could have a material adverse effect on us. Underlying market conditions are subject to change based on economic conditions, consumer preferences and other factors that are beyond our control, including media attention and scientific research, which may be positive or negative.

 

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Because a substantial portion of our sales are to or through health food stores, we are dependent to a large degree upon the success of this channel as well as the success of specific retailers in the channel.

 

We sell primarily in the United States and, in this market, a significant portion of our sales are through health food stores. Because of this, we are dependent to a large degree upon the success of that channel as well as the success of specific retailers in the channel. There are some large chains of health food stores, such as Whole Foods Market and The Vitamin Shoppe, but many health food stores are individual stores or very small chains. We rely on these health food stores to purchase, market, and sell our products. A fair portion of our success is dependent, to a large degree, on the growth and success of the health and natural foods channel, which is outside our control. There can be no assurance that the health and natural foods channel will be able to grow or prosper as it faces price and service pressure from other channels, including the mass market. There can be no assurance that retailers in the health and natural foods channel, in the aggregate, will respond or continue to respond to our stated loyalty to this channel.

 

We are highly dependent upon consumers' perception of the safety and quality of our products as well as similar products distributed by other companies in our industry, and adverse publicity and negative public perception regarding particular ingredients or products or our industry in general could limit our ability to increase revenue and grow our business.

 

Decisions about purchasing made by consumers of our products may be affected by adverse publicity or negative public perception regarding particular ingredients or products or our industry in general. This negative public perception may include publicity regarding the legality or quality of particular ingredients or products in general or of other companies or our products or ingredients specifically. Negative public perception may also arise from regulatory investigations, regardless of whether those investigations involve us. We are highly dependent upon consumers' perception of the safety and quality of our products as well as similar products distributed by other companies. Thus, the mere publication of reports asserting that such products may be harmful could have a material adverse effect on us, regardless of whether these reports are scientifically supported. Publicity related to nutritional supplements may also result in increased regulatory scrutiny of our industry and/or the healthy foods industry. Adverse publicity may have a material adverse effect on our business, financial condition and results of operations. There can be no assurance of future favorable scientific results and media attention or of the absence of unfavorable or inconsistent findings.

 

We face intense competition from competitors that are larger, more established and that possess greater resources than we do, and if we are unable to compete effectively, we may be unable to maintain sufficient market share to sustain profitability.

 

Numerous manufacturers and retailers compete actively for consumers. There can be no assurance that we will be able to compete in this intensely competitive environment. In addition, nutritional supplements can be purchased in a wide variety of channels of distribution. These channels include mass market retail stores and the Internet. Because these markets generally have low barriers to entry, additional competitors could enter the market at any time. Private label products of our customers also provide competition to our products. Additional national or international companies may seek in the future to enter or to increase their presence in the healthy foods industry or the vitamin, mineral and supplement market. Increased competition in either or both could have a material adverse effect on us. 

  

The nutritional supplement industry increasingly relies on intellectual property rights and although we seek to ensure that we do not infringe the intellectual property rights of others, there can be no assurance that third parties will not assert intellectual property infringement claims against us, which claims may result in substantial costs and diversion of management and other resources and could have a material adverse effect on our business, financial condition and operating results. Our inability to acquire, protect or maintain our intellectual property could harm our ability to compete or grow.

 

Recently it has become more and more common for suppliers and competitors to apply for patents or develop proprietary technologies and processes. We seek to ensure that we do not infringe the intellectual property rights of others, but there can be no assurance that third parties will not assert intellectual property infringement claims against us. These developments could prevent us from offering or supplying competitive products or ingredients in the marketplace. They could also result in litigation or threatened litigation against us related to alleged or actual infringement of third-party rights. If an infringement claim is asserted or litigation is pursued, we may be required to obtain a license of rights, pay royalties on a retrospective or prospective basis or terminate our manufacturing and marketing of our products that are alleged to have infringed. Litigation with respect to such matters could result in substantial costs and diversion of management and other resources and could have a material adverse effect on our business, financial condition and results of operations. We have numerous United States and foreign trademarks and service marks. There can be no assurance that the protection afforded by these trademarks and service marks will provide us with a competitive advantage or that we will be able to assert our intellectual property rights in infringement actions.

 

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We may be affected adversely by increased utility and fuel costs.

 

Increasing fuel costs may affect our results of operations adversely in that consumer traffic to health and natural food stores may be reduced and the costs of our sales may increase as we incur fuel costs in connection with our manufacturing operations and the transportation of goods from our warehouse and distribution facilities to health and natural food stores. Also, high oil costs can affect the cost of our raw materials and components and the competitive environment in which we operate may limit our ability to recover higher costs resulting from rising fuel prices.

 

Adverse economic conditions may harm our business.

 

Inflation or other changes in economic conditions that affect demand for nutritional supplements could adversely affect our revenue. Uncertainty about current global economic conditions poses a risk as consumers and businesses may postpone spending in response to tighter credit markets, negative financial news and/or declines in income or asset values, each of which could have a material negative effect on the demand for our products. Other factors that could influence demand include conditions in the residential real estate and mortgage markets, labor and healthcare costs, and access to credit, consumer confidence and other macroeconomic factors affecting consumer spending behavior. These and other economic factors could have a material adverse effect on demand for our products and on our financial condition and results of operations.

 

Business Strategy and Operational Risks

 

If we are unable to retain key personnel, our ability to manage our business effectively and continue our growth could be negatively impacted.

 

Key management employees of the company and its subsidiaries include Anthony Zolezzi as the Chief Executive Officer, Carla Goffstein, as the Senior Vice President of Finance and Interim Chief Financial Officer, Gregory T. Grochoski as the Executive Vice President and Chief Science Officer, Shari Gottesman as Senior Vice President, General Counsel and Corporate Secretary, James Handley as the Vice President of Operations, Elizabeth Collins as the Vice President of Human Resources and Vincent Tricario as the Vice President of Contract Manufacturing. These key management employees are primarily responsible for our day-to-day operations, and we believe our success depends in part on our ability to retain them and to continue to attract additional qualified individuals to our management team. The loss or limitation of the services of any of our key management employees or the inability to attract additional qualified management personnel could have a material adverse effect on our business, financial condition and results of operations.

 

As a part of our business strategy, we have made and may make acquisitions in the future that could disrupt our operations and harm our operating results.

 

An element of our strategy includes expanding our product offerings, gaining shelf-space and gaining access to new skills and other resources through strategic acquisitions when attractive opportunities arise. Acquiring additional businesses and the implementation of other elements of our business strategy are subject to various risks and uncertainties. Some of these factors are within our control and some are outside our control. These risks and uncertainties include, but are not limited to, the following:

 

 

any acquisition may result in significant expenditures of cash, stock and/or management resources,

 

acquired businesses may not perform in accordance with expectations,

 

we may encounter difficulties, delays and costs with the integration of the acquired businesses,

 

we may be unable to achieve the anticipated operating and cost synergies or long-term strategic benefits we expect,

 

management's attention may be diverted from other aspects of our business,

 

we may face unexpected problems entering geographic and product markets in which we have limited or no direct prior experience,

 

we may lose key employees of acquired or existing businesses,

 

we may incur liabilities and claims arising out of acquired businesses,

 

we may be unable to obtain financing,

 

we may incur indebtedness or issue additional capital stock which could be dilutive to holders of our common stock, and

 

we may acquire a substantial amount of goodwill and other intangible assets as a result of acquisitions and as a result we may experience in the future impairments of goodwill or other intangible assets.

 

There can be no assurance that attractive acquisition opportunities will be available to us, that we will be able to obtain financing (on acceptable terms or at all) for or otherwise consummate any future acquisitions, including those described below, or that any acquisitions which are consummated will prove to be successful. There can be no assurance that we can successfully execute all aspects of our business strategy.

 

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Because we depend on outside suppliers with whom we may not have long-term agreements for raw materials, we may be unable to obtain adequate supplies of raw materials for our products at favorable prices or at all, which could result in product shortages and back orders for our products, with a resulting loss of net sales and profitability.

 

We acquire all our raw materials for the manufacture of our products from third-party suppliers. Currently, we rely on third-party co-packers for our products; our reliance on these third-party co-packers has increased as the result of the winding down of our Utah manufacturing facility in 2018. We have selective agreements with third-party co-packers for the continued supply of these materials and products. Several of our products contain one or more ingredients that may only be available from a single source or supplier. Any of our suppliers could discontinue selling to us at any time. In certain situations, we may be required to alter our products or substitute different materials from different alternative sources. Our suppliers or government regulators may interpret new regulations (including cGMP regulations) in such a way as to cause a disruption in our supply chain as these parties undertake increased scrutiny of raw materials and components of raw materials and products, causing certain suppliers or us to discontinue, change or suspend the sale of certain ingredients or components. Although we believe that we could establish alternate sources for most of these materials, any delay in locating and establishing relationships with other sources could result in product shortages and back orders for the products, with a resulting loss of net sales and profitability. We are also subject to delays associated with raw materials. These delays can be caused by conditions not within our control, including:

 

 

burdensome tariffs,

  weather,
 

crop conditions,

 

transportation interruptions,

 

strikes by materials supplier employees, third-party co-packer’s employees or third-party logistics employees, and

 

natural disasters or other catastrophic events.

 

These factors could result in a delay in or disruption of the supply of certain raw materials. Any significant delay in or disruption of the supply of raw materials could have a material adverse effect upon us.

 

We rely on our information systems to conduct our business, and any failure to protect these systems against security breaches or failure of these systems themselves could adversely affect our business, results of operations and liquidity and could result in litigation and penalties. If these systems fail or become unavailable for any significant period of time, our business could be harmed. Additionally, the inappropriate use of social media vehicles could harm our reputation and adversely impact our business.

 

The efficient operation of our business is dependent on computer hardware and software systems. Among other things, these systems collect and store certain personal information from customers, vendors and employees and process customer payment information. Our information systems and those maintained by our third-party vendors and the sensitive data they are designed to protect are vulnerable to security breaches by computer hackers, cyber terrorists and other cyber attackers. We rely on industry accepted security measures and technology to securely maintain confidential and proprietary information maintained on our information systems, and we rely on our third-party vendors to take appropriate measures to protect the confidentiality of the information on those information systems. However, these measures and technology may not adequately prevent security breaches. Our information systems may become unavailable or fail to perform as anticipated for any reason, including viruses, loss of power or human error. Any significant interruption or failure of our information systems or those maintained by our third-party vendors or any significant breach of security could adversely affect our reputation with our customers, vendors and employees and could adversely affect our business, results of operations and liquidity and could result in litigation against us or the imposition of penalties. A significant interruption, failure or breach of the security of our information systems or those of our third-party vendors could also require us to expend significant resources to upgrade the security measures and technology that guard sensitive data against computer hackers, cyber terrorists and other cyber attackers.

 

Additionally, we rely on search engine marketing and social media platforms to attract and retain customers as part of our marketing efforts. A variety of risks are associated with the use of social media, including the improper disclosure of proprietary information, negative comments about our company and our products, exposure of personally identifiable information, fraud, or outdated information. The inappropriate use of social media vehicles by our customers or employees could increase our costs, lead to litigation or result in negative publicity that could damage our reputation.

 

To the extent that we currently rely on third-party manufactures, now and in the future, we are dependent upon the uninterrupted and efficient operation of those third-party facilities, which may experience power failures, the breakdown, failure or substandard performance of equipment, the improper installation or operation of equipment, natural or other disasters , employee disruptions, and the need to comply with the requirements or directives of government agencies, including the FDA.

 

We are dependent upon the uninterrupted and efficient operation of our third-party manufacturing partners. Those operations may experience power failures, the breakdown, failure or substandard performance of equipment, the improper installation or operation of equipment, natural or other disasters, employee disruptions and the need to comply with the requirements or directives of government agencies, including the FDA. There can be no assurance that the occurrence of these or any other operational problems at our facility would not have a material adverse effect on our business, financial condition and results of operations.

 

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We may become a party to lawsuits that arise in the ordinary course of business in the future.

 

We may become a party to lawsuits that arise in the ordinary course of business in the future. The possibility of such litigation, and its timing, is in large part outside our control. It is possible that future litigation could arise that could have material adverse effects on us.

 

If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.

 

Under generally accepted accounting principles, we review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill and indefinite-lived intangible assets are tested for impairment at least annually. Factors that may indicate that the carrying value of our goodwill or intangible assets may not be recoverable include a decline in stock price and market capitalization, reduced future cash flow estimates and slower growth rates in our industry. During the fourth quarter of 2018, we completed our annual impairment test of goodwill and intangible assets and did not recognize impairment charges, see Note 5, Intangible Assets and Goodwill, in the Notes to Consolidated Financial Statements included in this report.

 

We may need additional capital in the future to finance our operations and to execute our business strategy, which we may not be able to raise, or it may only be available on terms unfavorable to us and or our stockholders. This may result in our inability to fund our working capital requirements and harm our operational results.

 

Our current cash on hand is insufficient to fund our operations. We believe that cash flows from operations and other committed sources of additional liquidity will not be sufficient to fund our operations in the ordinary course of business through April 16, 2020. If we experience extraordinary expenses or other events beyond our control, we will need to raise additional funds to continue our operations.

 

Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited.

 

Changes in accounting standards, especially those that relate to management estimates and assumptions, are unpredictable and may materially impact how we report and record our financial condition.

 

Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Some of these policies require use of estimates and assumptions that may affect the value of our assets or liabilities and financial results and are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain. From time to time the Financial Accounting Standards Board ("FASB") and the Securities and Exchange Commission (the "SEC") change the financial accounting and reporting standards that govern the preparation of our financial statements. In addition, accounting standard setters and those who interpret the accounting standards (such as the FASB, the SEC, banking regulators and our outside auditors) may change or even reverse their previous interpretations or positions on how these standards should be applied. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements.

 

We are an "emerging growth company" under the JOBS Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

 

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"), and we take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We have elected to adopt these reduced disclosure requirements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

 

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In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

 

We will remain an "emerging growth company" for up to five years, although we will lose that status sooner if our annual revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million and as a result we become a large accelerated filer.

 

Because of our history of accumulated deficits, recurring losses and negative cash flows from operating activities, we must improve profitability and may be required to obtain additional funding if we are to continue as a "going concern."

 

We incurred negative cash flows from operating activities and recurring net operating losses in the year ended December 31, 2018. We had negative working capital at the end of fiscal year 2018 and 2017.  As of December 31, 2018 and 2017, our accumulated deficit was $274,372 and $253,963, respectively.  These factors raise substantial doubt about our ability to continue as a going concern. The financial statements included with this report do not include any adjustments that might result from the outcome of this uncertainty.  In order for us to remove substantial doubt about our ability to continue as a going concern, we must achieve profitability, generate positive cash flows from operating activities and obtain necessary debt or equity funding.  

                              

Our financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business.  Our independent registered public accounting firm has issued its report dated April 16, 2019, which includes an explanatory paragraph stating that our recurring losses, among other things, raise substantial doubt about our ability to continue as a going concern.  It has been necessary to rely upon debt and the sale of our equity securities to sustain operations.  Our management anticipates that we may require additional capital over the next 12 months to fund ongoing operations.  There can be no guarantee that we will be able to obtain such funds, or obtain them on satisfactory terms, and that such funds would be sufficient.   

 

Risks Relating to Our Common Stock

 

Our common stock currently has very limited trading volume and holders of our securities may not be able to sell quickly any significant number of shares.

 

Our common stock is quoted on the OTCPK. There has been very limited trading volume of our common stock. Because of this, holders of our securities may not be able to sell quickly any significant number of such shares, and any attempted sale of a large number of our shares will likely have a material adverse impact on the price of our common stock. The price per share of our common stock is subject to volatility and may be subject to rapid price swings in the future.

 

Because the trading price of our common stock is below $5.00 per share it is deemed a low-priced "Penny" stock and an investment in our common stock should be considered high risk and subject to marketability restrictions.

 

Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Since the trading price of the common stock is below $5.00 per share, trading in the common stock will be subject to the penny stock rules of the Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

 

 

Approve the customer for the specific penny stock transaction and receive from the customer a written agreement to the transaction,

 

Deliver to the customer, and obtain a written receipt for, a disclosure document describing risks of investing in penny stocks,

 

Disclose certain recent price information about the stock,

 

Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer,

 

Send monthly statements to customers with market and price information about the penny stock, and

 

In some circumstances, approve the purchaser's account under certain standards and deliver written statements to the customer with information specified in the rules.

 

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.

 

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We have the ability to issue additional shares of our common stock without asking for stockholder approval, which could cause your investment to be diluted. Issuances of preferred stock could have superior right to those of our shares of common stock.

 

Our Articles of Incorporation authorize the Board of Directors to issue up to 5 billion shares of common stock. The power of the Board of Directors to issue shares of common stock or warrants or options to purchase shares of common stock is generally not subject to stockholder approval. If we issue shares of preferred stock in the future, the shares of preferred stock could be given voting rights, dividend rights, liquidation rights or other similar rights superior to those of our shares of common stock. Additionally, any additional issuance of our common stock, or preferred stock that may be convertible into common stock, may have the effect of diluting your investment.

 

FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.

 

In addition to the "penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

 

Management may not timely institute proper controls , or compensating controls when necessary or our controls may fail, which may result in a material adverse effect on our business, financial condition and results of operations.

 

During the fourth quarter of 2018, management identified material weaknesses in the selection and testing of our third-party logistics and fulfillment provider ("3PL"), whom the Company engaged to replace the Company's Utah manufacturing facility. The Company has determined that the 3PL does not issue reports pursuant to the Statement on Standards for Attestation Engagement No. 18 attestation standards ("SSAE18"). The Company should have designed and implemented the necessary internal controls to address the potential risks of using a 3PL who does not issue SSAE18 reports. The Company should have taken steps to design and implement controls around the receipt of inventory at the 3PL to ensure the quantities and description of inventory movements related to the 3PL. Additionally, the Company should take steps to obtain and review the appropriate SSAE 18 reports issued by the software company which the 3PL uses as its inventory management software. Management also identified a material weakness related to a lack of appropriate staffing in our accounting and information technology departments to address the Company's ability to continue to close the books both timely and accurately and to meet internal control documentation requirements. Prior normal staffing turnover along with technical accounting issues and the Company's change to a 3PL impacted the Company's ability to react to technical accounting matters encountered.

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f) and 15d-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. 

 

Concurrent with year-end reporting, under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we conducted an evaluation of the effectiveness of the overall design of our system of internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 (COSO). Under standards established by the Public Company Accounting Oversight Board of the United States, a material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 

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To remediate the material weaknesses described above, management has begun implementing several initiatives for 2019, including but not limited to the following:

 

 

Engaging and working throughout the year with our independent Sarbanes Oxley Act consultant to help improve the overall testing of our system of internal control.

 

Designing and implementing controls around the receipt of inventory at the 3PL to ensure the quantities and descriptions of inventory movements are input accurately.

 

Conducting monthly sampling of outgoing shipping documents and validating that the shipment date per the 3PL matches to the shipment date per the 3rd party freight carrier’s documents to corroborate the 3PL’s shipping records and to avoid placing inadvertent reliance on the 3PL’s shipping records.

 

Reconciling inventory per the general ledger to the 3PL records on a regular basis to ensure inventory is recorded completely and accurately.

 

Observing the annual physical inventory count performed by the 3PL to ensure the existence of inventory and that the inventory value is not misstated. Also, the Company will consider observing random cycle counts performed throughout the year.

 

Obtaining and reviewing the SSAE 18 SOC 1 report issued by the software company, which the 3PL uses as its inventory management software.

 

Hiring, training and retaining the appropriate staffing in the accounting and information technology departments including technical accountants to support and alleviate the work load on the current team. The additional staffing should proactively identify and account for transactions of a complex or non-routine nature. Furthermore, the additional staffing should be responsible for managing the day-to-day responsibilities of Sarbanes Oxley compliance. The additional staffing should also reduce inefficiencies and address documenting evidence of operating effectiveness for business process controls and information technology general controls.

 

Management and our audit committee will continue to monitor these remedial measures and the effectiveness of our internal controls and procedures. Other than as described above, there were no changes in our internal controls over financial reporting during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

An excess of a majority of our outstanding voting securities are beneficially owned by two individuals and their affiliates, and these two individuals can elect all directors who in turn appoint all officers, without the votes of any other stockholders. These two individuals and their affiliates are also lenders to the Company of a significant portion of our indebtedness.

 

Mr. Van Andel, the Chairman of our Board of Directors, and Mr. Golisano, also a director and stockholder, and their affiliates collectively beneficially own over 80% of our outstanding voting securities and, accordingly, have effective control of us and may have effective control of us for the near- and long-term future. Votes of other stockholders can have little effect since we are managed by our Board of Directors and operated through our officers, all of whom can be elected or appointed by two individuals. These two individuals and their affiliates are also lenders to the Company of a significant portion of our indebtedness. As of December 31, 2018, we had related party debt of $82.3 million.

 

We do not expect to pay dividends in the near future.

 

We do not expect to declare or pay any dividends on our common stock in the foreseeable future. The declaration and payment in the future of any cash or stock dividends on the common stock will be at the discretion of our Board of Directors and will depend upon a variety of factors, including our ability to service our outstanding indebtedness, if any, and to pay dividends on securities ranking senior to the common stock, our future earnings, if any, capital requirements, financial condition and such other factors as our Board of Directors may consider to be relevant from time to time. Our earnings, if any, are expected to be retained for use in expanding our business.

 

Item 1B.

Unresolved Staff Comments.

 

Not Applicable.

 

 

Item 2.

Properties

 

We occupy approximately 3,600 rentable square feet of office space in Grand Rapids, Michigan under a month-to-month lease. We have possession of the 5 th and 6 th floor of an office building which is approximately 30,600 rentable square feet of office space in St. Petersburg, Florida under a lease that expires April 30, 2027. On December 1, 2016, we entered into a sublease for approximately 15,300 square feet on the 5 th floor. We have possession of approximately 162,000 rentable square feet of manufacturing, R&D, warehousing and shipping space, which includes roughly 30,000 square feet of office space, in American Fork, Utah under a lease that expires in February 2028. We occupy approximately 13,000 rentable square feet in Boca Raton, Florida under a lease that expires February 2026. We occupy certain space at NutraScience's offices in Farmingdale, New York under a lease agreement that expires May 2021. We also own a water capture and bottling facility that has been discontinued in Peru, Indiana that is approximately 47,000 square feet. We believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed.

   

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TCH Properties

 

Twinlab Manufacturing Facility and Offices

Leased

American Fork, Utah

Twinlab Executive Offices (Marketing, Sales and Legal)

Leased

Boca Raton, Florida

Twinlab Corporate Offices (Regulatory and Marketing)

Leased

Grand Rapids, Michigan

NutraScience Labs Facilities

Leased

Farmingdale, New York

Additional Office Space

Leased

St. Petersburg, Florida

Cole Water Aquifer and Bottling Facility (Water Capture and Bottling)

Owned

Peru, Indiana

 

Item 3.

Legal Proceedings

 

CH Robinson Worldwide v. Twinlab Consolidation Corporation, Case No.: , in the District Court of the Fourth Judicial District in and for Hennepin County, Minnesota, allegedly filed on March 7, 2018 asserting the Company failed to pay for services rendered. An investigation of this claim revealed that the plaintiff’s invoices in the Company’s name were paid. Though this matter was served on the Company, plaintiff did not take the requisite action to perfect the filing with the court within one year pursuant to Rule 41 of the Minnesota Rules of Civil Procedure. On March 5, 2019, the plaintiff filed a formal motion to voluntarily dismiss its complaint, and such dismissal was granted.

 

Item 4.

Mine Safety Disclosures.

 

Not Applicable.

 

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PART II

 

 

Item 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Market Information

Our common stock is traded in the OTC Markets PK (OTCPK), under the symbol "TLCC". We have been eligible to participate in the OTCPK since June 25, 2014 and from that time until the date of this Report our common stock has had only minimal trading. Over-the-counter market quotations of our common stock reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

 

Holders of Common Stock

 

As of April 15, 2019, there were approximately 382 stockholders of record of our common stock. This number does not include shares held by brokerage clearing houses, depositories or others in unregistered form.

 

Dividends

 

We have not declared or paid any cash dividends on our common stock during our two most recent years. Any decisions regarding dividends will be made by our Board of Directors. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Our Board of Directors has complete discretion on whether to pay dividends. Even if our Board of Directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the Board of Directors may deem relevant .

 

Item 6.

Selected Financial Data.

 

We are a smaller reporting company as defined by Regulation S-K and, as such, we are not required to provide the information contained in this item pursuant to Regulation S-K.

 

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations. (Amounts in thousands, except per share amounts and per square feet.)

 

Overview

 

This Annual Report on Form 10-K contains forward-looking statements. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained herein that are not statements of historical fact, including statements regarding guidance, industry prospects or future results of operations or financial position made in this report are forward-looking. We often use words such as anticipates, believes, estimates, expects, intends, predicts, hopes, should, plans, will and similar expressions to identify forward-looking statements. These statements are based on management’s current expectations and accordingly are subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained herein due to various important factors, including (but not limited to): consumer preferences, spending and debt levels; the general economic and credit environment; interest rates; variations in consumer purchasing activities; competitive pressures on sales; pricing and gross sales margins; the associated fees or estimated cost savings from contract renegotiations; and our ability to establish and maintain acceptable commercial terms with contract manufacturers. We undertake no obligation to publicly update or revise any forward-looking statements.

 

Our Operations

 

We are an integrated formulator, marketer, distributor and retailer of branded nutritional supplements and other natural products sold to and through domestic health and natural food stores, mass market retailers, specialty retailers, on-line retailers and websites. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers.

 

Our products include vitamins, minerals, specialty supplements and sports nutrition products primarily under the Twinlab® (including the REAAL, and Twinlab Fuel brand of sports nutrition products), Reserveage and ResVitale ® brands. We also formulate, market and sell diet and energy products under the Metabolife® and Re-Body® brands and a full line of herbal teas under the Alvita® brand. To accommodate consumer preferences, our products come in various formulations and delivery forms, including capsules, tablets, softgels, chewables, liquids, sprays, powders and whole herbs. These products are sold primarily through health and natural food stores and on-line retailers, supermarkets, and mass-market retailers. 

 

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We also perform contract manufacturing services for private label products. Our contract manufacturing services business involves the manufacture of custom products to the specifications of a customer who requires finished products under the customer’s own brand name. We do not market these private label products as our business is to sell the products to the customer, who then markets and sells the products to retailers or end consumers.

 

We distribute one of the broadest branded product lines in the industry with approximately 260 stock keeping units, or SKUs. We believe that as a result of our emphasis on innovation, quality, loyalty, education and customer service, our brands are widely recognized in health and natural food stores and among their customers.

 

We have fully integrated our two 2015 acquisitions. The first was the acquisition of the customer relationships of Nutricap, a provider of dietary supplement contract manufacturing services, into our subsidiary, NutraScience, in February 2015, and the second was the acquisition of 100% of the equity interests of Organic Holdings, a market leader in the healthy aging and beauty from within categories and owner of the award-winning Reserveage Nutrition brand, in October 2015. We continue to believe that these acquisitions significantly strengthened our product offerings, contract manufacturing services and our sales and marketing capabilities, providing us with opportunities to improve our market position in addition to adding to supply chain efficiencies.

 

Going Concern Uncertainty

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. In most periods since our formation, we have generated losses from operations. At December 31, 2018, we had an accumulated deficit of $274,372. Historical losses are primarily attributable to lower than planned sales resulting from low fill rates on demand due to limitations of our working capital, delayed product introductions and postponed marketing activities, merger-related and other restructuring costs, and interest and refinancing charges associated with our debt refinancing. Losses have been funded primarily through issuance of common stock and third-party or related party debt.

 

Because of our history of operating losses, increase in debt over time, and the recording of derivative liabilities, the latter of which has been significantly reduced in 2018, we have a working capital deficiency of $69,505 at December 31, 2018. We also have $70,539 of debt, net of discount, which could be due within the next 12 months. These continuing conditions, among others, raise substantial doubt about our ability to continue as a going concern.

 

Management has addressed operating issues through the following actions: focusing on growing the core business and brands; continuing emphasis on major customers and key products; reducing manufacturing and operating costs and continuing to negotiate lower prices from major suppliers.  We believe that we may need additional capital to execute our business plan. If additional funding is required, there can be no assurance that sources of funding will be available when needed on acceptable terms or at all.

 

The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

Critical Accounting Policies and Estimates

 

This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. The preparation of our financial statements required us to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the reported periods. Significant estimates include values and useful lives assigned to acquired intangible assets, reserves for customer returns and allowances, uncollectible accounts receivable, valuation adjustments for slow moving, obsolete and/or damaged inventory and valuation, recoverability of long-lived assets, intangibles and goodwill, estimated values of stock options and warrants, share-based compensation, and the identification and valuation of derivatives. Actual results may differ from these estimates.

 

Our critical accounting policies and estimates include the following:

 

Revenue Recognition

Revenue from product sales, net of estimated returns and allowances, is recognized when evidence of an arrangement is in place, related prices are fixed, and determinable, contractual obligations have been satisfied, title and risk of loss have been transferred to the customer and collection of the resulting receivable is reasonably assured. Shipping terms are generally freight on board shipping point. We sell predominately in the North American and European markets, with international sales transacted in U.S. dollars.

 

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Accounts Receivable and Allowances

We grant credit to customers and generally do not require collateral or other security. We perform credit evaluations of our customers and provide for expected claims, related to promotional items; customer discounts; shipping shortages and damages; and doubtful accounts based upon historical bad debt and claims experience.

 

Inventories

Inventories are stated at the lower of cost or net realizable value and are reduced by an estimated reserve for obsolete inventory.

 

Intangible Assets

Intangible assets consist primarily of trademarks and customer relationships, which are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 30 years. The valuation and classification of these assets and the assignment of amortizable lives involve significant judgment and the use of estimates.

 

We believe that our long-term growth strategy supports our fair value conclusions. For intangible assets, the recoverability of these amounts is dependent upon achievement of our projections and the execution of key initiatives related to revenue growth and improved profitability.

 

Goodwill

Goodwill is not subject to amortization, but is reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. An impairment charge is recorded to the extent the carrying value of goodwill exceeds its estimated fair value. The testing of goodwill under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

 

Impairment of Long-Lived Assets

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

 

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets relating to the asset acquisition of Organic Holdings are determined to have an indefinite useful economic life and as such are not amortized. Indefinite-lived intangible assets are tested for impairment annually which consists of a comparison of the fair value of the asset with its carrying value.

 

Value of Warrants Issued with Debt

We estimate the grant date value of certain warrants issued with debt using a valuation method, such as the Black-Scholes option pricing model, or, if the terms are more complex, using an outside professional valuation firm, which uses the Monte Carlo option lattice model.  We record the amounts as interest expense or debt discount, depending on the terms of the agreement. These estimates involve multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project earnings before interest, taxes, depreciation and amortization (“EBITDA”) and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

 

Derivative Liabilities

We have recorded certain warrants as derivative liabilities at estimated fair value, as determined based on the Company’s use of an outside professional valuation firm, due to the variable terms of the warrant agreements. The value of the derivative liabilities is generally estimated using the Monte Carlo option lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

 

Share-Based Compensation

We record share-based compensation, including grants of restricted stock units, based on their grant date fair values and record compensation expense over the vesting period of the restricted stock awards.

 

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Income Taxes

We account for income taxes using an asset and liability approach. Deferred income taxes are determined by applying currently enacted tax laws and rates to the cumulative temporary differences between the carrying values of assets and liabilities for financial statement and income tax purposes. Valuation allowances against deferred income tax assets are recorded when we are unable to conclude that it is more likely than not that such deferred income tax assets will be realized.

 

Results of Operations

 

Net Sales

Our net sales decreased $12,210 or 14%, to $73,291 for the year ended December 31, 2018 from $85,501 for the year ended December 31, 2017. The decrease in our net sales is primarily related to out-of-stock conditions caused by order fulfillment shortfalls that began in 2016 and continued through 2017. While our product was still in high demand, and in 2018 the closing of our manufacturing facility in Utah contributed to the ongoing out-of-stock condition which began to improve in late 2018.

   

Gross Profit

Our gross profit decreased $5,926, or 31%, to $13,087 for the year ended December 31, 2018 from $19,013 for the year ended December 31, 2017.  The decrease in our gross profit is derived from aged inventory write-offs, shifts in the margin mix of sales, and lower net sales.

 

Selling, General and Administrative Expenses

Our selling, general and administrative expenses decreased $1,955, or 7%, to $27,077 for the year ended December 31, 2018 from $29,032 for the year ended December 31, 2017.  The decrease in our selling, general and administrative expenses is primarily due to our reduction in force to right-size the number of employees which began in 2017 and continued into 2018 with the closing of the Utah facility.

 

Impairment of Goodwill and Intangible Assets

During the fourth quarter of 2018, we completed our annual impairment test of goodwill and intangible assets and recognized no impairment charges. We recognized impairment of goodwill and intangible assets of $11,106 during the year ended December 31, 2017. During the fourth quarter of fiscal 2017, we completed our annual impairment test of goodwill and intangible assets and recognized impairment charges of $6,301 for goodwill related to Organic Holdings and an aggregate impairment loss of intangible assets of $4,805. During the fourth quarter of fiscal 2017, management updated the fiscal 2017 budget and financial projections beyond fiscal 2017. Due to a decline in Metabolife sales, we determined that the carrying value of the trademark exceeded its fair value. We also determined that due to an increase in debt, our weighted average cost of capital increased, which created an impairment in both Reserveage and Rebody tradenames as well as Organic Holdings goodwill.

  

Interest Expense, Net

Our interest expense increased $770, or 9%, to $9,704 for the year ended December 31, 2018 from $8,934 for the year ended December 31, 2017. The increase in our interest expense is primarily due to an increase in notes payable.

 

Gain (Loss) on Change in Derivative Liabilities

The number of shares of common stock issuable pursuant to certain warrants issued in 2015 will be increased if our audited adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) or the market price of the Company’s common stock do not meet certain defined amounts.  We have recorded the estimated fair value of the warrants as of the date of issuance and each subsequent balance sheet reporting date.  Due to the variable terms of the warrant agreements, changes in the estimated fair value of the warrants from the date of issuance to each balance sheet reporting date are recorded as gain (loss) on change in derivative liabilities in our consolidated statements of operations.  During the year ended December 31, 2018, we reported a gain on change in derivative liabilities of $2,432. During the year ended December 31, 2017, we reported a loss on change in derivative liabilities of $336.

 

Liquidity and Capital Resources

 

On December 31, 2018, we had an accumulated deficit of $274,372, primarily because of significant losses from operations, and interest expense.  We have a working capital deficiency of $69,505 at December 31, 2018.  Losses have been funded primarily through issuances of common stock, borrowings from our stockholders and third-party or related party debt and proceeds from the exercise of warrants. As of December 31, 2018, we had cash of $6,227.  On an ongoing basis, we also seek to improve operating cash through trade receivables and payables management as well as reduced inventory stocking levels. We used net cash in operating activities of $6,564 for the year ended December 31, 2018.   During the year ended December 31, 2018, we incurred new debt of $24,000, remitted debt repayments of $1,711, and had a net decrease in borrowings on our senior credit facility of $12,088.

 

26

 

 

Our total liabilities increased by $14,813 to $115,127 at December 31, 2018 from $100,314 at December 31, 2017. This increase in our total liabilities was primarily due to a net increase of $14,063 in debt, principally due to new debt financings obtained during 2018, offset by a decrease in our non-cash derivative liabilities of $2,432. For discussion of our debt financings completed during 2018, see Notes 6 and 7 in the Notes to Consolidated Financial Statements included in this report.

 

 

Cash Flows from Operating, Investing and Financing Activities

Net cash used in operating activities was $6,564 for the year ended December 31, 2018 as a result of our net loss of $20,409, offset by a non-cash gain on change in derivative liabilities of $2,432, non-cash expenses totaling $6,319 and a decrease in net operating assets and liabilities of $9,958.  By comparison, for the year ended December 31, 2017, net cash used in operating activities was $6,503 as a result of our net loss of $29,491, a non-cash loss on change in derivative liabilities of $336, impairment losses of $11,106, as well as other net non-cash expenses totaling $5,566 and an increase in net operating assets and liabilities of $5,980. See Consolidated Statements of Cash Flows included in this report for additional information.

 

Net cash provided by investing activities was $1,240 for the year ended December 31, 2018 primarily due to the sale of property and equipment, compared to net cash used in investing activities for the year ended December 31, 2017 which was $152 consisting of the purchase of property and equipment.

 

Net cash provided by financing activities was $10,201 for the year ended December 31, 2018, primarily consisting of proceeds from the issuance of debt of $24,000, partially offset by net repayment of $12,088 under our revolving credit facilities and repayment of debt of $1,711. Net cash provided by financing activities was $2,908 for the year ended December 31, 2017, primarily consisting of proceeds from the issuance of debt of $6,267, partially offset by the net repayment of $1,240 under our revolving credit facilities and repayment of debt of $2,119.

 

Ongoing Funding Requirements

As set forth above, we have obtained additional debt financing during 2017, and again in 2018, to support operations. We need additional funding to enable us to fund our operating expenses and capital expenditure requirements.

 

Until such time, if ever, as we can generate substantial product revenues and income from operations, we intend to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. There can be no assurance that any of those sources of funding will be available when needed on acceptable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or we may have to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or relationships with third parties when needed or on acceptable terms, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts abandon our business strategy of growth through acquisitions or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

 

Recent Accounting Pronouncements

 

In January 2017, FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment (Topic 350)” which removes Step 2 of the goodwill impairment test that requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  The amendments in this ASU are effective for fiscal years beginning after December 15, 2019.  Early adoption is permitted after January 1, 2017.  We do not expect the new guidance to have a significant impact on our consolidated financial statements or related disclosures.

 

In February 2016, FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the current accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Earlier application is permitted. Our status as an emerging growth company allowed us to defer the adoption until the year (and interim periods therein) beginning January 1, 2020. The Company is currently evaluating the impact that the adoption of this ASU will have on its Consolidated Financial Statements. 

 

27

 

 

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016; however, in July 2015, the FASB agreed to delay the effective date by one year. The proposed deferral may permit early adoption but would not allow adoption any earlier than the original effective date of the standard. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.  Our status as an emerging growth company allowed us to defer the adoption until the year (and interim periods therein) beginning January 1, 2019. We have determined that we have no material impact from this accounting pronouncement.

 

Although there are several other new accounting pronouncements issued or proposed by FASB, which we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements has had or will have a material impact on our consolidated financial position or results of operations.

 

Material Contractual Obligations

 

As of December 31, 2018, we have total debt of $85,539, of which $82,277 is considered to be related-party debt. For discussion of our debt financings, see Notes 6 and 7 in the Notes to Consolidated Financial Statements included in this report.

 

On January 17, 2018, the Company entered into a sublicense agreement with 463IP Partners, LLC (“463IP”) in which 463IP granted an exclusive, worldwide, perpetual sublicense to the licensed patents, licensed processes and licensed technology with the right to use, make, sell, offer, import, export, practice and develop the licensed patents, licensed processes, licensed products and licensed technology in all of the countries and territories of the world and with respect to the direct marketing, sale, use and consumption efforts directed towards athletes. In return for this sublicense, the Company agreed to purchase certain minimum amounts of licensed product solely from 463IP or from a manufacturer approved by 463IP. The minimum requirements are 10,000 kilograms of blended licensed product during the first year of the sublicense agreement and 20,000 kilograms of blended licensed product during the second year of the sublicense agreement.  Additionally, the Company will pay a royalty equal to $2.50 per kilogram of blended licensed product purchased regardless of whether it is purchased from 463IP or a manufacturer approved by 463IP. The per kilo fee shall be reduced by 50% under certain circumstances set forth in the sublicense agreement.

 

On December 27, 2017, we entered into the agreement for equity in exchange for services (‘Platinum Agreement”) with Platinum Advisory Services LLC (“Platinum”). Pursuant to the Platinum Agreement, we will issue from time to time shares of the Company’s common stock with an aggregate purchase price of $3,000 in exchange for payment in-kind consisting of the provision of media support and services performed by Platinum or its affiliates.

 

On December 15, 2016, we entered into an operating lease agreement for approximately 13,000 square feet of office space in Boca Raton, Florida.  The agreement expires in February 2026 and has a monthly base rent of $17 in year 1 to $21 in year 8. The commencement date is August 2017.

 

Effective April 7, 2015, we entered into an operating lease agreement for approximately 31,000 square feet of office space in St. Petersburg, Florida. The agreement expires in April 2027 and has a monthly base rent of $59 for year 1 to $76 for year 12.

 

Effective February 6, 2013, we entered into an operating lease agreement for approximately 170,000 square feet of manufacturing, research and development, warehousing and shipping space, which includes roughly 30,000 square feet of office space, in American Fork, Utah.  The agreement expires in February 2028 and has a monthly base rent of $60, provided that commencing on the five-year anniversary date thereafter, the base rent shall be increased by 10% over the base rent for every preceding five-year period. 

 

Off-Balance Sheet Arrangements

 

None.

 

Item 7a.

Quantitative and Qualitative Disclosures About Market Risk.

 

This item is not applicable as we are currently considered a smaller reporting company.

 

28

 

 

Item 8.

Financial Statements and Supplementary Data.

 

The report of the independent registered public accounting firm and consolidated financial statements listed in the accompanying index is filed as part of this Report. See “Exhibits and Financial Statement Schedules" on page 32.

 

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None.

 

Item 9A.

Controls and Procedures.

 

Internal Control Over Financial Reporting

 

Background

 

We previously reported a material weakness in internal control over financial reporting for the years ended December 31, 2016 and 2015 related to the following:

 

Information technology general controls (including access to programs and data, program changes, data backups) were not appropriately designed or followed.

 

There is a lack of segregation of duties in accounting functions.

 

There is a lack of documentation of proper review and approval.

 

Necessary adjustments and accruals were not recorded on a timely basis.

 

Deficient controls for calculating diluted earnings per share. 

In 2017, we reported that management has concluded that the material weakness has been remediated.

 

As disclosed herein, for the year ended December 31, 2018, management has concluded that we have identified new material weaknesses.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2018 pursuant to Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. On the basis of this review, our management, including our chief executive officer and our chief financial officer, has concluded that as of the end of the period covered by this report, our disclosure controls and procedures were not effective to give reasonable assurance that the information required to be disclosed in our reports filed with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, in a manner that allows timely decisions regarding required disclosure.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined by Rule 13a-15(f) and 15d-15(f) under the Exchange Act). In assessing the effectiveness of our internal control over financial reporting as of December 31, 2018, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

 

During the fourth quarter of 2018, management identified material weaknesses in the selection and testing of our third-party logistics and fulfillment provider, whom the Company engaged to replace the Company's Utah manufacturing facility. The Company has determined that the 3PL does not issue reports pursuant to the Statement on Standards for Attestation Engagement No. 18 attestation standards. The Company should have designed and implemented the necessary internal controls to address the potential risks of using a 3PL who does not issue SSAE18 reports. The Company should have taken steps to design and implement controls around the receipt of inventory at the 3PL to ensure the quantities and description of inventory movements related to the 3PL. Additionally, the Company should take steps to obtain and review the appropriate SSAE 18 reports issued by the software company which the 3PL uses as its inventory management software. Management also identified a material weakness related to a lack of appropriate staffing in our accounting and information technology departments to address the Company's ability to continue to close the books both timely and accurately and to meet internal control documentation requirements. Prior normal staffing turnover along with technical accounting issues and the Company's change to a 3PL impacted the Company's ability to react to technical accounting matters encountered.

 

29

 

 

Although we have implemented certain measures that we believe will remediate these material weaknesses, we can provide no assurance that our remediation efforts will be effective or that additional material weaknesses in our internal control over financial reporting will not be identified in the future.  Any failure to maintain or implement required new or improved controls, or any difficulties that may be encountered in their implementation, could result in additional material weaknesses, cause us to fail to meet our periodic or annual reporting obligations or result in material misstatements in our financial statements.  Any such failure could also adversely affect the results of periodic management evaluations regarding the effectiveness of our internal control over financial reporting required under Section 404 of the Sarbanes Oxley Act of 2002 and the rules promulgated thereunder.  The existence of material weaknesses could result in errors in our financial statements that could result in a restatement of those financial statements.

 

Inherent Limitation on the Effectiveness of Internal Control

 

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but we cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

 

Changes in Internal Control over Financial Reporting

 

To remediate the material weaknesses described above, management implemented several initiatives, including but not limited to the following:

 

 

To address the material weakness related to Inventory Controls, the Company is designing and implementing controls around the receipt of inventory at the 3PL to ensure the quantities and descriptions of inventory movements are input accurately. The Company is looking to conduct monthly sampling of outgoing shipping documents and validate that the shipment date per the 3PL matches to the shipment date per the 3rd party freight carrier’s documents to corroborate the 3PL’s shipping records and avoid placing inadvertent reliance on the 3PL’s shipping records. Additionally, the Company will reconcile inventory per the general ledger to the 3PL records on a regular basis to ensure inventory is recorded completely and accurately. Management plans to observe the annual physical inventory count performed by the 3PL to ensure the existence of inventory and that the inventory value is not misstated. Also, the Company will consider observing random cycle counts performed throughout the year. The Company is also working to obtain and review the SSAE 18 SOC 1 report issued by the software company which the 3PL uses as its inventory management software. These controls and documentation will also be considered as part of the ongoing improvement plan of the of the Company’s enterprise resource system.

 

To address the material weakness related to appropriate staffing, the Company is looking to hire, train and retain the appropriate staffing in the accounting and information technology departments including technical accountants to support and alleviate the work load on the current team. The additional staffing should proactively identify and account for transactions of a complex or non-routine nature. Furthermore, the additional staffing should be responsible for managing the day-to-day responsibilities of Sarbanes Oxley compliance. The additional staffing should also reduce inefficiencies and address documenting evidence of operating effectiveness for business process controls and information technology general controls.

 

The Company has engaged and worked throughout the year with our independent Sarbanes Oxley Act consultant to help improve the overall testing of our system of internal control over financial reporting. We promptly identified and refined controls subsequent to the year-end and prior to the filing date of this report on Form 10-K. Specifically, we were able to:

 

Refine our key controls and compensating control procedures to properly address inventory reporting risks.

 

Implement periodic control validation and testing to ensure controls continue to operate consistently and as designed.

 

Hire, assign and train staffing within the accounting department to be responsible for managing the day-to-day responsibilities of maintaining appropriate evidence of operating effectiveness of key controls over financial reporting.

 

Other than as described above, there were no changes in our internal controls over financial reporting during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

Item 9B.

Other Information.

 

None.

 

30

 

 

PART III

 

Item 10.

Directors, Executive Officers and Corporate Governance.  

 

Information regarding our directors, executive officers and corporate governance is incorporated herein by reference from our Definitive Proxy Statement for the 2019 Annual Meeting of Stockholders (“2019 Proxy”) to be filed pursuant to Regulation 14A within 120 days after the close of the year ended December 31, 2018.

 

Item 11.

Executive Compensation

 

Information on executive compensation is incorporated herein by reference from our 2019 Proxy to be filed pursuant to Regulation 14A within 120 days after the close of the year ended December 31, 2018.  

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

Information on security ownership of certain beneficial owners and management and related stockholder matters is incorporated herein by reference from our 2019 Proxy to be filed pursuant to Regulation 14A within 120 days after the close of the year ended December 31, 2018. 

 

Item 13.

Certain Relationships and Related Transactions, And Director Independence.

 

Information on certain relationships and related transactions and director independence is incorporated herein by reference from our 2019 Proxy to be filed pursuant to Regulation 14A within 120 days after the close of the year ended December 31, 2018.

 

Item 14.

Principal Accountant Fees and Services  

 

Information on principal accounting fees and services is incorporated herein by reference from our 2019 Proxy to be filed pursuant to Regulation 14A within 120 days after the close of the year ended December 31, 2018. 

 

31

 

 

PART IV

 

Item 15.

Exhibits and Financial Statement Schedules.

 

(a)(1)

The following consolidated financial statements are filed as a part of this 2018 10-K Report:

 

 

 

 

 

(i)

Report of Independent Registered Certified Public Accounting Firm

44

 

(ii)

Consolidated Balance Sheets

45

 

(iii)

Consolidated Statements of Operations

46

 

(iv)

Consolidated Statements of Stockholders’ Deficit

47

 

(v)

Consolidated Statements of Cash Flows

48-49

 

(vi)

Notes to Consolidated Financial Statements

50-71

 

 

 

 

(a)(2)

Consolidated financial statement schedules have been omitted either because the required information is set forth in the consolidated financial statements or notes thereto, or the information called for is not required.

 

(b) Exhibits. The following exhibits are filed as part of the report on Form 10-K:

 

Exhibit
Number

Exhibit Description  

2.1

Agreement and Plan of Merger, dated September 4, 2014. (1)

2.1.1

First Amendment to Agreement and Plan of Merger dated September 16, 2014. (2)

2.2

Asset Purchase Agreement, dated as of February 4, 2015, by and among Nutricap Labs, LLC, Vitacap Labs, LLC, Canyon Marketing V, LLC, Canyon Marketing II, Inc., Canyon Marketing III, LLC and TCC CM Subco I, Inc. (13)

3.1

Articles of Incorporation. (3)

3.1.1

Amendment to Articles of Incorporation. (4)

3.1.(c)

Certificate of Change, dated August 28, 2014. (5)

3.2

Bylaws. (3)

4.1

Subscription and Surrender Agreement, dated as of September 3, 2014 between Twinlab Consolidation Corporation and Thomas Tolworthy. (6)

10.1

Twinlab Consolidation Corporation 2013 Stock Incentive Plan. (6) *

10.2

Debt Repayment Agreement dated as of July 31, 2014 between Little Harbor LLC and Twinlab Holdings, Inc. (f/k/a Idea Sphere Inc.) (6)

10.3

Commercial Lease Agreement dated August 22, 2014 between Essex Capital Corporation and Twinlab Corporation. (6)

10.4

Restricted Stock Purchase Agreement dated as of November 4, 2013 between Twinlab Consolidation Corporation and Thomas Tolworthy. (6)

10.5

Series A Warrant, dated as of September 30, 2014, issued by Twinlab Consolidated Holdings, Inc. to Capstone Financial Group, Inc. (7)

10.6

Series B Warrant, dated as of September 30, 2014, issued by Twinlab Consolidated Holdings, Inc. to Capstone Financial Group, Inc. (7)

10.7

Common Stock Put Agreement, dated as of September 30, 2014, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc. (7)

10.8

Registration Rights Agreement, dated as of September 30, 2014, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc. (7)

10.9

Note and Warrant Purchase Agreement, dated as of November 13, 2014, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation and Penta Mezzanine SBIC Fund I, L.P. (8)

10.10

Initial Note, dated as of November 13, 2014, made by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc. and Twinlab Corporation payable to Penta Mezzanine SBIC Fund I, L.P. (8)

10.11

Warrant, dated November 13, 2014, issued by Twinlab Consolidated Holdings, Inc. to Penta Mezzanine SBIC Fund I, L.P. (8)

10.12

Security Agreement, dated as of November 13, 2014, made by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., and Twinlab Corporation in favor of Penta Mezzanine SBIC Fund I, L.P. (8)

10.13

Form of Deferred Draw Note made by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc. and Twinlab Corporation payable to Penta Mezzanine SBIC Fund I, L.P. (8)

10.14

Form of Warrant issued by Twinlab Consolidated Holdings, Inc. to Penta Mezzanine SBIC Fund I, L.P. (8)

 

32

 

 

10.15

Employment Agreement, dated as of December 1, 2014, between Twinlab Consolidation Corporation and Glenn Wolfson. (9) *

10.16

Amendment No. 1 to Common Stock Put Agreement, dated as of December 15, 2014, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc. (10)

10.17

Credit and Security Agreement, dated as of January 22, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., Twinlab Corporation, ISI Brands Inc., TCC CM Subco I, Inc. and TCC CM Subco II, Inc. and MidCap Financial Trust. (11)

10.18

Revolving Loan Note, dated January 22, 2015, by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, TCC CM Subco I, Inc. and TCC CM Subco II, Inc. to the order of MidCap Financial Trust. (11)

10.19

Pledge Agreement, dated as of January 22, 2015, by and between Twinlab Consolidated Holdings, Inc. and MidCap Financial Trust. (11)

10.20

Pledge Agreement, dated as of January 22, 2015, by and between Twinlab Consolidation Corporation and MidCap Financial Trust. (11)

10.21

Pledge Agreement, dated as of January 22, 2015, by and between Twinlab Holdings, Inc. and MidCap Financial Trust. (11)

10.22

Warrant, dated January 22, 2015, issued by Twinlab Consolidated Holdings, Inc. to MidCap Funding X Trust. (11)

10.23

Registration Rights Agreement, dated as of January 22, 2015, by and between Twinlab Consolidated Holdings, Inc. and MidCap Funding X Trust. (11)

10.24

Note and Warrant Purchase Agreement, dated as of January 22, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, TCC CM Subco I, Inc., TCC CM Subco II, Inc. and JL-BBNC Mezz Utah, LLC. (11)

10.25

Note, dated as of January 22, 2015, made by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, TCC CM Subco I, Inc. and TCC CM Subco II, Inc. payable to JL-BBNC Mezz Utah, LLC. (11)

10.26

Warrant, dated January 22, 2015, issued by Twinlab Consolidated Holdings, Inc. to JL-BBNC Mezz Utah, LLC. (11)

10.27

Security Agreement, dated as of January 22, 2015, made by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, TCC CM Subco I, Inc. and TCC CM Subco II, Inc. in favor of JL-BBNC Mezz Utah, LLC. (11)

10.28

Trust Deed, dated January 22, 2015, among Twinlab Corporation, as Trustor, Ryan B. Hancey, as Trustee, and JL-BBNC Mezz Utah, LLC. (11)

10.29

Pledge Agreement, dated as of January 22, 2015, by and between Twinlab Consolidated Holdings, Inc. and JL-BBNC Mezz Utah, LLC. (11)

10.30

Pledge Agreement, dated as of January 22, 2015, by and between Twinlab Consolidation Corporation and JL-BBNC Mezz Utah, LLC. (11)

10.31

Pledge Agreement, dated as of January 22, 2015, by and between Twinlab Holdings, Inc. and JL-BBNC Mezz Utah, LLC. (11)

10.32

Letter, dated January 16, 2015, from Fifth Third Bank to Twinlab Corporation, Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, ISI Brands Inc., Twinlab Holdings, Inc., David L. Van Andel, William W. Nicholson and MidCap Financial Trust. (11)

10.33

First Amendment to Note and Warrant Purchase Agreement, Consent and Joinder, dated as of January 22, 2015 by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, TCC CM Subco I, Inc., TCC CM Subco II, Inc. and Penta Mezzanine SBIC Fund I, L.P. (11)

10.34

Amended and Restated Note, dated as of January 22, 2015, by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, TCC CM Subco I, Inc., TCC CM Subco II, Inc. in favor of Penta Mezzanine SBIC Fund I, L.P. (11)

10.35

Warrant, dated January 22, 2015, issued by Twinlab Consolidated Holdings, Inc. to Penta Mezzanine SBIC Fund I, L.P. (11)

10.36

Pledge Agreement, dated as of January 22, 2015, by and between Twinlab Consolidated Holdings, Inc. and Penta Mezzanine SBIC Fund I, L.P. (11)

10.37

Pledge Agreement, dated as of January 22, 2015, by and between Twinlab Consolidation Corporation and Penta Mezzanine SBIC Fund I, L.P. (11)

10.38

Pledge Agreement, dated as of January 22, 2015, by and between Twinlab Holdings, Inc. and Penta Mezzanine SBIC Fund I, L.P. (11)

10.39

Employment Agreement, dated as of January 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Mark Jaggi. (12) *

10.40

Employment Agreement, dated as of January 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Richard Neuwirth. (12) *

 

33

 

 

10.41

Employment Agreement, dated as of January 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Kathleen C. Pastor. (12) *

10.42

Amendment No. 1 to Credit and Security Agreement and Limited Consent, dated as of February 4, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, TCC CM Subco I, Inc. and TCC CM Subco II, Inc. and MidCap Funding X Trust. (13)

10.43

First Amendment to Note and Warrant Purchase Agreement and Consent, dated as of February 4, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, TCC CM Subco I, Inc., TCC CM Subco II, Inc. and JL-BBNC Mezz Utah, LLC. (13)

10.44

Warrant, dated February 4, 2015, issued by Twinlab Consolidated Holdings, Inc. to JL-BBNC Mezz Utah, LLC. (13)

10.45

Second Amendment to Note and Warrant Purchase Agreement and Consent, dated as of February 4, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, TCC CM Subco I, Inc., TCC CM Subco II, Inc. and Penta Mezzanine SBIC Fund I, L.P. (13)

10.46

Unsecured Promissory Note, dated February 6, 2015, in the amount of $2,500,000 made by TCC CM Subco I, Inc. payable to Nutricap Labs, LLC. (13)

10.47

Unsecured Promissory Note, dated February 6, 2015, in the amount of $1,478,000 made by TCC CM Subco I, Inc. payable to Nutricap Labs, LLC. (13)

10.48

Transition Services Agreement, dated February 6, 2015, by and between TCC CM Subco I, Inc., Nutricap Labs, LLC and Vitacap Labs, LLC. (13)

10.49

Registration Rights Agreement, dated as of February 6, 2015, by and between Twinlab Consolidated Holdings, Inc. and 2014 Huntington Holdings, LLC. (13)

10.50

Office Lease Agreement, dated April 7, 2015, by and between First Central Tower, Limited Partnership and Twinlab Consolidated Holdings, Inc. and Twinlab Consolidation Corporation, as Joint Tenants. (14)

10.51

Reimbursement Agreement, dated as of April 30, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation and JL Properties, Inc. (15)

10.52

Warrant, dated April 30, 2015, issued by Twinlab Consolidated Holdings, Inc. to JL Properties, Inc. (15)

10.53

Warrant, dated April 30, 2015, issued by Twinlab Consolidated Holdings, Inc. to JL Properties, Inc. (15)

10.54

Amendment No. 3 to Credit and Security Agreement and Limited Consent, dated as of April 30, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc. and NutraScience Labs IP Corporation and MidCap Funding X Trust. (15)

10.55

Third Amendment to Note and Warrant Purchase Agreement and Consent, dated as of April 30, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and Penta Mezzanine SBIC Fund I, L.P. (15)

10.56

Second Amendment to Note and Warrant Purchase Agreement and Consent, dated as of April 30, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and JL-BBNC Mezz Utah, LLC. (15)

10.57

Compromise Agreement, dated May 28, 2015, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc. (16)

10.58

Amendment No. 1 to Series B Warrant, dated as of May 28, 2015, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc. (16)

10.59

Stock Purchase Agreement, dated as of June 2, 2015, by and between Twinlab Consolidated Holdings, Inc. and the David L. Van Andel Trust, under Trust Agreement dated November 30, 1993. (17)

10.60

Warrant, dated June 2, 2015, by and between Twinlab Consolidated Holdings, Inc. and the David L. Van Andel Trust, under Trust Agreement dated November 30, 1993. (17)

10.61

Warrant, dated June 2, 2015, by and between Twinlab Consolidated Holdings, Inc. and the David L. Van Andel Trust, under Trust Agreement dated November 30, 1993. (17)

10.62

Stock Purchase Agreement, dated as of June 2, 2015, by and between Twinlab Consolidated Holdings, Inc. and Little Harbor, LLC. (17)

10.63

Warrant, dated June 2, 2015, by and between Twinlab Consolidated Holdings, Inc. and Little Harbor, LLC. (17)

10.64

Amendment No. 4 to Credit and Security Agreement and Limited Waiver, dated as of June 30, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and MidCap Funding X Trust. (18)Z

10.65

Amendment No. 5 to Credit and Security Agreement and Limited Waiver, dated as of June 30, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and MidCap Funding X Trust. (18)

10.66 Stock Purchase Agreement, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Penta Mezzanine SBIC Fund I, L.P. (18)

 

34

 

 

10.67

Warrant, dated June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Penta Mezzanine SBIC Fund I, L.P. (18)

10.68

Fourth Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and Penta Mezzanine SBIC Fund I, L.P. (18)

10.69

Stock Purchase Agreement, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and JL-BBNC Mezz Utah, LLC. (18)

10.70

Warrant, dated June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and JL-BBNC Mezz Utah, LLC. (18)

10.71

Third Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver, dated as of June 30, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and JL-BBNC Mezz Utah LLC. (18)

10.72

Amended and Restated Unsecured Promissory Note, dated June 30, 2015, payable by NutraScience Labs, Inc. to Nutricap Labs, LLC. (18)

10.73

Payment Guaranty, made as of June 30, 2015, by Twinlab Consolidation Corporation to and for the benefit of Nutricap Labs, LLC. (18)

10.74

Bill of Sale, dated June 30, 2015, by Twinlab Corporation to Essex Capital Corporation. (18)

10.75

Commercial Lease Agreement, dated June 30, 2015, by and between Essex Capital Corporation and Twinlab Corporation. (18)

10.76

Commercial Lease Agreement, dated June 30, 2015, by and between Essex Capital Corporation and Twinlab Corporation. (18)

10.77

Warrant, dated June 30, 2015, by and between Twinlab Consolidated Holdings, Inc. and Essex Capital Corporation. (18)

10.78

Warrant, dated August 14, 2015, by and between Twinlab Consolidated Holdings, Inc. and Penta Mezzanine SBIC Fund I, LP. (19)

10.79

Amendment No. 1 to Twinlab Consolidated Holdings, Inc. Warrant, dated as of August 14, 2015, by and among Twinlab Consolidated Holdings, Inc. and the David L. Van Andel Trust, Under Trust Agreement Dated November 30, 1993. (19)

10.80

Amendment No. 1 to Twinlab Consolidated Holdings, Inc. Warrant, dated as of August 14, 2015, by and among Twinlab Consolidated Holdings, Inc. and the David L. Van Andel Trust, Under Trust Agreement Dated November 30, 1993. (19)

10.81

Amendment No. 1 to Twinlab Consolidated Holdings, Inc. Warrant, dated as of August 14, 2015, by and among Twinlab Consolidated Holdings, Inc. and Little Harbor, LLC. (19)

10.82

Amendment No. 1 to Twinlab Consolidated Holdings, Inc. Warrant, dated as of August 14, 2015, by and among Twinlab Consolidated Holdings, Inc. and JL-BBNC Mezz Utah, LLC. (19)

10.83

Put Agreement Related to Exercise of Warrant 2015-17, dated as of September 9, 2015, by and among Twinlab Consolidated Holdings, Inc. and the David L. Van Andel Trust under trust agreement dated November 30, 1999. (20)

10.84

Amendment No. 6 to Credit and Security Agreement, Limited Consent and Limited Waiver, dated as of September 9, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and MidCap Funding X Trust. (20)

10.85

Fifth Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of September 9, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and Penta Mezzanine SBIC Fund I, L.P. (20)z

10.86

Fourth Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of September 9, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and JL-Mezz Utah LLC. (20)

10.87

Stock Purchase Agreement, dated as of October 1, 2015, by and between Twinlab Consolidated Holdings, Inc. and GREAT HARBOR CAPITAL, LLC. (21)

10.88

Securities Purchase Agreement, dated as of October 2, 2015, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (22)

10.89

Common Stock Purchase Warrant, dated October 5, 2015, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (22)

10.90

Registration Rights Agreement, dated as of October 5, 2015, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (22)

10.91

Voting Agreement, dated as of October 5, 2015, among Twinlab Consolidated Holdings, Inc., Golisano Holdings LLC, and Thomas A. Tolworthy, Little Harbor, LLC, Great Harbor Capital, LLC and the David L. Van Andel Trust U/A dated November 30, 1993. (22)

10.92

Voting Agreement, dated as of October 2, 2015, among Twinlab Consolidated Holdings, Inc., Great Harbor Capital, LLC and Golisano Holdings LLC, Thomas A. Tolworthy, Little Harbor, LLC, and the David L. Van Andel Trust U/A dated November 30, 1993. (22)

 

35

 

 

10.93

Surrender Agreement, dated as of October 5, 2015, between Twinlab Consolidated Holdings, Inc. and Thomas A. Tolworthy. (22)

10.94

Amendment No. 7 and Joinder Agreement to Credit and Security Agreement, dated as of October 5, 2015, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings, LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC and MidCap Funding X Trust. (22)

10.95

First Amended and Restated Revolving Loan Note, dated October 5, 2015, by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings, LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC. (22)

10.96

Sixth Amendment to Note and Warrant Purchase Agreement, dated as of October 5, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and Penta Mezzanine SBIC Fund I, L.P. (22)

10.97

Limited Waiver to Note Warrant and Purchase Agreement, dated as of October 2, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and Penta Mezzanine SBIC Fund I, L.P. (22)

10.98

Fifth Amendment to Note and Warrant Purchase Agreement, dated as of October 5, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC). (22)

10.99

Limited Waiver to Note Warrant and Purchase Agreement, dated as of October 2, 2015, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation and JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC). (22)

10.100

Amendment No. 1 to Agreement for Limited Waiver of Non-Circumvention Provision and to Compromise Agreement and Release, dated as of October 1, 2015, by and between Twinlab Consolidated Holdings, Inc. and Capstone Financial Group, Inc. (22)

10.101

Unit Purchase Agreement, dated as of September 2, 2014, by and among Naomi L. Balcombe, Robert Whittel and Twinlab Consolidation Corporation. (22)

10.102

Amendment No. 1 to Unit Purchase Agreement, dated as of July 17, 2015, by and among Naomi L. Balcombe, Robert Whittel and Twinlab Consolidation Corporation. (22)

10.103

Employment Agreement, dated as of October 2, 2015, between Twinlab Consolidation Corporation and Naomi L. Balcombe. (22) *

10.104

Stock Purchase Agreement, dated as of October 21, 2015, by and between Twinlab Consolidated Holdings, Inc. and Jonathan B. Rubini. (23)

10.105

Stock Purchase Agreement, dated as of October 21, 2015, by and between Twinlab Consolidated Holdings, Inc. and Clare Bertucio. (23)

10.106

Stock Purchase Agreement, dated as of October 21, 2015, by and between Twinlab Consolidated Holdings, Inc. and Michael Corrigan. (23)

10.107

Stock Purchase Agreement, dated as of October 21, 2015, by and between Twinlab Consolidated Holdings, Inc. and the Jonathan B. Rubini 2009 Family Exempt Trust, created under the Jonathan B. Rubini Family Trust, under trust agreement dated October 9, 2009. (23)

10.108

Stock Purchase Agreement, dated as of October 21, 2015, by and between Twinlab Consolidated Holdings, Inc. and Mark Kroloff. (23)

10.109

Surrender Agreement, dated as of October 21, 2015, by and between Twinlab Consolidated Holdings, Inc. and Thomas A. Tolworthy. (23)

10.110

Unsecured Promissory Note, dated January 28, 2016, issued by Twinlab Consolidated Holdings, Inc. in favor of Golisano Holdings LLC. (24)

10.111

Warrant, dated January 28, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (24)

10.112

Unsecured Promissory Note, dated January 28, 2016, issued by Twinlab Consolidated Holdings, Inc. in favor of GREAT HARBOR CAPITAL, LLC. (24)

10.113

Warrant, dated January 28, 2016, by and between Twinlab Consolidated Holdings, Inc. and GREAT HARBOR CAPITAL, LLC. (24)

10.114

Amendment No. 8 to Credit and Security Agreement, dated as of January 28, 2016, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings, LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC and MidCap Funding X Trust.(24)

 

36

 

 

10.115

Seventh Amendment to Note and Warrant Purchase Agreement, dated as of January 28, 2016, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC, and Joie Essance, LLC and Penta Mezzanine SBIC Fund I, L.P. (24)

10.116

SixthAmendmenttoNoteandWarrantPurchaseAreementdatedasofJanuar282016bandbetweenTwinlabConsolidatedHoldinsInc. Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC, and Joie Essance, LLC and JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC). (24)

10.117

Unsecured Promissory Note, dated March 21, 2016, issued by Twinlab Consolidated Holdings in favor of Golisano Holdings LLC. (25)

10.118

Warrant, dated March 21, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (25)

10.119

Unsecured Promissory Note, dated March 21, 2016, issued by Twinlab Consolidated Holdings, Inc. in favor of GREAT HARBOR CAPITAL, LLC. (25)

10.120

Warrant, dated March 21, 2016, by and between Twinlab Consolidated Holdings, Inc. and GREAT HARBOR CAPITAL, LLC. (25)

10.121

Amendment No. 1 to Unsecured Promissory Note, dated as of March 21, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (25)

10.122

Amendment No. 1 to Unsecured Promissory Note, dated as of March 21, 2016, by and between Twinlab Consolidated Holdings, Inc. and GREAT HARBOR CAPITAL, LLC. (25)

10.123

Separation and Release Agreement, dated as of March 23, 2016, by and between Twinlab Consolidated Holdings, Inc. and Thomas A. Tolworthy. (26) *

10.124

Unsecured Promissory Note, dated April 5, 2016, issued by Twinlab Consolidated Holdings, Inc. in favor of JL-Utah Sub, LLC. (27)

10.125

Warrant, dated April 5, 2016, by and between Twinlab Consolidated Holdings, Inc. and JL-Utah Sub, LLC. (27)

10.126

Amendment No. 9 to Credit and Security Agreement, dated as of April 5, 2016, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC and MidCap Funding X Trust.(27)

10.127

Eighth Amendment to Note and Warrant Purchase Agreement, dated as of April 5, 2016, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC, and Joie Essance, LLC and Penta Mezzanine SBIC Fund I, L.P. (27)

10.128

Seventh Amendment to Note and Warrant Purchase Agreement, dated as of April 5, 2016, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC, and Joie Essance, LLC and JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC). (27)

10.129

Amendment No. 2 to Unsecured Promissory Note, dated as of April 5, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (27)

10.130

Amendment No. 1 to Unsecured Promissory Note, dated as of April 5, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (27)

10.131

Amendment No. 2 to Unsecured Promissory Note, dated as of April 5, 2016, by and between Twinlab Consolidated Holdings, Inc. and GREAT HARBOR CAPITAL, LLC. (27)

10.132

Amendment No. 1 to Unsecured Promissory Note, dated as of April 5, 2016, by and between Twinlab Consolidated Holdings, Inc. and GREAT HARBOR CAPITAL, LLC. (27)

10.133

Unsecured Delayed Draw Promissory Note, dated July 21, 2016, issued by Twinlab Consolidated Holdings, Inc. in favor of Golisano Holdings LLC. (29)

10.134

Warrant, dated July 21, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (29)

 

37

 

 

10.135

Unsecured Delayed Draw Promissory Note, dated July 21, 2016, issued by Twinlab Consolidated Holdings, Inc. in favor of Little Harbor, LLC. (29)

10.136

Warrant, dated July 21, 2016, by and between Twinlab Consolidated Holdings, Inc. and Little Harbor, LLC. (29)

10.137

Amendment No. 3 to Unsecured Promissory Note, dated as of July 21, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (29)

10.138

Amendment No. 2 to Unsecured Promissory Note, dated as of July 21, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (29)

10.139

Amendment No. 3 to Unsecured Promissory Note, dated as of July 21, 2016, by and between Twinlab Consolidated Holdings, Inc. and GREAT HARBOR CAPITAL, LLC. (29)

10.140

Amendment No. 2 to Unsecured Promissory Note, dated as of July 21, 2016, by and between Twinlab Consolidated Holdings, Inc. and GREAT HARBOR CAPITAL, LLC. (29)

10.141

Amendment No. 1 to Unsecured Promissory Note, dated as of July 21, 2016, by and between Twinlab Consolidated Holdings, Inc. and JL-Utah Sub, LLC. (29)

10.142

Amendment No. 10 to Credit and Security Agreement, dated as of April 5, 2016, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC and MidCap Funding X Trust. (30)

10.143

Ninth Amendment to Note and Warrant Purchase Agreement, dated as of April 5, 2016, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Speciality Distribution, LLC, and Joie Essance, LLC and Penta Mezzanine SBIC Fund I, L.P. (30)

10.144

Eighth Amendment to Note and Warrant Purchase Agreement, dated as of April 5, 2016, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Speciality Distribution, LLC, and Joie Essance, LLC and JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC). (30)

10.145

Amendment No. 11 to Credit and Security Agreement, dated as of September 2, 2016, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC and MidCap Funding X Trust. (31)

10.146

Employment Agreement by and between the Company and Naomi L. Whittel dated September 21, 2016 and made effective as of March 16, 2016 (32) *

10.147

First Amendment to Lease Agreement, made as of November 18, 2016, by and between First Central Tower, Limited Partnership and Twinlab Consolidation Corporation and Twinlab Consolidated Holdings, Inc. (33)

10.148

Agreement of Sublease, dated as of December 1, 2016, by and among Twinlab Consolidated Holdings, Inc. and Twinlab Consolidation Corporation and Powerchord, Inc. (34)

10.149

Lease Agreement, dated as of December 15, 2016, by and between Boca T-Rex Borrower, LLC and Twinlab Consolidation Corporation.  (35)

10.150

Basic Lease Information Rider, dated December 15, 2016, between Boca T-Rex Borrower, LLC and Twinlab Consolidation Corporation. (36)

10.151

Unsecured Promissory Note, dated December 30, 2016, issued by Twinlab Consolidated Holdings, Inc. in favor of Golisano Holdings LLC. (37)

10.152

Warrant, dated December 30, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (38)

10.153

Unsecured Promissory Note, dated December 30, 2016, issued by Twinlab Consolidated Holdings, Inc. in favor of Great Harbor, LLC. (39)

10.154

Warrant, dated December 30, 2016, by and between Twinlab Consolidated Holdings, Inc. and Great Harbor, LLC. (40)

10.155

Amendment No. 4 to Unsecured Promissory Note, dated as of December 30, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (41)

10.156

Amendment No. 3 to Unsecured Promissory Note, dated as of December 30, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (42)

10.157

Amendment No. 1 to Unsecured Delayed Draw Promissory Note, dated as of December 30, 2016, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (43)

 

38

 

 

10.158

Amendment No. 3 to Unsecured Promissory Note, dated as December 30, 2016, by and between Twinlab Consolidated Holdings, Inc. and GREAT HARBOR CAPITAL, LLC. (44)

10.159

Amendment No. 4 to Unsecured Promissory Note, dated as December 30, 2016, by and between Twinlab Consolidated Holdings, Inc. and GREAT HARBOR CAPITAL, LLC. (45)

10.160

Amendment No. 1 to Unsecured Delayed Draw Promissory Note, dated as of December 30, 2016, by and between Twinlab Consolidated Holdings, Inc. and LITTLE HARBOR CAPITAL, LLC. (46)

10.161

Amendment No. 2 to Unsecured Promissory Note, dated as of December 30, 2016, by and between Twinlab Consolidated Holdings, Inc. and JL-Utah Sub, LLC. (47)

10.162

Unsecured Promissory Note, dated as of March 14, 2017, issued by Twinlab Consolidated Holdings, Inc. in favor of Golisano Holdings LLC. (48)

10.163

Warrant, dated March 14, 2017, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. (49)

10.164

Employment Agreement between Twinlab Consolidated Holdings, Inc. and Alan S. Gever, dated March 21, 2017 (50) *

10.165

Settlement Agreement, dated June 2, 2017, by and among Twinlab Consolidated Corporation, Twinlab Consolidated Holdings, Inc., Nutrascience Labs, Inc., 2014 Huntington Holdings, LLC, Carolyn Holdings, LLC, NCL Holing Company, LLC and Vitacap Labs, LLC (51)

10.166

Unsecured Promissory Note, dated June 2, 2017, issued by Twinlab Consolidated Holdings, Inc. in favor of 2014 Huntington Holdings, LLC. (51)

10.167

Subordination Agreement, dated June 2, 2017, by and among 2014 Huntington Holdings, LLC, Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, Nutrascience Labs, Inc., Nutrascience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC, Joie Essance, LLC, and Midcap Funding X Trust. (51)

10.168

Agreement of Lease, dated June 2, 2017, between Carolyn Holdings, LLC and Twinlab Consolidated Holdings, Inc. (51)

10.169

Rider to the Lease, dated June 2, 2017, by and between Carolyn Holdings, LLC and Twinlab Consolidated Holdings, Inc. (51)

10.170

Landlord’s Agreement, dated June 2, 2017, by and among Carolyn Holdings LLC, Twinlab Consolidated Holdings, Inc. and Midcap Funding X Trust. (51)

10.171

Secured Promissory Note, dated August 30, 2017, issued by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, Nutrascience Labs, Inc., Nutrascience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, LLC, Innovita Specialty Distribution LLC, and Joie Essance, LLC in favor of Great Harbor Capital, LLC (52)

10.172

Warrant, dated August 30, 2017, by and between Twinlab Consolidated Holdings, Inc. and Great Harbor Capital, LLC (52)

10.173

Amendment No. 13 to Credit and Security Agreement and Limited Consent, dated as of August 30, 2017, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC, Joie Essance, LLC and MidCap Funding X Trust. (52)

10.174

Amendment No. 14 to Credit and Security Agreement and Limited Waiver, dated as of March 22, 2018 by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC, Joie Essance, LLC and MidCap Funding X Trust. (53)

10.175 Agreement for Equity in Exchange for Services, dated as of December 27, 2017, by and between Platinum Advisory Services LLC and Twinlab Consolidated Holdings, Inc. (Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment). (54)
10.176 Separation and Release Agreement, dated as of April 25, 2018, by and between Twinlab Consolidated Holdings, Inc. and Ms. Naomi Whittel (incorporated by reference to Exhibit 10.176 to the Company’s current report on Form 8-K filed on April 30, 2018) *  (55)
10.177 Employment Agreement, dated July 17, 2018, by and between Twinlab Consolidated Holdings, Inc. and Mr. Anthony Zolezzi (incorporated by reference to Exhibit 10.177 to the Company’s current report on Form 8-K filed on July 19, 2018) * (56)
10.178 Secured Promissory Note, dated July 27, 2018, issued by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, Nutrascience Labs, Inc., Nutrascience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, LLC, Innovita Specialty Distribution LLC, and Joie Essance, LLC in favor of Great Harbor Capital, LLC   (57)
10.179 Warrant, dated July 27, 2018, by and between Twinlab Consolidated Holdings, Inc. and Great Harbor Capital, LLC (58)

 

39

 

 

10.180 Twelfth Amendment to Note and Warrant Purchase Agreement, dated as of July 27, 2018, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Speciality Distribution, LLC, Joie Essance, LLC and Golisano Holdings LLC, as successor by assignment to JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC). (59)
10.181 Thirteenth Amendment to Note and Warrant Purchase Agreement, dated as of July 27, 2018, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Speciality Distribution, LLC, Joie Essance, LLC and Golisano Holdings LLC, as successor by assignment to Penta Mezzanine SBIC Fund I, L.P. (60)
10.182 Secured Promissory Note, dated November 5, 2018, issued by Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, Nutrascience Labs, Inc., Nutrascience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, LLC, Innovita Specialty Distribution LLC, and Joie Essance, LLC in favor of Great Harbor Capital, LLC ** (portions of the exhibit have been omitted)
10.183 Warrant, dated November 5, 2018, by and between Twinlab Consolidated Holdings, Inc. and Great Harbor Capital, LLC **
10.184 Thirteenth Amendment to Note and Warrant Purchase Agreement, dated as of November 5, 2018, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Speciality Distribution, LLC, Joie Essance, LLC and Golisano Holdings LLC, as successor by assignment to JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC).** (portions of the exhibit have been omitted)
10.185 Fourteenth Amendment to Note and Warrant Purchase Agreement, dated as of November 5, 2018, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Speciality Distribution, LLC, Joie Essance, LLC and Golisano Holdings LLC, as successor by assignment to Penta Mezzanine SBIC Fund I, L.P ** (portions of the exhibit have been omitted)
10.186 Term Loan Note and Agreement, dated December 4, 2018, by and between Twinlab Consolidated Holdings, Inc. and Macatawa Bank**
10.187 Limited Guaranty, dated as of December 4, 2018, by and between 463IP Partners, LLC and Macatawa Bank**
10.188 Fourteenth Amendment to Note and Warrant Purchase Agreement, dated as of December 4, 2018, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Speciality Distribution, LLC, Joie Essance, LLC and Golisano Holdings LLC, as successor by assignment to JL-Mezz Utah LLC (f/k/a JL-BBNC Mezz Utah, LLC).**
10.189 Fifteenth Amendment to Note and Warrant Purchase Agreement, dated as of December 4, 2018, by and between Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Speciality Distribution, LLC, Joie Essance, LLC and Golisano Holdings LLC, as successor by assignment to Penta Mezzanine SBIC Fund I, L.P.**
10.190 Amendment No. 15 to Credit and Security Agreement [and Limited Waiver], dated as of December 4, 2018 by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC, Joie Essance, LLC and MidCap Funding X Trust.**
10.191 Amendment No. 1 to Amended and Restated Unsecured Delayed Draw Promissory Note, dated January 23, 2019, by and between Twinlab Consolidated Holdings, Inc. and Little Harbor LLC**
10.192 Third Amended and Restated Revolving Loan Note, dated January 22, 2019, by Twinlab Consolidated Holdings, Inc.**
10.193 Amendment No. 6 to Unsecured Promissory Note, dated January 23, 2019, by and between Twinlab Consolidated Holdings, Inc. and Great Harbor Capital, LLC. ($7MM) **
10.194 Amendment No. 7 to Unsecured Promissory Note, dated January 23, 2019, by and between Twinlab Consolidated Holdings, Inc. and Great Harbor Capital, LLC. ($2.5MM)**
10.195 Amendment No. 16 to Credit and Security Agreement, dated as of January 22, 2019, by and among Twinlab Consolidated Holdings, Inc., Twinlab Consolidation Corporation, Twinlab Holdings, Inc., ISI Brands Inc., Twinlab Corporation, NutraScience Labs, Inc., NutraScience Labs IP Corporation, Organic Holdings LLC, Reserve Life Organics, LLC, Resvitale, LLC, Re-Body, LLC, Innovitamin Organics, LLC, Organics Management LLC, Cocoawell, LLC, Fembody, LLC, Reserve Life Nutrition, L.L.C., Innovita Specialty Distribution, LLC and Joie Essance, LLC and MidCap Funding X Trust. **

 

40

 

 

10.196 Amendment No. 1 to Amended and Restated Unsecured Delayed Draw Promissory Note, dated January 28, 2019, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. ($4.7MM)**
10.197 Amendment No. 1 to Amended and Restated Unsecured Promissory Note, dated January 28, 2019, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. ($2.5MM)**
10.198 Amendment No. 1 to Amended and Restated Unsecured Promissory Note, dated January 28, 2019, by and between Twinlab Consolidated Holdings, Inc. and Golisano Holdings LLC. ($7MM)**

 

14.1

Code of Ethics.**

21.1

Subsidiaries of the Company.**

23.1

Consent of Tanner LLC.**

31.1

Rule 13a-14(a)/15d-14(a) Certification.**

31.2

Rule 13a-14(a)/15d-14(a) Certification. **

32.1

Certification Pursuant to 18 U.S.C. Section 1350. **

32.2

Certification Pursuant to 18 U.S.C. Section 1350. **

101.INS

XBRL Instance.

101.SCH

XBRL Taxonomy Extension Schema.

101.CAL

XBRL Taxonomy Extension Calculation.

101.DEF

XBRL Taxonomy Extension Definition.

101.LAB

XBRL Taxonomy Extension Label.

101.PRE

XRRL Taxonomy Extension Presentation

 

(1)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on September 4, 2014.

(2)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on September 17, 2014.

(3)

Incorporated by reference from the Company’s Registration Statement on Form S-1 (Reg. No. 333-193101) filed on December 27, 2013.

(4)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on August 8, 2014.

(5)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on August 29, 2014.

(6)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on September 22, 2014.

(7)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on October 6, 2014.

(8)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on November 18, 2014.

(9)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 5, 2014.

(10)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on December 16, 2014.

(11)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on January 28, 2015

(12)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on February 5, 2015.

(13)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on February 9, 2015.

(14)

Incorporated by reference from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015 and filed on May 14, 2015.

(15)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on May 6, 2015.

(16)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 3, 2015.

(17)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on June 8, 2015.

(18)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on July 7, 2015.

(19)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on August 20, 2015.

(20)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on September 15, 2015.

(21)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on October 7, 2015.

(22)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on October 8, 2015.

(23)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on October 27, 2015.

(24)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on February 3, 2016.

(25)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 25, 2016.

(26)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 29, 2016.

(27)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on April 11, 2016.

(28)

Incorporated by reference from the Company’s Current Report on Form 8-K filed on September 12, 2014.

(29)

Incorporated by reference from the Company's Current Report on Form 8-K filed on July 27, 2016.

(30)

Incorporated by reference from the Company's Current Report on Form 8-K filed on August 16, 2016.

(31)

Incorporated by reference from the Company's Current Report on Form 8-K filed on September 7, 2016.

(32)

Incorporated by reference from the Company's Current Report on Form 8-K filed on September 26, 2016.  

(33)

Incorporated by reference from the Company's Current Report on Form 8-K filed on December 6, 2016 (filed as Exhibit 10.1 therein).

 

41

 

 

(34)

Incorporated by reference from the Company's Current Report on Form 8-K filed on December 6, 2016 (filed as Exhibit 10.2 therein).

(35)

Incorporated by reference from the Company's Current Report on Form 8-K filed on December 16, 2016 (filed as Exhibit 10.1 therein).

(36)

Incorporated by reference from the Company's Current Report on Form 8-K filed on December 16, 2016 (filed as Exhibit 10.2 therein).

(37)

Incorporated by reference from the Company's Current Report on Form 8-K filed on January 6, 2017 (filed as Exhibit 10.144 therein).

(38)

Incorporated by reference from the Company's Current Report on Form 8-K filed on January 6, 2017 (filed as Exhibit 10.145 therein).

(39)

Incorporated by reference from the Company's Current Report on Form 8-K filed on January 6, 2017 (filed as Exhibit 10.146 therein).

(40)

Incorporated by reference from the Company's Current Report on Form 8-K filed on January 6, 2017 (filed as Exhibit 10.147 therein).

(41)

Incorporated by reference from the Company's Current Report on Form 8-K filed on January 6, 2017 (filed as Exhibit 10.148 therein).

(42)

Incorporated by reference from the Company's Current Report on Form 8-K filed on January 6, 2017 (filed as Exhibit 10.149 therein).

(43)

Incorporated by reference from the Company's Current Report on Form 8-K filed on January 6, 2017 (filed as Exhibit 10.150 therein).

(44)

Incorporated by reference from the Company's Current Report on Form 8-K filed on January 6, 2017 (filed as Exhibit 10.151 therein).

(45)

Incorporated by reference from the Company's Current Report on Form 8-K filed on January 6, 2017 (filed as Exhibit 10.152 therein).

(46)

Incorporated by reference from the Company's Current Report on Form 8-K filed on January 6, 2017 (filed as Exhibit 10.153 therein).

(47)

Incorporated by reference from the Company's Current Report on Form 8-K filed on January 6, 2017 (filed as Exhibit 10.154 therein).

(48)

Incorporated by reference from the Company's Current Report on Form 8-K filed on March 17, 2017 (filed as Exhibit 10.146 therein).

(49)

Incorporated by reference from the Company's Current Report on Form 8-K filed on March 17, 2017 (filed as Exhibit 10.147 therein).

(50)

Incorporated by reference from the Company's Current Report on Form 8-K filed on March 27, 2017 (filed as Exhibit 10.1 therein).

(51)

Incorporated by reference from the Company's Current Report on Form 8-K filed on June 8, 2017.

(52)

Incorporated by reference from the Company's Current Report on Form 8-K filed on September 6, 2017.

(53)

(54)

(55)

(56)

(57)

(58)

(59)

(60)

Incorporated by reference from the Company's Current Report on Form 8-K filed on March 29, 2018. (filed as Exhibit 10.174 therein)

Incorporated by reference from the Company's Annual Report on Form 10-K filed on April 3, 2018. (filed as Exhibit 10.175 therein)

Incorporated by reference from the Company's Current Report on Form 8-K filed on April 30, 2018. (filed as Exhibit 10.176 therein)

Incorporated by reference from the Company's Current Report on Form 8-K filed on July 19, 2018. (filed as Exhibit 10.177 therein)

Incorporated by reference from the Company's Quarterly Report on Form 10-Q filed on November 19, 2018. (filed as Exhibit 10.178 therein)

Incorporated by reference from the Company's Quarterly Report on Form 10-Q filed on November 19, 2018. (filed as Exhibit 10.179 therein)

Incorporated by reference from the Company's Quarterly Report on Form 10-Q filed on November 19, 2018. (filed as Exhibit 10.180 therein)

Incorporated by reference from the Company's Quarterly Report on Form 10-Q filed on November 19, 2018. (filed as Exhibit 10.181 therein) 

 

* Management contract or compensatory plan, contract or agreement as defined in Item 402(a)(3) of Regulation S-K

**Filed herewith.

 

 

Item 16.     Form 10-K Summary.

 

None.

 

42

 

 

SIGNATURES

 

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

 

 

Date: April 16, 2019

 

By:

/s/ Anthony Zolezzi

 

 

 

Anthony Zolezzi

 

 

 

Chief Executive Officer

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

SIGNATURES

 

TITLE

 

DATE

 

 

 

 

 

/s/ Anthony Zolezzi

 

Chief Executive Officer

 

April 16, 2019

Anthony Zolezzi

 

and Director (Principal Executive Officer)

 

 

 

 

 

 

 

/s/ Carla Goffstein

 

SVP, Finance and Interim Chief Financial Officer

 

April 16, 2019

Carla Goffstein

 

(Principal Financial Officer)

 

 

 

 

 

 

 

/s/ Seth Ellis

 

 

 

 

Seth Ellis

 

Director

 

April 16, 2019

 

 

 

 

 

/s/ B. Thomas Golisano

 

 

 

 

B. Thomas Golisano

 

Director

 

April 16, 2019

 

 

 

 

 

/s/ David Still

 

 

 

 

David Still

 

Director

 

April 16, 2019

 

 

 

 

 

/s/ David L. Van Andel

 

 

 

 

David L. Van Andel

 

Director

 

April 16, 2019

 

 

 

 

 

 

43

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of Twinlab Consolidated Holdings, Inc.

 

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Twinlab Consolidated Holdings, Inc. and subsidiaries (collectively, the Company) as of December 31, 2018 and 2017, and the related consolidated statements of operations, stockholders' deficit, and cash flows for each of the years in the two-year period ended December 31, 2018 and the related notes and schedules (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2018 and 2017, and the consolidated results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

 

Other Matter

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company has negative working capital, has incurred operating losses and negative cash flows from operating activities, and has an accumulated deficit. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

We have served as the Company’s auditors since 2014.

 

 

/s/ Tanner LLC

Salt Lake City, Utah

April 16, 2019

 

44

 

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

 

 

   

December 31,

   

December 31,

 
   

2018

   

2017

 

ASSETS

               
                 

Current assets:

               

Cash

  $ 6,227     $ 1,350  

Accounts receivable, net of allowance of $2,651 and $2,534, respectively

    8,566       6,528  

Inventories, net

    7,945       17,168  

Prepaid expenses and other current assets

    6,560       2,256  

Total current assets

    29,298       27,302  
                 

Property and equipment, net

    1,117       3,169  

Intangible assets, net

    21,308       23,063  

Goodwill

    17,797       17,797  

Other assets

    1,720       1,762  
                 

Total assets

  $ 71,240     $ 73,093  
                 

LIABILITIES AND STOCKHOLDERS’ D EFICIT

               
                 

Current liabilities:

               

Accounts payable

  $ 8,081     $ 10,146  

Accrued expenses and other current liabilities

    15,824       10,336  

Derivative liabilities

    4,359       6,791  

Notes payable and current portion of long-term debt, net of discount of $3,797 and $3,451, respectively

    70,539       68,093  

Total current liabilities

    98,803       95,366  
                 

Long-term liabilities:

               

Deferred gain on sale of assets

    1,324       1,565  

Notes payable and long-term debt, net of current

    15,000       3,383  

Total long-term liabilities

    16,324       4,948  
                 

Total liabilities

    115,127       100,314  
                 

Commitments and contingencies

               
                 

Stockholders’ deficit:

               

Preferred stock, $0.001 par value, 500,000,000 shares authorized, no shares issued and outstanding

    -       -  

Common stock, $0.001 par value, 5,000,000,000 shares authorized, 390,449,879 and 388,081,117 shares issued, respectively

    390       388  

Additional paid-in capital

    230,625       226,884  

Stock subscriptions receivable

    (30

)

    (30

)

Treasury stock. 134,806,051 shares at cost, respectively

    (500

)

    (500

)

Accumulated deficit

    (274,372

)

    (253,963

)

Total stockholders’ deficit

    (43,887

)

    (27,221

)

                 

Total liabilities and stockholders' deficit

  $ 71,240     $ 73,093  

 

The accompanying notes are an integral part of the consolidated financial statements. 

 

45

 

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

 

 

   

For the Years Ended

 
   

December 31,

 
   

2018

   

2017

 
                 

Net sales

  $ 73,291     $ 85,501  

Cost of sales

    60,204       66,488  
                 

Gross profit

    13,087       19,013  
                 

Operating expenses:

               

Selling, general and administrative expenses

    27,077       29,032  

Impairment of goodwill and intangible assets

    -       11,106  
                 

Total operating expenses

    27,077       40,138  
                 

Loss from operations

    (13,990

)

    (21,125

)

                 

Other income (expense):

               

Interest expense, net

    (9,704

)

    (8,934

)

Gain (loss) on change in derivative liabilities

    2,432       (336

)

Gain on disposition of property and equipment

    861       -  

Other income (expense), net

    21       (39

)

                 

Total other expense, net

    (6,390

)

    (9,309

)

                 

Loss before income taxes

    (20,380

)

    (30,434

)

Benefit (provision) for income taxes

    (29

)

    943  
                 

Total net loss

  $ (20,409

)

  $ (29,491

)

                 

Weighted average number of common shares outstanding – basic

    254,325,294       252,943,406  
                 

Net loss per common share – basic

  $ (0.08

)

  $ (0.12

)

 

Weighted average number of common shares outstanding – diluted

    266,684,088       252,943,406  

Net loss per common share - diluted

  $ (0.09

)

  $ (0.12

 

)

 

The accompanying notes are an integral part of the consolidated financial statements.

 

46

 

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

 

 

   

Common Stock

   

 

Additional

Paid-in

   

 

Stock

Subscriptions

   

Treasury Stock

   

Accumulated

         

Description

 

Shares

   

Amount

   

Capital

   

Receivable

   

Shares

   

Amount

   

Deficit

   

Total

 
                                                                 

Balance, December 31, 2016

    387,730,078     $ 388     $ 226,380     $ (30

)

    134,163,685     $ (500

)

  $ (224,472

)

  $ 1,766  

Stock-based compensation

    351,039       -       504       -       -       -       -       504  

Purchase of treasury shares

    -       -       -       -       642,366       -       -       -  

Net loss

    -       -       -       -       -       -       (29,491

)

    (29,491

)

Balance, December 31, 2017

    388,081,117     $ 388     $ 226,884     $ (30

)

    134,806,051     $ (500

)

  $ (253,963

)

  $ (27,221

)

                                                                 

Issuance of common shares for prepaid services

    4,166,667       4       996       -       -       -       -       1,000  

Issuance of warrants with debt

    -       -       2,695       -       -       -       -       2,695  

Surrender and cancellation of common shares

    (3,000,000

)

    (3

)

    3       -       -       -       -       -  

Stock-based compensation

    1,202,095       1       47       -       -       -       -       48  

Net loss

    -       -       -       -       -       -       (20,409

)

    (20,409

)

Balance, December 31, 2018

    390,449,879     $ 390     $ 230,625     $ (30

)

    134,806,051     $ (500

)

  $ (274,372

)

  $ (43,887

)

 

The accompanying notes are an integral part of the consolidated financial statements.

 

47

 

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS)

 

 

   

For the Years Ended

 
   

December 31,

 
   

2018

   

2017

 

Cash flows from operating activities:

               

Net loss

  $ (20,409

)

  $ (29,491

)

Adjustments to reconcile net loss to net cash used in operating activities:

               

Depreciation and amortization

    2,575       3,170  

Amortization of debt discount

    2,557       2,419  

Issuance of common stock for services

    352       -  

Stock-based compensation

    48       504  

Provision for obsolete inventory

    18       442  

Provision for losses on accounts receivable

    1,871       152  

(Gain) loss on change in derivative liabilities

    (2,432

)

    336  

Gain on disposition of property and equipment

    (861

)

    -  

Other non-cash items

    (241

)

    (162

)

Impairment of goodwill and intangible assets

    -       11,106  

Deferred income taxes

    -       (959

)

Changes in operating assets and liabilities:

               

Accounts receivable

    (3,909

)

    1,088  

Inventories

    9,205       (9

)

Prepaid expenses and other current assets

    (3,656

)

    614  

Other assets

    42       (95

)

Accounts payable

    2,788       2,280  

Accrued expenses and other current liabilities

    5,488       2,102  
                 

Net cash used in operating activities

    (6,564

)

    (6,503

)

                 

Cash flows from investing activities:

               

Proceeds from the disposition of property and equipment

    1,296       -  

Purchase of property and equipment

    (56

)

    (152

)

                 

Net cash provided by (used in) investing activities

    1,240       (152

)

                 

Cash flows from financing activities:

               

Proceeds from the issuance of debt

    24,000       6,267  

Repayment of debt

    (1,711

)

    (2,119

)

Net repayment on revolving credit facility

    (12,088

)

    (1,240

)

                 

Net cash provided by financing activities

    10,201       2,908  
                 

Net increase (decrease) in cash

    4,877       (3,747

)

Cash at the beginning of the year

    1,350       5,097  
                 

Cash at the end of the year

  $ 6,227     $ 1,350  

 

The accompanying notes are an integral part of the consolidated financial statements.

 

48

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS) - Continued

 

 

   

For the Years Ended

 
   

December 31,

 
   

2018

   

2017

 
                 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

               

Cash paid for interest

  $ 1,029     $ 3,038  

Cash paid for income taxes

    -       -  
                 

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:

               

Issuance of warrants for debt discount and additional paid-in capital

  $ 2,695     $ -  

Issuance of common stock for prepaid expenses

    648       -  

Reduction of common stock and increase in additional paid-in capital for surrender of common stock

    3       -  

Issuance of debt for payment of accounts payable

    4,000       -  

Accrued liability settled through the issuance of long-term debt

    -       3,200  

Property and equipment acquired through the issuance of capital leases

    -       330  

Issuance of common stock and decrease in additional paid in capital for RSUs vested

    1       -  

Reduction in capital lease obligation through the sale of property and equipment

    853       -  

 

The accompanying notes are an integral part of the consolidated financial statements.

 

49

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

 

 

 

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization

Twinlab Consolidated Holdings, Inc. (the “Company”, “Twinlab,” “we,” “our” and “us”) was incorporated on October 24, 2013 under the laws of the State of Nevada as Mirror Me, Inc. On August 7, 2014, we amended our articles of incorporation and changed our name to Twinlab Consolidated Holdings, Inc.

 

Nature of Operations

We are an integrated marketer, distributor and retailer of branded nutritional supplements and other natural products sold to and through domestic health and natural food stores, mass market retailers, specialty store retailers, on-line retailers and websites. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers.

 

Our products include vitamins, minerals, specialty supplements and sports nutrition products sold under the Twinlab brand name (including the Twinlab® Fuel brand and REAAL sports nutrition products); a market leader in the healthy aging and beauty from within categories sold under the Reserveage Nutrition and ResVitale® brand names; diet and energy products sold under the Metabolife brand name; the Re-Body brand name; and a full line of herbal teas sold under the Alvita brand name. To accommodate consumer preferences, our products come in various formulations and delivery forms, including capsules, tablets, softgels, chewables, liquids, sprays and powders. These products are sold primarily through health and natural food stores and on-line retailers, supermarkets, and mass-market retailers.

 

We also perform contract manufacturing services for private label products.  Our contract manufacturing services business involves the manufacture of custom products to the specifications of a customer who requires finished product under the customer’s own brand name.  We do not market these private label products as our business is to sell the products to the customer, who then markets and sells the products to retailers or end consumers.

 

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

 

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant management estimates include those with respect to returns and allowances, allowance for doubtful accounts, reserves for inventory obsolescence, the recoverability of long-lived assets, intangibles and goodwill and the estimated value of warrants and derivative liabilities.

 

Revenue Recognition

Revenue from product sales, net of estimated returns and allowances, is recognized when evidence of an arrangement is in place, related prices are fixed and determinable, contractual obligations have been satisfied, title and risk of loss have been transferred to the customer and collection of the resulting receivable is reasonably assured. Shipping terms are generally freight on board shipping point. We sell predominately in the North American and European markets with international sales transacted in U.S. dollars.

 

Fair Value of Financial Instruments

We apply the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

 

Level 1 – inputs are quoted prices in active markets for identical assets that the reporting entity has the ability to access at the measurement date.

 

Level 2 – inputs are other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.

 

Level 3 – inputs are unobservable inputs for the asset that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability.

 

50

 

 

The following table summarizes our financial instruments that are measured at fair value on a recurring basis as of December 31, 2018 and 2017:

 

December 31, 2018

 

Total

   

Level 1

   

Level 2

   

Level 3

 
                                 

Derivative liabilities

  $ 4,359     $ -     $ -     $ 4,359  

 

December 31, 2017

 

Total

   

Level 1

   

Level 2

   

Level 3

 
                                 

Derivative liabilities

  $ 6,791     $ -     $ -     $ 6,791  

 

 

Accounts Receivable and Allowances

We grant credit to customers and generally do not require collateral or other security. We perform credit evaluations of our customers and provide for expected claims related to promotional items; customer discounts; shipping shortages; damages; and doubtful accounts based upon historical bad debt and claims experience. As of December 31, 2018, total allowances amounted to $2,651, of which $1,954 was related to doubtful accounts receivable. As of December 31, 2017, total allowances amounted to $2,534, of which $329 was related to doubtful accounts receivable.

 

Inventories

Inventories are stated at the lower of cost or net realizable value and are reduced by an estimated reserve for obsolete inventory.

 

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation, including amounts amortized under capital leases, is calculated on the straight-line method over the estimated useful lives of the related assets, which are 7 to 10 years for machinery and equipment, 8 years for furniture and fixtures and 3 years for computers. Leasehold improvements are amortized over the shorter of the useful life of the asset or the term of the lease.

  

Normal repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts and any gain or loss is included in the results of operations.

 

Intangible Assets

Intangible assets consist primarily of trademarks and customer relationships, which are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 30 years. The valuation and classification of these assets and the assignment of amortizable lives involve significant judgment and the use of estimates.

 

We believe that our long-term growth strategy supports our fair value conclusions. For intangible assets, the recoverability of these amounts is dependent upon achievement of our projections and the execution of key initiatives related to revenue growth and improved profitability. 

 

Goodwill

Goodwill is not subject to amortization, but is reviewed for impairment annually, or more frequently whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. An impairment charge would be recorded to the extent the carrying value of goodwill exceeds its estimated fair value. The testing of goodwill under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

 

Impairment of Long-Lived Assets

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment when changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount of the asset exceeds the expected undiscounted cash flows of the asset, an impairment charge is recognized equal to the amount by which the carrying amount exceeds fair value. The testing of these intangibles under established guidelines for impairment requires significant use of judgment and assumptions. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations.

 

51

 

 

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets relating to the asset acquisition of Organic Holdings, LLC (“Organic Holdings”), a market leader in the healthy aging and beauty from within categories and owner of the award-winning Reserveage™ Nutrition brand, are determined to have an indefinite useful economic life and as such are not amortized. Indefinite-lived intangible assets are tested for impairment annually which consists of a comparison of the fair value of the asset with its carrying value. The total indefinite-lived intangible assets as of December 31, 2018 and 2017 was $4,346 and $4,346, respectively. An impairment of $0 and $1,554 was recorded in the years ended December 31, 2018 and 2017, respectively (see Note 5).

 

Shipping and Handling Costs

Shipping and handling fees when billed to customers are included as a component of net sales. The total costs associated with shipping and handling are included as a component of cost of sales and totaled $3,244 and $3,521 in 2018 and 2017, respectively.

 

Advertising and Promotion Costs

We advertise our branded products through national and regional media and through cooperative advertising programs with customers. Costs for cooperative advertising programs are expensed as earned by customers and recorded in selling, general and administrative expenses. Our advertising expenses were $4,983 and $4,577 in 2018 and 2017, respectively. Customers are also offered in-store promotional allowances and certain products are also promoted with direct to consumer rebate programs. Costs for these promotional programs are recorded as incurred as a reduction to net sales.

 

Research and Development Costs

Research and development costs are expensed as incurred and totaled $436 and $1,377 in 2018 and 2017, respectively.

 

Income Taxes

We use the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases and operating loss and income tax credit carry-forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in income tax rates is recognized in the period that includes the enactment date.

 

Value of Warrants Issued with Debt

We estimate the grant date value of certain warrants issued with debt, using a valuation method, such as the Black-Scholes option pricing model, or, if the terms are more complex, using an outside professional valuation firm, which uses the Monte Carlo option lattice model.  We record the amounts as interest expense or debt discount, depending on the terms of the agreement. These estimates involve multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project earnings before interest, taxes, depreciation and amortization (“EBITDA”) and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

 

Derivative Liabilities

We have recorded certain warrants as derivative liabilities at estimated fair value, as determined based on our use of an outside professional valuation firm, due to the variable terms of the warrant agreements. The value of the derivative liabilities is generally estimated using the Monte Carlo option lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

 

Deferred gain on sale of assets

We entered into a sale-leaseback arrangement relating to our office facilities in 2013. Under the terms of the arrangement, we sold an office building and surrounding land and then leased the property back under a 15-year operating lease. We recorded a deferred gain for the amount of the gain on the sale of the asset, to be recognized as a reduction of rent expense over the life of the lease. Accordingly, we recorded amortization of deferred gain as a reduction of rental expense of $241 for 2018 and $162 for 2017. As of December 31, 2018, and 2017, unamortized deferred gain on sale of assets was $1,324 and $1,565, respectively.

 

Net Loss per Common Share

Basic net income or loss per common share (Basic EPS) is computed by dividing net income or loss by the weighted average number of common shares outstanding. Diluted net income or loss per common share (Diluted EPS) is computed by dividing net income or loss by the sum of the weighted average number of common shares outstanding and the dilutive potential common shares then outstanding. Potential dilutive common share equivalents consist of total shares issuable upon the exercise of outstanding stock options and warrants to acquire common stock using the treasury stock method and the average market price per share during the period.

 

52

 

 

 The common shares used in the computation of our basic and diluted net loss per share are reconciled as follows:

 

   

For the Year Ended

 
   

December 31,

 
   

201 8

   

201 7

 
                 

Numerator:

               

Net loss

  $ (20,409

)

  $ (29,491

)

Effect of dilutive securities on net loss:

               

Common stock warrants

    (2,431 )     -  
                 

Total net loss for purpose of calculating diluted net loss per common share

  $ (22,840

)

  $ (29,491

)

                 

Number of shares used in per common share calculations:

               

Total shares for purposes of calculating basic net loss per common share

    254,325,294       252,943,406  

Weighted-average effect of dilutive securities:

               

Common stock warrants

    12,358,794       -  
                 

Total shares for purpose of calculating diluted net loss per common share

    266,684,088       252,943,406  
                 

Net loss per common share:

               

Basic

  $ (0.08

)

  $ (0.12

)

Diluted

  $ (0.09

)

  $ (0.12

)

 

 

Significant Concentration of Credit Risk

The Company maintains its cash in bank deposit accounts which, at times, exceed federally insured limits. At December 31, 2018, the Company had approximately $6,382 of cash that exceeded federally insured limits. To date, the Company has not experienced a loss or lack of access to its invested cash; however, no assurance can be provided that access to the Company's invested cash will not be impacted by adverse conditions in the financial markets.

 

Sales to our top three customers aggregated to approximately 26% and 30% of total consolidated sales in 2018 and 2017, respectively. Sales to the largest customer were approximately 12% of total sales in 2018 and 2017.  Accounts receivable from these customers were approximately 22% and 36% of total accounts receivable as of December 31, 2018 and 2017, respectively. A single customer represents 14% of total accounts receivable. Our two major vendors accounted for 42% and 16% of purchases for the year ended December 31, 2018 and 2017, respectively. A third vendor represents an additional 11%.

 

Recent Accounting Pronouncements

In January 2017, FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment (Topic 350)” which removes Step 2 of the goodwill impairment test that requires a hypothetical purchase price allocation.  A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  The amendments in this ASU are effective for fiscal years beginning after December 15, 2019.  Early adoption is permitted after January 1, 2017.  We do not expect the new guidance to have a significant impact on our consolidated financial statements or related disclosures.

  

In February 2016, FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which requires companies to recognize all leases as assets and liabilities on the consolidated balance sheet. This ASU retains a distinction between finance leases and operating leases, and the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the current accounting literature. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in a consolidated statement of comprehensive income and a consolidated statement of cash flows is largely unchanged from previous GAAP. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Earlier application is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its Consolidated Financial Statements. Our status as an emerging growth company allowed us to defer the adoption until the year (and interim periods therein) beginning January 1, 2020.

 

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016; however, in July 2015, the FASB agreed to delay the effective date by one year. The proposed deferral may permit early adoption but would not allow adoption any earlier than the original effective date of the standard. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.  Our status as an emerging growth company allowed us to defer the adoption until the year (and interim periods therein) beginning January 1, 2019. We have determined that we have no material impact from this accounting pronouncement.

 

53

 

 

Although there are several other new accounting pronouncements issued or proposed by FASB, which we have adopted or will adopt, as applicable, we do not believe any of these accounting pronouncements has had or will have a material impact on our consolidated financial position or results of operations.

 

 

N OTE 2 – GOING CONCERN

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. In most periods since our formation, we have generated losses from operations. At December 31, 2018, we had an accumulated deficit of $274,372. Historical losses are primarily attributable to lower than planned sales resulting from low fill rates on demand due to limitations of our working capital, delayed product introductions and postponed marketing activities, merger-related and other restructuring costs, and interest and refinancing charges associated with our debt refinancing. Losses have been funded primarily through issuance of common stock and third-party or related party debt.

 

Because of our history of operating losses, increase in debt, and the recording of significant derivative liabilities, we have a working capital deficiency of $69,505 at December 31, 2018.  We also have $70,539 of debt, net of discount, which could be due within the next 12 months. These continuing conditions, among others, raise substantial doubt about our ability to continue as a going concern.

 

Management has addressed operating issues through the following actions: focusing on growing the core business and brands; continuing emphasis on major customers and key products; reducing manufacturing and operating costs and continuing to negotiate lower prices from major suppliers.  We believe that we will need additional capital to execute our business plan. If additional funding is required, there can be no assurance that sources of funding will be available when needed on acceptable terms or at all.

 

 

NOTE 3 – INVENTORIES

 

Inventories consisted of the following at:

   

December 31,

   

December 31,

 
   

201 8

   

201 7

 
                 

Raw materials

  $ 4,346     $ 5,347  

Work in process

    -       1,965  

Finished goods

    5,997       12,236  
      10,343       19,548  

Reserve for obsolete inventory

    (2,398

)

    (2,380

)

    $ 7,945     $ 17,168  

 

  

 

NOTE 4 – PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following at:

 

   

December 31,

   

December 31,

 
   

201 8

   

201 7

 
                 

Machinery and equipment

  $ 1,367     $ 12,156  

Computers and other

    7,540       9,589  

Aquifer

    482       482  

Leasehold improvements

    1,553       1,530  
      10,942       23,757  

Accumulated depreciation and amortization

    (9,825

)

    (20,588

)

    $ 1,117     $ 3,169  

 

Assets held under capital leases are included in machinery and equipment and amounted to $0 and $777 as of December 31, 2018 and 2017, respectively.

 

54

 

 

Depreciation and amortization expense totaled $820 and $841 in 2018 and 2017, respectively.

 

 

NOTE 5 – INTANGIBLE ASSETS AND GOODWILL

 

Intangible assets consisted of the following at:

 

   

December 31,

   

December 31,

 
   

201 8

   

201 7

 
                 

Trademarks

  $ 8,915     $ 8,915  

Indefinite-lived intangible assets

    4,346       4,346  

Customer relationships

    19,110       19,110  

Other

    753       753  
      33,124       33,124  

Accumulated amortization

    (11,816

)

    (10,061

)

    $ 21,308     $ 23,063  

 

Trademarks are amortized over periods ranging from 3 to 30 years, customer relationships are amortized over periods ranging from 15 to 16 years, and other intangible assets are amortized over 3 years. Amortization expense was $1,755 and $2,329 for 2018 and 2017, respectively.

 

In December 2018, we completed our annual impairment test of goodwill and intangible assets and recognized no impairment charges. During the fourth quarter of fiscal 2018, management updated the 2018 budget and financial projections beyond fiscal 2018. No impariment was recorded in 2018. In 2017, due to a decline in Metabolife sales we determined that the carrying value of the trademark exceeded its fair value. We also determined in 2017 that due to an increase in debt, our weighted average cost of capital increased, which created an impairment in both Reserveage and Rebody tradenames as well as Organic Holdings goodwill.

 

The fair value of these assets was determined using level 3 inputs in an income approach using the estimated discounted cash flow valuation methodology. In the second step of the impairment test, we performed a hypothetical acquisition and purchase price allocation and measured the implied fair value of each asset to its carrying value. The impairment was calculated by deducting the present value of the expected cash flows from the carrying value. The second step of the goodwill and intangible assets impairment tests resulted in a 2017 impairment charge of $6,301 for goodwill related to Organic Holdings and in an aggregate impairment loss of intangible assets of $4,805 in 2017.  The impairment charges were recorded in operating expenses in the consolidated statement of operations.  

 

Estimated aggregate amortization expense for the intangible assets for each of the five years subsequent to 2018 is as follows:

 

Years Ending December 31,

       
         

2019

    1,517  

2020

    1,517  

2021

    1,517  

2022

    1,517  

2023

    1,517  

Thereafter

    9,377  
         
    $ 16,962  

 

55

 

 

 

NOTE 6 – DEBT

 

Debt consisted of the following at:

  

   

December 31 ,
2018

   

December 31,
2017

 

Related Party Debt:

               

July 2014 note payable to Little Harbor, LLC

  $ 3,267     $ 3,267  

July 2016 note payable to Little Harbor, LLC

    4,770       4,770  

January 2016 note payable to Great Harbor Capital, LLC

    2,500       2,500  

March 2016 note payable to Great Harbor Capital, LLC

    7,000       7,000  

December 2016 note payable to Great Harbor Capital, LLC

    2,500       2,500  

August 2017 note payable to Great Harbor Capital, LLC

    3,000       3,000  

February 2018 note payable to Great Harbor Capital, LLC

    2,000       -  

July 2018 note payable to Great Harbor Capital, LLC, net of discount of $1,056 at December 31, 2018

    3,944       -  

November 2018 note payable to Great Harbor Capital, LLC, net of discount of $1,088 at December 31, 2018

    2,912       -  

January 2016 note payable to Golisano Holdings LLC

    2,500       2,500  

March 2016 note payable to Golisano Holdings LLC

    7,000       7,000  

July 2016 note payable to Golisano Holdings LLC

    4,770       4,770  

December 2016 note payable to Golisano Holdings LLC

    2,500       2,500  

March 2017 note payable to Golisano Holdings LLC

    3,267       3,267  

February 2018 note payable to Golisano Holdings LLC

    2,000       -  

November 2014 note payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $678 and $1,491 as of December 31, 2018 and December 31, 2017, respectively

    7,322       6,509  

January 2015 note payable to Golisano Holdings LLC (formerly payable to JL-BBNC Mezz Utah, LLC), net of discount and unamortized loan fees in the aggregate of $915 and $1,829 as of December 31, 2018 and December 31, 2017, respectively

    4,085       3,171  

February 2015 note payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.), net of discount and unamortized loan fees in the aggregate of $60 and $131 as of December 31, 2018 and December 31, 2017, respectively

    1,940       1,869  

Macatawa Bank

    15,000       -  

Total related party debt

    82,277       54,623  
                 

Senior Credit Facility with Midcap

    -       12,088  
                 

Other Debt:

               

April 2016 note payable to JL-Utah Sub, LLC

    62       313  

Capital lease obligations

    -       1,252  

Huntington Holdings, LLC

    3,200       3,200  

Total other debt

    3,262       4,765  
                 

Total debt

    85,539       71,476  

Less current portion

    (70,539 )     (68,093 )
                 

Long-term debt

  $ 15,000     $ 3,383  

 

56

 

 

Future aggregate maturities of debt as of December 31, 2018 were as follows:  

 

Years Ending December 31,

       

2019

  $ 70,539  

2020

    15,000  
         
    $ 85,539  

 

Future aggregate maturities of debt that have maturities beyond 2019 have been classified as current on the consolidated balance sheet as the Company has determined that it is probable that the Company will not be able to meet the 2019 debt obligations as they become due, thus causing a technical default of the debt obligations.  

Related-Party Debt

 

Little Harbor Capital LLC

Mr. David L. Van Andel, the Chairman of the Company’s Board of Directors, is the owner and principal of Little Harbor Capital LLC . Mr. Mark Bugge at the time the note(s) were entered into was a member of the Company’s Board of Directors and the Secretary of Little Harbor Capital LLC.

 

July 2014 Note Payable to Little Harbor, LLC

Pursuant to a July 2014 Debt Repayment Agreement with Little Harbor, LLC (“Little Harbor”), an entity owned by certain stockholders of the Company, we were obligated to pay such party $4,900 per year in structured monthly payments for 3 years provided that such payment obligations would terminate at such earlier time as the trailing ninety day volume weighted average closing sales price of the Company’s common stock on all domestic securities exchanges on which such stock is listed equals or exceeds $5.06 per share. This note is unsecured and matured on July 25, 2017 with an outstanding balance of $3,267. On February 6, 2018, we entered into an agreement with Little Harbor to convert the obligations into an unsecured promissory note. The note matures on July 25, 2020, bears interest at an annual rate of 8.5%, with the principal payable at maturity.

 

July 2016 Note Payable to Little Harbor, LLC

On July 21, 2016, we issued an Unsecured Delayed Draw Promissory Note in favor of Little Harbor (“LH Delayed Draw Note”), pursuant to which Little Harbor may, in its sole discretion and pursuant to draw requests made by the Company, loan us up to the maximum principal amount of $4,770. This note is unsecured and was to mature on January 28, 2019; however, the maturity of this note has been extended to June 30, 2019. This note bears interest at an annual rate of 8.5%, with the principal payable at maturity. If Little Harbor, in its discretion, accepts a draw request made by the Company under this note, Little Harbor shall not transfer cash to the Company, but rather Little Harbor shall irrevocably agree to accept the principal amount of any monthly delayed draw under this note in lieu and in complete satisfaction of the obligation to make an equivalent dollar amount of periodic cash payments otherwise due to Little Harbor under the July 2014 note payable. During the year ended December 31, 2016, we requested and Little Harbor LLC approved, full draw amounts totaling $4,770. We issued a warrant into escrow in connection with this loan (see Little Harbor Escrow Warrants in Note 7). (See also Subsequent Events in Note 13)

 

Little Harbor also delivered a deferment letter to which Little Harbor agreed to defer all payments due under all the notes specified in the Little Harbor Deferment Letter through May 31, 2019 and agreed to refrain from declaring a default and/or exercising any remedies under the notes.

 

Great Ha r bor Capital LLC

Mr. David L. Van Andel, the Chairman of the Company’s Board of Directors, is the owner and principal of Great Harbor Capital LLC . Mr. Mark Bugge at the time the note(s) were entered into was a member of the Company’s Board of Directors and the Secretary of Great Harbor Capital LLC.

 

January 2016 Note Payable to Great Harbor Capital, LLC

Pursuant to a January 28, 2016 Unsecured Promissory Note (“January 2016 GH Promissory Note”) with Great Harbor Capital, LLC (“GH”), an affiliate of a member of our Board of Directors, GH lent us $2,500. The note was to mature on January 28, 2019; however, the maturity of this note has been extended to June 30, 2019. The note bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $104 which was to commence on February 28, 2017 but has been deferred to May 31, 2019. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note 7). (See also Subsequent Events in Note 13)

 

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March 2016 Note Payable to Great Harbor Capital, LLC

Pursuant to a March 21, 2016 Unsecured Promissory Note (“March 2016 GH Note”), GH lent us $7,000. The note was to mature on March 21, 2019; however, the maturity of this note has been extended to June 30, 2019. This note bears interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $292 which was to commence on April 21, 2017 but has been deferred to May 31, 2019. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note 7). (See also Subsequent Events in Note 13)

 

December 2016 Note Payable to Great Harbor Capital, LLC

Pursuant to a December 31, 2016 Unsecured Promissory Note (“December 2016 GH Note”), GH lent us $2,500. The note matures on December 30, 2019, bears interest at an annual rate of 8.5%, with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note 7).

  

August 2017 Note Payable to Great Harbor Capital, LLC

Pursuant to an August 30, 2017 Secured Promissory Note, GH lent us $3,000 (“August 2017 GH Note”). The note matures on August 29, 2020, bears interest at an annual rate of 8.5%, with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see GH Escrow Warrants in Note 7).

 

February 2018 Note Payable to Great Harbor Capital, LLC

Pursuant to a February 6, 2018 Secured Promissory Note, GH lent us $2,000 (“February 2018 GH Note”). The note matures on February 6, 2021, bears interest at an annual rate of 8.5%, with the principal payable at maturity. This note is secured by collateral and is subordinate to the indebtedness owed to Midcap Funding X Trust as successor-by-assignment from MidCap Financial Trust (“MidCap”),

 

Also, on February 6, 2018, the Company issued an Amended and Restated Secured Promissory Note to GH (“A&R August 2017 GH Note”) replacing the prior Secured Promissory Note issued on August 30, 2017. The amendment added a requirement that when the Company consummates any Special Asset Disposition (as defined in the February 2018 GH Note), provided that the Company has a minimum liquidity of $1,000, the Company will use the net cash proceeds from the Special Asset Disposition to pay any accrued and unpaid interest under the A&R August 2017 GH Note and any other note subject to the Intercreditor Agreement (defined below). The maturity date, interest rate and payment terms remain unchanged from the original secured promissory note issued to GH on August 30, 2017.

 

Furthermore, as a result of notes issued on February 6, 2018, by GH and Golisano LLC, GH and Golisano entered into an “Intercreditor Agreement” where they agreed that each of the February 2018 GH Note, A&R August 2017 GH Note, and the Golisano LLC Note (as defined below) are pari passu as to repayment, security and otherwise and are equally and ratably secured.

 

July 2018 Note Payable to Great Harbor Capital, LLC

Pursuant to a July 27, 2018 Secured Promissory Note, GH loaned the Company $5,000 ("July 2018 GH Note"). The July 2018 GH Note matures on January 27, 2020 and bears interest at an annual rate of 8.5%, with the principal payable on maturity. Interest on the outstanding principal accrues at a rate of 8.5% per year and is payable monthly on the first day of each month, beginning September 1, 2018. The principal of the July 2018 GH Note is payable at maturity on January 20, 2020. The July 2018 GH Note is secured by collateral. We issued a warrant in connection with this loan (see GH Warrants in Note 7).

 

The July 2018 GH Note is subordinate to the indebtedness owed to MidCap. The July 2018 GH Note is senior to the indebtedness owed to Little Harbor, LLC and Golisano Holdings LLC.

 

November 2018 Note Payable to Great Harbor Capital, LLC

Pursuant to a November 5, 2018 Secured Promissory Note, GH loaned the Company $4,000 ("November 2018 GH Note"). The November 2018 GH Note matures on November 5, 2020 and bears interest at an annual rate of 8.5%, with the principal payable on maturity. Interest on the outstanding principal accrues at a rate of 8.5% per year and is payable monthly on the first day of each month, beginning December 1, 2018. The principal of the November 2018 GH Note is payable at maturity on November 5, 2020. November 2018 GH Note is secured by collateral. We issued a warrant in connection with this loan (see GH Warrants in Note 7).

 

GH also delivered a deferment letter to which GH agreed to defer all payments due under all the notes specified in the Great Harbor Deferment Letter through May 31, 2019 and agreed to refrain from declaring a default and/or exercising any remedies under the notes.

 

Golisano Holdings LLC.

Mr. B. Thomas Golisano, a member of the Company’s Board of Directors is a principal of Golisano Holdings LLC .

 

58

 

 

November 2014 Note Payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.)

On November 13, 2014, we raised proceeds of $8,000, less certain fees and expenses, from the issuance of a secured note to Penta Mezzanine SBIC Fund I, L.P. (“Penta”). The Managing Director of Penta, an institutional investor, is also a director of our Company. We granted Penta a security interest in our assets and pledged the shares of our subsidiaries as security for the note. On March 8, 2017, Golisano Holdings LLC (“Golisano LLC”) acquired this note payable from Penta. Interest on the outstanding principal accrued at a rate of 12% per year from date of issuance to March 8, 2017, and decreased to 8% per year thereafter, payable monthly. The note matures on November 13, 2019. On August 30, 2017, we entered into an amendment with Golisano LLC which extended payment of principal to maturity. We issued a warrant to Penta to purchase 4,960,740 shares of the Company’s common stock in connection with this loan (see Penta Warrants in Note 7). The estimated fair value of the warrant at the date of issuance was $3,770, which was recorded as a note discount and is being amortized into interest expense over the term of this loan. Additionally, we had incurred loan fees of $273, which is also being amortized into interest expense over the term of this loan.

 

January 2015 Note Payable to Golisano Holdings LLC (formerly payable to JL-Mezz Utah, LLC-f/k/a JL-BBNC Mezz Utah, LLC)

On January 22, 2015, we raised proceeds of $5,000, less certain fees and expenses, from the sale of a note to JL-Mezz Utah, LLC (f/k/a JL-BBNC Mezz Utah, LLC) (“JL-US”). The proceeds were restricted to pay a portion of the Nutricap Labs, LLC (“Nutricap”) asset acquisition. We granted JL-US a security interest in the Company’s assets, including real estate and pledged the shares of our subsidiaries as security for the note.  On March 8, 2017, Golisano LLC acquired this note payable from JL-US. Interest on the outstanding principal accrued at a rate of 12% per year from date of issuance to March 8, 2017, and decreased to 8% per year thereafter, payable monthly. The note matures on November 13, 2019. On August 30, 2017, we entered into an amendment with Golisano LLC which extended payment of principal to maturity. We issued a warrant to JL-US to purchase 2,329,400 shares of the Company’s common stock on January 22, 2015 and 434,809 shares of the Company’s common stock on February 4, 2015 (see JL Warrants in Note 7).  The estimated fair value of these warrants at the date of issuances was $4,389, which was recorded as a note discount and is being amortized into interest expense over the term of these loans.  Additionally, we had incurred loan fees of $152 relating to this loan, which is also being amortized into interest expense over the term of these loans.

 

February 2015 Note Payable to Golisano Holdings LLC (formerly payable to Penta Mezzanine SBIC Fund I, L.P.)

On February 6, 2015, we raised proceeds of $2,000, less certain fees and expenses, from the issuance of a secured note payable to Penta. The proceeds were restricted to pay a portion of the acquisition of the customer relationships of Nutricap. On March 8, 2017, Golisano LLC acquired this note payable from Penta. Interest on the outstanding principal accrued at a rate of 12% per year from date of issuance to March 8, 2017, and decreased to 8% per year thereafter, payable monthly. The note matures on November 13, 2019. On August 30, 2017, we entered into an amendment with Golisano LLC which extended payment of principal to maturity. We issued a warrant to Penta to purchase 869,618 shares of the Company’s common stock in connection with this loan (see Penta Warrants in Note 7). The estimated fair value of these warrants at the date of issuances totaled $250, which was recorded as a note discount and is being amortized into interest expense over the term of this loan. Additionally, we had incurred loan fees of $90, which is also being amortized into interest expense over the term of these loans.

 

January 2016 Note Payable to Golisano Holdings LLC

Pursuant to a January 28, 2016 Unsecured Promissory Note with Golisano LLC (“Golisano LLC January 2016 Note”), an affiliate of a member of our Board of Directors, Golisano LLC lent us $2,500. The note was to mature on January 28, 2019; however, the maturity of this note has been extended to June 30, 2019. This notebears interest at an annual rate of 8.5%. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7). (See also Subsequent Events in Note 13)

 

March 2016 Note Payable to Golisano Holdings LLC

Pursuant to a March 21, 2016 Unsecured Promissory Note, Golisano LLC lent us $7,000 (“Golisano LLC March 2016 Note”). The note was to matureon March 21, 2019; however, the maturity of this note has been extended to June 30, 2019. This note bears interest at an annual rate of 8.5%. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7). (See also Subsequent Events in Note 13)

 

July 2016 Note Payable to Golisano Holdings LLC

On July 21, 2016, we issued an Unsecured Delayed Draw Promissory Note in favor of Golisano LLC pursuant to which Golisano LLC may, in its sole discretion and pursuant to draw requests made by the Company, loan the Company up to the maximum principal amount of $4,770 (the “Golisano LLC July 2016 Note”). The Golisano LLC July 2016 Note was to mature on January 28, 2019; however, the maturity of this note has been extended to June 30, 2019. Interest on the outstanding principal accrues at a rate of 8.5% per year. The principal of the Golisano LLC July 2016 Note is payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7). During the year ended December 31, 2016, we requested and Golisano LLC approved, draws totaling $4,770. (See also Subsequent Events in Note 13)

 

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December 2016 Note Payable to Golisano Holdings LLC

Pursuant to a December 31, 2016 Unsecured Promissory Note, Golisano LLC lent us $2,500 (“Golisano LLC December 2016 Note”). The note matures on December 30, 2019, bears interest at an annual rate of 8.5%, with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7).

 

March 2017 Note Payable to Golisano Holdings LLC

Pursuant to a March 14, 2017 Unsecured Promissory Note, Golisano LLC lent us $3,267 (“Golisano LLC March 2017 Note”). The note matures on December 30, 2019, bears interest at an annual rate of 8.5%, with the principal payable at maturity. We issued a warrant into escrow in connection with this loan (see Golisano Escrow Warrants in Note 7).

 

February 2018 Note Payable to Golisano Holdings LLC

Pursuant to a February 6, 2018 Secured Promissory Note, Golisano LLC lent us $2,000 (“Golisano LLC February 2018 Note”). The note matures on February 6, 2021, bears interest at an annual rate of 8.5%, with the principal payable at maturity. This note is secured by collateral and is subordinate to the indebtedness owed to MidCap.

 

Golisano LLC also delivered a deferment letter pursuant to which Golisano LLC agreed to defer all payments due under the notes specified in the Golisano Deferment Letter through May 31, 2019 and agreed to refrain from declaring a default and/or exercising any remedies under the notes.

 

Macatawa Bank

Mr. Mark Bugge is a former member of the board of directors of Macatawa Bank and was a member of the Company’s Board of Directors at the time of the term loan note. Two other members of the Company’s Board of Directors, Mr. B. Thomas Golisano and Mr. David L. Van Andel, are the owners and principals of the guarantor, 463IP Partners LLC. Furthermore, Mr. Van Andel, through his interest in a trust, holds an indirect limited partnership interest in White Bay Capital, LLLP, which has an ownership interest of greater than 10% in the Macatawa Bank.

 

On December 4, 2018, the Company entered into a Term Loan Note and Agreement (the "Term Loan") in favor of Macatawa Bank (the "Macatawa"). Pursuant to the Term Loan, the Macatawa loaned the Company $15,000. The Term Loan matures on November 30, 2020. The Term Loan accrues interest at the interest rate equivalent to the one-month LIBOR Rate plus 1.00% (the interest rate will not be less than 2.50%; the rate was 3.38% as of December 31, 2018). After the maturity date or upon the occurrence or continuation of an event of default, the unpaid principal balance shall bear interest at the interest rate of the note plus 3.00%. The note is secured by the Limited Guaranty, defined below, and is subordinate to the indebtedness owed to MidCap.

 

In connection with the Term Loan, 463IP Partners, LLC (the "463IP") has entered into a limited guaranty, dated as of December 4, 2018, in favor of the Macatawa (the "Limited Guaranty") pursuant to which it has agreed to guarantee payment under the Term Loan and any and all renewals of the Term Loan and all interest accrued on such indebtedness limited to $15,000 plus any accrued interest.

 

Senior Credit Facility

 

On January 22, 2015, we entered into a three-year $15,000 revolving credit facility (the “Senior Credit Facility”) based on our accounts receivable and inventory, increasable to up to $20,000, with MidCap. On September 2, 2016, we entered into an amendment with Midcap to increase the Senior Credit Facility to $17,000 and extend our facility an additional 12 months. We granted MidCap a first priority security interest in certain of our assets and pledged the shares of our subsidiaries as security for amounts owed under the credit facility. We are required to pay Midcap an unused line fee of 0.50% per annum, a collateral management fee of 1.20% per month and interest of LIBOR plus 5% per annum, which was 6.36% per annum as of December 31, 2017. We issued a warrant to Midcap to purchase 500,000 shares of the Company’s common stock (see Midcap Warrant in Note 7). The estimated fair value of these warrants at the date of issuance was $130, which was recorded as a note discount and is being amortized into interest expense over the term of the Senior Credit Facility. Additionally, we have incurred loan fees totaling $540 relating to the Senior Credit Facility and any subsequent amendments, which is also being amortized into interest expense over the term of the Senior Credit Facility. The balance owing on the Senior Credit Facility was $0 as of December 31, 2018. (See also Subsequent Events in Note 13)

 

On February 6, 2018, MidCap agreed to consent to the transactions contemplated in exchange for a warrant to MidCap exercisable for up to 500,000 shares of the Company’s common stock at an exercise price of $0.76 per share. The Company has reserved 500,000 shares of the Company’s common stock for issuance to MidCap. On February 6, 2019, the warrant expired, unexercised. (See also Subsequent Events in Note 13)

 

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Other Debt 

 

April 2016 Note Payable to JL-Utah Sub, LLC

Pursuant to an April 5, 2016 Unsecured Promissory Note, JL-Utah Sub, LLC lent us $500 (“JL-US Note”). On this note's maturity date, March 21, 2019, the note was paid in full. The note bore interest at an annual rate of 8.5%, with the principal payable in 24 monthly installments of $21 commencing on April 21, 2017. (See also Subsequent Events in Note 13)

 

 

Capital Lease Obligations

Our capital lease obligations pertain to various leasing agreements with Essex Capital Corporation (“Essex”), a related party to the Company as Essex’s principal owner was a director of the Company until January 22, 2018. This obligation was paid in full in November 2018.

 

Huntington Holdings, LLC

On August 6, 2016, the 18-month anniversary of the closing of a share purchase agreement, we were required to pay the purchaser of the common stock the difference between $2.29 per share and either a defined market price or a price per share determined by a valuation firm acceptable to both parties. Based on an outside professional valuation performed on the Company’s common stock, the Company estimated the stock price guarantee payment to be $3,210. Accordingly, the Company recorded a loss on the stock purchase price guarantee of $3,210 and a corresponding liability for the same amount in 2016, which was included in accrued expenses and other current liabilities in the accompanying consolidated balance sheet as of December 31, 2016. On June 2, 2017, the two parties came to an agreement in which we were required to issue an Unsecured Promissory Note (“Huntington Note”) in favor of Huntington Holdings, LLC (“Huntington”). The Huntington Note matures on June 2, 2019 with the principal amount of $3,200 payable at maturity. Interest on the outstanding principal accrues at a rate of 8.5% per year from August 6, 2016 to August 15, 2017 and increases to 10% per year thereafter. We paid $50 to Huntington related to accrued interest from August 6, 2016 through the date of issuance of the Huntington Note. Huntington was required to return 778,385 shares of the Company’s common stock which were issued into escrow. We were required to provide certain piggyback registration rights to Huntington in regards to the remaining 749,999 shares of the Company’s common stock held by Huntington. If the Huntington Note was paid off prior to August 14, 2017, the 778,385 shares held in escrow were to be released from escrow and transferred to the Company for no additional consideration. If the note remained outstanding on August 15, 2017, we had the right, but not the obligation, to pay $140 to Huntington to purchase 764,192 of the shares held in escrow (the “Subject Shares”). Upon the exercise of this purchase option, the Subject Shares were to be released from escrow and transferred to the Company. If the note remained outstanding on August 15, 2017 and we did not exercise the option to purchase the shares, the shares were to be returned from escrow to Huntington and we would no longer have repurchase rights. On August 15, 2017, the note was outstanding and we did not exercise the repurchase right. The 778,385 shares were returned from escrow to Huntington.

 

Financial Covenants

 

Certain of the foregoing debt agreements, as amended, require us to meet certain affirmative and negative covenants, including maintenance of specified ratios.  We amended our debt agreements with MidCap, Penta and JL-US, effective July 29, 2016, to, among other things, reset the financial covenants of each debt agreement. Management has determined that as of December 31, 2018, and April 16, 2019 we were in compliance with the covenants.

   

 

NOTE 7 – WARRANTS AND REGISTRATION RIGHTS AGREEMENTS

 

The following table presents a summary of the status of our issued warrants as of December 31, 2018, and changes during the two years then ended:

 

           

Weighted

Average

 
   

Shares

   

Exercise Price

 
                 

Outstanding, December 31, 2016

    15,855,017     $ 0.18  

Granted

    -       -  

Canceled / Expired

    -       -  

Exercised

    -       -  
                 

Outstanding, December 31, 2017

    15,855,017       0.18  
                 

Granted

    5,000,000       0.09  

Canceled / Expired

    (714,286

)

    0.53  

Exercised

    -       -  

Outstanding, December 31, 2018

    20,140,731       0.15  

 

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Warrants Issued

 

Midcap Warrant

On January 22, 2015, the Company entered into a revolving credit facility with MidCap Financial Trust, which subsequently assigned the agreement to MidCap.

 

In connection with the line of credit agreement with MidCap described in Note 6, we issued MidCap a warrant, exercisable through January 22, 2018, for an aggregate of 500,000 shares of the Company’s common stock at an exercise price of $0.76 per share (the “MidCap Warrant 1”). We entered into a registration rights agreement with Midcap, dated as of January 22, 2015, granting MidCap certain registration rights, commencing October 1, 2015, for the shares of common stock issuable on the exercise of the MidCap Warrant 1. The MidCap Warrant 1 was not exercised and expired on January 22, 2018.

 

The agreement is amended from time to time and wherein it was necessary under the terms of the agreement to obtain MidCap's consent to the transactions contemplated by the above mentioned February 2018 GH Note, A&R August 2017 GH Note and Golisano LLC Note; on February 6, 2018, MidCap agreed to consent to the transactions contemplated in exchange for a warrant to MidCap exercisable for up to 500,000 shares of the Company’s common stock at an exercise price of $0.76 per share (“MidCap Warrant 2”). The Company has reserved 500,000 shares of the Company’s common stock for issuance under the MidCap Warrant 2.

 

The MidCap Warrant 2 was not exercised and expired on February 6, 2019. (See also Subsequent Events in Note 13)

 

Penta Warrants

Pursuant to a stock purchase agreement dated June 30, 2015, a warrant was issued to Penta to purchase an aggregate 807,018 shares of our common stock at a price of $0.01 per share at any time prior to the close of business on June 30, 2020. We granted Penta certain registration rights, commencing October 1, 2015, for the shares of common stock issuable upon exercise of the warrant.

 

JL -BBNC Warrants

Pursuant to a June 30, 2015 stock purchase agreement, a warrant was issued to JL-BBNC Mezz Utah, LLC (“JL-BBNC”) to purchase an aggregate 403,509 shares of the Company’s common stock at a price of $0.01 per share at any time prior to the close of business on June 30, 2020, subject to certain adjustments. We granted JL-BBNC certain registration rights, commencing October 1, 2015, for the shares of common stock issuable upon exercise of the warrant. The warrant was subsequently assigned by JL-BBNC to two individuals.

 

Essex Warrants

In connection with the guarantee of a note payable issued in the Nutricap asset acquisition and equipment financing by Essex discussed in Note 6, Essex was issued a warrant exercisable for an aggregate 1,428,571 shares of the Company’s common stock at a purchase price of $0.77 per share, at any time prior to the close of business on June 30, 2020. The number of shares issuable upon the exercise of the warrant is subject to adjustment on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property. Essex subsequently assigned warrants for 350,649 shares to another company.

 

JL Properties, Inc. Warrants

In April 2015, we entered into an office lease agreement which requires a $1,000 security deposit, subject to reduction if we achieve certain market capitalization metrics at certain dates. On April 30, 2015, we entered into a reimbursement agreement with JL Properties, Inc. (“JL Properties”) pursuant to which JL Properties agreed to arrange for and provide an unconditional, irrevocable, transferable, and negotiable commercial letter of credit to serve as the security deposit. As partial consideration for the entry by JL Properties into the reimbursement agreement and the provision of the letter of credit, we issued JL Properties two warrants to purchase shares of the Company’s common stock.

 

The first warrant is exercisable for an aggregate of 465,880 shares of common stock, subject to certain adjustments, at an aggregate purchase price of $0.01, at any time prior to April 30, 2020. In addition to adjustments on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property, the number of shares of common stock issuable pursuant to the warrant will be increased in the event our consolidated audited adjusted EBITDA (as defined in the warrant agreement) for the year ending December 31, 2018 does not equal or exceed $19,250. JL Properties subsequently assigned the warrant to two individuals.

 

On December 31, 2018, our audited adjusted EBITDA yielded a negative calculation; therefore, the warrant will not increase in shares.

 

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The second warrant is exercisable for an aggregate of 86,962 shares of common stock, at a per share purchase price of $1.00, at any time prior to April 30, 2020. The number of shares issuable upon exercise of the second warrant is subject to adjustment on terms and conditions customary for a transaction of this nature in the event of (i) reorganization, recapitalization, stock split-up, combination of shares, mergers, consolidations and (ii) sale of all or substantially all of our assets or property.

 

We have granted JL Properties certain registration rights, commencing October 1, 2015, for the shares of common stock issuable on exercise of the two warrants.

 

Golisano LLC Warrants (formerly Penta Warrants)

In connection with the November 13, 2014 note for $8,000 (see Note 6), Penta was issued a warrant to acquire 4,960,740 shares of the Company’s common stock at an aggregate exercise price of $0.01, through November 13, 2019. In connection with Penta’s consent to the terms of additional debt obtained by us, we also granted Penta a warrant to acquire an additional 869,618 shares of common stock at a purchase price of $1.00 per share, through November 13, 2019. Both warrant agreements grant Penta certain registration rights, commencing October 1, 2015, for the shares of common stock issuable on exercise of the warrants. Penta has the right, under certain circumstances, to require us to purchase all or any portion of the equity interest in the Company issued or represented by the warrant to acquire 4,960,740 shares at a price based on the greater of (i) the product of (x) ten times our adjusted EBITDA with respect to the twelve months preceding the exercise of the put right multiplied by (y) the investor’s percentage ownership in the Company assuming full exercise of the warrant; or (ii) the fair market value of the investor’s equity interest underlying the warrant. In the event (i) we do not have the funds available to repurchase the equity interest under the warrant or (ii) such repurchase is not lawful, adjustments to the principal of the note purchased by Penta will be made or, under certain circumstances, interest will be charged on the amount otherwise due for such repurchase. We have the right, under certain circumstances, to require Penta to sell to us all or any portion of the equity interest issued or represented by the warrant to acquire 4,960,740 shares. The price for such repurchase will be the greater of (i) the product of (x) eleven times our adjusted EBITDA with respect to the twelve months preceding the exercise of the call right multiplied by (y) the investor’s percentage ownership in the company assuming full exercise of the warrant; or (ii) the fair market value of the equity interests underlying the warrant; or (iii) $3,750. In connection with Golisano LLC’s acquisition of the note payable from Penta on March 8, 2017 (see Note 6 above for additional information), the above warrants in aggregate of 5,830,358 shares were assigned to Golisano LLC.

 

Golisano LLC Warrants (formerly JL Warrants)

In connection with the January 22, 2015 note payable to JL, we issued JL warrants to purchase an aggregate of 2,329,400 shares of the Company’s common stock, at an aggregate exercise price of $0.01, through February 13, 2020. On February 4, 2015, we also granted to JL a warrant to acquire a total of 434,809 shares of common stock at a purchase price of $1.00 per share, through February 13, 2020. Both warrant agreements grant JL certain registration rights, commencing October 1, 2015, for the shares of common stock issuable upon exercise of the warrants. These warrants were subsequently assigned to two individuals. During the year ended December 31, 2016, these individuals exercised warrants for a total of 1,187,995 shares of the Company’s common stock for total proceeds to the Company of less than $1. In connection with Golisano LLC’s acquisition of the note payable from JL on March 8, 2017 (see Note 6 above for additional information), the remaining portions of these warrants were assigned to Golisano LLC.

 

Golisano LLC Warrants

Pursuant to an October 2015 securities purchase agreement with Golisano LLC, we issued Golisano LLC a warrant (the “Golisano Warrant”), which Golisano Warrant is intended to maintain, following each future issuance of shares of common stock pursuant to the conversion, exercise or exchange of certain currently outstanding warrants to purchase shares of common stock held by third-parties (the “Outstanding Warrants”), Golisano LLC’s proportional ownership of our issued and outstanding common stock so that it is the same thereafter as on October 5, 2015. We have reserved 12,697,977 shares of common stock for issuance under the Golisano Warrant. The purchase price for any shares of common stock issuable upon exercise of the Golisano Warrant is $.001 per share. The Golisano Warrant is exercisable immediately and up to and including the date which is sixty days after the later to occur of the termination, expiration, conversion, exercise or exchange of all of the Outstanding Warrants and our delivery of notice thereof to Golisano LLC. The Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets. In addition, if any payments are made to a holder of an Outstanding Warrant in consideration for the termination of or agreement not to exercise such Outstanding Warrant, Golisano LLC will be entitled to equal treatment. We have entered into a registration rights agreement with Golisano LLC, dated as of October 5, 2015, granting Golisano LLC certain registration rights for the shares of common stock issuable on exercise of the Golisano Warrant. On February 6, 2016, Golisano LLC exercised the Golisano Warrant in part for 509,141 shares of the Company’s common stock for an aggregate purchase price of $1. During the year ended December 31, 2016, the Golisano Warrant was cancelled in part for 6,857,143 shares pursuant to the cancellation of a portion of the Outstanding Warrants. As of December 31, 2018, we have reserved 4,542,219 shares of our common stock for issuance under the Golisano Warrant.

 

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GH Warrants

In connection with the July 2018 GH Note, we issued GH a warrant to purchase an aggregate of 2,500,000 shares of the Company’s common stock at an exercise price of $0.01 per share (the "July 2018 GH Warrant"). The July 2018 GH Warrant is exercisable on any business day prior to the expiration date. The Company has reserved 2,500,000 shares of the Company’s common stock for issuance under the July 2018 GH Warrant. The July 2018 GH Warrant expires on July 27, 2024. The July 2018 GH Warrant is also subject to customary adjustments upon any recapitalization, reorganization, stock split up, combination of shares, merger or consolidation. The Company estimated the value of the warrant using the Black-Scholes option pricing model and recorded a debt discount of $1,481 which will be amortized over the term of the July 2018 GH Note. $424 of the debt discount was amortized during the year ended December 31, 2018.

 

In connection with the November 2018 GH Note, we issued GH a warrant to purchase an aggregate of 2,000,000 shares of the Company’s common stock at an exercise price of $0.01 per share (the "November 2018 GH Warrant"). The November 2018 GH Warrant is exercisable on any business day prior to the expiration date. The Company has reserved 2,000,000 shares of the Company’s common stock for issuance under the November 2018 GH Warrant. The November 2018 GH Warrant expires on November 4, 2024. The November 2018 GH Warrant is also subject to customary adjustments upon any recapitalization, reorganization, stock split up, combination of shares, merger or consolidation. The Company estimated the value of the warrant using the Black-Scholes option pricing model and recorded a debt discount of $1,214 which will be amortized over the term of the November 2018 GH Note. $126 of the debt discount was amortized during for the year ended December 31, 2018.

 

Warrants Issued into Escrow

 

Golisano Escrow Warrants

In connection with the Golisano LLC January 2016 Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock at an exercise price of $0.01 per share (the “January 2016 Golisano Warrant”). The January 2016 Golisano Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the related note agreement). We have reserved 1,136,363 shares of the Company’s common stock for issuance under the January 2016 Golisano Warrant. The January 2016 Golisano Warrant, if exercisable, expires on February 28, 2022. The January 2016 Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

 

In connection with the Golisano LLC March 2016 Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 3,181,816 shares of the Company’s common stock at an exercise price of $0.01 per share (the “March 2016 Golisano Warrant”). The March 2016 Golisano Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the related promissory note and any accrued and unpaid interest thereon as of March 21, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the related note agreement). We have reserved 3,181,816 shares of the Company’s common stock for issuance under the March 2016 Golisano Warrant. The March 2016 Golisano Warrant, if exercisable, expires on March 21, 2022. The March 2016 Golisano Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

 

In connection with the Golisano LLC July 2016 Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 2,168,178 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “Golisano July 2016 Warrant”). The Golisano July 2016 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano LLC July 2016 Note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Golisano LLC July 2016 Note). We have reserved 2,168,178 shares of the Company’s common stock for issuance under the Golisano July 2016 Warrant. The Golisano July 2016 Warrant, if exercisable, expires on July 21, 2022. The Golisano July 2016 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

 

In connection with the Golisano LLC December 2016 Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “Golisano December 2016 Warrant”). The Golisano December 2016 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano LLC December 2016 Note and any accrued and unpaid interest thereon as of December 30, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Golisano LLC December 2016 note). We have reserved 1,136,363 shares of the Company’s common stock for issuance under the Golisano December 2016 Warrant. The Golisano December 2016 Warrant, if exercisable, expires on December 30, 2022. The Golisano December 2016 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

 

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In connection with the Golisano LLC March 2017 Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 1,484,847 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “Golisano March 2017 Warrant”). The Golisano March 2017 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Golisano LLC the entire unamortized principal amount of the Golisano LLC March 2017 Note and any accrued and unpaid interest thereon as of December 30, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the Golisano LLC March 2017 Note). We have reserved 1,484,847 shares of the Company’s common stock for issuance under the Golisano March 2017 Warrant. The Golisano March 2017 Warrant, if exercisable, expires on March 14, 2023. The Golisano March 2017 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

 

In connection with the Golisano LLC, February 2018 Note, we issued into escrow in the name of Golisano LLC a warrant to purchase an aggregate of 1,818,182 shares of the Company’s common stock at an exercise price of $0.01 per share (the "Golisano 2018 Warrant"). The Golisano 2018 Warrant will not be released from escrow or be exercisable unless and until the Company fails to pay Golisano LLC the entire unamortized principal amount of the Golisano LLC, February 2018 note and any accrued and unpaid interest thereon as of February 6, 2021, or such earlier date as is required pursuant to an acceleration notice. The Company has reserved 1,818,182 shares of the Company’s common stock for issuance under the Golisano 2018 Warrant. The Golisano 2018 Warrant expires on February 6, 2024.

 

We previously entered into a registration rights agreement with Golisano LLC, dated as of October 5, 2015 (the “Registration Rights Agreement”), granting Golisano LLC certain registration rights for certain shares of the Company’s common stock. The shares of common stock issuable pursuant to the above Golisano LLC warrants are also entitled to the benefits of the Registration Rights Agreement.

 

GH Escrow Warrants

In connection with a January 2016 GH Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock at an exercise price of $0.01 per share (the “January 2016 GH Warrant”). The January 2016 GH Warrant will not be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the January 2016 GH Promissory Note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the January 2016 GH Promissory Note). We have reserved 1,136,363 shares of the Company’s common stock for issuance under the January 2016 GH Warrant. The January 2016 GH Warrant, if exercisable, expires on February 28, 2022. The January 2016 GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

 

In connection with a March 2016 GH Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 3,181,816 shares of the Company’s common stock at an exercise price of $0.01 per share (the “March 2016 GH Warrant”). The March 2016 GH Warrant will not be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the March 2016 GH Note and any accrued and unpaid interest thereon as of March 21, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the March 2016 GH Note). We have reserved 3,181,816 shares of the Company’s common stock for issuance under the March 2016 GH Warrant. The March 2016 GH Warrant, if exercisable, expires on March 21, 2022. The March 2016 GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

 

In connection with the December 2016 GH Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 1,136,363 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “December 2016 GH Warrant”). The December 2016 GH Warrant will not be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the December 2016 GH Note and any accrued and unpaid interest thereon as of December 30, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the December 2016 GH Note). We have reserved 1,136,363 shares of common stock for issuance under the December 2016 GH Warrant. The December 2016 GH Warrant, if exercisable, expires on December 30, 2022. The December 2016 GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

 

65

 

 

In connection with the GH August 2017 Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 1,363,636 shares of the Company’s common stock, at an exercise price of $0.01 per share (the “August 2017 GH Warrant”). The August 2017 GH Warrant will not be released from escrow or be exercisable unless and until we fail to pay GH the entire unamortized principal amount of the August 2017 GH Note and any accrued and unpaid interest thereon as of August 29, 2020 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the August 2017 GH Note). We have reserved 1,363,636 shares of common stock for issuance under the August 2017 GH Warrant. The August 2017 GH Warrant, if exercisable, expires on August 30, 2023. The August 2017 GH Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets.

 

In connection with the GH February 2018 Secured Promissory Note, we issued into escrow in the name of GH a warrant to purchase an aggregate of 1,818,182 shares of the Company’s common stock at an exercise price of $0.01 per share (the "February 2018 GH Warrant"). The February 2018 GH Warrant will not be released from escrow or be exercisable unless and until the Company fails to pay GH the entire unamortized principal amount of the note and any accrued and unpaid interest thereon as of February 6, 2021, or such earlier date as is required pursuant to an acceleration notice. The Company has reserved 1,818,182 shares of the Company’s common stock for issuance under the February 2018 GH Warrant. The February 2018 GH Warrant expires on February 6, 2024.

 

JL-US Escrow Warrant

In connection with an April 5, 2016 Unsecured Promissory Note, we issued into escrow in the name of JL-US a warrant to purchase an aggregate of 227,273 shares of the Company’s common stock at an exercise price of $0.01 per share (the “JL-US Warrant”). The JL-US Warrant will not be released from escrow or be exercisable unless and until we fail to pay JL-US the entire unamortized principal amount of the JL-US Note and any accrued and unpaid interest thereon as of March 21, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the JL-US Note). We have reserved 227,273 shares of the Company’s common stock for issuance under the JL-US Warrant. The JL-US Warrant, if exercisable, expires on March 21, 2022. The JL-US Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets. This warrant expired as a result of payment of the April 5, 2016 Unsecured Promissory Note in full on March 21, 2019. (See also Subsequent Events in Note 13)

 

Little Harbor Escrow Warrant

The LH Delayed Draw Note provides that we issue into escrow in the name of Little Harbor a warrant to purchase an aggregate of 2,168,178 shares of common stock at an exercise price of $0.01 per share (the “Little Harbor July 2016 Warrant”). The Little Harbor July 2016 Warrant will not be released from escrow or be exercisable unless and until we fail to pay Little Harbor the entire unamortized principal amount of the LH Delayed Draw Note and any accrued and unpaid interest thereon as of January 28, 2019 or such earlier date as is required pursuant to an Acceleration Notice (as defined in the LH Delayed Draw Note). We have reserved 2,168,178 shares of the Company’s common stock for issuance under the Little Harbor July 2016 Warrant. The Little Harbor July 2016 Warrant, if exercisable, expires on July 21, 2022. The Little Harbor July 2016 Warrant is also subject to customary adjustments upon any recapitalization, capital reorganization or reclassification, consolidation, merger or transfer of all or substantially all of our assets. The Little Harbor July 2016 Warrant grants Little Harbor certain registration rights for the shares of the Company’s common stock issuable upon exercise of the Little Harbor July 2016 Warrant.

   

 

NOTE 8 – DERIVATIVE LIABILITIES

 

We have recorded the estimated fair value of the warrants as of the date of issuance. Due to the variable terms of the warrant agreements, the warrants are recorded as derivative liabilities with a corresponding charge to our consolidated statements of operations for changes in the estimated fair value of the warrants from the date of issuance to each balance sheet reporting date. As of December 31, 2018, we have estimated the total fair value of the derivative liabilities to be $4,359 as compared to $6,791 as of December 31, 2017. We had the following activity in our derivative liabilities account since December 31, 2016:

 

Derivative liabilities at January 1, 2017

  $ 6,455  

Loss on change in fair value of derivative liabilities

    336  

Derivative liabilities at December 31, 2017

    6,791  
         

Gain on change in fair value of derivative liabilities

    (2,432

)

Derivative liabilities at December 31, 2018

  $ 4,359  

 

The value of the derivative liabilities is generally estimated using an options lattice model with multiple inputs and assumptions, including the market price of the Company’s common stock, stock price volatility and other assumptions to project EBITDA and other reset events. These inputs and assumptions are subject to management’s judgment and can vary materially from period to period.

 

 

  NOTE 9 – STOCKHOLDERS’ DEFICIT

 

Preferred Stock

The Company has authorized 500,000,000 shares of preferred stock with a par value of $0.001 per share. No shares of the preferred stock have been issued.

 

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Twinlab Consolidation Corporation 2013 Stock Incentive Plan

The only equity compensation plan currently in effect is the Twinlab Consolidation Corporation 2013 Stock Incentive Plan (the “TCC Plan”), which was assumed by the Company on September 16, 2014. The TCC Plan originally established a pool of 20,000,000 shares of common stock for issuance as incentive awards to employees for the purposes of attracting and retaining qualified employees who will aid in the success of the Company. From January through December 2015, the Company granted restricted stock units to certain employees of the Company pursuant to the TCC Plan. Each restricted stock unit relates to one share of the Company’s common stock. The restricted stock unit awards vest 25% each annually on various dates through 2019. The Company estimated the grant date fair market value per share of the restricted stock units and is amortizing the total estimated grant date value over the vesting periods.  During 2018, there were 1,202,095 shares of common stock issued to employees pursuant to the vesting of restricted stock units. As of December 31, 2018, 7,194,412 shares remain available for use in the TCC Plan.

 

Common Stock Repurchase

On January 5, 2017, pursuant to a repurchase agreement, 642,366 shares of the Company’s common stock were repurchased for an aggregate repurchase price of less than $1.

 

Stock Subscription Receivable

At December 31, 2018, the stock subscription receivable dated August 1, 2014 for the purchase of 1,528,384 shares of the Company’s common stock had a principal balance of $30 and bears interest at an annual rate of 5%.

  

 

NOTE 10 - INCOME TAXES

 

Income tax (provision) benefit consisted of the following for the years ended December 31, 2018 and 2017 as follows:

 

   

December 31,

   

December 31,

 
   

201 8

   

201 7

 

Current:

               

State

  $ (29

)

  $ (16

)

Total current expense

    (29

)

    (16

)

                 

Deferred:

               

Federal

    3,641       (22,899

)

State

    2,264       2,064  

Change in valuation allowance

    (5,905

)

    21,794  

Total deferred benefit (expense)

    -       959  
                 

Total income tax benefit (provision)

  $ (29

)

  $ 943  

 

 

The income tax benefit (provision) differs from the amount computed at federal statutory rates for the years ended December 31, 2018 and 2017 as follows:

 

   

December 31,

   

December 31,

 
   

201 8

   

201 7

 

Income tax benefit at statutory rate

  $ 4,280     $ 10,218  
                 

State income taxes (net of federal benefit)

    1,363       1,143  

Interest expense

    (264

)

    (427

)

Equity-based expenses

    383       (138

)

Adjustment to state net operating loss carryforward

    -       (1,750

)

Adjustment to book/tax difference in asset bases

    -       (1,599

)

Change in valuation allowance

    (5,905

)

    21,794  

Tax rate change

    159       (28,549

)

Other

    (45

)

    251  
                 

Income tax (provision) benefit

  $ (29

)

  $ 943  

 

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Deferred tax assets are comprised of the following at December 31, 2018 and 2017:

 

Deferred tax assets:

               

Accruals and reserves

  $ 4,011     $ 2,366  

Deferred revenue

    418       452  

Net operating loss carryforwards

    53,167       49,245  

Depreciation and amortization

    1,383       1,450  

Indefinite lived intangible assets

    271       812  

Other

    2,184       1,204  

Gross deferred tax assets

    61,434       55,529  

Less: valuation allowance

    (61,434

)

    (55,529

)

                 

Net deferred tax assets

  $ -     $ -  

 

 

As a result of recurring operating losses, we have recorded a full valuation allowance against our net deferred income tax assets as of December 31, 2018 and 2017, as management was unable to conclude that it is more likely than not that the deferred income tax assets will be realized. During the years ended December 31, 2018 and 2017, the valuation allowance on deferred income tax assets increased by $5,905 and decreased by $21,794, respectively.

 

We had federal net operating loss carryforwards of approximately $220,000 and state net operating loss carryforwards of approximately $141,000 at December 31, 2018, which are available to reduce future federal and state taxable income. The federal and state net operating loss carryforwards expire from 2022 through 2038. If substantial changes in our ownership should occur, there would be an annual limitation of the amount of the net operating loss carryforwards which could be utilized.

 

We perform a review of our material tax positions in accordance with recognition and measurement standards established by authoritative accounting literature, which requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position.  If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.  Based upon our review and evaluation, during the years ended December 31, 2018 and 2017, we concluded that we had no unrecognized tax benefit that would affect our effective tax rate if recognized.

 

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted. The legislation significantly revises the U.S. corporate income tax system by, among other things, lowering corporate income tax rates from 35% to 21%, introducing new limitations on interest expense, subjecting foreign earnings in excess of an allowable return to U.S. taxation, adopting a territorial tax regime and imposing a one-time transitional tax on deemed repatriated earnings of foreign subsidiaries.

As a result of the enactment of the Tax Act, the Company’s deferred tax assets and liabilities were revalued at the lower federal income tax rate. Because the Company is in a full valuation allowance position, no deferred tax expense related to the Tax Act was recorded.

 

The Company is subject to audit by the IRS and various states for tax years dating back to 2014. No federal or state tax return are currently under audit. 

  

 

N OTE 11 - COMMITMENTS AND CONTINGENCIES

 

Litigation

 

From time to time, the Company and its subsidiaries are parties to litigation arising in the ordinary course of business operations. Such litigation primarily involves claims for personal injury, property damage, breach of contract and claims involving employee relations and certain administrative proceedings. Based on current information, we believe that the ultimate conclusion of the various pending litigation matters, in the aggregate, will not have a material adverse effect on our consolidated financial position, results of operations and cash flows and liquidity.

  

Leases

 

We have operating leases for certain factory, warehouse, office space, and machinery and equipment. Certain leases provide for payment of real estate taxes, common area maintenance, insurance and certain other expenses. Lease terms may have escalating rent provisions and rent holidays that are expensed on a straight-line basis over the term of the lease and expire at various dates through 2028. Certain rent expenditures are made on a month-to-month basis as the underlying operating lease has expired. Total rental expense for operating leases was $1,778 and $1,831 for the years ended December 31, 2018 and 2017, respectively.

 

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The future minimum lease payments in the aggregate are as follows:

 

   

Operating

 

Years Ending December 31,

 

Leases

 
         

2019

  $ 2,036  

2020

    2,069  

2021

    1,933  

2022

    1,841  

2023

    1,941  

Thereafter

    7,048  
         
    $ 16,868  

 

St. Petersburg Office Lease Agreement

 

On April 7, 2015, we entered into an Office Lease Agreement (the "Lease") for premises in St. Petersburg, Florida (the "Building"). The term of the Lease is for twelve years, commencing on May 1, 2015 and ending on April 30, 2027.

 

We initially leased the fifth floor of the Building (“Initial Premises”) and were required to expand the Initial Premises to include the sixth floor of the Building (“Expansion Premises”) between February 1, 2016 and October 31, 2016, upon notice to the landlord and provided that the landlord is not obligated to deliver the Expansion Premises unless we then have a traded market capitalization of $50,000 or more for the immediately preceding thirty days prior to the date of notice (“Market Cap Test”).

 

On November 30, 2016, both parties agreed to delay the planned improvements for the 6th floor of the Building to allow us the opportunity to obtain potential subtenants. Additionally, both parties agreed that the Initial Premises rent commencement date occurred on May 1, 2016, the Expansion Premises commencement date occurred on October 1, 2016 and our obligation to pay rent commenced on October 1, 2016. The aggregate amount of rent to be paid over the term of the Lease is $4,466 for the Initial Premises. In the event that we lease the Expansion Premises, rent for the Expansion Premises will be paid at the same rental rate payable for the Initial Premises and, if leased by us at the earliest date available under the Lease, will result in additional payments of up to approximately $4,552 over the term of the Lease.

 

The Lease required us to deposit a $1,000 security deposit with the landlord, payable July 1, 2015. If on May 1, 2018 (or on any subsequent May 1st during the term of the Lease), we satisfy the Market Cap Test, the landlord is required to return the entire security deposit to the Company. On April 30, 2015, the Company and a current institutional investor and lender entered into a Reimbursement Agreement pursuant to which the investor agreed to arrange for and provide an unconditional, irrevocable, transferable, and negotiable commercial letter of credit to serve as the security deposit.

 

On November 30, 2016, we entered into a sublease agreement for the 5th floor of the Building with Powerchord, Inc. (“Subtenant”). The term commenced on February 1, 2017 and expires on June 30, 2022. We granted an option to renew the subleased space for the period July 1, 2022 through April 29, 2027. Subtenant will pay us an aggregate of $2,005 over the term of the agreement and an aggregate of $2,133 in the event of lease renewal. The Subtenant has delivered an irrevocable letter of credit in the amount of $100 to secure its performance under the sublease agreement. In the event Subtenant exercises its option for renewal, Subtenant must secure its performance under the renewed sublease agreement by delivering an amended Letter of Credit or a new letter of credit.

 

Employee Agreements

 

We have entered into employment agreements with certain members of management. The terms of each agreement are different. However, one or all of these agreements include stipulated base salary, bonus potential, vacation benefits, severance and non-competition agreements.

   

Platinum Advisory Services LLC Agreement

 

On December 27, 2017, we entered into an agreement for equity in exchange for services with Platinum Advisory Services LLC (“Platinum”). Pursuant to the agreement, we will issue from time to time shares of the Company’s common stock with an aggregate purchase price of $3,000 in exchange for payment in-kind consisting of the provision of media support and services performed by Platinum or its affiliates.

 

69

 

 

On June 6, 2018, the Company issued 4,166,667 shares of common stock to Platinum in accordance with the terms of the equity in exchange for services agreement that the parties entered into on December 27, 2017, wherein the Company received, or will receive, advertising services in exchange for the shares.

  

 

NOTE 12 - RELATED PARTY TRANSACTIONS

 

See Note 6 for discussion of notes payable to related parties Little Harbor, GH, and Golisano LLC. In addition, Little Harbor, GH, and Golisano LLC were also issued warrants to purchase shares of the Company’s common stock, as discussed in Note 7.

 

Also discussed in Note 6 are certain loan guarantees made jointly and severally by related party Essex and its owner, Ralph Ianelli who was a director of the company until January 22, 2018. See also Note 6 for discussion of operating leases with Essex, the 2015 purchase by Essex of certain machinery and equipment from us, and the lease back to use of same assets.

 

We had sales of $5,161 and $3,103 in 2018 and 2017, respectively, to an entity whose board of directors includes an individual who is also a member of the Company's board of directors. Such sales were made to this related party on the same terms that would have been obtained by an unrelated party.

   

 

NOTE 13 – SUBSEQUENT EVENTS

 

Debt Agreements

 

July 2016 Note Payable to Little Harbor, LLC

On January 28, 2019, the Company issued an amendment to the LH Delayed Draw Note extending the maturity date of this note to June 30, 2019.

 

January 2016 Note Payable to Great Harbor Capital, LLC

On January 28, 2019, the Company issued an amendment to the January 2016 GH Promissory Note extending the maturity date of this note to June 30, 2019.

 

March 2016 Note Payable to Great Harbor Capital, LLC

On January 28, 2019, the Company issued an amendment to the March 2016 GH Note extending the maturity date of this note to June 30, 2019.

 

January 2016 Note Payable to Golisano Holdings LLC

On January 28, 2019, the Company issued an amendment to the Golisano LLC January 2016 Note extending the maturity date of this note to June 30, 2019.

 

March 2016 Note Payable to Golisano Holdings LLC

On January 28, 2019, the Company issued an amendment to the Golisano LLC March 2016 Note extending the maturity date of this note to June 30, 2019.

 

July 2016 Note Payable to Golisano Holdings LLC

On January 28, 2019, the Company issued an amendment to the Golisano LLC July 2016 Note extending the maturity date of this note to June 30, 2019.

 

April 2016 Note Payable to JL-Utah Sub, LLC

In March 2019, payment of the Unsecured Promissory Note, JL-Utah Sub, LLC was satisfied in full. The subsequent warrant (Warrant 2016-25) that issued in conjunction with this note, expired as the result of payment of the note in full.

 

JL-Utah Sub Escrowed Warrant

This warrant (Warrant 2016-25) which was issued in conjunction with the April 2016 Note Payble to JL-Utah Sub. That note was satisfied in full on March 21, 2019. This warrant expired as the result of payment of the note in full.

 

Senior Credit Facility

On January 22, 2019, the Company and its direct and indirect wholly owned subsidiaries, TCC, THI, Twinlab Corporation, ISI, NutraScience, NutraScience Labs IP Corporation ("NSLIP"), Organic Holdings, Reserve Life Organics, LLC ("Reserve"), Resvitale, LLC ("Resvitale"), Re-Body, LLC ("Re-Body"), Innovitamin Organics, LLC ("Innovitamin"), Organics Management LLC ("Organics Mgmt."), Cocoawell, LLC ("Cocoawell"), Fembody, LLC ("Fembody"), Reserve Life Nutrition, L.L.C. ("Reserve Life"), Innovita Speciality Distribution, LLC ("Innovita") and Joie Essance, LLC ("Joie" and with the Company, TCC, THI, Twinlab Corporation, ISI, NutraScience, NSLIP, Organic Holdings, Reserve, Resvitale, Re-Body, Innovitamin, Organics Mgmt., Cocoawell, Fembody, Reserve Life and Innovita, collectively, the "Twinlab Companies") and MidCap entered into Amendment Sixteen to the Credit and Security Agreement (the "MidCap Sixteenth Amendment"). The MidCap Sixteenth Amendment reduced the Revolving Loan Commitment Amount (as defined in the Sixteenth Amendment) from a total of $17,000 to a total of $5,000 and extended the expiration date from January 22, 2019 to April 22, 2019. Additionally, the Company issued the Third Amended and Restated Revolving Loan Note (the “Midcap Revolver Note”) in favor of MidCap, pursuant to which MidCap will loan the Company up to a principal amount of $5,000 pursuant to the credit agreement as modified by the MidCap Sixteenth Amendment.

 

70

 

 

On February 6, 2019, the Midcap Warrant 2 expired, unexercised.

 

Changes in Directors

 

On March 27, 2019, Mr. Mark Bugge resigned from the Company’s Board of Directors.

 

 

71

 

Exhibit 10.182

 

THIS NOTE IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT (GREAT HARBOR SECURED DEBT) DATED AS OF AUGUST 30, 2017 IN FAVOR OF MIDCAP FUNDING X TRUST, A DELAWARE STATUTORY TRUST, AS ADMINISTRATIVE AGENT, WHICH SUBORDINATION AGREEMENT (GREAT HARBOR SECURED DEBT) (AS AMENDED IN ACCORDANCE WITH ITS TERMS) IS INCORPORATED HEREIN BY REFERENCE (THE "MIDCAP SUBORDINATION AGREEMENT").

 

THIS NOTE IS SUBJECT TO THE TERMS OF AN INTERCREDITOR AGREEMENT, DATED AS OF FEBRUARY 6, 2018, BETWEEN HOLDER AND GOLISANO HOLDINGS LLC, A NEW YORK LIMITED LIABILITY COMPANY, WHICH INTERCREDITOR AGREEMENT (AS AMENDED IN ACCORDANCE WITH ITS TERMS) IS INCORPORATED HEREIN BY REFERENCE.

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION THEREFROM.

 

SECURED PROMISSORY NOTE

 

$4,000,000 November 5, 2018

 

FOR VALUE RECEIVED, the undersigned, TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (" TCHI "), TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation, TWINLAB HOLDINGS, INC., a Michigan corporation, ISI BRANDS INC., a Michigan corporation, TWINLAB CORPORATION, a Delaware corporation, NUTRASCIENCE LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION, a Delaware corporation, ORGANIC HOLDINGS LLC, a Delaware limited liability company, RESERVE LIFE ORGANICS, LLC, a Delaware limited liability company, RESVITALE, LLC, a Delaware limited liability company, RE-BODY, LLC, a Delaware limited liability company, INNOVITAMIN ORGANICS, LLC, a Delaware limited liability company, ORGANICS MANAGEMENT LLC, a Delaware limited liability company, COCOAWELL, LLC, a Delaware limited liability company, FEMBODY, LLC, a Delaware limited liability company, RESERVE LIFE NUTRITION, L.L.C., a Delaware limited liability company, INNOVITA SPECIALTY DISTRIBUTION LLC, a Delaware limited liability company, and JOIE ESSANCE, LLC, a Delaware limited liability company (collectively as " Maker "), promises to pay to GREAT HARBOR CAPITAL, LLC, a Delaware limited liability company (" Holder "), the principal sum of FOUR MILLION DOLLARS AND NO CENTS ($4,000,000.00), together with interest on the unpaid principal balance of this Secured Promissory Note (this " Note ") from time to time outstanding until paid in full, in lawful money of the United States of America. This Note shall mature and be due and payable by Maker on November 5, 2020 (the " Maturity Date ") or, if such day is not a Business Day, then the next succeeding Business Day. Capitalized terms used herein and not otherwise defined are set forth in Section 3.12 hereof.

 

 


* Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

 

 

ARTICLE I

TERMS AND CONDITIONS

 

1.01      Payment of Principal and Accrued Interest .

 

a.     Interest shall accrue on the outstanding principal amount of this Note at eight and one-half percent (8.5%) per annum (the " Interest Rate "). Interest shall be computed hereunder based on a 360-day year. Interest shall be payable monthly on the 1st day of each month, with the first interest payment due December 1, 2018.

 

b.     If not paid sooner under this Section 1.01 or otherwise, the principal amount of this Note together with all accrued and unpaid interest thereon shall be due and payable on the Maturity Date.

 

c.     Subject to the MidCap Subordination Agreement and MidCap Credit Agreement, when any Maker consummates any Special Asset Disposition ([          ]), such Maker will use the Net Cash Proceeds of such Special Asset Disposition to pay any accrued and unpaid interest under this Note and any other note subject to the Intercreditor Agreement, such payment to be made promptly but in no event more than three (3) business days following receipt of such Net Cash Proceeds and until the date of payment, such proceeds shall be held in trust for the Holder and the holder of any other note subject to the Intercreditor Agreement.

 

d.     Subject to the MidCap Subordination Agreement and MidCap Credit Agreement, when any Maker [          ], such Maker will use the Net Cash Proceeds of such sale to pay the accrued and unpaid interest and outstanding principal under this Note, such payment to be made directly [          ] upon consummation of such sale. Any Net Cash Proceeds in excess of the amount due to pay all accrued and unpaid interest and outstanding principal on this Note may be remitted to any other secured lender of Maker or to Maker, as the case may be.

 

1.02      Prepayment .

 

a.     The principal amount of this Note may be prepaid, in whole or in part, at any time and from time to time, together with accrued and unpaid interest to the date of such prepayment on the amount so prepaid, without premium or penalty. Any partial prepayment of principal made after the Maturity Date shall be applied as follows: first, to the payment of accrued interest; and second, to the payment of principal.

 

b.     Upon any partial prepayment, at the request of either Maker or Holder, Exhibit A shall be updated by Holder to reflect such payment. In the event that this Note is prepaid in its entirety, this Note shall be surrendered to Maker for cancellation as a condition to any such prepayment.

 

1.03      Payments Only on Business Days . Payments hereunder shall be made only on a Business Day. Any payment hereunder which, but for this Section 1.0 3 , would be payable on a day which is not a Business Day, shall instead be due and payable on the next succeeding Business Day.

 

2

 

 

1.04      Conversion of Note to Equity . If and upon terms and conditions approved by the Disinterested Members (as defined below) of TCHI's Board of Directors and execution of definitive documents mutually agreed upon by the parties, Holder shall have the right the convert the then outstanding principal and accrued interest due to Holder under this Note into the common stock, par value $0.001 per share, of Twinlab Consolidated Holdings, Inc. For purposes of this provision, and solely with respect to the approval of the terms and conditions of conversion pursuant to this Section 1.04 , the " Disinterested Members " of TCHI’s Board of Directors shall mean those directors other than David Van Andel, Mark Bugge, and any director appointed by Holder pursuant to that certain Voting Agreement in favor of Holder, dated October 2, 2015.

 

1.05      Warrant . Concurrently herewith, TCHI has issued the Warrant to Holder. The issuance of the Warrant is additional consideration for Holder making the loan to Maker and is not, nor shall it be deemed to be, made in lieu of or to otherwise reduce or limit in any way Maker’s payment obligations under this Note or be deemed or construed as a limitation on any other rights or remedies that Holder may have hereunder, at law or in equity, or otherwise.

 

ARTICLE II
DEFAULTS

 

2.01      Events of Default . Each of the following shall constitute an " Event of Default " under this Note:

 

a.     failure by Maker to make any interest payment required under this Note when the same shall become due and payable (whether at maturity, by acceleration or otherwise) and the continuation of such failure for a period of fifteen (15) Business Days following notice thereof; or

 

b.     failure by Maker to make any payments of principal required under this Note when the same shall become due and payable (whether at maturity, by acceleration or otherwise) and the continuation of such failure for a period of fifteen (15) Business Days following notice thereof; or

 

c.     the occurrence of an event of default under any of the Loan Documents and the continuation of such failure for a period of fifteen (15) Business Days following notice thereof;

 

d.     the occurrence of (x)(i) a default or an event of default with respect to any indebtedness of Maker for borrowed money that accrues interest, including, but not limited to Midcap, JL Properties, JL-US, the Holder, Golisano Holdings, and Little Harbor and (ii) such indebtedness is accelerated by the creditor or (y) the non-payment of indebtedness of Maker for borrowed money at its scheduled final maturity (including any extension or refinancings thereof); or

 

e.     Maker, pursuant to or within the meaning of any Bankruptcy Law (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against it in an involuntary case or proceeding; (iii) consents to the appointment of a custodian of it or for all or any substantial portion of its property or assets; or (iv) makes a general assignment for the benefit of its creditors;

 

3

 

 

f.     an involuntary case or proceeding is commenced against Maker under any Bankruptcy Law and is not dismissed, bonded or discharged within sixty (60) days thereafter, or a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Maker in an involuntary case or proceeding; (ii) appoints a custodian of Maker or for all or substantially all of its properties; or (iii) orders the liquidation of Maker; and in each case the order or decree remains unstayed and in effect for sixty (60) days; or

 

g.    [          ]

 

If an Event of Default occurs, the Interest Rate shall equal fifteen percent (15%) per annum from and after the date of such Event of Default until the date upon which this Note is repaid in full. If an Event of Default occurs, Holder may, at its option, declare, by notice in writing to Maker (the " Acceleration Notice "), the entire principal amount of this Note (and any accrued and unpaid interest thereon) to be immediately due and payable and upon any such declaration such principal and interest shall become and be forthwith due and payable without any further notice, presentment, protest, or demand of any kind, all of which are hereby expressly waived by Maker. If an Event of Default specified in Section s 2.01( d ) or 2.01( e ) hereof occurs, the principal amount of this Note (and any accrued and unpaid interest thereon) shall become due and payable immediately without any declaration or other act on the part of Holder. If any Event of Default shall have occurred, Holder may proceed to protect and enforce its rights either by suit in equity or by action at law, or both, whether for specific performance of any provision of this Note or in aid of the exercise of any power granted to Holder under this Note.

 

ARTICLE III
MISCELLANEOUS

 

3.01      No Waiver: Amendment . Maker hereby waives presentment, demand for payment, notice of dishonor, notice of protest and all other notices or demands in connection with the delivery, acceptance, performance or default of this Note. No delay by Holder in exercising any power or right hereunder shall operate as a waiver of any power or right, nor shall any single or partial exercise of any power or right preclude other or further exercise thereof, or the exercise of any other power or right hereunder or otherwise; and no waiver whatsoever or modification of the terms hereof, including but not limited to an extension of the time for the payment of this Note or any installment due hereunder, shall be valid unless set forth in writing by Holder. This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. No modifications or amendments made by agreement with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the liability of Maker under this Note, either in whole or in part unless Holder agrees otherwise in writing.

 

3.02      Limit of Validity . The provisions of this Note are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of demand or acceleration of the maturity of this Note or otherwise, shall the amount paid, or agreed to be paid to Holder for the use, forbearance or retention of money under this Note (" Interest ") exceed the maximum amount permissible under applicable law. If, from any circumstance whatsoever, performance or fulfillment of any provision hereof or of any agreement between Maker and Holder shall, at the time performance or fulfillment of such provision shall be due, exceed the limit for Interest prescribed by law or otherwise transcend the limit of validity prescribed by applicable law, then ipso facto the obligation to be performed or fulfilled shall be reduced to such limit and if, from any circumstance whatsoever, Holder shall ever receive anything of value deemed Interest by applicable law in excess of the maximum lawful amount, an amount equal to any excessive Interest shall be applied to the reduction of the principal amount owing under this Note (whether or not then due) or at the option of Holder be paid over to Maker, and not to the payment of Interest. All Interest (including any amounts or payments deemed to be Interest) paid or agreed to be paid to Holder shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full period until payment in full of the principal amount of this Note so that the Interest thereof for such full period will not exceed the maximum amount permitted by applicable law.

 

4

 

 

3.03      Arm's Length Agreement . This Agreement has been negotiated and prepared at the mutual request, direction and construction of Holder and Maker, at arm's length, with the advice and participation of counsel, and will be interpreted in accordance with its terms without favor to any party.

 

3.04      Governing Law . This Note shall be interpreted, construed and enforced according to the substantive laws of the State of New York, without giving effect to principles of conflicts of law.

 

3.05      Judicial Proceedings . All judicial proceedings brought against Maker arising out of or relating to this Note may be brought in the Federal courts of the United States of America or the courts of the State of New York, in each case, located in Monroe County, New York, and by execution and delivery of this Note, Maker accepts for itself and in connection with its properties, generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts and waives any defense of forum non conveniens and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Note. Maker hereby agrees that service of all process in any such proceeding in any such court may be made by registered or certified mail, return receipt requested, to Maker at its address set forth in Section 3.06 , such service being hereby acknowledged by Maker to be sufficient for personal jurisdiction in any action against Maker in any such court and to be otherwise effective and binding service in every respect. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of Holder to bring proceedings against Maker in the courts of any other jurisdiction.

 

3.06      Notices . Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, electronic mail or registered or certified mail, postage prepaid, return receipt requested:

 

a.     If to Maker, to:

 

Twinlab Consolidated Holdings, Inc.

4800 T-Rex Avenue
Suite 305
Boca Raton, Florida 33431
Attention: Carla Goffstein, Interim Chief Financial Officer

e-mail: cgoffstein@twinlab.com

 

5

 

 

b.     If to Holder, to:

 

Great Harbor Capital, LLC

3133 Orchard Vista Drive SE

Grand Rapids, MI 49546

Attention: Mark J. Bugge, Secretary

Facsimile: (616) 808-2721

e-mail: Mark.Bugge@vaegr.com

 

3.07      Assignment and Transfer; Covenant . Neither this Note nor any interest herein shall be assigned, transferred, pledged or otherwise disposed of, through liquidation or otherwise (any of the foregoing, a " Transfer "), in whole or in part, by Maker without the express prior written consent of Holder. Any attempted assignment of this Note by Maker in violation of this restriction shall be void.

 

3.08      Replacement of Notes . Upon receipt by Maker of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note, and (in case of loss, theft or destruction) of an indemnity reasonably satisfactory to it, and upon surrender and cancellation of this Note, if mutilated, Maker will deliver a new Note, or like tenor in lieu of this Note, payable to Holder, in the same principal amount as the unpaid principal amount of this Note and bearing interest at the same Interest Rate as this Note. Any Note delivered in accordance with the provisions of this Section 3.08 shall be dated as of the date of this Note.

 

3.09      Successors and Assigns . The respective rights and obligations of Maker and Holder shall be binding upon and inure to the benefit of their respective successors and permitted assigns.

 

3.10      Collection Costs . If any amount due under this Note is not paid at the earlier of (i) the due date hereunder or (ii) at acceleration of maturity as herein provided and is placed in the hands of an attorney for collection, or if it is collected through bankruptcy, probate or other court after maturity or the acceleration thereof, Maker shall pay all reasonable attorneys’ fees and collection costs of Holder incurred with respect to the collection of amounts due under this Note promptly on the demand of Holder.

 

3.11      Security . The indebtedness evidenced by this Note and any extensions, renewals or modifications of such indebtedness is secured by any and all mortgages, security agreements, guaranties and other security documents now or hereafter in effect as security for this Note (collectively, the " Loan Documents ").

 

Definitions . The following terms have the following meanings:

 

" Acceleration Notice " shall have the meaning set forth in Section 2.01 .

 

" Bankruptcy Law " means Title 11, United States Code, or any similar federal, state or foreign law for the relief of debtors or any arrangement, reorganization, assignment for the benefit of creditors or any other marshalling of the assets and liabilities of Maker.

 

" Business Day " means each day other than Saturdays, Sundays and days when commercial banks are authorized or required by law to be closed for business in New York, New York.

 

6

 

 

" Disinterested Members " shall have the meaning set forth in Section 1.04 .

 

" Events of Default " shall have the meaning set forth in Section 2.01 .

 

" Event of Loss " means, with respect to any property, any of the following: (a) any loss, destruction or damage of such property or (b) any condemnation, seizure, or taking, by exercise of the power of eminent domain or otherwise, of such property, or confiscation of such property or the requisition of the use of such property.

 

" Golisano Holdings " shall mean Golisano Holdings LLC, a New York limited liability company.

 

" Holder " shall have the meaning set forth in the Preamble .

 

" Interest " shall have the meaning set forth in Section 3.02 .

 

" Interest Rate " shall have the meaning set forth in Section 1.0 1 (a) .

 

" JL Properties " shall mean JL Properties, Inc., an Alaska corporation.

 

" JL-US " shall mean JL-Utah Sub, LLC, an Alaska limited liability company.

 

" Little Harbor " shall mean Little Harbor, LLC, a Nevada limited liability company.

 

" Maker " shall have the meaning set forth in the Preamble .

 

" Maturity Date " shall have the meaning set forth in the Preamble .

 

" MidCap " means MidCap Funding X Trust, a Delaware statutory trust, its successors and assigns.

 

" MidCap Credit Agreement " means that certain Credit and Security Agreement dated as of January 22, 2015, among Maker as borrower, MidCap, as administrative agent for the lenders and individually as a lender, and the other financial institutions or other entities from time to time parties thereto, as lenders, as such agreement may, from time to time, be amended, restated, renewed, supplemented or otherwise modified.

 

" MidCap Subordination Agreement " shall have the meaning set forth in the Preamble .

 

[          ]

 

[          ]

 

[          ]

 

7

 

 

" Net Cash Proceeds " means, (a) with respect to any Special Asset Disposition ([          ]) by a person, cash and cash equivalent proceeds received by or for such person's account, net of (i) reasonable direct documented costs relating to such Special Asset Disposition, (ii) sale, use or other transactional taxes paid or payable by such person as a direct result of such Special Asset Disposition, (iii) the principal amount of any indebtedness which is secured by a prior perfected lien (other than in favor of MidCap, Golisano Holdings LLC or Great Harbor Capital, LLC) on the asset subject to such Special Asset Disposition and is required to be repaid in connection with such Special Asset Disposition and (iv) an amount required to be paid to MidCap such that the Revolving Loans Outstanding (as defined in the MidCap Credit Agreement) do not exceed the Revolving Loan Limit (as defined in the MidCap Credit Agreement); and (b) [          ] (i) reasonable direct documented costs [          ], (ii) sale, use or other transactional taxes paid or payable by such person [          ], (iii) the principal amount of any indebtedness which is secured by a prior perfected lien (other than in favor of MidCap, Great Harbor Capital, LLC and Golisano Holdings LLC) [          ] and is required to be repaid in connection [          ], (iv) an amount required to be paid to MidCap of 120% of the reduction in the Borrowing Base (as defined in the MidCap Credit Agreement) [          ] and (v) principal and interest due under that certain Secured Promissory Note, dated as of July 27, 2018, issued by Maker to Holder.

 

" Ordinary Course of Business " means, in respect of any transaction involving Maker, (a) the ordinary course of business of such Maker as conducted by such Maker in accordance with past practices or (b) with respect to a business that is the subject of acquisition permitted by the MidCap Credit Agreement, the ordinary course of such business in accordance with past practices prior to such acquisition.

 

" Special Asset Disposition " means any sale, lease, license, transfer, assignment or other consensual disposition by any Maker of any asset other than (a) dispositions of inventory in the Ordinary Course of Business or proceeds thereof and not pursuant to any bulk sale, (b) dispositions of furniture, fixtures and equipment in the Ordinary Course of Business that such Maker determines in good faith is no longer used or useful in the business of such Maker, (c) an Event of Loss, and/or (d) an offering of equity securities of a person or the issuance of any indebtedness by a person.

 

" Transfer " has the meaning set forth in Section 3.07 .

 

" Warrant " means Warrant No. 2018-26 in the form attached as Exhibit B to the Note.

 

 

 

[SIGNATURE PAGES FOLLOW]

 

8

 

 

IN WITNESS WHEREOF, Maker has executed this Note as of the date first above written.

 

 

MAKER:

TWINLAB CONSOLIDATION

CORPORATION

 

 

By:     /s/ Anthony Zolezzi                                   ( Seal)

Name: Anthony Zolezzi

Title:   Chief Executive Officer

   

TWINLAB CONSOLIDATED

HOLDINGS, INC.

 

 

By: /s/Anthony Zolezzi                                       (Seal)

Name: Anthony Zolezzi

Title:   Chief Executive Officer

TWINLAB HOLDINGS, INC.

 

 

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title:   Chief Executive Officer

   

TWINLAB CORPORATION

 

 

By: /s/Anthony Zolezzi                                       (Seal)

Name: Anthony Zolezzi

Title:   Chief Executive Officer

ISI BRANDS INC.

 

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title:   Chief Executive Officer

   

NUTRASCIENCE LABS, INC.

 

 

By: /s/Anthony Zolezzi                                       (Seal)

Name: Anthony Zolezzi

Title:   Chief Executive Officer

NUTRASCIENCE LABS IP CORPORATION

 

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title:   Chief Executive Officer

   

ORGANIC HOLDINGS LLC

 

 

By: /s/Anthony Zolezzi                                       (Seal)

Name: Anthony Zolezzi

Title:   Sole Manager

RESERVE LIFE ORGANICS, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title:   Sole Manager

 

 

[First Signature Page to Secured Promissory Note – November 2018 – Great Harbor]

 

 

 

RESVITALE, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

RE-BODY, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

   

INNOVITAMIN ORGANICS, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

ORGANICS MANAGEMENT LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

   

COCOAWELL, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

FEMBODY, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

   

RESERVE LIFE NUTRITION, L.L.C.

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

INNOVITA SPECIALTY DISTRIBUTION LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

 

 

[Second Signature Page to Secured Promissory Note – November 2018 – Great Harbor]

 

 

 

JOIE ESSANCE, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

 

 

 

 

#14056452

 

 

[Third Signature Page to Secured Promissory Note – November 2018 – Great Harbor]

 

 

 

ACKNOWLEDGED & AGREED

 

GREAT HARBOR CAPITAL, LLC

 

 

 

By:       /s/ Mark Bugge                                  

Name: Mark J. Bugge

Title: Secretary

 

 

 

 

EXHIBIT A

 

SCHEDULE OF PREPAYMENTS

 

 

 

 

EXHIBIT B

 

FORM OF WARRANT

 

Exhibit 10.183

 

THIS WARRANT AND THE EQUITY INTERESTS THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD OR TRANSFERRED, OR OFFERED FOR SALE OR TRANSFER, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION THEREUNDER OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

No. – 2018 – 26 November 5, 2018

 

Warrant

 

This Warrant (the " Warrant ") certifies that, for value received, GREAT HARBOR CAPITAL, LLC, and its permitted transferees, successors and assigns (the " Holder "), is entitled to purchase from TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (the " Company "), TWO MILLION (2,000,000) shares of common stock of the Company (subject to any adjustments pursuant to Section 3.3) issuable upon the full exercise of this Warrant at the purchase price of $0.01 per share (the " Exercise Price "), at any time prior to 5:00 P.M. Eastern Time on November 5, 2024 (the " Expiration Date ").

 

ARTICLE I

DEFINITIONS

 

SECTION 1.1       Definitions . As used in this Warrant, the following terms shall have the following meanings:

 

" Applicable Law " means all provisions of laws, statutes, ordinances, rules, regulations, permits, certificates or orders of any Governmental Authority applicable to the Person in question or any of its assets or property, and all judgments, injunctions, orders and decrees of all courts and arbitrators in proceedings or actions in which the Person in question is a party or by which any of its assets or properties are bound.

 

" Assignment Form " shall mean the assignment form attached as Annex 2 hereto.

 

" Affiliate " or " Affiliated " means, as applied to (i) any Person, directly or indirectly, in which such Person holds, beneficially or of record, ten percent (10%) or more of the equity of voting securities; (ii) any Person that holds, of record or beneficially, ten percent (10%) or more of the equity or voting securities of such Person; (iii) any director, officer, partner or individual holding a similar position in respect of such Person; (iv) as to any natural Person, any Person related by blood, marriage or adoption and any Person owned by such Persons, including any spouse, parent, grandparent, aunt, uncle, child, grandchild, sibling, cousin or in-law of such Person; or (v) any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.

 

 

 

 

" Business Day " means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close.

 

" Company " shall have the meaning set forth in the Preamble.

 

" Current Holder’s Equity Interest " means TWO MILLION (2,000,000) shares of common stock of the Company issuable upon the full exercise of this Warrant, minus any Equity Interest previously issued pursuant to the exercise of this Warrant.

 

" Delivery Date " shall have the meaning given to such term in Section 3.2 .

 

" Equity Interest " shall mean the interest of (i) a shareholder in a corporation, (ii) a partner (whether general or limited) in a partnership (whether general, limited or limited liability), (iii) a member in a limited liability company, or (iv) any other Person having any other form of equity security or ownership interest in any Person.

 

" Exchange Act " shall mean the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

 

" Exchange Form " shall mean the exchange form attached as Annex 3 hereto.

 

" Executive Officer " shall mean, with respect to the Company, its Chief Executive Officer, President, Chief Financial Officer or Chief Operating Officer.

 

" Exercise Form " shall mean the exercise form attached as Annex 1 hereto.

 

" Exercise Price " shall have the meaning set forth in the Preamble.

 

" Expiration Date " shall have the meaning set forth in the Preamble.

 

" GAAP " shall mean generally accepted accounting principles in the United States as of the relevant date in question, consistently applied.

 

" Governmental Authority " means any arbitrator or any governmental authority, agency, department, commission, bureau, board, instrumentality, court or quasi-governmental authority having jurisdiction or supervisory or regulatory authority over the Company.

 

" Holder " shall have the meaning set forth in the Preamble.

 

" Holder's Equity Interest " shall have the meaning given to such term in Section 3.3 .

 

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" Person " shall mean any individual, corporation, partnership, limited liability company, trust, unincorporated organization, or any other form of entity.

 

" Rights Agreement " shall have the meaning given to such term in Section 4.1 .

 

" Securities Act " shall mean the Securities Act of 1933, as amended from time to time, and any successor statute.

 

" Subsidiary " shall mean a corporation or other entity any of whose Equity Interests having ordinary voting power (other than Equity Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other Persons performing similar functions for such entity, are owned, directly or indirectly, by such Person.

 

" Taxes " means all taxes, charges, fees, levies or other assessments, however denominated and whether imposed by a taxing authority within or without the United States, including all net income, gross income, gross receipts, sales, use, ad valorem, goods and services, capital, transfer, franchise, profits, license, withholding, payroll, employment, employer health, excise, estimated, severance, stamp, occupation, property or other taxes, custom duties, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority whether arising before, on or after the date hereof.

 

" Warrant " or " Warrants " shall mean this Warrant.

 

" Warrant Register " shall have the meaning given to such term in Section 2.1.

 

SECTION 1.2       Interpretation . Unless the context of this Warrant clearly requires otherwise, the masculine, feminine or neuter gender and the singular or plural number shall be deemed to include the others whenever the context so requires. Accounting terms used but not otherwise defined herein have the meanings given to them under GAAP. The terms "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation." The words "hereof," "herein," "hereunder," and similar terms in this Warrant refer to this Warrant as a whole and not to any particular provision of this Warrant. References to "Articles", "Sections," "Subsections," "Exhibits," "Preamble," "Annexes," and "Schedules" are to articles, sections, subsections, exhibits, preamble, annexes and schedules, respectively, of this Warrant, unless otherwise specifically provided. References to "days" and "months" refer to calendar days and calendar months unless otherwise expressly designated (i.e., business days or particular 30-day periods). The captions contained herein are for convenience only and shall not control or affect the meaning or construction of any provision of this Warrant. The term "dollars" or "$" means United States Dollars.

 

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ARTICLE II

FORM; EXCHANGE FOR WARRANTS; TRANSFER; TAXES

 

SECTION 2.1       Warrant Register . Each Warrant issued, exchanged or transferred shall be registered in a warrant register (the " Warrant Register "). The Warrant Register shall set forth the number of each Warrant, the name and address of the holder thereof, and the Current Holder’s Equity Interest for which the Warrant is then exercisable. The Warrant Register will be maintained by the Company and will be available for inspection by the Holder at the principal office of the Company or such other location as the Company may designate to the Holder in the manner set forth in Section 5.1 hereof. The Company shall be entitled to treat the Holder as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other Person.

 

SECTION 2.2       Exchange of Warrants for Warrants .

 

(a)     The Holder may exchange this Warrant for another Warrant or Warrants of like kind and tenor representing in the aggregate the right to purchase the same Current Holder’s Equity Interest which could be purchased pursuant to the Warrant being so exchanged. In order to effect an exchange permitted by this Section 2.2 , the Holder shall deliver to the Company such Warrant accompanied by an Exchange Form in the form attached hereto as Annex 3 signed by the Holder thereof specifying the number and denominations of Warrants to be issued in such exchange and the names in which such Warrants are to be issued. Within ten (10) Business Days of receipt of such a request, the Company shall issue, register and deliver to the Holder thereof each Warrant to be issued in such exchange.

 

(b)     Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of the Holder, including indemnification reasonably acceptable to the Company) of the ownership and the loss, theft, destruction or mutilation of any Warrant or, in the case of any such mutilation, upon surrender of such Warrant, the Company shall (at its expense) execute and deliver in lieu of such Warrant a new Warrant of like kind and tenor representing the same rights represented by and dated the date of such lost, stolen, destroyed or mutilated Warrant. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by any Person.

 

(c)     The Company shall pay all Taxes (other than any applicable income or similar Taxes payable by a Holder of a Warrant) attributable to an exchange of a Warrant pursuant to this Section 2.2 ; provided, however , that the Company shall not be required to pay any Tax which may be payable in respect of any transfer involved in the issuance of any Warrant in a name other than that of the Holder of the Warrant being exchanged.

 

SECTION 2.3       Transfer of Warrant .

 

(a)     Subject to Section 2.3(c) hereof, each Warrant and the rights thereunder may be transferred by the Holder thereof, in whole or in part, by delivering to the Company such Warrant accompanied by a properly completed Assignment Form in the form of Annex 2 . Within ten (10) Business Days of receipt of such Assignment Form the Company shall issue, register and deliver to the new Holder, subject to Section 2.3(c ) hereof a new Warrant or Warrants of like kind and tenor representing in the aggregate the right to purchase the same Current Holder’s Equity Interest which could be purchased pursuant to the Warrant being transferred. In all cases of transfer by an attorney, the original power of attorney, duly approved, or a copy thereof, duly certified, shall be deposited and remain with the Company. In case of a transfer by executors, administrators, guardians or other legal representatives, duly authenticated evidence of their authority shall be produced and may be required to be deposited and remain with the Company in its discretion.

 

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(b)     Each Warrant issued in accordance with this Section 2.3 shall bear the restrictive legend set forth on the face of this Warrant, unless the Holder or transferee thereof supplies to the Company an opinion of counsel, reasonably satisfactory to the Company, that the restrictions described in such legend are no longer applicable to such Warrant.

 

(c)     The transfer of Warrants and any Equity Interest purchased thereunder shall be permitted, so long as such transfer is pursuant to a transaction that complies with, or is exempt from, the provisions of the Securities Act, and the Company may require an opinion of counsel in form and substance reasonably satisfactory to it to such effect prior to effecting any transfer of Warrants or any Equity Interest purchased thereunder.

 

ARTICLE III

EXERCISE OF WARRANT; EXCHANGE FOR EQUITY INTEREST

 

SECTION 3.1       Exercise of Warrants . On any Business Day prior to the Expiration Date, the Holder may exercise this Warrant, in whole or in part, by delivering to the Company this Warrant accompanied by a properly completed Exercise Form in the form of Annex 1 and a check in an aggregate amount equal to the applicable Exercise Price.

 

SECTION 3.2       Issuance of Equity Interest .

 

(a)     The Company represents and warrants that the authorized Equity Interest of the Company consists solely of (i) 5,000,000,000 shares of common stock, par value $0.001 per share, of which 389,247,784 common shares (including treasury shares of 134,806,051) have been issued and remain outstanding as of the date hereof and (ii) 500,000,000 shares of preferred stock, none of which preferred shares have been issued as of the date hereof. The shares of common stock of the Company issued and outstanding as of the date hereof are duly authorized, validly issued, fully paid and non-assessable. The delivery to the Holder of certificates representing the Equity Interest that the Holder purchases pursuant to the exercise of this Warrant shall grant to the Holder good and valid title to the Equity Interest represented by such certificate, free and clear of any and all liens, pledges, security interests, charges or encumbrances of any kind or nature or any option, warrant or trust having the practical effect of any of the foregoing.

 

(b)     Immediately upon the exercise of this Warrant in accordance with Section 3.1 , the Company (the " Delivery Date ") shall issue the Equity Interest that the Holder has purchased pursuant to such exercise, deliver to the Holder the certificates representing such Equity Interest and reflect the issuance of such Equity Interest, which Equity Interest shall be duly authorized, validly issued, outstanding, fully paid and non-assessable, in the Company’s shareholder records (maintained by the Company or its duly appointed transfer agent), whereupon the Holder shall be deemed for all purposes, effective as of the Delivery Date, to be a holder of record and beneficial owner of the Equity Interest that it has purchased pursuant to such exercise.

 

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(c)     If a Holder shall exercise this Warrant for less than all of the Equity Interest which could be purchased or received hereunder, the Company shall issue to the Holder, within five (5) Business Days of the Delivery Date, a new Warrant of like kind and tenor to this Warrant evidencing the right to purchase the remaining Equity Interest represented by the Warrant. This Warrant shall be cancelled upon surrender thereof pursuant to Section 3.1 .

 

(d)     The Company shall pay all Taxes (other than any applicable income or similar Taxes payable by a Holder of a Warrant) attributable to the initial issuance of any Equity Interest upon the exercise or exchange of this Warrant or any successor Warrant; provided , however , that the Company shall not be required to pay any Tax which may be payable in respect of any transfer involved in the issuance of a successor to this Warrant in a name other than that of the Holder of the Warrant being exercised or exchanged.

 

(e)     Except as set forth in any document that is un-redacted and publicly filed with the U.S. Securities and Exchange Commission, neither the Company nor its Subsidiaries has any liabilities or obligations of any nature (whether absolute, accrued, contingent or otherwise and whether due or to become due) which are not fully reflected or reserved against on the balance sheet in accordance with GAAP, except for liabilities and obligations incurred in the ordinary course of business and consistent with past practice since the date thereof.

 

SECTION 3.3       Adjustment of Holder’s Equity Interest and/or Exercise Price . The Equity Interest issuable upon exercise of this Warrant (such Equity Interest is referred to herein as the " Holder's Equity Interest ") shall be subject to adjustment from time to time in accordance with this Section 3.3 .

 

SECTION 3.3.1       Issuance of Additional Equity Interest; Capital Reorganization or Capital Reclassifications . If, at any time after the date hereof, the Equity Interests of the Company shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation (including, without limitation, any subdivision or combination of Equity Interest), then in each case the Company shall cause effective provision to be made so that this Warrant shall, effective as of the effective date of such event retroactive to the record date, if any, of such event, be exercisable or exchangeable for the kind and number of equity securities, cash or other property to which a holder of the Equity Interest deliverable upon exercise or exchange of this Warrant would have been entitled upon such event and any such provision shall include adjustments in respect of such securities or other property that shall be equivalent to the adjustments provided for in this Warrant with respect to such Warrant.

 

SECTION 3.3.2      Consolidations and Mergers; Dissolution .

 

(a)     If, at any time after the date hereof, the Company shall consolidate with, merge with or into, or sell all or substantially all of its assets or property to, another Person, then the Company shall cause effective provision to be made so that each Warrant shall, effective as of the effective date of such event retroactive to the record date, if any, of such event, be exercisable or exchangeable for the kind and number of shares of stock, membership or other equity interests, other securities, cash or other property to which a holder of the Equity Interest deliverable upon exercise or exchange of such Warrant would have been entitled upon such event. The Company shall not consolidate or merge unless, prior to consummation, the successor corporation (if other than the Company) assumes the obligations of this paragraph by written instrument executed and mailed to the Holder at the Holder’s address set forth in Section 5.1. A sale or lease of all or substantially all the assets of the Company for a consideration (apart from the assumption of obligations) consisting primarily of securities is a consolidation or merger for the foregoing purposes.

 

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(b)     In case a voluntary or involuntary dissolution, liquidation, or winding up of the Company (other than in connection with a consolidation or merger covered by subsection (a) above) is at any time proposed, the Company shall give at least 30 days’ prior written notice to the Holder. Such notice shall contain: (1) the date on which the transaction is to take place; (2) the record date (which shall be at least 30 days after the giving of the notice) as of which the Holder will be entitled to receive distributions as a result of the transaction; (3) a brief description of the transaction; (4) a brief description of the distributions to be made to the Holder as a result of the transaction and (5) an estimate of the fair value of the distributions. On the date of the transaction, if it actually occurs, this Warrant and all rights hereunder shall terminate.

 

SECTION 3.3.3      Notice; Calculations; Etc . Whenever the Equity Interest issuable hereunder shall be adjusted as provided in this Section 3.3 , the Company shall provide to the Holder a statement, signed by an Executive Officer, describing in detail the facts requiring such adjustment and setting forth a calculation of the Equity Interest applicable to each Warrant after giving effect to such adjustment. All calculations under this Section 3.3 shall be made to the nearest one hundredth of a cent or to the nearest one-tenth of a unit, as the case may be.

 

ARTICLE IV

CERTAIN OTHER RIGHTS

 

SECTION 4.1       Registration Rights .

 

(a)     At any time at which this Warrant or the Equity Interest underlying the same remains outstanding, upon the request of the Holder, the Company will enter into a registration rights agreement with Holder (the " Rights Agreement "). Such Rights Agreement shall provide that beginning on the date hereof, if the Company is eligible for the use of a registration statement on Form S-3, then the Holder shall have the right to request an initial registration and thereafter on a quarterly basis after such initial registration shall have been declared effective by the U.S. Securities and Exchange Commission, registration of its Equity Interests on Form S-3 or any similar short-form registration (each, a " Demand Registration "). The Rights Agreement will provide that each request for a Demand Registration shall specify the approximate number of Equity Interests requested to be registered and that the Company shall cause a registration statement on Form S-3 (or any successor form) to be filed within twenty (20) days after the date on which the initial request is given and shall use its reasonable best efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter. The Rights Agreement will provide that the Company may postpone for up to ninety (90) days the filing or effectiveness of a registration statement for a Demand Registration if the Company determines in its reasonable good faith judgment that such Demand Registration would (i) materially interfere with a significant acquisition, corporate reorganization or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act. The Rights Agreement shall contain such other terms and conditions applicable to the Holder no less favorable to the Holder than registration rights made available to any other holder of any Equity Interest or other equity security of the Company.

 

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(b)     The rights to cause the Company to register Equity Interests pursuant hereto may be assigned (but only with all related obligations) by the Holder in a Qualified Assignment; provided, that, (i) the Company is, upon or within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the securities with respect to which such registration rights are being assigned, (ii) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Warrant, (iii) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by transferee or assignee is restricted under the Securities Act, and (iv) such assignment shall be effective only if immediately following such transfer such Equity Interests continue to be Equity Interests of the Company.

 

SECTION 4.2 Reservation of Underlying Shares .

 

(a)     The Company covenants   at all times to reserve and keep available out of its authorized shares of Common Stock, free from preemptive rights, solely for the purpose of issue upon exercise of the Warrant as herein provided, the maximum number of shares of Common Stock as shall then be issuable upon the exercise of this Warrant. 

 

(b)     The Company covenants that all shares of Common Stock issued upon exercise of the Warrant which shall be so issuable shall, when issued, be duly and validly issued and fully paid and non-assessable, free from all taxes, liens and charges with respect to the purchase and the issuance of the shares, and shall not have any legend or restrictions on resale, except as required by the Rights Agreement or hereby.

 

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ARTICLE V

MISCELLANEOUS

 

SECTION 5.1       Notices . Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and shall be made by electronic mail, personal service, facsimile or reputable courier service:

 

 

(a)

If to the Company, to:

 

Twinlab Consolidated Holdings, Inc.

4800 T-Rex Avenue, Suite 305

Boca Raton, FL 33431

Attention: Carla Goffstein, Interim Chief Financial Officer

e-mail: cgoffstein@twinlab.com

 

With a copy to:

 

Ackerman LLP

Three Brickell City Centre

98 Southeast Seventh Street

Miami, FL 33131

Attention: Esther Moreno, Esq.

 

 

(b)

If to the Holder, to:

 

Great Harbor Capital, LLC

3133 Orchard Vista Drive SE

Grand Rapids, MI 49546

Attention: Mark J. Bugge, Secretary

Facsimile: (616) 808-2721

e-mail: Mark.Bugge@vaegr.com

 

With a copy to:

 

Honigman Miller Schwartz and Cohn LLP

315 East Eisenhower Parkway

Suite 100

Ann Arbor, MI 48108-3330

Attention: Barbara Kaye, Esq.

Facsimile: (734) 418-4261

E-mail: bkaye@honigman.com

 

Unless otherwise specifically provided herein, any notice or other communication shall be deemed to have been given when delivered in person or by courier service, upon receipt of electronic mail or upon receipt of facsimile.

 

SECTION 5.2       No Voting Rights: Limitations of Liability . This Warrant shall not entitle the holder thereof to any voting rights or, except as otherwise provided or referenced herein, other rights of an equity owner of the Company. No provision hereof, in the absence of affirmative action by the Holder to purchase its Equity Interest, and no enumeration herein of the rights or privileges of the Holder shall give rise to any liability of the Holder for the Exercise Price of the Equity Interest acquirable by exercise hereunder or as a stockholder of the Company.

 

9

 

 

SECTION 5.3       Amendments and Waivers . Any provision of this Warrant may be amended or waived, but only pursuant to a written agreement signed by the Company and the Holder.

 

SECTION 5.4       Severability . If any provision of this Warrant shall be held to be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any way affect or render invalid or unenforceable any other provision of this Agreement, and such provision shall be deemed to be restated to reflect the parties' original intentions as nearly as possible in accordance with Applicable Law(s).

 

SECTION 5.5       Specific Performance . The Holder shall have the right to specific performance by the Company of the provisions of this Warrant, in addition to any other remedies it may have at law or in equity. The Company hereby irrevocably waives, to the extent that it may do so under Applicable Law, any defense based on the adequacy of a remedy at law which may be asserted as a bar to the remedy of specific performance in any action brought against the Company for specific performance of this Warrant by the Holder.

 

SECTION 5.6       Binding Effect . This Warrant shall be binding upon and inure to the benefit of the Company, the Holder and their respective successors and assigns.

 

SECTION 5.7       Counterparts . This Warrant may be executed in several counterparts, and/or by the execution of counterpart signature pages that may be attached to one or more counterparts of this Warrant, and all so executed shall constitute one agreement binding on all of the parties hereto, notwithstanding that all of the parties hereto are not signatory to the original or the same counterpart. In addition, any counterpart signature page may be executed by any party wherever such party is located, and may be delivered by telephone facsimile or by electronic mail in PDF format, and any such transmitted signature pages may be attached to one or more counterparts of this Warrant, and such faxed or sent by electronic mail signature(s) shall have the same force and effect, and be as binding, as if original signatures had been executed and delivered in person.

 

SECTION 5.8       Entire Agreement . This Warrant, together with the other documents and instruments entered into by the parties thereto in connection therewith, constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersedes any prior agreements, written or oral, with respect to the subject matter hereof.

 

SECTION 5.9       Governing law . THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS RULES AND PRINCIPLES. THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSE OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS WARRANT, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE PARTY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS WARRANT.

 

10

 

 

SECTION 5.10       Expenses . The Company will promptly (and in any event within thirty (30) days of receiving any statement or invoice therefor) pay all reasonable fees, expenses and costs relating hereto, including, but not limited to, (i) the cost of reproducing this Warrant, (ii) the fees and disbursements of counsel to the Holder in preparing this Warrant, (iii) all transfer, stamp, documentary or other similar Taxes, assessments or charges levied by any governmental or revenue authority in respect hereof or any other document referred to herein, (iv) fees and expenses (including, without limitation, reasonable attorneys' fees) incurred in respect of the enforcement by the Holder of the rights granted to the Holder under this Warrant, and (v) the expenses relating to the consideration, negotiation, preparation or execution of any amendments, waivers or consents requested by the Company pursuant to the provisions hereof, whether or not any such amendments, waivers or consents are executed.

 

SECTION 5.11       Attorneys' Fees . In any action or proceeding brought by a party to enforce any provision of this Warrant, the prevailing party shall be entitled to recover the reasonable costs and expenses incurred by it or him in connection therewith (including reasonable attorneys’ and paralegals’ fees and costs incurred before and at any trial or arbitration and at all appellate levels), as well as all other relief granted or awarded in such action or other proceeding.

 

SECTION 5.12       Filings . The Company shall, at its own expense, promptly execute and deliver, or cause to be executed and delivered, to the Holder all applications, certificates, instruments and all other documents and papers that the Holder may reasonably request in connection with the obtaining of any consent, approval, qualification, or authorization of any Federal, provincial, state or local government (or any agency or commission thereof) necessary or appropriate in connection with, or for the effective exercise of, the Warrant (and/or any successor Warrant(s) hereto).

 

SECTION 5.13       Other Transactions . Nothing contained herein shall preclude the Holder from engaging in any transaction, in addition to those contemplated by this Warrant with the Company or any of its Affiliates in which the Company or such Affiliate is not restricted hereby from engaging with any other Person.

 

SECTION 5.14       Waiver of Jury Trial . THE HOLDER AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS WARRANT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE HOLDER OR THE COMPANY. THE COMPANY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER ENTERING INTO THIS WARRANT.

 

11

 

 

SECTION 5.15       Headings . Section titles and captions contained in this Warrant are inserted only as a matter of convenience and for reference. The titles and captions in no way define, limit, extend or describe the scope of this Warrant or the intent of any provision hereof.

 

SECTION 5.16       No Third-Party Beneficiaries . This Warrant is for the sole benefit of the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Warrant.

 

[Remainder of page intentionally left blank; signatures on following page]

 

12

 

 

IN WITNESS WHEREOF, the undersigned has caused this Warrant to be duly executed and delivered by an authorized officer, all as of the date and year first above written.

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.,

a Nevada corporation

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/  Anthony Zolezzi

 

 

Name:

Anthony Zolezzi

 

 

Title:

Chief Executive Officer

 

 

Signature Page t o Warrant – 2018 – 26

 

13

 

 

ACKNOWLEDGED AND AGREED:

 

GREAT HARBOR CAPITAL, LLC,

a Delaware limited liability company

 

 

 

By:   /s/Mark Bugge                                           

Name: Mark J. Bugge

Title: Secretary

 

Signature Page t o Warrant – 2018 – 26

 

14

 

 

ANNEX 1

 

 

 

ELECTION TO EXERCISE FORM

 

(To Be Executed By the Holder of This Warrant

 

In Order to Exercise This Warrant)

 

The undersigned hereby irrevocably elects to exercise the right covered by this Warrant to purchase ____________________ of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, according to the conditions hereof and herewith makes payment in full of the Exercise Price with respect to such Equity Interest.

 

 

 

 

       
    Signature  
       
       
       
       
    Address  

 

 

Dated:                                                 

 

 

 

 

ANNEX 2

 

 

 

ASSIGNMENT FORM

 

(To Be Executed by the Holder of This Warrant

 

In Order to Assign This Warrant)

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _____________________________ this Warrant and all rights evidenced thereby and does irrevocably constitute and appoint ___________________, attorney, to transfer the said Warrant on the books of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation.

 

 

       
    Signature  
       
       
       
       
    Address  

 

 

Dated:                                                 

 

 

 

 

ANNEX 3

 

 

 

EXCHANGE FORM

 

(To Be Executed by the Holder of This Warrant

 

In Order to Exchange and Assign This Warrant)

 

The undersigned hereby irrevocably elects to exchange this Warrant to purchase ________________, of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, for ___________ Warrants to purchase the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, set forth below to the Persons named and hereby sells, assigns and transfers unto such Persons that portion of this Warrant represented by such new Warrants and all rights evidenced thereby and does irrevocably constitute and appoint ____________________, attorney, to exchange and transfer this Warrant as aforesaid on the books of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation.

 

Equity Interest     Assignee  
         
         
         
         
         
         
      Signature  
         
         
         
    Address  

 

FOR USE BY THE COMPANY ONLY:

 

This Warrant No. __ cancelled (or transferred or exchanged) this ________ day of _____________, ____________ of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, issued therefor in the name of ____ ___________ Warrant No. ___ for ________, of the Equity Interest of TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, in the name of _________________________.

 

 

Dated:                              

 

Exhibit 10.184

 

THIRTEENTH AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT

 

This THIRTEENTH AMENDMENT TO NOTE AND WARRANT AGREEMENT (this " Amendment "), dated as of November 5, 2018, is made by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation, TWINLAB HOLDINGS, INC., a Michigan corporation, ISI BRANDS INC., a Michigan corporation, and TWINLAB CORPORATION, a Delaware corporation, NUTRASCIENCE LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION., a Delaware corporation, ORGANIC HOLDINGS LLC, a Delaware limited liability company, RESERVE LIFE ORGANICS, LLC, a Delaware limited liability company, RESVITALE, LLC, a Delaware limited liability company, RE-BODY, LLC, a Delaware limited liability company, INNOVITAMIN ORGANICS, LLC, a Delaware limited liability company, ORGANICS MANAGEMENT LLC, a Delaware limited liability company, COCOAWELL, LLC, a Delaware limited liability company, FEMBODY, LLC, a Delaware limited liability company, RESERVE LIFE NUTRITION, L.L.C., a Delaware limited liability company, INNOVITA SPECIALTY DISTRIBUTION LLC, a Delaware limited liability company, and JOIE ESSANCE, LLC, a Delaware limited liability company (each of the foregoing Persons being referred to herein individually as a " Company " and collectively as the " Companies "), and GOLISANO HOLDINGS LLC, a New York limited liability company, as successor by assignment to JL-Mezz Utah, LLC f/k/a JL-BBNC Mezz Utah, LLC (the " Purchaser ").

 

WHEREAS, the Companies and the Purchaser are parties to a Note and Warrant Purchase Agreement dated as of January 22, 2015, as amended by that certain First Amendment to Note and Warrant Purchase Agreement, Consent and Joinder dated as of February 4, 2015, that certain Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015 and that certain Third Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver dated as of June 30, 2015 and Fourth Amendment to Note and Warrant Agreement and Limited Consent dated as of September 9, 2015, that certain Limited Waiver to Note and Warrant Purchase Agreement dated as of October 2, 2015, that certain Fifth Amendment to Note and Warrant Purchase Agreement dated as of October 5, 2015, that certain Joinder Agreement dated as of November 10, 2015 and that certain Limited Consent dated as of January 5, 2016, that certain Sixth Amendment to Note and Warrant Purchase Agreement dated as of January 28, 2016, that certain Seventh Amendment to Note and Warrant Purchase Agreement dated as of April 5, 2016, that certain Eighth Amendment to Note and Warrant Purchase Agreement and Limited Consent dated as of August 11, 2016 but effective as of July 29, 2016, that certain Ninth Amendment to Note and Warrant Purchase Agreement and Limited Consent dated as of December 2, 2016, that certain Tenth Amendment to Note and Warrant Purchase Agreement dated as of August 30, 2017, that certain Eleventh Amendment to Note and Warrant Purchase Agreement dated as of February 6, 2018, and that certain Twelfth Amendment to Note and Warrant Purchase Agreement dated as of July 27, 2018 (as the same may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the " Note Purchase Agreement ").

 

WHEREAS, (a) the Companies have requested that the Purchaser (i) consent to a secured loan in the original principal amount of $4,000,000 from Great Harbor; (ii) [          ] (as defined below) and (iii) amend certain provisions of the Note Purchase Agreement, and (b) the Purchaser has agreed to do so subject to the terms and conditions set forth herein.

 


* Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

 

 

NOW, THEREFORE, in consideration of the promises and the mutual agreements contained in this Amendment, and subject to the terms and conditions set forth herein, each party hereto hereby agrees as follows:

 

1.      Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings set forth in the Note Purchase Agreement.

 

2.      Consent to Transactions .

 

(a)      At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 6 below) and in reliance on the representations, warranties and covenants of the Companies set forth herein, the Purchaser hereby consents to (a) the Companies’ incurrence of secured indebtedness in the original principal amount of up to $4,000,000 to Great Harbor on the terms and subject to the conditions set forth in that Secured Promissory Note in the original principal amount of $4,000,000 issued by the Companies to Great Harbor, as it may be amended, supplemented, restated or otherwise modified from time to time (the " Second Great Harbor [          ] Secured Note "), and (b) use of the Net Cash Proceeds (for avoidance of doubt, following any amounts required to be paid with respect to the Senior Lender under the Senior Loan Documents) [          ] as follows:

 

First , to the payment of the accrued and unpaid interest and outstanding principal on the Great Harbor [          ] Secured Note and the Second Great Harbor [          ] Secured Note;

 

Second , to the payment of accrued and unpaid rent owed by any Company and/or accrued and unpaid interest due to Little Harbor, LLC, Great Harbor Capital, LLC or Golisano Holdings LLC;

 

Third, to the Companies.

 

(b)     For purposes of this Amendment, " Net Cash Proceeds " means, with respect [          ], cash and cash equivalent proceeds received by or for such person's account, net of (i) reasonable direct documented costs [          ] (ii) sale, use or other transactional taxes paid or payable by such person as a direct result of [          ], (iii) the principal amount of any indebtedness which is secured by a prior perfected lien (other than in favor of MidCap, Great Harbor and Purchaser) and (iv) any amount required to be paid to Senior Lender [          ]

 

(c)     The limited consent set forth in this Section 2 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Note Purchase Agreement or of any other Transaction Document; (b) prejudice any right that the Purchaser have or may have in the future under or in connection with the Note Purchase Agreement or any other Transaction Document; (c) waive any Event of Default that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Companies, on the one hand, or the Purchaser on the other hand.

 

 

 

 

3.      Amendments to Note Purchase Agreement . Subject to the satisfaction of the conditions precedent set forth herein and in reliance on the representations, warranties and covenants of the Companies set forth herein and in the Note Purchase Agreement, each party hereto hereby agrees that the Note Purchase Agreement be and hereby is, amended as follows:

 

3.1.      Amendment and Restatement of Existing Defined Term . Section 1 of the Note Purchase Agreement is hereby amended to amend and restate the defined term "Senior Great Harbor Debt" in its entirety as follows:

 

" Senior Great Harbor Debt " means all debts, obligations or liabilities now or hereafter existing, absolute or contingent of the Companies, or any one or more of them, arising under that certain Amended and Restated Secured Promissory Note, dated as of
February 6, 2018, in the original principal amount of $3,000,000 (as amended, modified, extended, renewed, refinanced, restated or replaced from time to time), that certain Secured Promissory Note, dated as of February 6, 2018, in the original principal amount of $2,000,000 (as amended, modified, extended, renewed, refinanced, restated or replaced from time to time), that certain Secured Promissory Note, dated as of July 27, 2018, in the original principal amount of $5,000,000 (as amended, modified, extended, renewed, refinanced, restated or replaced from time to time) and that certain Secured Promissory Note, dated as of November 5, 2018, in the original principal amount of $4,000,000 (as amended, modified, extended, renewed, refinanced, restated or replaced from time to time), each issued by the Companies to Great Harbor, whether voluntary or involuntary, whether due or not due, or whether incurred directly or indirectly.

 

4.      Representations and Warranties; No Default . Each Company hereby represents and warrants that:

 

4.1.     The execution, delivery and performance by such Company of this Amendment (a) are within such Company's corporate or similar powers and, at the time of execution hereof and have been duly authorized by all necessary corporate and similar action; (b) does not and will not result, in any breach or default under any other document, instrument or agreement to which a Company or any of its Subsidiaries is a party or to which a Company or any of its Subsidiaries, the Premises, the Collateral or any of the property of a Company or any of its Subsidiaries is subject or bound, except for such breaches or defaults which, individually or in the aggregate, have not had, and would not reasonably be expected to result in, a Material Adverse Effect and (c) will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order.

 

4.2.     This Amendment has been duly executed and delivered for the benefit of or on behalf of each Company and constitutes a legal, valid and binding obligation of each Company, enforceable against such Company in accordance with its terms except (a) as the same may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws now or hereafter in effect relating to creditors rights generally and (b) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

4.3.     Both before and after giving effect to this Amendment on the date hereof (a) the representations and warranties of the Companies contained in Section 4.1 of the Note Purchase Agreement and the other Transaction Documents are true, correct and complete on and as of the date hereof as if made on such date (and to the extent any representations and warranties shall relate to the Effective Date or another earlier date, such representation and warranties shall be deemed to be amended to relate to the date hereof), and (b) no Default or Event of Default has occurred and is continuing.

 

5.      Ratification and Confirmation . The Companies hereby ratify and confirm all of the terms and provisions of the Note Purchase Agreement and the other Transaction Documents and agree that all of such terms and provisions, as amended hereby, remain in full force and effect, except as, and to the extent expressly set forth herein.

 

 

 

 

6.      Condition to Effectiveness . The effectiveness of this Amendment shall be subject to the satisfaction of the following conditions precedent:

 

6.1.     The Purchaser shall have received a fully executed copy of this Amendment.

 

6.2.     The Purchaser shall have received the corresponding, fully executed copies of the Senior Loan Documents evidencing the Permitted Senior Debt of Great Harbor, in form and substance satisfactory to the Purchaser.

 

6.3.     All representations and warranties of the Companies contained herein shall be true and correct in all material respects as of the date hereof (and such parties' delivery of their respective signatures hereto shall be deemed to be its certification thereof).

 

6.4.     The Purchaser shall have received all fees and other amounts due and payable to the Purchaser and its counsel in connection with this Amendment, and to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Companies under the Note Purchase Agreement.

 

7.      Miscellaneous .

 

7.1.     Except as otherwise expressly set forth herein, nothing herein shall be deemed to constitute an amendment, modification or waiver of any of the provisions of the Note Purchase Agreement, the Security Agreement or the other Transaction Documents, all of which remain in full force and effect as of the date hereof and are hereby ratified and confirmed. Each Company hereby acknowledges and agrees that nothing contained herein shall be deemed to entitle any Company to consent to, or a waiver, amendment or modification of, any of the terms, conditions, obligations, covenants or agreements contained in the Transaction Documents in similar or different circumstances. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Note Purchase Agreement.

 

7.2.     This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, but all counterparts shall together constitute one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be equally effective as delivery of a manually executed counterpart of this Amendment.

 

7.3.     This Amendment shall be governed by the laws of the State of New York without giving effect to any conflict of law principles and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

7.4.     The Companies agree to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Amendment and the transactions contemplated hereby.

 

7.5.     This Amendment shall be deemed a Transaction Document for all purposes of the Note Purchase Agreement and the other Transaction Documents. On and after the date hereof, each reference in the Note Purchase Agreement and the other Transaction Documents to the Note Purchase Agreement, shall mean and be a reference to the Note Purchase Agreement, as modified by this Amendment.

 

 

 

 

7.6.     Each Company, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, " Releasing Parties "), does hereby fully and completely release, acquit and forever discharge each Indemnified Party of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnified Parties (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. " Prior Related Event " means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Transaction Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between the Purchaser and any Company, or (d) any other actions or inactions by the Purchaser, all on or prior to the date hereof. Each Company acknowledges that the foregoing release is a material inducement to the Purchaser's decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

 

 

[Signature Pages Follow.]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment which shall be deemed to be a sealed instrument as of the date first above written.

 

 

COMPANIES

 

 

 

TWINLAB CONSOLIDATION CORPORATION

By :   /s/Anthony Zolezzi                                      (Seal)

Name: Anthony Zolezzi
Title: Chief Executive Officer

   
   

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

 

By :  /s/Anthony Zolezzi                                     (Seal)

Name: Anthony Zolezzi
Title: Chief Executive Officer

TWINLAB HOLDINGS, INC .

 

 

 

By :  /s/Anthony Zolezzi                                     (Seal)

Name: Anthony Zolezzi
Title: Chief Executive Officer

   
   

TWINLAB CORPORATION  

 

 

By :  /s/Anthony Zolezzi                                     (Seal)

Name: Anthony Zolezzi
Title: Chief Executive Officer

ISI BRANDS, INC.

 

 

By :  /s/Anthony Zolezzi                                     (Seal)

Name: Anthony Zolezzi
Title: Chief Executive Officer

   
   

NUTRASCIENCE LABS, INC.

 

 

By :  /s/Anthony Zolezzi                                     (Seal)

Name: Anthony Zolezzi
Title: Chief Executive Officer

NUTRASCIENCE LABS IP CORPORATION

 

 

By :  /s/Anthony Zolezzi                                     (Seal)

Name: Anthony Zolezzi
Title: Chief Executive Officer

   
   

ORGANIC HOLDINGS LLC

 

 

By :  /s/Anthony Zolezzi                                     (Seal)

Name: Anthony Zolezzi
Title: Sole Manager

RESERVE LIFE ORGANICS, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By :  /s/Anthony Zolezzi                                     (Seal)

Name: Anthony Zolezzi
Title: Sole Manager

 

 

 

 

RESVITALE, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By :  /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi
Title: Sole Manager

RE-BODY, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By :  /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi
Title: Sole Manager

   

INNOVITAMIN ORGANICS, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By :  /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi
Title: Sole Manager

ORGANICS MANAGEMENT LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By :  /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi
Title: Sole Manager

   

COCOAWELL, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By :  /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi
Title: Sole Manager

FEMBODY, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By :  /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi
Title: Sole Manager

   

RESERVE LIFE NUTRITION, L.L.C.

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By :  /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi
Title: Sole Manager

INNOVITA SPECIALTY DISTRIBUTION LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By :  /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi
Title: Sole Manager

   

JOIE ESSANCE, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By :  /s/Anthony Zolezzi                                    (Seal)

Name: Anthony Zolezzi
Title: Sole Manager

 

 

#14057921

 

 

 

 

 

PURCHASER :

 

GOLISANO HOLDINGS LLC ,

a New York limited liability company

 

 

By:      /s/ B. Thomas Goliasano

Name: B. Thomas Golisano

Title:    Member

 

Exhibit 10.185

 

FOURTEENTH AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT AND LIMITED CONSENT

 

This FOURTEENTH AMENDMENT TO NOTE AND WARRANT AGREEMENT (this " Amendment "), dated as of November 5, 2018, is made by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation, TWINLAB HOLDINGS, INC., a Michigan corporation, ISI BRANDS INC., a Michigan corporation, and TWINLAB CORPORATION, a Delaware corporation, NUTRASCIENCE LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION., a Delaware corporation, ORGANIC HOLDINGS LLC, a Delaware limited liability company, RESERVE LIFE ORGANICS, LLC, a Delaware limited liability company, RESVITALE, LLC, a Delaware limited liability company, RE-BODY, LLC, a Delaware limited liability company, INNOVITAMIN ORGANICS, LLC, a Delaware limited liability company, ORGANICS MANAGEMENT LLC, a Delaware limited liability company, COCOAWELL, LLC, a Delaware limited liability company, FEMBODY, LLC, a Delaware limited liability company, RESERVE LIFE NUTRITION, L.L.C., a Delaware limited liability company, INNOVITA SPECIALTY DISTRIBUTION, LLC, a Delaware limited liability company, and JOIE ESSANCE, LLC, a Delaware limited liability company (each of the foregoing Persons being referred to herein individually as a " Company " and collectively as the " Companies "), and GOLISANO HOLDINGS LLC, a New York limited liability company, as successor by assignment to Penta Mezzanine SBIC Fund I, L.P. (the " Purchaser ").

 

WHEREAS, the Companies and the Purchaser are parties to a Note and Warrant Purchase Agreement dated as of November 13, 2014, as amended by that certain First Amendment to Note and Warrant Purchase Agreement, Consent and Joinder dated as of January 22, 2015, that certain Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of February 4, 2015, that certain Third Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015, that certain Fourth Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver dated as of June 30, 2015, that certain Fifth Amendment to Note and Warrant Purchase Agreement and Limited Consent dated as of September 9, 2015, that certain Sixth Amendment to Note and Warrant Purchase Agreement dated October 5, 2015, that certain Joinder Agreement dated as of October 30, 2015, that certain Seventh Amendment to Note and Warrant Purchase Agreement dated as of January 28, 2016, that certain Eighth Amendment to Note and Warrant Purchase Agreement dated as of April 5, 2016, that certain Ninth Amendment to Note and Warrant Purchase Agreement and Limited Consent dated as of August 11, 2016 but effective as of July 29, 2016, that certain Tenth Amendment to Note and Warrant Purchase Agreement and Limited Consent dated as of December 2, 2016, that Eleventh Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of August 30, 2017, that certain Twelfth Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of February 6, 2018, and that certain Thirteenth Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of July 27, 2018 (as the same may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the " Note Purchase Agreement "); and

 

WHEREAS, (a) the Companies have requested that the Purchaser (i) consent to a secured loan in the original principal amount of $4,000,000 from Great Harbor; (ii) consent to use of the Net Cash Proceeds (as defined below) arising from the [          ] (as defined below) and (iii) amend certain provisions of the Note Purchase Agreement, and (b) the Purchaser has agreed to do so subject to the terms and conditions set forth herein.

 


* Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

 

 

 

NOW, THEREFORE, in consideration of the promises and the mutual agreements contained in this Amendment, and subject to the terms and conditions set forth herein, each party hereto hereby agrees as follows:

 

1.      Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings set forth in the Note Purchase Agreement.

 

2.      Limited Consent to Transactions .

 

(a)      At the request of and as an accommodation to the Companies and subject to the strict compliance with the terms, conditions and requirements set forth herein (including, without limitation, satisfaction of each of the conditions set forth in Section 6 below) and in reliance on the representations, warranties and covenants of the Companies set forth herein, the Purchaser hereby consents to (a) the Companies’ incurrence of secured indebtedness in the original principal amount of up to $4,000,000 to Great Harbor on the terms and subject to the conditions set forth in that Secured Promissory Note in the original principal amount of $4,000,000 issued by the Companies to Great Harbor, as it may be amended, supplemented, restated or otherwise modified from time to time (the " Second Great Harbor [          ] Secured Note "), and (b) use of the Net Cash Proceeds arising from [          ] (for avoidance of doubt, following any amounts required to be paid with respect to the Senior Lender under the Senior Loan Documents) as follows:

 

First , to the payment of the accrued and unpaid interest and outstanding principal on Great Harbor [          ] Secured Note (as defined in the Thirteenth Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of July 27, 2018) and the Second Great Harbor [          ] Secured Note;

 

Second , to the payment of accrued and unpaid rent owed by any Company and/or accrued and unpaid interest due to Little Harbor, LLC, Great Harbor Capital, LLC or Golisano Holdings LLC;

 

Third, to the Companies.

 

(b)     For purposes of this Amendment, " Net Cash Proceeds " means, with respect to [          ], cash and cash equivalent proceeds received by or for such person's account, net of (i) reasonable direct documented costs relating to [          ], (ii) sale, use or other transactional taxes paid or payable by such person as a direct result of [          ], (iii) the principal amount of any indebtedness which is secured by a prior perfected lien (other than in favor of MidCap, Great Harbor Capital, LLC and Purchaser) and (iv) any amount required to be paid to Senior Lender; [          ]

 

(c)     The limited consent set forth in this Section 2 is effective solely for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) except as expressly provided herein, be a consent to any amendment, waiver or modification of any term or condition of the Note Purchase Agreement or of any other Transaction Document; (b) prejudice any right that the Purchaser have or may have in the future under or in connection with the Note Purchase Agreement or any other Transaction Document; (c) waive any Event of Default that exists as of the date hereof; or (d) establish a custom or course of dealing among any of the Companies, on the one hand, or the Purchaser on the other hand.

 

2

 

 

3.      Amendments to Note Purchase Agreement . Subject to the satisfaction of the conditions precedent set forth herein and in reliance on the representations, warranties and covenants of the Companies set forth herein and in the Note Purchase Agreement, each party hereto hereby agrees that the Note Purchase Agreement be and hereby is, amended as follows:

 

3.1.      Amendment and Restatement of Existing Defined Term . Section 1 of the Note Purchase Agreement is hereby amended to amend and restate the defined term "Senior Great Harbor Debt" in its entirety as follows:

 

" Senior Great Harbor Debt " means all debts, obligations or liabilities now or hereafter existing, absolute or contingent of the Companies, or any one or more of them, arising under that certain Amended and Restated Secured Promissory Note, dated as of
February 6, 2018, in the original principal amount of $3,000,000 (as amended, modified, extended, renewed, refinanced, restated or replaced from time to time), that certain Secured Promissory Note, dated as of February 6, 2018, in the original principal amount of $2,000,000 (as amended, modified, extended, renewed, refinanced, restated or replaced from time to time), that certain Secured Promissory Note, dated as of July 27, 2018, in the original principal amount of $5,000,000 (as amended, modified, extended, renewed, refinanced, restated or replaced from time to time), and that that certain Secured Promissory Note, dated as of November 5, 2018, in the original principal amount of $4,000,000 (as amended, modified, extended, renewed, refinanced, restated or replaced from time to time), each issued by the Companies to Great Harbor, whether voluntary or involuntary, whether due or not due, or whether incurred directly or indirectly.

 

4.      Representations and Warranties; No Default . Each Company hereby represents and warrants that:

 

4.1.     The execution, delivery and performance by such Company of this Amendment (a) are within such Company's corporate or similar powers and, at the time of execution hereof and have been duly authorized by all necessary corporate and similar action; (b) does not and will not result, in any breach or default under any other document, instrument or agreement to which a Company or any of its Subsidiaries is a party or to which a Company or any of its Subsidiaries, the Premises, the Collateral or any of the property of a Company or any of its Subsidiaries is subject or bound, except for such breaches or defaults which, individually or in the aggregate, have not had, and would not reasonably be expected to result in, a Material Adverse Effect and (c) will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order.

 

4.2.     This Amendment has been duly executed and delivered for the benefit of or on behalf of each Company and constitutes a legal, valid and binding obligation of each Company, enforceable against such Company in accordance with its terms except (a) as the same may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws now or hereafter in effect relating to creditors rights generally and (b) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

4.3.     Both before and after giving effect to this Amendment on the date hereof (a) the representations and warranties of the Companies contained in Section 4.1 of the Note Purchase Agreement and the other Transaction Documents are true, correct and complete on and as of the date hereof as if made on such date (and to the extent any representations and warranties shall relate to the Effective Date or another earlier date, such representation and warranties shall be deemed to be amended to relate to the date hereof), and (b) no Default or Event of Default has occurred and is continuing.

 

3

 

 

5.      Ratification and Confirmation . The Companies hereby ratify and confirm all of the terms and provisions of the Note Purchase Agreement and the other Transaction Documents and agree that all of such terms and provisions, as amended hereby, remain in full force and effect, except as, and to the extent expressly set forth herein.

 

6.      Condition to Effectiveness . The effectiveness of this Amendment shall be subject to the satisfaction of the following conditions precedent:

 

6.1.     The Purchaser shall have received a fully executed copy of this Amendment.

 

6.2.     The Purchaser shall have received the corresponding, fully executed copies of the Senior Loan Documents evidencing the Permitted Senior Debt of Great Harbor, in form and substance satisfactory to the Purchaser.

 

6.3.     All representations and warranties of the Companies contained herein shall be true and correct in all material respects as of the date hereof (and such parties' delivery of their respective signatures hereto shall be deemed to be its certification thereof).

 

6.4.     The Purchaser shall have received all fees and other amounts due and payable to the Purchaser and its counsel in connection with this Amendment, and to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Companies under the Note Purchase Agreement.

 

 

7.

Miscellaneous .

 

7.1.     Except as otherwise expressly set forth herein, nothing herein shall be deemed to constitute an amendment, modification or waiver of any of the provisions of the Note Purchase Agreement, the Security Agreement or the other Transaction Documents, all of which remain in full force and effect as of the date hereof and are hereby ratified and confirmed. Each Company hereby acknowledges and agrees that nothing contained herein shall be deemed to entitle any Company to consent to, or a waiver, amendment or modification of, any of the terms, conditions, obligations, covenants or agreements contained in the Transaction Documents in similar or different circumstances. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Note Purchase Agreement.

 

7.2.     This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, but all counterparts shall together constitute one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be equally effective as delivery of a manually executed counterpart of this Amendment.

 

7.3.     This Amendment shall be governed by the laws of the State of New York without giving effect to any conflict of law principles and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

7.4.     The Companies agree to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Amendment and the transactions contemplated hereby.

 

7.5.     This Amendment shall be deemed a Transaction Document for all purposes of the Note Purchase Agreement and the other Transaction Documents. On and after the date hereof, each reference in the Note Purchase Agreement and the other Transaction Documents to the Note Purchase Agreement, shall mean and be a reference to the Note Purchase Agreement, as modified by this Amendment.

 

4

 

 

7.6.     Each Company, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, " Releasing Parties "), does hereby fully and completely release, acquit and forever discharge each Indemnified Party of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnified Parties (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. " Prior Related Event " means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Transaction Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between the Purchaser and any Company, or (d) any other actions or inactions by the Purchaser, all on or prior to the date hereof. Each Company acknowledges that the foregoing release is a material inducement to the Purchaser's decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

[Signature Pages Follow.]

 

5

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment which shall be deemed to be a sealed instrument as of the date first above written.

 

 

TWINLAB CONSOLIDATED

HOLDINGS, INC.

 

 

By:   /s/ Anthony Zolezzi                       (Seal)

Name: Anthony Zolezzi

Title: Chief Executive Officer

TWINLAB HOLDINGS, INC.

 

 

 

By:    /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Chief Executive Officer

   
   

TWINLAB CORPORATION

 

 

By /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Chief Executive Officer

ISI BRANDS INC.

 

 

By:    /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Chief Executive Officer

   
   

NUTRASCIENCE LABS, INC.

 

 

By:    /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Chief Executive Officer

NUTRASCIENCE LABS IP CORPORATION

 

 

By: /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Chief Executive Officer

   
   

ORGANIC HOLDINGS LLC

 

 

By:    /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

RESERVE LIFE ORGANICS, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

   
   

RESVITALE, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

RE-BODY, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

 

 

First Signature Page – Fourteenth Amendment to Note and Warrant Purchase Agreement

 

 

 

INNOVITAMIN ORGANICS, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

ORGANICS MANAGEMENT LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

   
   

COCOAWELL, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

FEMBODY, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

   
   

RESERVE LIFE NUTRITION, L.L.C.

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

INNOVITA SPECIALTY DISTRIBUTION, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

   
   

JOIE ESSANCE, LLC

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/ Anthony Zolezzi                      (Seal)

Name: Anthony Zolezzi

Title: Sole Manager

 

 

 

Second Signature Page – Fourteenth Amendment to Note and Warrant Purchase Agreement

 

 

 

 

PURCHASER :

   
 

GOLISANO HOLDINGS, LLC ,

a New York limited liability company

   
   
     
 

By:

/s/ B. Thomas Golisano

 

Name:  B. Thomas Golisano

 

Title:    Member

 

 

Third Signature Page – Fourteenth Amendment to Note and Warrant Purchase Agreement

Exhibit 10.186

 

THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT (MACATAWA BANK) DATED AS OF DECEMBER 4, 2018 IN FAVOR OF MIDCAP FUNDING X TRUST, A DELAWARE STATUTORY TRUST, AS ADMINISTRATIVE AGENT, WHICH SUBORDINATION AGREEMENT (MACATAWA BANK) (AS AMENDED IN ACCORDANCE WITH ITS TERMS) IS INCORPORATED HEREIN BY REFERENCE.

 

 

TERM LOAN NOTE AND AGREEMENT

 

 

$15,000,000      Date: December 4, 2018

 

 

FOR     VALUE     RECEIVED ,     the     undersigned,      TWINLAB     CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, of 4800 T-Rex Avenue, Suite 305, Boca Raton, Florida 33431 (the " Borrower "), promises to pay to the order of MACATAWA BANK, a Michigan banking corporation, of 10753 Macatawa Dr., Holland, Michigan 49424, for itself and as agent for the benefit of all of its affiliates (individually and collectively, " Lender "), at Lender's address listed above, or at any other place that the holder of this Term Loan Note and Agreement designates in writing, the sum of $15,000,000, together with interest on the principal balance from time to time outstanding, for the period from the date of this Note until the principal balance is paid in full, at the rates and on the dates provided for below.

 

 

1.

Definitions . In this Note:

 

"Affiliate" of a Person means any Person that now or in the future controls, is controlled by, or is under common control with the Person. A Person controls a Person if the Person has, directly or indirectly, the power to direct or cause the direction of the management or policies of the Person.

 

"Banking Day " means any day, other than a Saturday or Sunday, on which Lender is open for the transaction of substantially all of its banking functions and, with respect to the LIBOR Rate, on which dealings in foreign exchange and currencies may be carried on by Lender in the interbank LIBOR market.

 

"Capital Lease" means a lease that, in accordance with GAAP, is required to be shown as a liability on Borrower's balance sheet.

 

"Capitalized Lease Obligation" means, at any time, any obligation of Borrower to pay future rentals under a Capital Lease.

 

"Claim" means any claim, counterclaim, cross-claim, or third-party claim.

 

2

 

 

"Code" means the Internal Revenue Code of 1986, as now and in the future amended, together with all regulations issued under it.

 

"Collateral" means any properties or assets of Guarantor in or upon which Lender at any time holds a security interest, mortgage, or other lien to secure any Lender Indebtedness.

 

"Collateral Document" means the Deposit Account Control Agreement and each security agreement, mortgage, pledge agreement, assignment, guaranty, and every other agreement and document that has been or in the future is, or is required to be, given by any Guarantor to secure any Lender Indebtedness.

 

"Commodity Exchange Act" means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

"Contamination" or "Contaminated" means, when used with reference to any real or personal property, that a Hazardous Substance is present on or in the property in excess of an amount or level then imposed by any Environmental Law.

 

"CPAs" means independent certified public accountants that are satisfactory to Lender.

 

"Default Rate" means, from time to time, an annual interest rate equal to 3% plus the Interest Rate.

 

" Deposit Account Control Agreement " means the deposit account control agreement between Lender and Guarantor, dated as of the date of this Note.

 

"Dollars" and the sign "$" mean lawful currency of the United States of America.

 

"Entity Guarantor" means any sole proprietorship, corporation, partnership, limited liability company, trust, business trust, association, or other entity who has guarantied or in the future guaranties payment or performance of all or any portion of the Lender Indebtedness, including, without limitation, 463IP Partners, LLC, a Delaware limited liability company.

 

"Environmental Law" means, at any time, any applicable federal, state, local or foreign law (including common law), ordinance, rule, regulation, permit, order, or other legally binding requirement that then (1) regulates the quality of air, water, soil, or other environmental media, (2) regulates the generation, management, transportation, treatment, storage, recycling, or disposal of any waste, (3) protects public health, occupational safety and health, natural resources, or the environment, or (4) establishes liability for the investigation, removal, or remediation of, or harm caused by, Contamination.

 

"ERISA" means the Employee Retirement Income Security Act of 1974, as now and in the future amended, together with all regulations issued under it.

 

"ERISA Affiliate" means any trade or business (whether or not incorporated) that together with Borrower or any Guarantor is treated as a single employer under Section 414 of the Code.

 

 

 

 

"ERISA Event" means the occurrence of any of the following: (1) any "reportable event," as defined in Section 4043(c) of ERISA, with respect to any Plan, other than those events as to which the 30-day notice period referred to in Section 4043(c) of ERISA has been waived; (2) any nonexempt "prohibited transaction," within the meaning of Section 406 of ERISA or Section 4975 of the Code, with respect to any Plan; (3) the failure of any health and welfare plan to satisfy the non-discrimination requirements of Sections 97, 105, 125 or 129 of the Code or Section 2716 of Title XXVII of the Public Health Service Act; (4) the receipt by Borrower, any Guarantor, or any ERISA Affiliate of any notice of liability under Section 4980H of the Code; (5) the determination by Borrower, any Guarantor, or any ERISA Affiliate of liability under Section 4980D of the Code or receipt by Borrower, any Guarantor, or any ERISA Affiliate of any notice of liability under Section 4980D of the Code; (6) any failure by any Pension Plan to satisfy the minimum funding standards, within the meaning of Sections 412 or 430 of the Code or Section 302 of ERISA, applicable to such Pension Plan, whether or not waived; (7) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan; (8) the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Pension Plan; (9) the failure of Borrower, any Guarantor, or any ERISA Affiliate to make any required contribution to a Multiemployer Plan; (10) the incurrence by Borrower, any Guarantor, or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Pension Plan, including, without limitation, the imposition of any lien in favor of the PBGC or any Pension Plan; (11) a determination that any Pension Plan is, or is expected to be, in "at risk" status, within the meaning of Section 430 of the Code or Section 303 of ERISA; (12) the receipt by Borrower, any Guarantor, or any ERISA Affiliate from the PBGC or a Plan administrator of any notice relating to an intention to terminate any Pension Plan or to appoint a trustee to administer any Pension Plan under Section 4042 of ERISA; (13) the incurrence by Borrower, any Guarantor, or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Pension Plan or Multiemployer Plan; or (14) the receipt by Borrower, any Guarantor, or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Borrower, any Guarantor, or any ERISA Affiliate of any notice, concerning the imposition of withdrawal liability, within the meaning of Section 4201 of ERISA, or a determination that a Multiemployer Plan is, or is expected to be, "insolvent," within the meaning of Section 4245 of ERISA, in "reorganization," within the meaning of Section 4241 of ERISA, or in endangered or critical status, within the meaning of Section 432 of the Code or Section 305 of ERISA.

 

"Event of Default" means each event specified in Section 9 of this Note.

 

"Excluded Swap Obligation" means, with respect to any Guarantor of a Swap Obligation, including the grant of a security interest to secure the guaranty of such Swap Obligation, any Swap Obligation if, and to the extent that, such Swap Obligation is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor's failure, for any reason, to constitute an "eligible contract participant" as defined in the Commodity Exchange Act and the regulations thereunder at the time the guaranty or grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Swap Obligation or security interest is or becomes illegal.

 

 

 

 

"Executive Order" means Executive Order No. 13224, effective as of September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)).

 

"Foreign Assets Control Regulations" means the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended).

 

"Future Subsidiary" means any Subsidiary that arises or exists in the future, whether by Borrower's acquisition of such Subsidiary or otherwise.

 

"GAAP" means generally accepted accounting principles of the United States of America, consistently applied.

 

"GAAP Exceptions" means typical year-end adjustments and a lack of footnotes otherwise required by GAAP.

 

"Guarantor" means each Entity Guarantor and each Individual Guarantor. During any time when the Lender Indebtedness is not required to be guarantied, each reference in this Note to "Guarantor," "Entity Guarantor," and "Individual Guarantor" shall be null and void.

 

"Hazardous Substance" means, at any time, any substance or waste that is then regulated by or subject to any Environmental Law.

 

"Indebtedness" means, at any time, the sum of all of the following: (1) obligations for borrowed money, (2) obligations representing the deferred purchase price of property or services (other than accounts payable arising in the ordinary course of business payable on terms customary in the trade), (3) obligations, whether or not assumed, secured by liens or payable out of the proceeds or production from property now or hereafter owned or acquired, (4) obligations which are evidenced by notes, acceptances, or other instruments, (5) obligations with respect to letters of credit, whether drawn or undrawn, contingent or otherwise, (6) net mark-to-market exposure under Rate Management Agreements, swaps and other financial contracts, (7) off-balance sheet liabilities, (8) Capitalized Lease Obligations, (9) indebtedness attributable to permitted securitization transactions, (10) any other obligation for borrowed money or other financial accommodation which in accordance with GAAP would be shown as a liability on a balance sheet, and (11) all contingent obligations with respect to any of the foregoing indebtedness of others.

 

"Interest Rate" means One Month LIBOR Rate, plus 1.00%, but in no event will the interest rate be less than 2.50%, until Maturity.

 

"Lender Indebtedness" means any Indebtedness, of whatever type or nature, that Borrower now or in the future owes to Lender or any Affiliate of Lender, including, without limitation, all indebtedness and obligations under this Note and any Rate Management Obligations, but not including Excluded Swap Obligations.

 

 

 

 

"Lender Information" means any review, appraisal, audit, survey, inspection, report, or other information that Lender obtains, whether or not Borrower pays for it or Lender furnishes it to Borrower.

 

"liabilities" means, at any time, all liabilities that GAAP requires to be classified as liabilities on a balance sheet of Borrower.

 

"LIBOR Rate" means the variable rate per annum equal to the average of interbank offered rates for one month U.S. dollar-denominated deposits in the London market (LIBOR) as published in the money rates section of the Wall Street Journal , or such other independent reporting source selected in the Lender's sole discretion, it being acknowledged that the LIBOR Rate is not necessarily (a) the lowest rate of interest or the only "LIBOR" denominated interest rate then available from Lender, or (b) calculated in the same manner as any other "LIBOR" denominated interest rate offered by Lender. It is further acknowledged that the LIBOR Rate is not necessarily calculated in the same manner as any other "LIBOR" denominated interest rate offered by any other bank. Lender will inform Borrower of the current LIBOR Rate upon request. The LIBOR Rate shall be calculated on the first Banking Day of each month, shall be based upon the LIBOR Rate effective on such Banking Day, and shall be the interest rate of this Note for the entire month. If the LIBOR Rate is unavailable at any time prior to the time the principal of this Note is paid in full, Lender may designate a substitute index rate with notice to Borrower. Borrower acknowledges that Lender may make loans based on other indexes or rates as well. Lender may adjust the LIBOR Rate based upon requirements of any governmental authority or quasi-governmental authority, central bank, or comparable agency related to reserves, assessments, special deposit, or similar requirements applicable to Lender, including, without limitation, requirements arising from or related to Regulation D of the Board of Governors of the Federal Reserve System (or its successor), the Dodd-Frank Act, or rules, guidelines, or directives promulgated by the Bank of International Settlements, Basel Committee on Banking Regulations and Supervisory Practices (or its successor). Lender shall notify Borrower of any such adjustment to the LIBOR Rate (pursuant to an account statement or otherwise), but Lender's failure to do so shall not invalidate or otherwise limit Lender's adjustment of the LIBOR Rate.

 

"Loan" or "Loans" means any loan that Lender extends to Borrower under this Note.

 

"Loan Document" means this Note, each note, each renewal, extension, and replacement of each Note, each Collateral Document, any and all Rate Management Agreements, and every other agreement, instrument, and document that has been or in the future is signed or delivered in connection with this Note or in connection with any Lender Indebtedness.

 

"Material Adverse Effect" means any material adverse effect upon (1) the validity, performance, or enforceability of any Loan Document, (2) the properties, contracts, business operations, prospects, profits, or condition (financial or otherwise) of Borrower or any Guarantor, (3) the ability of Borrower or any Guarantor to fulfill any obligation under any Loan Document or (4) the ability of Lender to take possession of, collect, or otherwise realize upon any Collateral or other security for the Lender Indebtedness.

 

 

 

 

"Maturity" means the date and time when the entire remaining unpaid principal balance of this Note shall be or shall become due and payable for any reason, including acceleration under Section 9 .

 

" Maturity Date " means November 30, 2020.

 

MidCap ” means MidCap Funding X Trust, a Delaware statutory trust, and its successors and assigns.

 

"MidCap Credit Agreement" means the Credit and Security Agreement, dated as of January 22, 2015, by and among Borrower, certain subsidiaries of the Borrower, MidCap and the additional lenders from time to time party thereto, as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms thereof.

 

"Multiemployer Plan" means a "multiemployer plan," as defined in Section 4001(a)(3) of ERISA.

 

"Note" means this Term Loan Note and Agreement, as may in the future be amended, supplemented, or restated, including the schedules attached to this Note.

 

"OFAC" means the Office of Foreign Assets Control.

 

" Overdue Rate " means a rate per annum that is equal to the sum of the Interest Rate of this Note, plus 3.00%.

 

"Owner" means any Person who holds an Ownership Interest in Borrower.

 

"Owners' Equity" means, at any time, the sum of the following accounts set forth in a balance sheet of Borrower, prepared in accordance with GAAP: (1) the par or stated value of all outstanding Ownership Interests, (2) capital surplus, (3) retained earnings, and (4) Subordinated Indebtedness.

 

"Ownership Interest" means capital stock, membership interests, partnership interests, or other equity interests.

 

"PBGC" means the Pension Benefit Guaranty Corporation (or its successor).

 

"Payment Date" means the 1st day of each month beginning January 1, 2019.

 

"Pension Plan" means any Plan, other than a Multiemployer Plan, which is subject to Title IV of ERISA or Sections 412 and 430 of the Code or Section 302 of ERISA.

 

 

 

 

"Permitted Lien" means (1) a security interest, mortgage or other lien in favor of Lender, (2) any security interest, mortgage or other liens in favor of MidCap in connection with the MidCap Credit Agreement, (3) an existing encumbrance described on Schedule A attached to this Note or a future encumbrance approved in writing by Lender, (4) a lien for taxes that are not delinquent or, in a jurisdiction where payment of taxes is abated during the period of any contest, being contested in good faith by appropriate proceedings, if adequate reserves for it have been set aside on the obligated Person's books, (5) an inchoate construction, mechanics', workmen's, repairmen's, or other like lien arising in the ordinary course of business, if the obligation secured is not delinquent, and (6) a purchase money security interest or Capital Lease (i) that is created to secure payment of all or a portion of the purchase price of any tangible asset acquired by Borrower, if the outstanding principal amount of Indebtedness secured by such lien does not at any time exceed the purchase price paid by Borrower for such asset, (ii) that does not encumber any other asset at any time owned by Borrower, and (iii) that comprises the only lien on such asset at any time, other than liens in favor of Lender.

 

"Person" means an individual, sole proprietorship, corporation, partnership, limited liability company, trust, association, and any other entity.

 

"Plan" means any "employee benefit plan," as defined in Section 3(3) of ERISA, which is (now or in the future), or within the prior six years was, maintained or contributed to by Borrower, any Guarantor, or any ERISA Affiliate; provided, however, that "Plan" shall include all Multiemployer Plans, without regard to the preceding six-year limitation applicable to other Plans.

 

"Prohibited Jurisdiction" means any country or jurisdiction that is the subject of a prohibition order (or any similar order or directive), sanctions, or restrictions promulgated or administered by any governmental authority of the United States of America.

 

"Prohibited Person" means any Person (1) who is subject to the provisions of the Executive Order, (2) who is owned or controlled by, or acting for or on behalf of, any Person who is subject to the provisions of the Executive Order, (3) with whom Lender is prohibited from dealing or otherwise engaging in any transaction by any requirement of law, including the Executive Order, (4) who commits, threatens, or conspires to commit or supports "terrorism" as defined in the Executive Order, (5) who is named as a "specially designated national and blocked person" on the most current list published by the OFAC at its official website, http://www.treasury.gov/ofac/downloads/t11sdn.pdf, or at any replacement website or other replacement official publication of such list, or (6) who is an Affiliate of or affiliated with a Person listed above.

 

 

 

 

"Rate Management Agreement" means any agreement, device or arrangement providing for payments which are related to fluctuations of interest rates, exchange rates, forward rates, commodity prices or equity prices, including, without limitation, any transaction, device, agreement or arrangement (1) that is or is the functional equivalent of a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross- currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions), or (2) that is a type of transaction that is similar to any transaction referred to in clause (1) above that is currently, or in the future becomes, recurrently entered into in the financial markets (including terms and conditions incorporated by reference in such agreement) and which is a forward, swap, future, option or other derivative of one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, or any combination of these transactions, which transactions may be evidenced by an ISDA Master Agreement between Borrower and Lender or any Affiliate of Lender, and any schedules, confirmations and documents and other confirming evidence between the parties confirming transactions thereunder, all whether now existing or hereafter arising, and in each case as amended, modified or supplemented from time to time.

 

"Rate Management Obligations" means any and all obligations of Borrower to Lender or any Affiliate of Lender, whether absolute, contingent, or otherwise and howsoever and whensoever (whether now or in the future) created, arising, evidenced, or acquired (including all renewals, extensions, and modifications of and substitutions for the foregoing), under or in connection with (i) any and all Rate Management Agreements, or (ii) any and all cancellations, buy-backs, reversals, terminations, or assignments of any Rate Management Agreement.

 

"Subordinated Indebtedness" means, at any time, all Indebtedness that Borrower owes to any Person or Persons to the extent that its repayment is subordinated to payment of the Lender Indebtedness in form and manner satisfactory to Lender.

 

"Subsidiary" means a Person whose Ownership Interests having ordinary voting power (other than Ownership Interests having such power only by reason of the happening of a contingency) to elect a majority of the directors, managers, or other governing body of such Person are owned, directly or indirectly, by Borrower.

 

"Swap Obligation" means any Rate Management Obligation that constitutes a "swap" within the meaning of Section 1a (47) of the Commodity Exchange Act.

 

"Trading With the Enemy Act" means 50 U.S.C. App. 1 et seq.

 

"Unmatured Event of Default" means an event, condition, or circumstance that, with the lapse of time or the giving of notice to Borrower, or both, would be an Event of Default.

 

"USA PATRIOT Act" means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107- 56).

 

2.      Payments . Borrower shall pay the accrued interest on the principal balance of the Note on each Payment Date until November 30, 2020, at which time all accrued interest and the principal balance of this Note shall be paid in full.

 

3.      Interest Rates . Until Maturity, the unpaid principal balance of this Note shall bear interest at the Interest Rate. After Maturity or upon the occurrence and during the continuance of an Event of Default, the unpaid principal balance of this Note shall bear interest at the Overdue Rate.

 

 

 

 

4.      Method of Calculating Interest . Interest on this Note and other amounts that are due under this Note shall be computed on the basis of a year consisting of 360 days and paid for actual days elapsed, calculated as to each Interest Period from and including the first day of the Interest Period but excluding the last day of the Interest Period. If interest payable under this Note is in excess of the maximum permitted by law, the interest chargeable hereunder shall be reduced to the maximum amount permitted by law and any excess interest paid by Borrower to Lender over the maximum amount permitted by law shall be credited to the principal balance of this Note and applied to the same and not to the payment of interest.

 

5.      Prepayments . Except as otherwise provided in any applicable Rate Management Agreement, Borrower may from time to time prepay the principal of this Note in whole or in part without premium or penalty. Borrower may not reborrow amounts that it prepays.

 

6.      Late Payments; Fees . If Borrower fails to pay when due all or any portion of the regularly scheduled, monthly payment of principal or interest under this Note is not paid within ten (10) Banking Days after it was due, then Borrower must pay to Lender a late charge in an amount equal to three percent (3%) of the amount past due as of the date the payment was due. This late charge is in addition to Lender's other rights and remedies for default in payment of an installment of principal or interest when due. Lender may impose a non-sufficient funds fee for any check that is presented for payment that is returned for any reason.

 

7.      Security . This Note and all obligations of Borrower under it are secured by the Collateral Documents.

 

8.      Warranties and Representations . Borrower represents and warrants to Lender as follows:

 

(a)     Borrower is duly organized, validly existing, and in good standing under the laws of the State of Nevada. Borrower is duly qualified and authorized to do business, and is in good standing as a foreign entity, in each jurisdiction in which the failure to be so qualified or authorized to do business could reasonably be expected to have a Material Adverse Effect.

 

(b)     Borrower has all requisite power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business as now conducted and as contemplated that Borrower's business will be conducted in the future. Borrower is in compliance with all laws, rules, and regulations that apply to it, its operations, and its properties, the failure to comply with which could reasonably be expected to have a Material Adverse Effect.

 

(c)     All financial statements of Borrower which have been delivered to Lender have been prepared in accordance with Income Tax Basis Accounting and present fairly the Income Tax Basis financial position of Borrower as of those dates and the results of Borrower's operations for those periods. Since the date of the most recent of those financial statements, no change has occurred in Borrower's financial condition or operations that could have a Material Adverse Effect.

 

 

 

 

(d)     Neither this Note nor any financial statement that Section 8(c) above refers to nor any other written statement that Borrower has furnished to Lender in connection with the negotiation of any Loan contains any untrue statement of a material fact or omits a material fact necessary to make the statements contained in this Note, the financial statement, or other written statement not misleading. There is not any fact that Borrower has not disclosed to Lender in writing that has or, to the best of Borrower's knowledge, in the future could reasonably be expected to have, a Material Adverse Effect.

 

(e)     There is no proceeding pending, or, to the best of Borrower's knowledge, threatened, before any court, governmental authority or arbitration board or tribunal, against or affecting Borrower that, if determined adversely to Borrower, could have a Material Adverse Effect. Borrower is not in default with respect to any order, judgment or decree of any court, governmental authority, or arbitration board or tribunal.

 

(f)     Borrower has good and marketable title to all of the assets that they purport to own, including, as applicable, the assets that the financial statements referred to in Section 8(c) of this Note describe, free and clear from all liens, encumbrances, security interests, claims, charges, and restrictions, except Permitted Liens.

 

(g)     Borrower owns, licenses, or otherwise controls all of the patents, trademarks, service marks, trade names, copyrights, licenses, and rights, if any, that are necessary for the present and planned future conduct of its business, without any conflict with the rights of any other Person.

 

(h)     Borrower has full power and authority to sign, deliver, and perform the Loan Documents to which it is a party; the execution, delivery and performance of the Loan Documents (1) have been duly authorized by appropriate action of Borrower, (2) will not violate the provisions of its organizational documents or of any law, rule, judgment, order, agreement, or instrument to which Borrower is a party or by which it is bound, and (3) do not require any approval or consent of any public authority or other third party; such Loan Documents have been properly signed and delivered by, and are the valid and binding obligations of, Borrower and are generally enforceable in accordance with their terms.

 

(i)     Borrower has filed each tax return that it is required to file in any jurisdiction, and each has paid each tax, assessment, fee, and other governmental charge upon it or upon its assets, income, or franchises before the time when its nonpayment could give rise to a penalty or interest. Borrower does not know of any proposed additional tax assessment against it.

 

(j)     Borrower is not, and no Person that has "control" of Borrower is, an "executive officer," "director," or "person who directly or indirectly, or in concert with one or more persons owns, controls or has the power to vote more than 10 percent of any class of voting securities" (within the meaning of 12 U.S.C. §375(b) and regulations issued under that section), of Lender or any subsidiary of Lender.

 

 

 

 

(k)     All of Borrower's real and personal property, and all operations and activities on it, are in compliance with all Environmental Laws, the failure to comply with which could reasonably be expected to have a Material Adverse Effect; none of Borrower's or any Guarantor's real or personal property is or will be (1) Contaminated or the site of the disposal or release of any Hazardous Substance, (2) the source of any Contamination of any adjacent property or of any groundwater or surface water, or (3) the source of any air emissions in excess of any legal limit that is now or in the future in effect, the effect of which could reasonably be expected to have a Material Adverse Effect; and Borrower has not received notice of any Claim with respect to potential liability under any Environmental Laws or knows of any basis for such liability.

 

(l)     Immediately after the consummation of the transactions to occur on the date of this Note: (1) the fair value of Borrowers’ assets, at a fair valuation, will exceed their debts and liabilities, subordinated, contingent, or otherwise; (2) the present fair saleable value of Borrowers’ property will be greater than the amount that will be required to pay the probable liability of their debts and other liabilities, subordinated, contingent, or otherwise, as such debts and other liabilities become absolute and matured; (3) Borrowers will be able to pay their debts and liabilities, subordinated, contingent, or otherwise, as such debts and liabilities become absolute and matured; and (4) Borrowers will not have unreasonably small capital with which to conduct their businesses as now conducted and as contemplated that they will be conducted in the future.

 

(m)     There are no strikes, lockouts, or slowdowns against Borrower pending or, to the best of Borrower's knowledge, threatened. The hours worked by and payments made to employees of Borrower, and their respective Affiliates have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters. All payments due from Borrower, or its/their respective Affiliates, or for which any claim may be made against any of them, on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of Borrower or the Affiliate(s), as applicable.

 

 

 

 

(n)     (1) Neither Borrower nor any Affiliate over which Borrower exercises control is a Prohibited Person, and each such Affiliate is in compliance with all applicable orders, rules, regulations, and recommendations of the OFAC; (2) neither Borrower nor any Affiliate over which Borrower exercises control, or its members, shareholders or partners: (i) is subject to United States of America or multilateral economic or trade sanctions adopted by the United States of America and currently in force, (ii) is owned or controlled by, or acts on behalf of, any governments or Persons who are subject to United States of America or multilateral economic or trade sanctions adopted by the United States of America and currently in force, (iii) is a Prohibited Person or is otherwise named, identified, or described on any blocked persons list, designated nationals list, denied persons list, entity list, debarred party list, unverified list, sanctions list or other list of individuals or entities with whom U.S. Persons may not conduct business, including, without limitation, lists published or maintained by the OFAC, United States Department of Commerce, or the United States Department of State; (3) none of the Collateral is traded or used, directly or indirectly by a Prohibited Person or organized in a Prohibited Jurisdiction; (4) to the extent applicable to them, Borrower and its Affiliates have established an anti-money laundering compliance program as required by all applicable anti-money laundering laws and regulations, including the USA PATRIOT Act; (5) none of Borrower's, or any of its Affiliates', funds or other assets constitute property of, or are beneficially owned, directly or indirectly, by any Person subject to trade restrictions under the laws of the United States of America, including, without limitation, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading With the Enemy Act, any of the Foreign Assets Control Regulations, or any enabling legislation or regulations promulgated thereunder or executive order relating thereto, including, without limitation (i) the Executive Order, and (ii) the USA PATRIOT Act, with the result that an investment in Borrower or any of its Affiliates (whether directly or indirectly), is prohibited by law or any Loan made by Lender is in violation of law. No such Person has any interest of any nature whatsoever in Borrower or any Affiliate over which Borrower exercises control, with the result that an investment in Borrower or any such Affiliate (whether directly or indirectly) is prohibited by law or any Loan made by Lender is in violation of law; (6) no funds of Borrower or any Affiliate over which Borrower exercises control have been derived from any unlawful activity with the result that an investment in Borrower or any such Affiliate (whether directly or indirectly) is prohibited by law or any Loan made by Lender is in violation of law; and (7) neither Borrower nor any Affiliate over which Borrower exercises control (i) is a "blocked person" as described in the Executive Order, the Trading With the Enemy Act, or the Foreign Assets Control Regulations, or (ii) engages in any dealings or transactions, or is otherwise associated, with any such "blocked person." For the purposes of determining whether a representation with respect to any indirect ownership is true under this Section 8 , neither Borrower nor any Affiliate over which Borrower exercises control will be required to make any investigation into (a) ownership of publicly traded stock or other publicly traded securities, or (b) the ownership of assets by a collective investment fund that holds assets for employee benefit plans or retirement arrangements.

 

9.      Default and Acceleration . Each of the following is an " Event of Default " under this Note:

 

(a)     If Borrower defaults in the payment of the principal or interest of any Loan or if Borrower or any Guarantor defaults in the payment of principal or interest of any other Lender Indebtedness, within five days of the date when due, whether by acceleration or otherwise.

 

(b)     If Borrower fails to perform any of its other obligations under, or to comply with any of the terms, conditions, and covenants that are contained in, this Agreement, any Rate Management Agreement, or any other Loan Document or other agreement, document, or instrument that Borrower has given or in the future gives to Lender to secure any Lender Indebtedness, or if there occurs any other event of default, whether by Borrower, any Guarantor, or any third party (other than Lender and its Affiliates), as defined in any Loan Document or in any other agreement, document, or instrument that has been given or in the future is given to Lender to secure any Lender Indebtedness, and such failure or default continues for a period of 20 days after notice from Lender, except that such notice shall not be required, and Borrower shall have no cure rights, with respect of any default under any Section of this Note or any default that is not capable of being cured.

 

 

 

 

(c)     If Borrower defaults in the payment of any Indebtedness that Borrower at any time owes to any other Person or Persons aggregating more than $500,000.00 and the Person or Persons holding such Indebtedness elects to accelerate such Indebtedness before its stated maturity as a result of such default.

 

(d)     If any statement, warranty, or representation that Borrower makes in this Note or any statement, warranty, or representation that Borrower has made or in the future makes in any other Loan Document, certificate, report, or other document, instrument, or agreement that is delivered under this Note or in connection with any Lender Indebtedness is false or inaccurate in any material respect when made.

 

(e)     If any Collateral Document for any reason fails to create a valid and perfected first priority security interest or mortgage lien on any Collateral, except as permitted by the terms of such Collateral Document; if any Collateral Document fails to remain in full force and effect; or if any action is taken to discontinue or to assert the invalidity or unenforceability of any Collateral Document, including, without limitation, if any guaranty that now or in the future secures payment of all or any part of the Lender Indebtedness is terminated or limited for any reason without the written consent of Lender.

 

(f)     Intentionally deleted.

 

(g)     If an ERISA Event occurs and such event or condition could, in Lender's sole judgment, reasonably be expected to result in a Material Adverse Effect.

 

(h)     If Borrower or any Guarantor (i) applies for or consents to the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of all or a substantial part of its property, (ii) is generally unable to pay its debts as they become due, (iii) makes a general assignment for the benefit of its creditors, (iv) starts a voluntary case under the federal Bankruptcy Code (as now or in the future in effect),

(v)     files a petition that seeks to take advantage of any other law that provides for the relief of debtors, (vi) fails to controvert in a timely or appropriate manner, or acquiesces in writing to, any petition that is filed against Borrower or the Guarantor in any involuntary case under the Bankruptcy Code, or (vii) takes any action for the purpose of effecting any of the foregoing.

 

(i)     If a proceeding or case is started in any court of competent jurisdiction and is not dismissed within 60 days, seeking (i) the liquidation, reorganization, dissolution, winding up, or composition or readjustment of Borrower or any Guarantor or its assets or the appointment of a trustee, receiver, custodian, liquidator, or the like of Borrower or any Guarantor or of all or any substantial part of its assets or (ii) similar relief in respect of Borrower or any Guarantor under any law that provides for the relief of debtors; or if an order for relief against Borrower or any Guarantor is entered in an involuntary case under the Bankruptcy Code.

 

 

 

 

If an Event of Default that is described in Subsections 9(a) through 9(g) above occurs, then, at the option of Lender, all or any part of the unpaid principal balance of and accrued interest on all Lender Indebtedness will become immediately due and payable, without presentment, demand, or notice of any kind, all of which Borrower waives.

 

If an Event of Default that is described in Subsection 9(h) or 9(i) above occurs, then the entire unpaid principal balance of and accrued interest on all outstanding Lender Indebtedness will automatically and immediately become due and payable, without presentment, demand, or notice of any kind, all of which Borrower waives.

 

If an Event of Default occurs, in addition to acceleration and all other remedies which may be available, whether at law, in equity or otherwise, Lender may immediately exercise any one or any combination of the rights and remedies provided in this Note or in any Collateral Document or as provided at law or in equity, including but not limited to the appointment of a receiver.

 

10.      Place and Application of Payments . Each payment upon this Note shall be made at Lender's address set forth in this Note or at any other place that the holder of this Note directs in writing. Any payment upon this Note shall be applied to any expenses (including but not limited to expenses of collection) that are then due and payable to Lender under this Note, to late charges that are due and payable, to any accrued and unpaid interest under this Note and to the unpaid principal balance, in Lender's discretion. If Borrower at any time owes Lender any indebtedness or obligation in addition to the indebtedness that this Note evidences, and if any indebtedness that Borrower owes to Lender is then in default, then Borrower shall not have, and waives, any right to direct or designate the particular indebtedness or obligation upon which any payment made by, or collected from, Borrower shall be applied. Lender shall determine in its sole discretion the manner of application of the payment, as between or among such indebtedness and obligations.

 

 

11.

Affirmative Covenants . Borrower agrees as follows:

 

(a)     Furnish to Lender, beginning with its fiscal year ending December 31, 2018, a company prepared 10-K financial report, within five (5) days of filing with the United States Securities and Exchange Commission.

 

(b)     Furnish to Lender, beginning with its fiscal quarter ending March 31, 2019, a company prepared 10-Q financial report, within five (5) days of filing with the United States Securities and Exchange Commission.

 

(c)     (1) Promptly inform Lender of any occurrence that is an Event of Default that has had, or could reasonably be expected to have, a Material Adverse Effect and (2) grant to Lender or its representatives the right to examine its and its Affiliates' books and records at any reasonable time or times but not more than once annually at Lender's expense.

 

 

 

 

(d)     (1) Maintain or cause to be maintained insurance, including, without limitation, "special form" (f/k/a "all risk") property insurance, flood insurance (if required), workers' compensation insurance, and commercial general liability coverage with responsible insurance companies on its properties; and (2) furnish to Lender upon its request the details with respect to that insurance and satisfactory evidence of that insurance coverage. Each insurance policy that this Section 11(d) requires shall be written or endorsed in a manner that makes losses, if any, payable to Borrower and Lender or Guarantor and Lender, as applicable, as their respective interests appear and shall include, as applicable, an additional insured endorsement or a standard mortgage clause or standard lender's loss payable endorsement in favor of Lender in form and substance satisfactory to Lender.

 

(e)     Pay and discharge or cause to be paid and discharged, before they become delinquent and subject to penalty for late payment, all taxes and assessments of whatever nature that are levied or assessed against it or any of its properties, unless and to the extent only that (1) in a jurisdiction where payment of taxes and assessments is abated during the period of any contest, those taxes or assessments are being contested in good faith by appropriate proceedings, and (2) Borrower shall have set aside on its books adequate reserves with respect to those taxes and assessments.

 

(f)     Maintain its existence in good standing in its current jurisdiction of organization and its qualification in good standing in every other jurisdiction in which the failure to be qualified or authorized to do business could reasonably be expected to have a Material Adverse Effect; continue to conduct and operate its business substantially as presently conducted and operated; and comply with all governmental laws, rules, regulations, and orders that apply to it, the failure to comply with which could reasonably be expected to have a Material Adverse Effect.

 

(g)     Act prudently and in accordance with customary industry standards in managing and operating its assets, properties, business, and investments; and keep in good working order and condition, ordinary wear and tear excepted, all of its assets and properties that are necessary to the conduct of its business.

 

(h)     Comply with all applicable federal, state and local laws, ordinances, and rules and regulations concerning wage payments, minimum wages, overtime laws, and payment of withholding taxes, and deliver to Lender such reports and information, in a form reasonably satisfactory to Lender, as Lender may reasonably request from time to time to establish compliance with such laws.

 

 

(i)

Intentionally deleted.

 

 

(j)

Intentionally deleted.

 

(k)     (1) Comply in all material respects with the requirements of ERISA, including, without limitation, all provisions regarding minimum funding requirements and requirements as to plan termination insurance; (2) within 30 days after it is filed, furnish to Lender a copy of each annual report and annual return, with all schedules and attachments, that ERISA requires Borrower to file with the Department of Labor or the Internal Revenue Service pursuant to ERISA in connection with each Plan for each Plan year; (3) notify Lender immediately of any fact or circumstance, including, without limitation, any "reportable event" (as defined in Title IV of ERISA), that might be grounds for termination of a Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer the Plan, together with a statement, if Lender requests it, as to the reason the fact or circumstance has occurred and the action, if any, that Borrower proposes to take to avoid termination of the Plan; and (4) furnish to Lender, upon its request, any additional information concerning any Plan that Lender reasonably requests.

 

 

 

 

(l)     Notify Lender in writing within 10 days after Borrower, any Affiliate, or any Guarantor receives any notice of the beginning of (1) any proceeding or investigation by a federal or state environmental agency against Borrower, the Affiliate, or the Guarantor regarding compliance with Environmental Laws, or (2) any other judicial or administrative proceeding or litigation by or against Borrower, any Affiliate, or any Guarantor that, if adversely decided, could reasonably be expected to have a Material Adverse Effect.

 

(m)     Sign and deliver, or cause to be signed and delivered, any and all other agreements, instruments, assurances, or other documentation, and take, or caused to be taken, all other action, as Lender deems necessary in its reasonable discretion from time to time to give full effect to the Loan Documents and the transactions contemplated by this Note.

 

12.      Negative Covenants. From the date of this Note and until all Lender Indebtedness is fully paid and Lender does not have any obligation to extend loans or other credit facilities to Borrower, Borrower shall not, without the prior written consent of Lender, which shall not be unreasonably withheld:

 

 

(a)

Intentionally deleted.

 

 

(b)

Intentionally deleted .

 

 

(c)

Intentionally deleted.

 

 

(d)

Intentionally deleted.

 

(e)     Enter into any merger, consolidation, reorganization, or recapitalization, or purchase or otherwise acquire all, or substantially all, of the assets, obligations, or any Ownership Interests of any Person, other than a reorganization, recapitalization, purchase or acquisition of Borrower's Ownership Interests on terms and conditions that are satisfactory to Lender in its reasonable discretion; or amend, modify, or waive any of its rights under its charter documents, to the extent any such amendment, modification, or waiver could be adverse to Lender.

 

 

(f)

Intentionally deleted.

 

 

(g)

Intentionally deleted.

 

 

(h)

Intentionally deleted.

 

 

(i)

Intentionally deleted.

 

 

(j)

Intentionally deleted.

 

 

 

 

(k)     Engage, directly or indirectly, in any line of business other than a line of business in which Borrower is presently engaged or a line of business related to it.

 

 

(l)

Engage in any activity that would violate any applicable laws.

 

 

(m)

Intentionally deleted.

 

(n)     Change its name, fiscal year, or method of accounting, except as GAAP requires; provided, however, that Borrower may change its name if Borrower gives Lender 60 days' prior written notice of the name change.

 

 

(o)

Intentionally deleted.

 

 

(p)

Intentionally deleted.

 

13.      Application of Proceeds. Borrower shall use the proceeds of the Term Loan to (a) reduce outstanding payables, (b) purchase inventory, and/or (c) fund other working capital needs of Borrower.

 

14.      Remedies . Lender shall have all rights and remedies provided by law and by agreement of Borrower. Lender shall have the right at any time to set off any indebtedness that Lender then owes to Borrower against any Lender Indebtedness that is then due and payable. Lender shall also have all rights and remedies set forth in each other Loan Document.

 

15.      Fees and Expenses . Upon signing this Note, Borrower shall pay Lender a commitment fee of $2,500. Borrower shall also pay, or reimburse Lender for, all reasonable expenses incurred by Lender (including, but not limited to, search fees and fees and expenses of legal counsel, other professional advisers and consultants and experts) in connection with (1) the negotiation, preparation and execution of this Note and the other Loan Documents, each amendment to, or waiver of any provision of, this Note and the other Loan Documents, and each refinancing or restructuring of this Note, (2) the administration of this Note and the other Loan Documents, including, without limitation, making filings and recordings in public offices to perfect or give notice of liens in favor of Lender and obtaining financing statement searches, tax lien searches, inspections, audits and assessments, (3) obtaining advice of counsel or other professional advisers, consultants and experts regarding any aspect of this Note and the other Loan Documents, (4) the enforcement of any provision of this Note or the other Loan Documents and (5) the collection of any amount at any time owing to Lender by Borrower under this Note or the other Loan Documents.

 

16.      Relationship . The relationship between Borrower and Lender under this Note is solely that of debtor and creditor. Lender does not have any fiduciary responsibilities to Borrower. Lender does not and shall not have any responsibility to review, or to inform Borrower of any matter in connection with, any aspect of Borrower's business, operations or properties, any Collateral, or any other security for the Lender Indebtedness. Borrower shall rely entirely upon its own judgment with respect to each such matter.

 

 

 

 

17.      Environmental Compliance . Borrower represents and warrants to Lender, and agrees, that: (1) none of Borrower's real or personal property is, and Borrower will not permit it to become, contaminated by any substance that is now or in the future regulated by or subject to any present or future law or regulation that establishes liability for the removal or clean-up of, or damage caused by, any environmental contamination; (2) Borrower's operations, activities, and real and personal properties are, and Borrower shall cause them to continue to be, in compliance with each such law and regulation; (3) at any time Lender may, but shall not be obligated to, conduct or obtain an environmental investigation or audit of any or all of Borrower's properties, and, if obtained while an Event of Default exists, Borrower shall reimburse Lender for all reasonable costs and expenses that Lender incurs in connection with the investigation or audit, and

(4) Borrower shall indemnify and hold harmless Lender with respect to all claims, damages, losses, liabilities, and expenses (including reasonable attorney fees) asserted against or incurred by Lender by reason of any failure to comply with, or any inaccuracy in, any of the agreements, representations, and warranties contained in this paragraph.

 

18.      Waivers . No delay by Lender in the exercise of any right or remedy shall be a waiver of that right or remedy. No single or partial exercise by Lender of any right or remedy shall preclude any other or future exercise of that or any other right or remedy. No waiver by Lender of any default or of any provision of this Note or the other Loan Documents shall be effective unless it is in writing and signed by Lender. No waiver of any right or remedy on one occasion shall be a waiver of that right or remedy on any future occasion. Borrower waives demand for payment, presentment, notice of dishonor, and protest of this Note and consents to any extension or postponement of time of its payment.

 

19.      Governing Law . This Note shall be governed by and interpreted in accordance with the laws of the State of Michigan, without giving effect to principles of conflict of laws. Borrower irrevocably agrees and consents that Lender may bring an action against Borrower for collection or enforcement of this Note in a state or federal court that is located in, or whose district includes, Ottawa County, Michigan, and that court shall have personal jurisdiction over Borrower for purposes of the action. Borrower waives any objection that any such court is not a convenient forum. In any litigation between the parties involving this Note or any of the Loan Documents, the prevailing party shall be awarded its costs and expenses, including reasonable attorney fees.

 

20.      Complete Agreement . This Note and the Loan Documents contain the entire agreement between Borrower and Lender with respect to the subject matter of this Note. There are no promises, terms, conditions, or obligations with respect to such subject matter other than those contained in this Note and the Loan Documents. This Note may not be modified except by a writing signed by the party to be charged.

 

21.      Notices . Any notice or other communication that this Note requires or permits shall be in writing and shall be served either personally or sent by certified United States mail, with postage fully prepaid, or by a nationally-recognized overnight courier service, addressed to Borrower at its address set forth on Page 1 of this Note and to Lender at its address set forth on Page 1 of this Note, or to any other place that a party designates by like written notice served upon the other party. Notice shall be effective upon receipt, if served personally, three Banking Days after mailing, if served by mail, or one Banking Day after delivery to a courier service, if served by courier service.

 

 

 

 

22.      Other . This Note shall be binding upon and shall inure to the benefit of Lender and Borrower and their successors and assigns; provided, however, that Borrower may not assign its rights in or interests under this Note without Lender's prior written consent, which consent shall not be unreasonably withheld. There are no third party beneficiaries of this Note or any other Loan Document. Borrower and Lender have participated jointly in the negotiation of this Note. In the event any ambiguity or question of intent or interpretation arises, this Note shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Note or the other Loan Documents. The paragraph headings in this Note are included only for convenience of reference and shall not have an effect on the interpretation of a provision of this Note. If any provision of this Note is invalid, illegal, or unenforceable in any respect, then the validity, legality, and enforceability of the remaining provisions of this Note shall not be affected, impaired, prejudiced, or disturbed. This Note may be executed in one or more counterparts.

 

23.      Disclosure . Lender provides the following notice to Borrower as required by Section 326 of the USA Patriot Act of 2001 (31 USC Section 5318):

 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. This means that when you open an account, Lender will ask your name, address and other information that will allow Lender to identify you. Lender may also ask to see your organizational documents or other identifying documents.

 

 

 

 

EACH OF BORROWER AND LENDER IRREVOCABLY AND UNCONDITIONALLY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION, INCLUDING A CLAIM, COUNTERCLAIM, CROSS-CLAIM OR THIRD-PARTY CLAIM ("CLAIM"), THAT IS BASED UPON, ARISES OUT OF, OR RELATES TO THIS NOTE OR THE LOAN, INCLUDING A CLAIM BASED UPON, ARISING OUT OF, OR RELATING TO ANY ACTION OR INACTION OF LENDER IN CONNECTION WITH THE ACCELERATION OF THE LOAN OR ENFORCEMENT OF THIS NOTE.

 

[Signatures Follow]

 

 

 

 

 

TWINLAB     CONSOLIDATED     HOLDINGS,

INC., a Nevada corporation

 

 

 

By /s/ Carla Goffstein

 Carla Goffstein

 Its Chief Financial Officer and Treasurer

 

 

MACATAWA     BANK ,     a     Michigan     banking

corporation

 

 

By / s/Andrew E. Schmidt /

Andrew E. Schmidt

Its Vice President

 

 

 

 

SCHEDULE A

 

PERMITTED LIENS/ENCUMBRANCES AND

 

EXISTING NON-LENDER INDEBTEDNESS

 

 

Permitted Liens:

 

All liens disclosed in the UCC Lien Search results from the State of Michigan for Twinlab Consolidated Holdings, Inc., with a certification date of November 14, 2018.

 

There were no UCC Liens disclosed in the UCC Lien Search from the State of Delaware for 463IP Partners, LLC, with a certification date of November 9, 2018.

 

 

Non-Lender Indebtedness:

 

 

 

Creditor

Description of

Indebtedness

 

Unpaid Principal

 

Collateral

  

 

Lender has agreed to allow all non-lender indebtedness.

 

Exhibit 10.187

 

LIMITED GUARANTY

 

THIS LIMITED GUARANTY is given as of December 4, 2018, by 463IP PARTNERS, LLC , a Delaware limited liability company (" Guarantor "), in favor of MACATAWA BANK , a Michigan banking corporation, of 10753 Macatawa Drive, Holland, Michigan 49424 (" Lender "), pursuant to a certain $15,000,000 Term Loan Note and Agreement, dated as of the date of this Guaranty, between Lender and TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation (the Borrower "), as now or in the future amended, modified, or replaced (the " Loan Agreement ").

 

1.        Guaranty . In consideration of any credit or other financial accommodation that Lender has extended or in the future extends to Borrower, Guarantor absolutely, unconditionally, and irrevocably guarantees prompt payment when due and at all times in the future of (1) any and all Lender Indebtedness, and (2) any and all renewals, extensions, replacements, and modifications of and all interest accrued on the Lender Indebtedness (collectively, the " Guaranteed Indebtedness "); provided, however, that the Guaranteed Indebtedness shall not include Excluded Swap Obligations.

 

2.        Limited Liability . Notwithstanding the foregoing, the liability of Guarantor under Section 1 above is limited only to the terms and conditions of the Deposit Account Control Agreement by and between Guarantor and Lender dated the same day as this Limited Guaranty.

 

3.        Expenses . Guarantor shall reimburse Lender for all costs, reasonable attorney fees, and other expenses that Lender at any time expends or incurs in collecting or attempting to collect the Guaranteed Indebtedness or in enforcing this Guaranty or realizing upon any security for this Guaranty. Guarantor's obligations to reimburse Lender for such costs, fees and other expenses shall not be limited by Section 2 above.

 

4.        Unconditional . The effectiveness of this Guaranty is not subject to the satisfaction of any conditions, including, without limitation, the signing of this or another guaranty, or the granting of any other security, by any other Person. Lender may grant or continue credit from time to time to Borrower without notice to or authorization from Guarantor, regardless of Borrower's financial or other condition at the time of any such grant or continuation. Lender shall not have any obligation to disclose to or discuss with Guarantor its assessment of Borrower's financial condition or any matters affecting Borrower, its assets, liabilities, activities, or operations, including, without limitation, the status of the Lender Indebtedness. Guarantor's execution of this Guaranty, however, shall create no obligation or duty of Lender to grant or continue credit to Borrower.

 

5.        Application of Payments . Lender in its sole discretion may, without affecting, impairing, or reducing this Guaranty: (1) apply payments or collections that it receives from any source to the payment of Indebtedness other than the Guaranteed Indebtedness, even though Lender could have applied those payments to the Guaranteed Indebtedness, and (2) apply payments or collections that it receives from Guarantor or from any present or future security for this Guaranty to any liability of Guarantor under this Guaranty or to any liability of Guarantor for payment to Lender of any other Indebtedness. Any payments or collections that Lender applies to the liability of Guarantor under this Guaranty shall be applied to costs or expenses described in Section 3 above and to the principal, interest, or other components of the Guaranteed Indebtedness, all in such manner as Lender determines in its sole discretion.

 

 

 

 

6.        Rights Against Borrower . Guarantor shall not exercise or enforce, and waives, any right of contribution, reimbursement, recourse, recoupment, or subrogation that is available to Guarantor against Borrower or any other Person liable for payment of all or part of the Guaranteed Indebtedness, or as to any security for all or any part of the Guaranteed Indebtedness, unless and until all of the Guaranteed Indebtedness is paid in full and discharged.

 

7.        Warranties and Representations . Guarantor represents and warrants to Lender, and agrees, as follows:

 

(a)     Guarantor has all requisite power and authority and all necessary licenses and permits to own and operate its properties and to carry on its business as now conducted and as contemplated that it will be conducted in the future. Guarantor is in compliance with all laws, rules, and regulations that apply to it, its operations, or properties, the failure to comply with which could reasonably be expected to have a Material Adverse Effect.

 

(b)     All financial statements and other information concerning Guarantor that Borrower or Guarantor has furnished to Lender are true and correct in all material respects, and no such statements or other information contains any untrue statement of a material fact or omits a material fact necessary to make the statements or other information not misleading. There is not any fact that Guarantor has not disclosed to Lender in writing that has, or to the best of Guarantor's knowledge in the future could reasonably be expected to have, a Material Adverse Effect.

 

(c)     There is not any proceeding pending or, to the best of Guarantor's knowledge, threatened, before any court, governmental authority, or arbitration board or tribunal, against or affecting Guarantor that, if determined adversely to Guarantor, could reasonably be expected to have a Material Adverse Effect. Guarantor is not in default with respect to any order, judgment, or decree of any court, governmental authority, or arbitration board or tribunal.

 

(d)     Guarantor has good and marketable title to all of the assets that it purports to own, including the assets that the financial statements referred to above describe, free and clear from all liens, encumbrances, security interests, claims, charges, and restrictions.

 

(e)     Guarantor owns, licenses, or otherwise controls all of the patents, trademarks, service marks, trade names, copyrights, licenses, and rights that are necessary for the present and planned future conduct of its business, without any conflict with the rights of any other Person.

 

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(f)     Guarantor has filed each tax return that it is required to file in any jurisdiction, and has paid each tax, assessment, fee, and other governmental charge upon it or upon its assets, income, or franchises before the time when its nonpayment could give rise to a lien. Guarantor does not know of any proposed additional tax assessment against it.

 

(g)     All of Guarantor's real and personal property, and all operations and activities on it, are in compliance with all Environmental Laws, the failure to comply with which could reasonably be expected to have a Material Adverse Effect; none of Guarantor's real or personal property is or will be (1) Contaminated or the site of the disposal or release of any Hazardous Substance, (2) the source of any Contamination of any adjacent property or of any groundwater or surface water, or (3) the source of any air emissions in excess of any legal limit that is now or in the future in effect; and Guarantor has not received notice of any Claim with respect to potential liability under any Environmental Laws, and it does not know of any basis for such liability.

 

(h)     Immediately after its execution and delivery of this Guaranty: (1) the fair value of Guarantor's assets, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent, or otherwise; (2) the present fair saleable value of Guarantor's property will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent, or otherwise, as such debts and other liabilities become absolute and matured; (3) Guarantor will be able to pay its debts and liabilities, subordinated, contingent, or otherwise, as such debts and liabilities become absolute and matured; and (4) Guarantor will not have unreasonably small capital with which to conduct its business as now conducted and as contemplated that it will be conducted in the future.

 

(i)     There are no strikes, lockouts, or slowdowns against Guarantor that are pending or, to the best of its knowledge, threatened. The hours worked by and payments made to employees of Guarantor have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters. All payments due from Guarantor, or for which any Claim may be made against Guarantor, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability its books.

 

8.      Covenants . From the date of this Guaranty and until the Guaranteed Indebtedness is fully paid and Lender does not have any obligation to extend loans or other credit facilities to Borrower, Guarantor shall:

 

(a)     (1) Promptly inform Lender of any occurrence that is an Event of Default or Unmatured Event of Default and of any other occurrence that has had, or could reasonably be expected to have, a Material Adverse Effect; (2) grant to Lender or its representatives the right to examine Guarantor's books and records at any reasonable time or times; (3) maintain complete and accurate books and records of Guarantor's transactions in accordance with good accounting practices; and (4) furnish to Lender any information that it reasonably requests concerning Guarantor's or any of its Affiliates' financial affairs within 10 days after Lender makes the request.

 

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(b)     Pay and discharge or cause to be paid and discharged, as often as they are due and payable, all taxes and assessments of whatever nature that are levied or assessed against Guarantor or any of its properties, unless and to the extent only that (1) in a jurisdiction where payment of taxes and assessments is abated during the period of any contest, those taxes or assessments are being contested in good faith by appropriate proceedings, and (2) Guarantor shall have set aside on its books adequate reserves with respect to those taxes and assessments.

 

(c)     Maintain Guarantor's existence in good standing in its current jurisdiction of organization and its qualification in good standing in every other jurisdiction in which the failure to be qualified or authorized to do business could reasonably be expected to have a Material Adverse Effect; continue to conduct and operate Guarantor's business substantially as presently conducted and operated; and comply with all governmental laws, rules, regulations, and orders that apply to Guarantor, the failure to comply with which could reasonably be expected to have a Material Adverse Effect.

 

(d)     Act prudently and in accordance with customary industry standards in managing and operating Guarantor's assets, properties, business, and investments; and keep in good working order and condition, ordinary wear and tear excepted, all of Guarantor's assets and properties that are necessary to the conduct of its business.

 

(e)     Intentionally deleted.

 

(f)     Comply in all material respects with the requirements of ERISA, including, without limitation, all provisions regarding minimum funding requirements and requirements as to plan termination insurance; (2) within 30 days after it is filed, furnish to Lender a copy of each annual report and annual return, with all schedules and attachments, that ERISA requires Guarantor or any of Guarantor's Affiliates to file with the Department of Labor or the Internal Revenue Service pursuant to ERISA in connection with each Plan for each Plan year; (3) notify Lender immediately of any fact or circumstance, including, without limitation, any "reportable event" (as defined in Title IV of ERISA), that might be grounds for termination of a Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer the Plan, together with a statement, if Lender requests it, as to the reason the fact or circumstance has occurred and the action, if any, that Guarantor or the Affiliate(s) proposes to take to avoid termination of the Plan; and furnish to Lender, upon its request, any additional information concerning any Plan that Lender reasonably requests.

 

(g)     Notify Lender in writing within 10 days after Guarantor receives any notice of the beginning of (1) any proceeding or investigation by a federal or state environmental agency against Guarantor or any of Guarantor's Affiliates regarding compliance with Environmental Laws, or (2) any other judicial or administrative proceeding or litigation by or against Guarantor or any of Guarantor's Affiliates that, if adversely decided, could reasonably be expected to have a Material Adverse Effect.

 

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(h)     Intentionally deleted.

 

(i)     Intentionally deleted.

 

(j)     Intentionally deleted.

 

(k)     Intentionally deleted.

 

(l)     Intentionally deleted.

 

(m)     Intentionally deleted.

 

(n)     Intentionally deleted.

 

(o)     Intentionally deleted.

 

(p)     Intentionally deleted.

 

(q)     Not become or allow any Affiliate to become a contributing employer with respect to a multi-employer employee benefit plan within the meaning of Section 3(37)(A) of ERISA (29 U.S.C. 1002), as amended by Section 302 of the Multi- Employer Pension Plan Amendments Act of 1980; or establish or allow any Affiliate to establish for any of its employees any Plan that has, or may in the future incur, any unfunded past service liability.

 

(r)     Not change Guarantor's name, fiscal year, or method of accounting, except as GAAP requires; provided, however, that Guarantor may change its name if Guarantor gives Lender 60 days' prior written notice of the name change and takes any action that Lender considers necessary to continue the perfection of any security interests and liens that the Collateral Documents grant to Lender.

 

9.        Events of Default .     Each of the following is a " Default " under this Guaranty:

 

(a)     If an Event of Default occurs.

 

(b)     If Guarantor defaults in the payment of the principal or interest of any Indebtedness or other monetary obligation to Lender (" Guarantor Indebtedness "), within five days of when it is due and payable, whether by acceleration or otherwise.

 

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(c)     If Guarantor fails to perform any of its obligations under, or to comply with any of the terms, conditions, and covenants that are contained in, this Guaranty or any other Loan Document or other agreement, document, or instrument that Guarantor has given or in the future gives to Lender to secure any Guarantor Indebtedness or Lender Indebtedness, or if there occurs any other event of default, whether by Guarantor or any third party (other than Lender), as defined in any Loan Document or in any other agreement, document, or instrument that has been given or in the future is given to Lender to secure any Guarantor Indebtedness or Lender Indebtedness, and such failure or default continues for a period of 15 days after notice from Lender, except that such notice shall not be required, and Guarantor shall have no cure rights, with respect to any default or any default that is not capable of being cured.

 

(d)     If Guarantor defaults in the payment of any Indebtedness that Guarantor at any time owes to any other Person.

 

(e)     If any statement, warranty, or representation that Guarantor makes in this Guaranty or any statement, warranty, or representation that Guarantor or any third party has made or in the future makes in any other Loan Document, certificate, report, or other document, instrument, or agreement that is delivered under this Guaranty or in connection with any Lender Indebtedness is false or inaccurate in any material respect when made.

 

(f)     If Guarantor (1) applies for or consents to the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of all or a substantial part of its property, (2) is generally unable to pay its debts as they become due, (3) makes a general assignment for the benefit of its creditors, (4) starts a voluntary case under the federal Bankruptcy Code (as now or in the future in effect), (5) files a petition that seeks to take advantage of any other law that provides for the relief of debtors, (6) fails to controvert in a timely or appropriate manner, or acquiesces in writing to, any petition that is filed against Guarantor in any involuntary case under the Bankruptcy Code, or (7) takes any action for the purpose of effecting any of the foregoing.

 

(g)     If a proceeding or case is started in any court of competent jurisdiction and is not dismissed within 60 days, seeking (1) the liquidation, reorganization, dissolution, winding up, or composition or readjustment of Guarantor or its assets or the appointment of a trustee, receiver, custodian, liquidator, or the like of Guarantor or of all or any substantial part of its assets or (2) similar relief in respect of Guarantor under any law that provides for the relief of debtors; or if an order for relief against Guarantor is entered in an involuntary case under the Bankruptcy Code.

 

Upon the occurrence a Default, Lender shall have all rights and remedies provided by law and by agreement of Guarantor, including, without limitation, this Guaranty.

 

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10.      Waivers . Guarantor waives all defenses based on suretyship or impairment of collateral. Without limiting the generality of the preceding sentence, Guarantor waives (1) notice of the acceptance of this Guaranty and of the extension or continuation of all or any part of the Guaranteed Indebtedness; (2) presentment, protest, notice, demand, or action with respect to any default in payment of all or any part of the Guaranteed Indebtedness and with respect to any default by Guarantor in its obligations under this Guaranty; and (3) any right to require Lender to sue Borrower or any other Person obligated with respect to all or any part of the Guaranteed Indebtedness or to foreclose or realize upon any security for all or any part of the Guaranteed Indebtedness. Guarantor further waives any and all defenses, claims, and discharges of Borrower or any other obligor with respect to the Guaranteed Indebtedness, except the defense of discharge by payment. Without limiting the generality of the foregoing, Guarantor will not assert, plead, or enforce against Lender any defense of waiver, release, discharge in bankruptcy, statute of limitations, res judicata, statute of frauds, antideficiency statute, fraud, incapacity, minority, usury, ultra vires, lack of authorization, illegality, or unenforceability that may be available to Borrower or any other obligor with respect to the Guaranteed Indebtedness or any setoff available against Lender to Borrower or any such other obligor, whether or not on account of a related transaction. Guarantor shall be liable for any deficiency remaining after foreclosure of or realization upon any security for all or part of the Guaranteed Indebtedness, whether or not the liability of Borrower or any other obligor for the deficiency is discharged pursuant to statute or judicial decision.

 

11.      Termination or Revocation . This Guaranty shall continue in effect until 10 days after receipt by Lender of written notice of its termination or revocation. A notice of termination or revocation shall be effective only as to the Guarantor that gives the notice, and this Guaranty shall continue in effect for each Guarantor that does not give such notice. If terminated or revoked, this Guaranty shall continue in effect as to all Guaranteed Indebtedness that was incurred or arose or was committed for before the termination or revocation, including any extensions, renewals, or modifications of the Guaranteed Indebtedness that were made after the termination or revocation.

 

12.      No Impairment of Guaranty . The validity and enforceability of this Guaranty shall not be impaired or affected by any of the following (whether occurring before or after the effective date of a receipt by Lender of notice of termination or revocation of this Guaranty) with respect to all or part of the Guaranteed Indebtedness or any agreement relating to the Guaranteed Indebtedness or with respect to any present or future guaranty or other security for all or part of the Guaranteed Indebtedness: (1) any extension, modification, renewal, indulgence, or substitution; (2) any failure or omission to enforce any right, power, or remedy; (3) any waiver of any right, power, or remedy or of any default; (4) any release, surrender, compromise, settlement, subordination, or modification, with or without consideration, except in connection with a payment in full of the Guaranteed Indebtedness; (5) the unenforceability or invalidity of the Guaranteed Indebtedness or any such agreement, guaranty, or security; (6) any failure by Lender to perfect or secure any priority of its rights with respect to any security; or (7) any consent by Lender to any sale or transfer of any security; all whether or not Guarantor shall have had notice or knowledge of any act, omission, or circumstance referred to in this Section.

 

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13.      Enforceability . If any one or more provisions of this Guaranty are invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained in this Guaranty shall not in any way be affected, impaired, prejudiced, or disturbed. If at any time any portion of the obligations of Guarantor under this Guaranty is determined by a court of competent jurisdiction to be invalid, unenforceable, or avoidable, the remaining portion of the obligations of Guarantor under this Guaranty shall not in any way be affected, impaired, prejudiced, or disturbed and shall remain valid and enforceable to the fullest extent permitted by applicable law. If at any time all or any portion of the obligations of Guarantor under this Guaranty would otherwise be determined by a court of competent jurisdiction to be invalid, unenforceable, or avoidable under Section 548 of the U.S. Bankruptcy Code or under a similar applicable law of any jurisdiction, then notwithstanding any other provision of this Guaranty to the contrary, that obligation or portion thereof of Guarantor under this Guaranty shall not exceed (a) the maximum amount that Guarantor could incur under this Guaranty without rendering this Guaranty void or unenforceable under applicable law relating to fraudulent conveyance, fraudulent transfer, or the like after taking into account the probability of Guarantor making any payment pursuant to this Guaranty, the amount of such probable payment, and all consideration and value directly or indirectly received by Guarantor from Lender or Borrower as a result of Lender making loans and other financial accommodations to Borrower, now or in the future, minus (b) one dollar. If Guarantor claims that Guarantor's liability under the Guaranty is subject to the foregoing limitation, Guarantor agrees that Guarantor has the burden of proof as to all matters pertaining to that limitation in light of the fact that Guarantor has possession of all the financial information needed to determine the amount of such limitation.

 

14.      Independence of Obligations . The liability of Guarantor under this Guaranty is independent of any other guaranties or obligations that are at any time in effect with respect to all or any part of the Guaranteed Indebtedness and may be enforced regardless of the existence, validity, enforcement, or nonenforcement of any other guaranties or other obligations. Lender is authorized to release or modify the obligations of or surrender any security given by or waive any rights against any other Guarantor, without in any manner affecting or impairing the liability of Guarantor.

 

15.      Return of Payments . If any payment that Lender applies to the Guaranteed Indebtedness is set aside, recovered, rescinded, or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency, or reorganization of Borrower, any other Guarantor, or any other Person liable in respect of any Guaranteed Indebtedness), the Guaranteed Indebtedness to which the payment was applied shall for the purposes of this Guaranty be deemed to have continued in existence, notwithstanding the application, and this Guaranty shall be enforceable as to such Guaranteed Indebtedness as fully as if Lender had not made the application.

 

16.      Applicable Law, Venue, Jurisdiction . This Guaranty shall be governed by and interpreted according to the laws of the State of Michigan, without giving effect to principles of conflict of laws. Guarantor irrevocably agrees and consents that any action against Guarantor for collection or enforcement of this Guaranty may be brought in any state or federal court that has subject matter jurisdiction and is located in, or whose district includes, Ottawa County, Michigan, and that any such court shall have personal jurisdiction over Guarantor for purposes of the action. Guarantor waives any objection that any such court is not a convenient forum.

 

17.      Capitalized Terms; Complete Agreement . Capitalized terms that are not otherwise defined in this Guaranty shall have the same meanings set forth in the Loan Agreement, which Guarantor acknowledges having received (or received the opportunity to do so), all of which defined terms are incorporated by reference into this Guaranty. This Guaranty contains the entire agreement between Guarantor and Lender with respect to the subject matter of this Guaranty. There are not any promises, terms, conditions, or obligations other than those contained in this Guaranty. This Guaranty may not be modified except by a writing signed by the party to be charged.

 

-8-

 

 

18.      Notices . Any notice or other communication that this Guaranty requires or permits shall be in writing and shall be served either personally or sent by certified United States mail, with postage fully prepaid, or by a nationally recognized overnight courier service, addressed to Guarantor at its address set forth below its signature, and to Lender at its address set forth on Page 1 of this Guaranty, or to any other place that a party designates by like written notice served upon the other party(ies). Notice shall be effective upon receipt, if personally delivered, two Banking Days after mailing, if sent by mail, or one Banking Day after deposit with a courier service, if sent by courier service. Notice to any Guarantor shall constitute notice to each Guarantor.

 

19.      Binding Effect . This Guaranty shall inure to the benefit of and be binding upon Lender, Guarantor, and their respective heirs, personal representatives, successors and assigns. Each Guarantor shall be jointly and severally liable under this Guaranty, and "Guarantor" means each, all, and any Person signing below as a "guarantor."

 

20.      Mutual Benefit . Guarantor is affiliated with Borrower and will derive substantial direct and indirect benefits from the extensions of credit by Lender to Borrower. Accordingly, this Guaranty is necessary and convenient to the conduct, promotion, and attainment of the business of Borrower and is in furtherance of the business objectives of Guarantor.

 

21.     Waiver of Jury Trial. GUARANTOR AND LENDER (BY THE ACCEPTANCE OF THIS GUARANTY) EACH IRREVOCABLY AND UNCONDITIONALLY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION, INCLUDING, WITHOUT LIMITATION, ANY CLAIM, THAT IS BASED UPON OR ARISES OUT OF, OR RELATES TO THIS GUARANTY OR ANY RELATED INSTRUMENT OR AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY CLAIM THAT IS BASED UPON, ARISES OUT OF, OR RELATES TO ANY ACTION OR INACTION OF LENDER IN CONNECTION WITH THIS GUARANTY OR THE RELATED INSTRUMENT OR AGREEMENT.

 

 

 

[Signature follows.]

 

-9-

 

 

Guarantor has signed this Guaranty as of the date stated on the first page of this Guaranty.

 

  463IP PARTNERS, LLC , a Delaware limited liability company  
         
         
  By /s/ Mark Bugge  
         
    Its Authorized Agent  
         
         
  Notice Address :  
  3133 Orchard Vista Drive SE  
  Grand Rapids, Michigan 49546  

 

 

 

 

-10-

 

Exhibit 10.188

 

FOURTEENTH AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT

 

This FOURTEENTH AMENDMENT TO NOTE AND WARRANT AGREEMENT (this " Amendment "), dated as of November 5, 2018, is made by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation, TWINLAB HOLDINGS, INC., a Michigan corporation, ISI BRANDS INC., a Michigan corporation, and TWINLAB CORPORATION, a Delaware corporation, NUTRASCIENCE LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION., a Delaware corporation, ORGANIC HOLDINGS LLC, a Delaware limited liability company, RESERVE LIFE ORGANICS, LLC, a Delaware limited liability company, RESVITALE, LLC, a Delaware limited liability company, RE-BODY, LLC, a Delaware limited liability company, INNOVITAMIN ORGANICS, LLC, a Delaware limited liability company, ORGANICS MANAGEMENT LLC, a Delaware limited liability company, COCOAWELL, LLC, a Delaware limited liability company, FEMBODY, LLC, a Delaware limited liability company, RESERVE LIFE NUTRITION, L.L.C., a Delaware limited liability company, INNOVITA SPECIALTY DISTRIBUTION LLC, a Delaware limited liability company, and JOIE ESSANCE, LLC, a Delaware limited liability company (each of the foregoing Persons being referred to herein individually as a " Company " and collectively as the " Companies "), and GOLISANO HOLDINGS LLC, a New York limited liability company, as successor by assignment to JL-Mezz Utah, LLC f/k/a JL-BBNC Mezz Utah, LLC (the " Purchaser ").

 

WHEREAS, the Companies and the Purchaser are parties to a Note and Warrant Purchase Agreement dated as of January 22, 2015, as amended by that certain First Amendment to Note and Warrant Purchase Agreement, Consent and Joinder dated as of February 4, 2015, that certain Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015 and that certain Third Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver dated as of June 30, 2015 and Fourth Amendment to Note and Warrant Agreement and Limited Consent dated as of September 9, 2015, that certain Limited Waiver to Note and Warrant Purchase Agreement dated as of October 2, 2015, that certain Fifth Amendment to Note and Warrant Purchase Agreement dated as of October 5, 2015, that certain Joinder Agreement dated as of November 10, 2015 and that certain Limited Consent dated as of January 5, 2016, that certain Sixth Amendment to Note and Warrant Purchase Agreement dated as of January 28, 2016, that certain Seventh Amendment to Note and Warrant Purchase Agreement dated as of April 5, 2016, that certain Eighth Amendment to Note and Warrant Purchase Agreement and Limited Consent dated as of August 11, 2016 but effective as of July 29, 2016, that certain Ninth Amendment to Note and Warrant Purchase Agreement and Limited Consent dated as of December 2, 2016, that certain Tenth Amendment to Note and Warrant Purchase Agreement dated as of August 30, 2017, that certain Eleventh Amendment to Note and Warrant Purchase Agreement dated as of February 6, 2018, that certain Twelfth Amendment to Note and Warrant Purchase Agreement dated as of July 27, 2018 and that certain Thirteenth Amendment to Note and Warrant Purchase Agreement dated as of November 2, 2018 (as the same may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the " Note Purchase Agreement ").

 

WHEREAS, the Companies have requested that the Purchaser amend certain provisions of the Note Purchase Agreement to permit Parent to obtain an unsecured loan in the original principal amount of $15,000,000 from Macatawa Bank and the Purchaser has agreed to do so subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the promises and the mutual agreements contained in this Amendment, and subject to the terms and conditions set forth herein, each party hereto hereby agrees as follows:

 

1.      Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings set forth in the Note Purchase Agreement.

 

 

 

 

2.      Amendments to Note Purchase Agreement . Subject to the satisfaction of the conditions precedent set forth herein and in reliance on the representations, warranties and covenants of the Companies set forth herein and in the Note Purchase Agreement, each party hereto hereby agrees that the Note Purchase Agreement be and hereby is, amended as follows:

 

2.1.      New Defined Terms . Section 1 of the Note Purchase Agreement is hereby amended by inserting each of the following defined terms in the appropriate alphabetical order:

 

Macatawa Bank Agreement " means that certain Term Loan Note and Agreement, dated as of December 4, 2018, between Macatawa Bank and Parent.

 

" Macatawa Bank " means Macatawa Bank, a Michigan banking corporation.

 

" Macatawa Bank Debt " means the $15,000,000 loan provided by Macatawa Bank pursuant to that the Macatawa Bank Agreement.

 

2.2.      Amendment to Section 6.7 . Section 6.7 of the Note Purchase Agreement is hereby amended and restated in its entirety as follows:

 

" 6.7       Indebtedness .

 

Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of (a) the Indebtedness to Purchaser, (b) Permitted Senior Debt, (c) the Essex Debt, (d) the Little Harbor Debt, (e) Indebtedness, incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof, (f) the Utah Lease, (g) the Subordinated Debt; (h) Refinancing Indebtedness with respect to any of the foregoing; provided that any Refinancing Indebtedness that (i) is a renewal or extension of Permitted Senior Debt is renewed or extended in accordance with Section 15 of the Subordination Agreement, (ii) is a refinancing of Permitted Senior Debt is on terms reasonably satisfactory to the Purchaser, (iii) is a renewal or extension of the Subordinated Debt is renewed or extended in accordance with Section 15 of the JL-BBNC Subordination Agreement and (iv) is a refinancing of the Subordinated Debt is on terms reasonably satisfactory to the Purchaser; (i) the Nutricap Seller Notes; (j) the JL Properties Reimbursement Agreement, (k) the DVA Note, to the extent issued in accordance with the terms of the DVA Put Agreement, (l) the Golisano Holdings Debt; (m) the Great Harbor Debt, (n) the JL-Utah Debt and (o) the Macatawa Bank Debt."

 

3.      Representations and Warranties; No Default . Each Company hereby represents and warrants that:

 

3.1.     The execution, delivery and performance by such Company of this Amendment (a) are within such Company's corporate or similar powers and, at the time of execution hereof and have been duly authorized by all necessary corporate and similar action; (b) does not and will not result, in any breach or default under any other document, instrument or agreement to which a Company or any of its Subsidiaries is a party or to which a Company or any of its Subsidiaries, the Premises, the Collateral or any of the property of a Company or any of its Subsidiaries is subject or bound, except for such breaches or defaults which, individually or in the aggregate, have not had, and would not reasonably be expected to result in, a Material Adverse Effect and (c) will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order.

 

 

 

 

3.2.     This Amendment has been duly executed and delivered for the benefit of or on behalf of each Company and constitutes a legal, valid and binding obligation of each Company, enforceable against such Company in accordance with its terms except (a) as the same may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws now or hereafter in effect relating to creditors rights generally and (b) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

3.3.     Both before and after giving effect to this Amendment on the date hereof (a) the representations and warranties of the Companies contained in Section 4.1 of the Note Purchase Agreement and the other Transaction Documents are true, correct and complete on and as of the date hereof as if made on such date (and to the extent any representations and warranties shall relate to the Effective Date or another earlier date, such representation and warranties shall be deemed to be amended to relate to the date hereof), and (b) no Default or Event of Default has occurred and is continuing.

 

4.      Ratification and Confirmation . The Companies hereby ratify and confirm all of the terms and provisions of the Note Purchase Agreement and the other Transaction Documents and agree that all of such terms and provisions, as amended hereby, remain in full force and effect, except as, and to the extent expressly set forth herein.

 

5.      Condition to Effectiveness . The effectiveness of this Amendment shall be subject to the satisfaction of the following conditions precedent:

 

5.1.     The Purchaser shall have received a fully executed copy of this Amendment.

 

5.2.     The Purchaser shall have received the corresponding, fully executed copy of the Macatawa Bank Agreement, in form and substance satisfactory to the Purchaser.

 

5.3.     All representations and warranties of the Companies contained herein shall be true and correct in all material respects as of the date hereof (and such parties' delivery of their respective signatures hereto shall be deemed to be its certification thereof).

 

5.4.     The Purchaser shall have received all fees and other amounts due and payable to the Purchaser and its counsel in connection with this Amendment, and to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Companies under the Note Purchase Agreement.

 

6.      Miscellaneous .

 

6.1.     Except as otherwise expressly set forth herein, nothing herein shall be deemed to constitute an amendment, modification or waiver of any of the provisions of the Note Purchase Agreement, the Security Agreement or the other Transaction Documents, all of which remain in full force and effect as of the date hereof and are hereby ratified and confirmed. Each Company hereby acknowledges and agrees that nothing contained herein shall be deemed to entitle any Company to consent to, or a waiver, amendment or modification of, any of the terms, conditions, obligations, covenants or agreements contained in the Transaction Documents in similar or different circumstances. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Note Purchase Agreement.

 

 

 

 

6.2.     This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, but all counterparts shall together constitute one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be equally effective as delivery of a manually executed counterpart of this Amendment.

 

6.3.     This Amendment shall be governed by the laws of the State of New York without giving effect to any conflict of law principles and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

6.4.     The Companies agree to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Amendment and the transactions contemplated hereby.

 

6.5.     This Amendment shall be deemed a Transaction Document for all purposes of the Note Purchase Agreement and the other Transaction Documents. On and after the date hereof, each reference in the Note Purchase Agreement and the other Transaction Documents to the Note Purchase Agreement, shall mean and be a reference to the Note Purchase Agreement, as modified by this Amendment.

 

6.6.     Each Company, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, " Releasing Parties "), does hereby fully and completely release, acquit and forever discharge each Indemnified Party of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnified Parties (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. " Prior Related Event " means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Transaction Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between the Purchaser and any Company, or (d) any other actions or inactions by the Purchaser, all on or prior to the date hereof. Each Company acknowledges that the foregoing release is a material inducement to the Purchaser's decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

 

[Signature Pages Follow.]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment which shall be deemed to be a sealed instrument as of the date first above written.

 

 

COMPANIES

 

 

    TWINLAB CONSOLIDATION CORPORATION
     
    By : /s/ Anthony Zolezzi (Seal)  
   

Name:  Anthony Zolezzi
Title:    Chief Executive Officer

     

 

TWINLAB CONSOLIDATED HOLDINGS,

INC.

  TWINLAB HOLDINGS, INC .
     
By : /s/ Anthony Zolezzi (Seal)   By : /s/ Anthony Zolezzi (Seal)  
Name:  Anthony Zolezzi
Title:    Chief Executive Officer
 

Name:  Anthony Zolezzi
Title:    Chief Executive Officer

     

 

TWINLAB CORPORATION 

  ISI BRANDS, INC.
     
By : /s/ Anthony Zolezzi (Seal)   By : /s/ Anthony Zolezzi (Seal)  
Name:  Anthony Zolezzi
Title:    Chief Executive Officer
 

Name:  Anthony Zolezzi
Title:    Chief Executive Officer

     

 

 

 

NUTRASCIENCE LABS, INC.   NUTRASCIENCE LABS IP CORPORATION
     
By : /s/ Anthony Zolezzi (Seal)   By : /s/ Anthony Zolezzi (Seal)  
Name:  Anthony Zolezzi
Title:  Chief Executive Officer
 

Name:  Anthony Zolezzi
Title:  Chief Executive Officer

     

 

ORGANIC HOLDINGS LLC

  RESERVE LIFE ORGANICS, LLC
     
By : /s/ Anthony Zolezzi (Seal)  

By ORGANIC HOLDINGS LLC,

   
Name: Anthony Zolezzi
Title:  Sole Manager
    its sole Member    
        By : /s/ Anthony Zolezzi (Seal)  
   

Name: Anthony Zolezzi
Title: Sole Manager

 

 

First Signature Page – Fourteenth Amendment to Note and Warrant Purchase Agreement (JL)

 

 

 

RESVITALE, LLC   RE-BODY, LLC

 

   

By ORGANIC HOLDINGS LLC,

its sole Member

 

By ORGANIC HOLDINGS LLC,

its sole Member

    By : /s/ Anthony Zolezzi (Seal)  
By : /s/ Anthony Zolezzi (Seal)   Name: Anthony Zolezzi    
Name: Anthony Zolezzi
Title: Sole Manager
 

Title: Sole Manager

 

INNOVITAMIN ORGANICS, LLC   ORGANICS MANAGEMENT LLC

 

   

By ORGANIC HOLDINGS LLC,

its sole Member

 

By ORGANIC HOLDINGS LLC,

its sole Member

     
By : /s/ Anthony Zolezzi (Seal)   By : /s/ Anthony Zolezzi (Seal)  
Name: Anthony Zolezzi
Title: Sole Manager
 

Name: Anthony Zolezzi
Title: Sole Manager

 

COCOAWELL, LLC   FEMBODY, LLC

 

   

By ORGANIC HOLDINGS LLC,

its sole Member

 

By ORGANIC HOLDINGS LLC,

its sole Member

     
By : /s/ Anthony Zolezzi (Seal)   By : /s/ Anthony Zolezzi (Seal)  
Name: Anthony Zolezzi
Title: Sole Manager
 

Name: Anthony Zolezzi
Title: Sole Manager

 

RESERVE LIFE NUTRITION, L.L.C.   INNOVITA SPECIALTY DISTRIBUTION LLC

 

   

By ORGANIC HOLDINGS LLC,

its sole Member

 

By ORGANIC HOLDINGS LLC,

its sole Member

     
By : /s/ Anthony Zolezzi (Seal)   By :  /s/ Anthony Zolezzi (Seal)  
Name: Anthony Zolezzi
Title: Sole Manager
 

Name: Anthony Zolezzi
Title: Sole Manager

 

JOIE ESSANCE, LLC    

 

   

By ORGANIC HOLDINGS LLC,

its sole Member

   
     
By : /s/ Anthony Zolezzi (Seal)          
Name: Anthony Zolezzi
Title: Sole Manager
 

 

 

 

Second Signature Page – Fourteenth Amendment to Note and Warrant Purchase Agreement (JL)

 

 

 

 

 

PURCHASER :

 

GOLISANO HOLDINGS LLC ,

a New York limited liability company

 

 

By:   /s/  B. Thomas Golisano  

Name: B. Thomas Golisano

Title:   Member

 

 

Third Signature Page – Fourteenth Amendment to Note and Warrant Purchase Agreement (JL)

Exhibit 10.189

 

FIFTEENTH AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT

 

This FIFTEENTH AMENDMENT TO NOTE AND WARRANT AGREEMENT (this " Amendment "), dated as of December 4, 2018, is made by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation, TWINLAB CONSOLIDATION CORPORATION, a Delaware corporation, TWINLAB HOLDINGS, INC., a Michigan corporation, ISI BRANDS INC., a Michigan corporation, and TWINLAB CORPORATION, a Delaware corporation, NUTRASCIENCE LABS, INC., a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION., a Delaware corporation, ORGANIC HOLDINGS LLC, a Delaware limited liability company, RESERVE LIFE ORGANICS, LLC, a Delaware limited liability company, RESVITALE, LLC, a Delaware limited liability company, RE-BODY, LLC, a Delaware limited liability company, INNOVITAMIN ORGANICS, LLC, a Delaware limited liability company, ORGANICS MANAGEMENT LLC, a Delaware limited liability company, COCOAWELL, LLC, a Delaware limited liability company, FEMBODY, LLC, a Delaware limited liability company, RESERVE LIFE NUTRITION, L.L.C., a Delaware limited liability company, INNOVITA SPECIALTY DISTRIBUTION, LLC, a Delaware limited liability company, and JOIE ESSANCE, LLC, a Delaware limited liability company (each of the foregoing Persons being referred to herein individually as a " Company " and collectively as the " Companies "), and GOLISANO HOLDINGS LLC, a New York limited liability company, as successor by assignment to Penta Mezzanine SBIC Fund I, L.P. (the " Purchaser ").

 

WHEREAS, the Companies and the Purchaser are parties to a Note and Warrant Purchase Agreement dated as of November 13, 2014, as amended by that certain First Amendment to Note and Warrant Purchase Agreement, Consent and Joinder dated as of January 22, 2015, that certain Second Amendment to Note and Warrant Purchase Agreement and Consent dated as of February 4, 2015, that certain Third Amendment to Note and Warrant Purchase Agreement and Consent dated as of April 30, 2015, that certain Fourth Amendment to Note and Warrant Purchase Agreement, Limited Consent and Limited Waiver dated as of June 30, 2015, that certain Fifth Amendment to Note and Warrant Purchase Agreement and Limited Consent dated as of September 9, 2015, that certain Sixth Amendment to Note and Warrant Purchase Agreement dated October 5, 2015, that certain Joinder Agreement dated as of October 30, 2015, that certain Seventh Amendment to Note and Warrant Purchase Agreement dated as of January 28, 2016, that certain Eighth Amendment to Note and Warrant Purchase Agreement dated as of April 5, 2016, that certain Ninth Amendment to Note and Warrant Purchase Agreement and Limited Consent dated as of August 11, 2016 but effective as of July 29, 2016, that certain Tenth Amendment to Note and Warrant Purchase Agreement and Limited Consent dated as of December 2, 2016, that Eleventh Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of August 30, 2017, that certain Twelfth Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of February 6, 2018, that certain Thirteenth Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of July 27, 2018 and that certain Fourteenth Amendment to Note and Warrant Purchase Agreement and Limited Consent, dated as of November 2, 2018 (as the same may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the " Note Purchase Agreement "); and

 

WHEREAS, the Companies have requested that the Purchaser amend certain provisions of the Note Purchase Agreement to permit Parent to obtain an unsecured loan in the original principal amount of $15,000,000 from Macatawa Bank and the Purchaser has agreed to do so subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the promises and the mutual agreements contained in this Amendment, and subject to the terms and conditions set forth herein, each party hereto hereby agrees as follows:

 

1.      Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings set forth in the Note Purchase Agreement.

 

 

 

 

2.      Amendments to Note Purchase Agreement . Subject to the satisfaction of the conditions precedent set forth herein and in reliance on the representations, warranties and covenants of the Companies set forth herein and in the Note Purchase Agreement, each party hereto hereby agrees that the Note Purchase Agreement be and hereby is, amended as follows:

 

2.1.      New Defined Terms . Section 1 of the Note Purchase Agreement is hereby amended by inserting each of the following defined terms in the appropriate alphabetical order:

 

Macatawa Bank Agreement " means that certain Term Loan Note and Agreement, dated as of December 4, 2018, between Macatawa Bank and Parent.

 

" Macatawa Bank " means Macatawa Bank, a Michigan banking corporation.

 

" Macatawa Bank Debt " means the $15,000,000 loan provided by Macatawa Bank pursuant to that the Macatawa Bank Agreement.

 

2.2.      Amendment to Section 6.7 . Section 6.7 of the Note Purchase Agreement is hereby amended and restated in its entirety as follows:

 

" 6.7       Indebtedness .

 

Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except in respect of (a) the Indebtedness to Purchaser, (b) Permitted Senior Debt, (c) the Essex Debt, (d) the Little Harbor Debt, (e) Indebtedness, incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof, (f) the Utah Lease, (g) the Subordinated Debt; (h) Refinancing Indebtedness with respect to any of the foregoing; provided that any Refinancing Indebtedness that (i) is a renewal or extension of Permitted Senior Debt is renewed or extended in accordance with Section 15 of the Subordination Agreement, (ii) is a refinancing of Permitted Senior Debt is on terms reasonably satisfactory to the Purchaser, (iii) is a renewal or extension of the Subordinated Debt is renewed or extended in accordance with Section 15 of the JL-BBNC Subordination Agreement and (iv) is a refinancing of the Subordinated Debt is on terms reasonably satisfactory to the Purchaser; (i) the Nutricap Seller Notes; (j) the JL Properties Reimbursement Agreement, (k) the DVA Note, to the extent issued in accordance with the terms of the DVA Put Agreement, (l) the Golisano Holdings Debt; (m) the Great Harbor Debt, (n) the JL-Utah Debt and (o) the Macatawa Bank Debt."

 

3.      Representations and Warranties; No Default . Each Company hereby represents and warrants that:

 

3.1.     The execution, delivery and performance by such Company of this Amendment (a) are within such Company's corporate or similar powers and, at the time of execution hereof and have been duly authorized by all necessary corporate and similar action; (b) does not and will not result, in any breach or default under any other document, instrument or agreement to which a Company or any of its Subsidiaries is a party or to which a Company or any of its Subsidiaries, the Premises, the Collateral or any of the property of a Company or any of its Subsidiaries is subject or bound, except for such breaches or defaults which, individually or in the aggregate, have not had, and would not reasonably be expected to result in, a Material Adverse Effect and (c) will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order.

 

2

 

 

3.2.     This Amendment has been duly executed and delivered for the benefit of or on behalf of each Company and constitutes a legal, valid and binding obligation of each Company, enforceable against such Company in accordance with its terms except (a) as the same may be limited by bankruptcy, insolvency, reorganization moratorium or similar laws now or hereafter in effect relating to creditors rights generally and (b) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

 

3.3.     Both before and after giving effect to this Amendment on the date hereof (a) the representations and warranties of the Companies contained in Section 4.1 of the Note Purchase Agreement and the other Transaction Documents are true, correct and complete on and as of the date hereof as if made on such date (and to the extent any representations and warranties shall relate to the Effective Date or another earlier date, such representation and warranties shall be deemed to be amended to relate to the date hereof), and (b) no Default or Event of Default has occurred and is continuing.

 

4.      Ratification and Confirmation . The Companies hereby ratify and confirm all of the terms and provisions of the Note Purchase Agreement and the other Transaction Documents and agree that all of such terms and provisions, as amended hereby, remain in full force and effect, except as, and to the extent expressly set forth herein.

 

5.      Condition to Effectiveness . The effectiveness of this Amendment shall be subject to the satisfaction of the following conditions precedent:

 

5.1.     The Purchaser shall have received a fully executed copy of this Amendment.

 

5.2.     The Purchaser shall have received the corresponding, fully executed copy of the Macatawa Bank Agreement, in form and substance satisfactory to the Purchaser.

 

5.3.     All representations and warranties of the Companies contained herein shall be true and correct in all material respects as of the date hereof (and such parties' delivery of their respective signatures hereto shall be deemed to be its certification thereof).

 

5.4.     The Purchaser shall have received all fees and other amounts due and payable to the Purchaser and its counsel in connection with this Amendment, and to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Companies under the Note Purchase Agreement.

 

 

6.

Miscellaneous .

 

6.1.     Except as otherwise expressly set forth herein, nothing herein shall be deemed to constitute an amendment, modification or waiver of any of the provisions of the Note Purchase Agreement, the Security Agreement or the other Transaction Documents, all of which remain in full force and effect as of the date hereof and are hereby ratified and confirmed. Each Company hereby acknowledges and agrees that nothing contained herein shall be deemed to entitle any Company to consent to, or a waiver, amendment or modification of, any of the terms, conditions, obligations, covenants or agreements contained in the Transaction Documents in similar or different circumstances. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Note Purchase Agreement.

 

3

 

 

6.2.     This Amendment may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, but all counterparts shall together constitute one instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic mail shall be equally effective as delivery of a manually executed counterpart of this Amendment.

 

6.3.     This Amendment shall be governed by the laws of the State of New York without giving effect to any conflict of law principles and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

6.4.     The Companies agree to pay all reasonable expenses, including legal fees and disbursements, incurred by Purchaser in connection with this Amendment and the transactions contemplated hereby.

 

6.5.     This Amendment shall be deemed a Transaction Document for all purposes of the Note Purchase Agreement and the other Transaction Documents. On and after the date hereof, each reference in the Note Purchase Agreement and the other Transaction Documents to the Note Purchase Agreement, shall mean and be a reference to the Note Purchase Agreement, as modified by this Amendment.

 

6.6.     Each Company, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, " Releasing Parties "), does hereby fully and completely release, acquit and forever discharge each Indemnified Party of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnified Parties (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. " Prior Related Event " means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Transaction Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between the Purchaser and any Company, or (d) any other actions or inactions by the Purchaser, all on or prior to the date hereof. Each Company acknowledges that the foregoing release is a material inducement to the Purchaser's decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

[Signature Pages Follow.]

 

4

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment which shall be deemed to be a sealed instrument as of the date first above written.

 

 

TWINLAB CONSOLIDATED

HOLDINGS, INC.

  TWINLAB HOLDINGS, INC .

 

 

   
By : /s/ Anthony Zolezzi (Seal)   By : /s/ Anthony Zolezzi (Seal)  
Name:  Anthony Zolezzi
Title:    Chief Executive Officer
 

Name:  Anthony Zolezzi
Title:    Chief Executive Officer

     

 

TWINLAB CORPORATION 

  ISI BRANDS, INC.
     
By : /s/ Anthony Zolezzi (Seal)   By : /s/ Anthony Zolezzi (Seal)  
Name:  Anthony Zolezzi
Title:    Chief Executive Officer
 

Name:  Anthony Zolezzi
Title:    Chief Executive Officer

     

 

NUTRASCIENCE LABS, INC.   NUTRASCIENCE LABS IP CORPORATION

 

 

   
By : /s/ Anthony Zolezzi (Seal)   By : /s/ Anthony Zolezzi (Seal)  
Name:  Anthony Zolezzi
Title:    Chief Executive Officer
 

Name:  Anthony Zolezzi
Title:    Chief Executive Officer

     

 

ORGANIC HOLDINGS LLC

  RESERVE LIFE ORGANICS, LLC

 

 

 

By ORGANIC HOLDINGS LLC,

By : /s/ Anthony Zolezzi

(Seal)

 

its sole Member

   
Name: Anthony Zolezzi          
Title:   Sole Manager     By : /s/ Anthony Zolezzi (Seal)  
   

Name: Anthony Zolezzi
Title:   Sole Manager

 

 

RESVITALE, LLC   RE-BODY, LLC

 

   

By ORGANIC HOLDINGS LLC,

its sole Member

 

By ORGANIC HOLDINGS LLC,

its sole Member

     
By : /s/ Anthony Zolezzi (Seal)   By : /s/ Anthony Zolezzi (Seal)  
Name: Anthony Zolezzi
Title:   Sole Manager
 

Name: Anthony Zolezzi
Title:   Sole Manager

 

 

 

First Signature Page – Fifteenth Amendment to Note and Warrant Purchase Agreement

 

 

 

INNOVITAMIN ORGANICS, LLC   ORGANICS MANAGEMENT LLC

 

   

By ORGANIC HOLDINGS LLC,

its sole Member

 

By ORGANIC HOLDINGS LLC,

its sole Member

     
By : /s/ Anthony Zolezzi (Seal)   By : /s/ Anthony Zolezzi (Seal)  
Name: Anthony Zolezzi
Title:   Sole Manager
 

Name: Anthony Zolezzi
Title:   Sole Manager

 

 

COCOAWELL, LLC   FEMBODY, LLC

 

   

By ORGANIC HOLDINGS LLC,

its sole Member

 

By ORGANIC HOLDINGS LLC,

its sole Member

     
By : /s/ Anthony Zolezzi (Seal)   By : /s/ Anthony Zolezzi (Seal)  
Name: Anthony Zolezzi
Title:   Sole Manager
 

Name: Anthony Zolezzi
Title:   Sole Manager

 

 

RESERVE LIFE NUTRITION, L.L.C.   INNOVITA SPECIALTY DISTRIBUTION LLC

 

   

By ORGANIC HOLDINGS LLC,

its sole Member

 

By ORGANIC HOLDINGS LLC,

its sole Member

     
By : /s/ Anthony Zolezzi (Seal)   By :  /s/ Anthony Zolezzi (Seal)  
Name: Anthony Zolezzi
Title:   Sole Manager
 

Name: Anthony Zolezzi
Title:   Sole Manager

 

 

JOIE ESSANCE, LLC    

 

   

By ORGANIC HOLDINGS LLC,

its sole Member

   
     
By : /s/ Anthony Zolezzi (Seal)          
Name: Anthony Zolezzi
Title:   Sole Manager
 

 

 

 

Second Signature Page – Fifteenth Amendment to Note and Warrant Purchase Agreement

 

 

 

 

 

PURCHASER :

 

GOLISANO HOLDINGS LLC ,

a New York limited liability company

 

 

By:  /s/  B. Thomas Golisano                                                      

Name:  B. Thomas Golisano

Title:    Member

 

 

Third Signature Page – Fifteenth Amendment to Note and Warrant Purchase Agreement

Exhibit 10.190

 

AMENDMENT NO. 1 5 TO CREDIT AND SECURITY AGREEMENT

 

THIS AMENDMENT NO. 1 5 TO CREDIT AND SECURITY AGREEMENT (this “ Amendment ”) is made as of this 4 th  day of December, 2018, by and among TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, TWINLAB CONSOLIDATION CORPORATION , a Delaware corporation, TWINLAB HOLDINGS, INC. , a Michigan corporation, ISI BRANDS INC. , a Michigan corporation, TWINLAB CORPORATION , a Delaware corporation, NUTRASCIENCE LABS, INC. , a Delaware corporation (formerly known as TCC CM Subco I, Inc.), NUTRASCIENCE LABS IP CORPORATION , a Delaware corporation (formerly known as TCC CM Subco II, Inc.), ORGANIC HOLDINGS LLC , a Delaware limited liability company, RESERVE LIFE ORGANICS, LLC , a Delaware limited liability company, RESVITALE, LLC , a Delaware limited liability company, RE-BODY, LLC , a Delaware limited liability company, INNOVITAMIN ORGANICS, LLC , a Delaware limited liability company, ORGANICS MANAGEMENT LLC , a Delaware limited liability company, COCOAWELL, LLC , a Delaware limited liability company, FEMBODY, LLC , a Delaware limited liability company, RESERVE LIFE NUTRITION, L.L.C. , a Delaware limited liability company, INNOVITA SPECIALTY DISTRIBUTION, LLC , a Delaware limited liability company, and JOIE ESSANCE, LLC , a Delaware limited liability company (each of the foregoing Persons being referred to herein individually as a “ Borrower ”, and collectively as “ Borrowers ”), and MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust (as Agent for Lenders, “ Agent ”, and individually, as a Lender), and the other financial institutions or other entities from time to time parties to the Credit Agreement referenced below, each as a Lender.

 

RECITALS

 

A.      Pursuant to that certain Credit and Security Agreement dated as of January 22, 2015 by and among Borrowers, Agent and Lenders (as amended by that certain Amendment No. 1 to Credit and Security Agreement and Limited Consent dated as of February 4, 2015, by that certain Amendment No. 2 to Credit and Security Agreement and Limited Consent dated as of April 7, 2015, by that certain Amendment No. 3 to Credit and Security Agreement and Limited Consent dated as of April 30, 2015, by that certain Amendment No. 4 to Credit and Security Agreement and Limited Waiver dated as of June 30, 2015, by that certain Amendment No. 5 to Credit and Security Agreement and Limited Consent dated as of June 30, 2015, by that certain Amendment No. 6 to Credit and Security Agreement, Limited Consent and Limited Waiver dated as of September 9, 2015, by that certain Amendment No. 7 and Joinder Agreement to Credit and Security Agreement dated as of October 5, 2015, by that certain Amendment No. 8 to Credit and Security Agreement dated as of January 28, 2016, by that certain Amendment No. 9 to Credit and Security Agreement dated as of April 5, 2016, by that certain Amendment No. 10 to Credit and Security Agreement dated as of August 11, 2016, but effective as of July 29, 2016, by that certain Amendment No. 11 to Credit and Security Agreement dated as of September 1, 2016, by that certain Amendment No. 12 to Credit and Security Agreement and Limited Consent dated as of December 2, 2017, by that certain Amendment No. 13 to Credit and Security Agreement and Limited Consent dated as of August 30, 2017, by that certain Amendment No. 14 to Credit and Security Agreement and Limited Waiver dated as of March 22, 2018 and as it may be further amended, modified and restated from time to time, the “ Credit Agreement ”), Agent and Lenders agreed to make available to Borrowers a secured revolving credit facility in a principal amount of up to $17,000,000 from time to time (as amended, modified, supplemented, extended and restated from time to time, collectively, the “ Loans ”). Capitalized terms used but not otherwise defined in this Amendment shall have the meanings set forth in the Credit Agreement.

 

 

 

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, the terms and conditions set forth in this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agent, Lenders and Borrowers hereby agree as follows:

 

1.      Recitals. This Amendment shall constitute a Financing Document and the Recitals set forth above shall be construed as part of this Amendment as if set forth fully in the body of this Amendment.

 

2.       Amendment to Credit Agreement.      

 

(a)      Section 1.1 – New Defined Terms . Section 1.1 of the Credit Agreement is hereby amended to add the defined terms “Macatawa Bank,” “Macatawa Bank Debt,” and “Subordination Agreement (Macatawa Bank)” in their respective alphabetical order:

 

Macatawa Bank ” means Macatawa Bank , a Michigan banking corporation.

 

Macatawa Bank Debt” means the “Subordinated Loans” (as that term is defined in the Subordination Agreement ( Macatawa Bank ).

 

“Subordination Agreement ( Macatawa Bank )” means the Subordination Agreement dated as of December 3 , 2018 among Agent, Macatawa Bank and Borrowers, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

 

Section 1.1 – Definition of Permitted Debt . The defined term “ Permitted Debt ” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

“Permitted Debt” means: (a) Borrowers’ and its Subsidiaries’ Debt to Agent and each Lender under this Agreement and the other Financing Documents; (b) Debt incurred as a result of endorsing negotiable instruments received in the Ordinary Course of Business; (c) purchase money Debt with respect to equipment, Debt listed on Schedule 5.1, and such other Debt (other than the Essex Lease) not to exceed $3,000,000 at any time (whether in the form of a loan or a Capital Lease) used solely to acquire equipment used in the Ordinary Course of Business and secured only by such equipment; (d) Debt existing on the date of this Agreement and described on Schedule 5.1 and any Refinancing Debt with respect thereto; (e) Debt in the form of insurance premiums financed through the applicable insurance company; (f) trade accounts payable arising and paid on a timely basis and in the Ordinary Course of Business; (g) Subordinated Debt (for the avoidance of doubt, including the Golisano Holdings Debt, Great Harbor Debt, Little Harbor Debt, JL US Debt and Macatawa Debt ), (h) the Essex Lease; (i) the Nutricap Seller Notes; (j) the JL Properties Reimbursement Agreement; and (k) the DVA Note, to the extent issued in accordance with the terms of the DVA Put Agreement.

 

 

 

 

5 .      Confirmation of Representations and Warranties; Reaffirmation of Security Interest. Each Borrower hereby (a) confirms that all of the representations and warranties set forth in the Credit Agreement are, after giving effect to this Amendment and the transactions contemplated hereby, true and correct with respect to such Borrower as of the date hereof to the same extent as though made on and as of such date, except to the extent such representations and warranties specifically relate to an earlier date, and (b) covenants to perform its respective obligations under the Credit Agreement. Each Borrower confirms and agrees that all security interests and Liens granted to Agent continue in full force and effect, and all Collateral remains free and clear of any Liens, other than those granted to Agent and Permitted Liens. Nothing herein is intended to impair or limit the validity, priority or extent of Agent’s security interests in and Liens on the Collateral.

 

6 .      Enforceability. This Amendment constitutes the legal, valid and binding obligation of each Borrower, and is enforceable against each of the Borrowers in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.

 

7 .       Costs and Fees . Borrowers shall be responsible for the payment of all reasonable costs and fees of Agent’s counsel incurred in connection with the preparation of this Amendment and any related documents. If Agent or any Lender uses in-house counsel for any of these purposes, Borrowers further agree that the Obligations include reasonable charges for such work commensurate with the fees that would otherwise be charged by outside legal counsel selected by Agent or such Lender for the work performed. Borrowers hereby authorize Agent to deduct all of such fees set forth in this Section 7 from the proceeds of one or more Revolving Loans made under the Credit Agreement.

 

8 .       Conditions to Effectiveness. This Amendment shall become effective as of the date on which each of the following conditions has been satisfied (the “ Effective Date ”):

 

(a)     Borrowers shall have delivered to Agent this Amendment, duly executed by an authorized officer of each Borrower;

 

(b)     all representations and warranties of Borrowers contained herein shall be true and correct in all material respects as of the Effective Date (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof); and

 

(c)     Agent shall have received from Borrowers all of the fees owing pursuant to this Amendment and Agent’s reasonable out-of-pocket legal fees and expenses.

 

 

 

 

9 .      Release. Each Borrower, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “ Releasing Parties ”), does hereby fully and completely release, acquit and forever discharge each Indemnitee of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnitees (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. “ Prior Related Event ” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Financing Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between any Indemnitee and any Borrower, or (d) any other actions or inactions by any Indemnitee, all on or prior to the Effective Date. Each Borrower acknowledges that the foregoing release is a material inducement to Agent’s and Lender’s decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

1 0 .      No Waiver or Novation. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Agent, nor constitute a waiver of any provision of the Credit Agreement, the Financing Documents or any other documents, instruments and agreements executed or delivered in connection with any of the foregoing. Nothing herein is intended or shall be construed as a waiver of any existing Defaults or Events of Default under the Credit Agreement or other Financing Documents or any of Agent’s rights and remedies in respect of such Defaults or Events of Default. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Credit Agreement.

 

1 1 .       Affirmation. Except as specifically amended pursuant to the terms hereof, the Credit Agreement and all other Financing Documents (and all covenants, terms, conditions and agreements therein) shall remain in full force and effect, and are hereby ratified and confirmed in all respects by Borrowers. Each Borrower covenants and agrees to comply with all of the terms, covenants and conditions of the Credit Agreement (as amended and modified hereby) and the Financing Documents, notwithstanding any prior course of conduct, waivers, releases or other actions or inactions on Agent’s or any Lender’s part which might otherwise constitute or be construed as a waiver of or amendment to such terms, covenants and conditions.

 

1 2 .      Miscellaneous.

 

(a)      Reference to the Effect on the Credit Agreement. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of similar import shall mean and be a reference to the Credit Agreement, as amended and modified by this Amendment. Except as specifically amended and waived above, the Credit Agreement, and all other Financing Documents (and all covenants, terms, conditions and agreements therein), shall remain in full force and effect, and are hereby ratified and confirmed in all respects by Borrowers.

 

 

 

 

(b)      Incorporation of Credit Agreement Provisions. The provisions contained in Section 11.6 (Indemnification), Section 12.8 (Governing Law; Submission to Jurisdiction) and Section 12.9 (Waiver of Jury Trial) of the Credit Agreement are incorporated herein by reference to the same extent as if reproduced herein in their entirety.

 

(c)      Headings. Section headings in this Amendment are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

 

(d)      Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Signatures by facsimile or by electronic mail delivery of an electronic version (e.g., .pdf or .tif file) of an executed signature page shall be treated as delivery of an original and shall bind the parties hereto. This Amendment constitutes the entire agreement and understanding among the parties hereto and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

 

 

[SIGNATURES APPEAR ON FOLLOWING PAGES]

 

 

 

(Signature Page to Amendment No. 15 to Credit and Security Agreement)

 

 

IN WITNESS WHEREOF , intending to be legally bound, and intending that this document constitute an agreement executed under seal, the undersigned have executed this Amendment under seal as of the day and year first hereinabove set forth.

 

 

AGENT: MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust
         
  By:   Apollo Capital Management, L.P.,
      its investment manager
       
  By:   Apollo Capital Management GP, LLC,
      its general partner
         
  By:   /s/ Maurice Amsellem (SEAL)
  Name: Maurice Amsellem  
  Title: Authorized Signatory  

 

 

 

LENDER: MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust
         
  By:   Apollo Capital Management, L.P.,
      its investment manager
       
  By:   Apollo Capital Management GP, LLC,
      its general partner
         
  By:   /s/ Maurice Amsellem (SEAL)
  Name: Maurice Amsellem  
  Title: Authorized Signatory  

 

 

 

(Signature Page to Amendment No. 15 to Credit and Security Agreement)

 

BORROWERS:

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

TWINLAB CONSOLIDATION CORPORATION

TWINLAB HOLDINGS, INC .

TWINLAB CORPORATION  

ISI BRANDS, INC.

NUTRASCIENCE LABS, INC.

NUTRASCIENCE LABS IP CORPORATION

 

 

By: /s/ Anthony Zolezzi __________(Seal)

Name:  Anthony Zolezzi
Title:    Chief Executive Officer

 

 

ORGANIC HOLDINGS LLC

 

 

By: /s/ Anthony Zolezzi __________(Seal)

Name:  Anthony Zolezzi

Title:    Sole Manager

 

 

RESERVE LIFE ORGANICS, LLC

RESVITALE, LLC

RE-BODY, LLC

INNOVITAMIN ORGANICS, LLC

ORGANICS MANAGEMENT LLC

COCOAWELL, LLC

FEMBODY, LLC

RESERVE LIFE NUTRITION, L.L.C.

INNOVITA SPECIALTY DISTRIBUTION, LLC

JOIE ESSANCE, LLC

 

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By: /s/ Anthony Zolezzi __________(Seal)

Name:  Anthony Zolezzi
Title:    Sole Manager

 

Exhibit 10.191

 

AMENDMENT NO. 1 TO AMENDED AND RESTATED

UNSECURED DELAYED DRAW PROMISSORY NOTE

(Original Principal Amount $4,769,996)

 

This Amendment No. 1 to Amended and Restated Unsecured Delayed Draw Promissory Note (the "Amendment") is made as of this 23 day of January, 2019, by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (" Maker "), and LITTLE HARBOR LLC, a Nevada limited liability company (" Holder ").

 

WHEREAS , the Maker is indebted to the Holder under a certain Amended and Restated Unsecured Delayed Draw Promissory Note in the principal amount of Four Million Seven Hundred Sixty-Nine Thousand Nine Hundred Ninety-Six Dollars ($4,769,996), dated August 30, 2017 (the "Note"); and

 

WHEREAS , the Borrower and the Holder have agreed to amend the Note in accordance with this Amendment.

 

NOW , THEREFORE , the parties hereto agree as follows:

1.     In the introduction paragraph, the phrase "January 28, 2019" is hereby restated in its entirety to read as "June 30, 2019" such that the Maturity Date shall be June 30, 2019.

 

2.     Except as expressly amended hereby, all terms and conditions of the Note shall remain in full force and effect.

 

3.     Upon the effectiveness of this Amendment, each reference in the Note to "the Note," "this Note," "hereunder," "hereof," "herein," or words of similar import shall mean and be a reference to the Note, as amended by this Amendment.

 

4.     This Amendment constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements between such parties with respect to the subject matter hereof. To the extent of any conflict between the terms and conditions of this Amendment and the Note, the terms and conditions of this Amendment shall govern.

 

5.     This Amendment may be executed in one or more counterparts, including by means of facsimile and/or portable document format, each of which shall be an original and all of which shall together constitute one and the same document.

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

Amendment No. 1 to Amended and Restated

Unsecured Delayed Draw Promissory Note ($4,769,996 - Little Harbor)

 

 

 

IN WITNESS WHEREOF, Maker and Holder have executed this Amendment as of the date first above written.

 

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/  Anthony Zolezzi

 

 

 

Anthony Zolezzi

 

 

 

Chief Executive Officer

 

 

 

 

 

LITTLE HARBOR CAPITAL, LLC

 

 

 

 

 

 

 

 

 

 

By:

/s/  Mark Bugge

 

 

 

Mark J. Bugge

 

 

 

Secretary

 

 

 

Amendment No. 1 to Amended and Restated

Unsecured Delayed Draw Promissory Note ($4,769,996 - Little Harbor)

 

Exhibit 10.192

 

THIRD AMENDED AND RESTATED REVOLVING LOAN NOTE

 

$5,000,000.00

Bethesda, Maryland
January 22, 2019

 

 

FOR VALUE RECEIVED, each of TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, TWINLAB CONSOLIDATION CORPORATION , a Delaware corporation, TWINLAB HOLDINGS, INC. , a Michigan corporation, ISI BRANDS INC. , a Michigan corporation, TWINLAB CORPORATION , a Delaware corporation, NUTRASCIENCE LABS, INC. , a Delaware corporation, NUTRASCIENCE LABS IP CORPORATION , a Delaware corporation, ORGANIC HOLDINGS LLC , a Delaware limited liability company, RESERVE LIFE ORGANICS, LLC , a Delaware limited liability company, RESVITALE, LLC , a Delaware limited liability company, RE-BODY, LLC , a Delaware limited liability company, INNOVITAMIN ORGANICS, LLC , a Delaware limited liability company, ORGANICS MANAGEMENT LLC , a Delaware limited liability company, COCOAWELL, LLC , a Delaware limited liability company, FEMBODY, LLC , a Delaware limited liability company, RESERVE LIFE NUTRITION, L.L.C. , a Delaware limited liability company, INNOVITA SPECIALTY DISTRIBUTION, LLC , a Delaware limited liability company, and JOIE ESSANCE, LLC , a Delaware limited liability company (individually, each a “ Borrower ” and collectively, the “ Borrowers ”), hereby jointly and severally unconditionally promises to pay to the order of MIDCAP FUNDING X TRUST, a Delaware statutory trust and successor by assignment from MidCap Financial Trust (together with its successors and assigns, “ Lender ”) at the office of Agent (as defined herein) at 7255 Woodmont Avenue, Suite 200, Bethesda, MD 20814, or at such other place as Agent may from time to time designate in writing, in lawful money of the United States of America and in immediately available funds, in the principal sum of Five Million and No/100 Dollars ($5,000,000.00), or, if less, the aggregate unpaid principal amount of all Revolving Loans made or deemed made by Lender to Borrowers under the terms of that certain Credit and Security Agreement dated as of January 22, 2015 (as amended by that certain Amendment No. 1 to Credit and Security Agreement and Limited Consent dated as of February 4, 2015, by that certain Amendment No. 2 to Credit and Security Agreement and Limited Consent dated as of April 7, 2015, by that certain Amendment No. 3 to Credit and Security Agreement and Limited Consent dated as of April 30, 2015, by that certain Amendment No. 4 to Credit and Security Agreement and Limited Waiver dated as of June 30, 2015, by that certain Amendment No. 5 to Credit and Security Agreement and Limited Consent dated as of June 30, 2015, by that certain Amendment No. 6 to Credit and Security Agreement, Limited Consent and Limited Waiver dated as of September 9, 2015, by that certain Amendment No. 7 and Joinder Agreement to Credit and Security Agreement dated as of October 5, 2015, by that certain Amendment No. 8 to Credit and Security Agreement dated as of January 28, 2016, by that certain Amendment No. 9 to Credit and Security Agreement dated as of April 5, 2016, by that certain Amendment No. 10 to Credit and Security Agreement dated as of August 11, 2016, but effective as of July 29, 2016, by that certain Amendment No. 11 to Credit and Security Agreement dated as of September 1, 2016, by that certain Amendment No. 12 to Credit and Security Agreement and Limited Consent dated as of December 2, 2017, by that certain Amendment No. 13 to Credit and Security Agreement and Limited Consent dated as of August 30, 2017, by that certain Amendment No. 14 to Credit and Security Agreement and Limited Waiver dated as of March 22, 2018, by that certain Amendment No. 15 to Credit and Security Agreement dated as of December 4, 2018, by that certain Amendment No. 16 to Credit and Security Agreement dated as of the date hereof and as further amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), by and among Borrowers, such other borrowers that may become “Borrowers” under the Credit Agreement, various financial institutions as are, or may from time to time become, parties thereto as lenders (including without limitation, Lender) and MidCap Funding X Trust, individually as a Lender, and as administrative agent (in such capacity and together with its successors and assigns, “ Agent ”). All capitalized terms used herein (which are not otherwise specifically defined herein) shall be used in this Revolving Loan Note (this “ Note ”) as defined in the Credit Agreement.

 

 

 

 

1.     The outstanding principal balance of the Revolving Loans evidenced by this Note shall be payable in full on the Termination Date, or on such earlier date as provided for in the Credit Agreement.

 

2.     This Note is issued in accordance with the provisions of the Credit Agreement and is entitled to the benefits and security of the Credit Agreement and the other Financing Documents, and reference is hereby made to the Credit Agreement for a statement of the terms and conditions under which the Revolving Loans evidenced hereby were made and are required to be repaid.

 

3.     Each Borrower promises to pay interest from the date hereof until payment in full hereof on the unpaid principal balance of the Revolving Loans evidenced hereby at the per annum rate or rates set forth in the Credit Agreement. Interest on the unpaid principal balance of the Revolving Loans evidenced hereby shall be payable on the dates and in the manner set forth in the Credit Agreement. Interest as aforesaid shall be calculated in accordance with the terms of the Credit Agreement.

 

4.     Upon the occurrence and during the continuance of an Event of Default, Agent may, and shall if requested by Required Lenders, (a) by notice to Borrower Representative suspend or terminate the Revolving Loan Commitment and the obligations of Agent and the Lenders with respect thereto, in whole or in part (and, if in part, each Lender’s Revolving Loan Commitment shall be reduced in accordance with its Pro Rata Share), and/or (b) by notice to Borrower Representative declare all or any portion of the Obligations, including the Revolving Loans evidenced by this Note, to be, and the Obligations shall thereupon become, immediately due and payable, with accrued interest thereon, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower and Borrowers will pay the same; provided , however , that in the case of any of the Events of Default specified in Section 10.1(e) or 10.1(f) of the Credit Agreement, without any notice to any Borrower or any other act by Agent or the Lenders, the Revolving Loan Commitment and the obligations of Agent and the Lenders with respect thereto shall thereupon immediately and automatically terminate and all of the Obligations, including the Revolving Loans evidenced by this Note, shall become immediately and automatically due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Borrower and Borrowers will pay the same.

 

5.     Payments received in respect of the Revolving Loans shall be applied as provided in the Credit Agreement.

 

2

 

 

6.     Presentment, demand, protest and notice of presentment, demand, nonpayment and protest are each hereby waived by Borrowers.

 

7.     No waiver by Agent or any Lender of any one or more defaults by the undersigned in the performance of any of its obligations under this Note shall operate or be construed as a waiver of any future default or defaults, whether of a like or different nature, or as a waiver of any obligation of Borrowers to any other lender under the Credit Agreement.

 

8.     No provision of this Note may be amended, waived or otherwise modified unless such amendment, waiver or other modification is in writing and is signed or otherwise approved by Borrowers, the Required Lenders and any other lender under the Credit Agreement to the extent required under Section 11.16 of the Credit Agreement.

 

9.      THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

 

10.     Whenever possible each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but in case any provision of or obligation under this Note shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

11.     Whenever in this Note reference is made to Agent, Lender or Borrowers, such reference shall be deemed to include, as applicable, a reference to their respective successors and assigns. The provisions of this Note shall be binding upon each Borrower and its successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

 

12.     In addition to and without limitation of any of the foregoing, this Note shall be deemed to be a Financing Document and shall otherwise be subject to all of the general terms and conditions contained in Article 12 of the Credit Agreement, mutatis mutandis .

 

13.     This Note replaces in its entirety and is in substitution for but not in payment of that certain Second Amended and Restated Revolving Loan Note, dated as of September 1, 2016, made by Borrowers in favor of Lender in the maximum principal amount of $17,000,000.00 (the “ Prior Note ”), and does not and shall not be deemed to constitute a novation thereof. Such Prior Note shall be of no further force and effect upon the execution and delivery of this Note.

 

 

[SIGNATURES APPEAR ON FOLLOWING PAGE ( S ) ]

 

3

 

 

IN WITNESS WHEREOF, intending to be legally bound, and intending that this agreement constitute an agreement executed under seal, the undersigned have executed this Note under seal as of the day and year first hereinabove set forth.

 

 

BORROWERS:

TWINLAB CONSOLIDATED HOLDINGS, INC.

TWINLAB CONSOLIDATION CORPORATION

TWINLAB HOLDINGS, INC .

TWINLAB CORPORATION  

ISI BRANDS, INC.

NUTRASCIENCE LABS, INC.

NUTRASCIENCE LABS IP CORPORATION

 

 

By:   /s/ Anthony Zolezzi                          (Seal)

Name: Anthony Zolezzi
Title:   Chief Executive Officer

 

 

ORGANIC HOLDINGS LLC

 

 

By:    /s/ Anthony Zolezzi                          (Seal)

Name: Anthony Zolezzi

Title:   Sole Manager

 

 

RESERVE LIFE ORGANICS, LLC

RESVITALE, LLC

RE-BODY, LLC

INNOVITAMIN ORGANICS, LLC

ORGANICS MANAGEMENT LLC

COCOAWELL, LLC

FEMBODY, LLC

RESERVE LIFE NUTRITION, L.L.C.

INNOVITA SPECIALTY DISTRIBUTION, LLC

JOIE ESSANCE, LLC

 

 

By ORGANIC HOLDINGS LLC,

its sole Member

 

By:    /s/ Anthony Zolezzi                          (Seal)

Name: Anthony Zolezzi
Title:   Sole Manager

 

 

Signature Page to Third Amended and Restated Revolving Loan Note

Exhibit 10.193

 

AMENDMENT NO. 6 TO UNSECURED PROMISSORY NOTE

(Original Principal Amount $7,000,000)

 

This Amendment No. 6 to Unsecured Promissory Note (the "Amendment") is made as of this 23 day of January, 2019, by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (" Maker "), and GREAT HARBOR CAPITAL, LLC, a Delaware limited liability company (" Holder ").

 

WHEREAS , the Maker is indebted to the Holder under a certain Unsecured Promissory Note in the principal amount of Seven Million Dollars ($7,000,000) dated March 21, 2016, as amended by that certain Amendment No. 1 to Unsecured Promissory Note dated April 5, 2016, that certain Amendment No. 2 to Unsecured Promissory Note dated July 21, 2016, that certain Amendment No. 3 to Unsecured Promissory Note dated December 30, 2016, that certain Amendment No. 4 to Unsecured Promissory Note dated March 14, 2017, and that certain Amendment No. 5 to Unsecured Promissory Note dated August 30, 2017 (as amended, the "Note"); and

 

WHEREAS , the Borrower and the Holder have agreed to amend the Note in accordance with this Amendment.

 

NOW , THEREFORE , the parties hereto agree as follows:

 

1.     In the introduction date, the phrase "March 21, 2019" is hereby restated in its entirety to read as "June 30, 2019" such that the Maturity Date shall be June 30, 2019.

 

2.     Except as expressly amended hereby, all terms and conditions of the Note shall remain in full force and effect.

 

3.     Upon the effectiveness of this Amendment, each reference in the Note to "the Note," "this Note," "hereunder," "hereof," "herein," or words of similar import shall mean and be a reference to the Note, as amended by this Amendment.

 

4.     This Amendment constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements between such parties with respect to the subject matter hereof. To the extent of any conflict between the terms and conditions of this Amendment and the Note, the terms and conditions of this Amendment shall govern.

 

5.     This Amendment may be executed in one or more counterparts, including by means of facsimile and/or portable document format, each of which shall be an original and all of which shall together constitute one and the same document.

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

Amendment No. 6 to Unsecured Promissory Note ($7,000,000 – Great Harbor)

 

 

 

IN WITNESS WHEREOF, Maker and Holder have executed this Amendment as of the date first above written.

 

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/  Anthony Zolezzi

 

 

 

Anthony Zolezzi

 

 

 

Chief Executive Officer

 

 

 

 

 

GREAT HARBOR CAPITAL, LLC

 

 

 

 

 

 

 

 

 

 

By:

/s/  Mark Bugge

 

 

 

Mark J. Bugge

 

 

 

Secretary

 

 

 

Amendment No. 6 to Unsecured Promissory Note ($7,000,000 – Great Harbor)

Exhibit 10.194

 

AMENDMENT NO. 7 TO UNSECURED PROMISSORY NOTE

(Original Principal Amount $2,500,000)

 

This Amendment No. 7 to Unsecured Promissory Note (the "Amendment") is made as of this 23 day of January, 2019, by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (" Maker "), and GREAT HARBOR CAPITAL, LLC, a Delaware limited liability company (" Holder ").

 

WHEREAS , the Maker is indebted to the Holder under a certain Unsecured Promissory Note in the principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000) dated January 28, 2016, as amended by that certain Amendment No.1 to Unsecured Promissory Note, dated March 21, 2016, that certain Amendment No. 2 to Unsecured Promissory Note, dated April 5, 2016, that certain Amendment No. 3 to Unsecured Promissory Note, dated July 21, 2016, that certain Amendment No. 4 to Unsecured Promissory Note, dated December 30, 2016, that certain Amendment No. 5 to Unsecured Promissory Note, dated March 14, 2017, and that certain Amendment No. 6 to Unsecured Promissory Note, dated August 30, 2017 (as amended, the "Note"); and

 

WHEREAS , the Borrower and the Holder have agreed to amend the Note in accordance with this Amendment.

 

NOW , THEREFORE , the parties hereto agree as follows:

 

1.     In the introduction date, the phrase "January 28, 2019" is hereby restated in its entirety to read as "June 30, 2019" such that the Maturity Date shall be June 30, 2019.

 

2.     Except as expressly amended hereby, all terms and conditions of the Note shall remain in full force and effect.

 

3.     Upon the effectiveness of this Amendment, each reference in the Note to "the Note," "this Note," "hereunder," "hereof," "herein," or words of similar import shall mean and be a reference to the Note, as amended by this Amendment.

 

4.     This Amendment constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements between such parties with respect to the subject matter hereof. To the extent of any conflict between the terms and conditions of this Amendment and the Note, the terms and conditions of this Amendment shall govern.

 

5.     This Amendment may be executed in one or more counterparts, including by means of facsimile and/or portable document format, each of which shall be an original and all of which shall together constitute one and the same document.

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

Amendment No. 7 to Unsecured Promissory Note ($2,500,000 – Great Harbor)

 

 

 

 

IN WITNESS WHEREOF, Maker and Holder have executed this Amendment as of the date first above written.

 

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/  Anthony Zolezzi

 

 

 

Anthony Zolezzi

 

 

 

Chief Executive Officer

 

 

 

 

 

GREAT HARBOR CAPITAL, LLC

 

 

 

 

 

 

 

 

 

 

By:

/s/  Mark Bugge

 

 

 

Mark J. Bugge

 

 

 

Secretary

 

 

 

Amendment No. 7 to Unsecured Promissory Note ($2,500,000 – Great Harbor)

Exhibit 10.195

 

AMENDMENT NO. 1 6 TO CREDIT AND SECURITY AGREEMENT

 

THIS AMENDMENT NO. 1 6 TO CREDIT AND SECURITY AGREEMENT (this “ Amendment ”) is made as of this 22 nd day of January, 2019, by and among TWINLAB CONSOLIDATED HOLDINGS, INC. , a Nevada corporation, TWINLAB CONSOLIDATION CORPORATION , a Delaware corporation, TWINLAB HOLDINGS, INC. , a Michigan corporation, ISI BRANDS INC. , a Michigan corporation, TWINLAB CORPORATION , a Delaware corporation, NUTRASCIENCE LABS, INC. , a Delaware corporation (formerly known as TCC CM Subco I, Inc.), NUTRASCIENCE LABS IP CORPORATION , a Delaware corporation (formerly known as TCC CM Subco II, Inc.), ORGANIC HOLDINGS LLC , a Delaware limited liability company, RESERVE LIFE ORGANICS, LLC , a Delaware limited liability company, RESVITALE, LLC , a Delaware limited liability company, RE-BODY, LLC , a Delaware limited liability company, INNOVITAMIN ORGANICS, LLC , a Delaware limited liability company, ORGANICS MANAGEMENT LLC , a Delaware limited liability company, COCOAWELL, LLC , a Delaware limited liability company, FEMBODY, LLC , a Delaware limited liability company, RESERVE LIFE NUTRITION, L.L.C. , a Delaware limited liability company, INNOVITA SPECIALTY DISTRIBUTION, LLC , a Delaware limited liability company, and JOIE ESSANCE, LLC , a Delaware limited liability company (each of the foregoing Persons being referred to herein individually as a “ Borrower ”, and collectively as “ Borrowers ”), and MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust (as Agent for Lenders, “ Agent ”, and individually, as a Lender), and the other financial institutions or other entities from time to time parties to the Credit Agreement referenced below, each as a Lender.

 

RECITALS

 

A.      Pursuant to that certain Credit and Security Agreement dated as of January 22, 2015 by and among Borrowers, Agent and Lenders (as amended by that certain Amendment No. 1 to Credit and Security Agreement and Limited Consent dated as of February 4, 2015, by that certain Amendment No. 2 to Credit and Security Agreement and Limited Consent dated as of April 7, 2015, by that certain Amendment No. 3 to Credit and Security Agreement and Limited Consent dated as of April 30, 2015, by that certain Amendment No. 4 to Credit and Security Agreement and Limited Waiver dated as of June 30, 2015, by that certain Amendment No. 5 to Credit and Security Agreement and Limited Consent dated as of June 30, 2015, by that certain Amendment No. 6 to Credit and Security Agreement, Limited Consent and Limited Waiver dated as of September 9, 2015, by that certain Amendment No. 7 and Joinder Agreement to Credit and Security Agreement dated as of October 5, 2015, by that certain Amendment No. 8 to Credit and Security Agreement dated as of January 28, 2016, by that certain Amendment No. 9 to Credit and Security Agreement dated as of April 5, 2016, by that certain Amendment No. 10 to Credit and Security Agreement dated as of August 11, 2016, but effective as of July 29, 2016, by that certain Amendment No. 11 to Credit and Security Agreement dated as of September 1, 2016, by that certain Amendment No. 12 to Credit and Security Agreement and Limited Consent dated as of December 2, 2017, by that certain Amendment No. 13 to Credit and Security Agreement and Limited Consent dated as of August 30, 2017, by that certain Amendment No. 14 to Credit and Security Agreement and Limited Waiver dated as of March 22, 2018, by that certain Amendment No. 15 to Credit and Security Agreement dated as of December 4, 2018 and as it may be further amended, modified and restated from time to time, the “ Credit Agreement ”), Agent and Lenders agreed to make available to Borrowers a secured revolving credit facility in a principal amount of up to $17,000,000 from time to time (as amended, modified, supplemented, extended and restated from time to time, collectively, the “ Loans ”). Capitalized terms used but not otherwise defined in this Amendment shall have the meanings set forth in the Credit Agreement.

 

 

 

 

B.     Borrowers have requested that the Administrative Agent and the Lenders reduce the Revolving Loan Commitment Amount from a total of $17,000,000.00 to $5,000,000.00.

 

C.      Borrowers, Agent and Lenders have agreed to amend the Credit Agreement as set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, the terms and conditions set forth in this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agent, Lenders and Borrowers hereby agree as follows:

 

1.      Recitals. This Amendment shall constitute a Financing Document and the Recitals set forth above shall be construed as part of this Amendment as if set forth fully in the body of this Amendment.

 

2.       Amendment to Credit Agreement.      

 

(a)      Section 1.1 – Definitions of Commitment Expiry Date and Revolving Loan Commitment Amount . The defined terms “Commitment Expiry Date” and “Revolving Loan Commitment Amount” in Section 1.1 of the Credit Agreement are hereby amended and restated, respectively, in their entirety as follows:

 

“Commitment Expiry Date” means April 22, 2019 .

 

“Revolving Loan Commitment Amount” means, as to any Lender, the dollar amount set forth opposite such Lender’s name on the Commitment Annex under the column “Revolving Loan Commitment Amount” (if such Lender’s name is not so set forth thereon, then the dollar amount on the Commitment Annex for the Revolving Loan Commitment Amount for such Lender shall be deemed to be $0), as such amount may be adjusted from time to time (a) by any amounts assigned (with respect to such Lender’s portion of Revolving Loans outstanding and its commitment to make Revolving Loans) pursuant to the terms of any and all effective assignment agreements to which such Lender is a party, and (b) any Additional Tranche(s) activated by Borrowers. For the avoidance of doubt, the aggregate Revolving Loan Commitment Amount of all Lenders on the Sixteenth Amendment Closing Date shall be $ 5 ,000,000 and if the Additional Tranche is fully activated by Borrowers pursuant to the terms of the Agreement such amount shall increase to $ 8 ,000,000.

 

 

 

 

(b)      Section 1.1 – New Defined Term . Section 1.1 of the Credit Agreement is hereby amended to add the defined term “Sixteenth Amendment Closing Date” in its alphabetical order as follows:

 

Sixteenth Amendment Closing Date” means January 22 , 201 9 .

 

(c)      Annex A . Annex A to the Credit Agreement containing the Commitment Annex is hereby amended and restated as set forth on Exhibit A attached to and made a part of this Amendment.

 

3 .      Confirmation of Representations and Warranties; Reaffirmation of Security Interest. Each Borrower hereby (a) confirms that all of the representations and warranties set forth in the Credit Agreement are, after giving effect to this Amendment and the transactions contemplated hereby, true and correct with respect to such Borrower as of the date hereof to the same extent as though made on and as of such date, except to the extent such representations and warranties specifically relate to an earlier date, and (b) covenants to perform its respective obligations under the Credit Agreement. Each Borrower confirms and agrees that all security interests and Liens granted to Agent continue in full force and effect, and all Collateral remains free and clear of any Liens, other than those granted to Agent and Permitted Liens. Nothing herein is intended to impair or limit the validity, priority or extent of Agent’s security interests in and Liens on the Collateral.

 

4 .      Enforceability. This Amendment constitutes the legal, valid and binding obligation of each Borrower, and is enforceable against each of the Borrowers in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws relating to the enforcement of creditors’ rights generally and by general equitable principles.

 

5 .       Costs and Fees . In consideration of Agent’s agreement to enter into this Amendment, Borrower shall pay to Agent a modification fee equal to Fifty Thousand and No/100 Dollars ($50,000.00) (the “ Modification Fee ”). The Modification Fee shall be fully earned upon the execution of this Amendment, provided that if the Agent, Lenders and Borrowers, prior to the current maturity of April 22, 2019, agree to and enter into an amendment to the Credit Agreement extending the Commitment Expiry Date to January 22, 2022 or beyond, the Modification Fee will be applied as a credit towards the long-term extension fee to be charged equal to one percent (1%) of the Revolving Loan Commitment Amount in effect as of the date of such amendment. Furthermore, Borrowers shall be responsible for the payment of all reasonable costs and fees of Agent’s counsel incurred in connection with the preparation of this Amendment and any related documents. If Agent or any Lender uses in-house counsel for any of these purposes, Borrowers further agree that the Obligations include reasonable charges for such work commensurate with the fees that would otherwise be charged by outside legal counsel selected by Agent or such Lender for the work performed. Borrowers hereby authorize Agent to deduct all of such fees set forth in this Section 5 from the proceeds of one or more Revolving Loans made under the Credit Agreement.

 

 

 

 

6 .       Conditions to Effectiveness. This Amendment shall become effective as of the date on which each of the following conditions has been satisfied (the “ Effective Date ”):

 

(a)     Borrowers shall have delivered to Agent this Amendment, duly executed by an authorized officer of each Borrower;

 

(b)     all representations and warranties of Borrowers contained herein shall be true and correct in all material respects as of the Effective Date (and such parties’ delivery of their respective signatures hereto shall be deemed to be its certification thereof); and

 

(c)     Agent shall have received from Borrowers all of the fees owing pursuant to this Amendment and Agent’s reasonable out-of-pocket legal fees and expenses.

 

7 .      Release. Each Borrower, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “ Releasing Parties ”), does hereby fully and completely release, acquit and forever discharge each Indemnitee of and from any and all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnitees (or any of them) that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event. “ Prior Related Event ” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of this Amendment or any other Financing Document, (b) any actions, transactions, matters or circumstances related hereto or thereto, (c) the conduct of the relationship between any Indemnitee and any Borrower, or (d) any other actions or inactions by any Indemnitee, all on or prior to the Effective Date. Each Borrower acknowledges that the foregoing release is a material inducement to Agent’s and Lender’s decision to enter into this Amendment and to agree to the modifications contemplated hereunder.

 

8 .      No Waiver or Novation. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Agent, nor constitute a waiver of any provision of the Credit Agreement, the Financing Documents or any other documents, instruments and agreements executed or delivered in connection with any of the foregoing. Nothing herein is intended or shall be construed as a waiver of any existing Defaults or Events of Default under the Credit Agreement or other Financing Documents or any of Agent’s rights and remedies in respect of such Defaults or Events of Default. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Credit Agreement.

 

9 .       Affirmation. Except as specifically amended pursuant to the terms hereof, the Credit Agreement and all other Financing Documents (and all covenants, terms, conditions and agreements therein) shall remain in full force and effect, and are hereby ratified and confirmed in all respects by Borrowers. Each Borrower covenants and agrees to comply with all of the terms, covenants and conditions of the Credit Agreement (as amended and modified hereby) and the Financing Documents, notwithstanding any prior course of conduct, waivers, releases or other actions or inactions on Agent’s or any Lender’s part which might otherwise constitute or be construed as a waiver of or amendment to such terms, covenants and conditions.

 

 

 

 

10 .      Miscellaneous.

 

(a)      Reference to the Effect on the Credit Agreement. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of similar import shall mean and be a reference to the Credit Agreement, as amended and modified by this Amendment. Except as specifically amended and waived above, the Credit Agreement, and all other Financing Documents (and all covenants, terms, conditions and agreements therein), shall remain in full force and effect, and are hereby ratified and confirmed in all respects by Borrowers.

 

(b)      Incorporation of Credit Agreement Provisions. The provisions contained in Section 11.6 (Indemnification), Section 12.8 (Governing Law; Submission to Jurisdiction) and Section 12.9 (Waiver of Jury Trial) of the Credit Agreement are incorporated herein by reference to the same extent as if reproduced herein in their entirety.

 

(c)      Headings. Section headings in this Amendment are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

 

(d)      Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Signatures by facsimile or by electronic mail delivery of an electronic version (e.g., .pdf or .tif file) of an executed signature page shall be treated as delivery of an original and shall bind the parties hereto. This Amendment constitutes the entire agreement and understanding among the parties hereto and supersede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.

 

 

[SIGNATURES APPEAR ON FOLLOWING PAGES]

 

 

 

(Signature Page to Amendment No. 16 to Credit and Security Agreement)

 

IN WITNESS WHEREOF , intending to be legally bound, and intending that this document constitute an agreement executed under seal, the undersigned have executed this Amendment under seal as of the day and year first hereinabove set forth.

 

 

AGENT:

MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust

 

 

 

 

 

 

  By:   Apollo Capital Management, L.P.,  
      its investment manager  
         
  By:   Apollo Capital Management GP, LLC,  
      its general partner  
         

 

 

 

 

 

 

By:

 

/s/  Maurice Amsellem

(SEAL)

 

Name:

Maurice Amsellem

 

 

Title:

Authorized Signatory

 

 

        

               

LENDER:

MIDCAP FUNDING X TRUST, a Delaware statutory trust, as successor-by-assignment from MidCap Financial Trust

 

 

 

 

 

 

  By:   Apollo Capital Management, L.P.,  
      its investment manager  
         
  By:   Apollo Capital Management GP, LLC,  
      its general partner  
         

 

 

 

 

 

 

By:

 

/s/  Maurice Amsellem

(SEAL)

 

Name:

Maurice Amsellem

 

  Title: Authorized Signatory  

 

 

 

(Signature Page to Amendment No. 16 to Credit and Security Agreement)

 

 

BORROWERS:

TWINLAB CONSOLIDATED HOLDINGS, INC.

TWINLAB CONSOLIDATION CORPORATION

TWINLAB HOLDINGS, INC .

TWINLAB CORPORATION  

ISI BRANDS, INC.

NUTRASCIENCE LABS, INC.

NUTRASCIENCE LABS IP CORPORATION

           
           
  By:  /s/ Anthony Zolezzi (Seal)  
  Name: Anthony Zolezzi    
  Title: Chief Executive Officer    
         
         
  ORGANIC HOLDINGS LLC
   
         
  By:  /s/ Anthony Zolezzi (Seal)  
  Name: Anthony Zolezzi    
  Title: Sole Manager    
           
           
 

RESERVE LIFE ORGANICS, LLC

RESVITALE, LLC

RE-BODY, LLC

INNOVITAMIN ORGANICS, LLC

ORGANICS MANAGEMENT LLC

COCOAWELL, LLC

FEMBODY, LLC

RESERVE LIFE NUTRITION, L.L.C.

INNOVITA SPECIALTY DISTRIBUTION, LLC

JOIE ESSANCE, LLC

   
   
 

By ORGANIC HOLDINGS LLC,

its sole Member

           
  By: /s/ Anthony Zolezzi (Seal)  
  Name: Anthony Zolezzi    
  Title: Sole Manager    

 

 

 

 

Exhibit A

 

Annex A to Credit Agreement (Commitment Annex)

 

 

Lender

 

Revolving Loan

Commitment

Amount

 

Revolving Loan

Commitment

Percentage

MidCap Funding X Trust

 

$5,000,000

 

100%

TOTALS

 

$ 5 ,000,000

 

100%

 

Exhibit 10.196

 

AMENDMENT NO. 1 TO AMENDED AND RESTATED

UNSECURED DELAYED DRAW PROMISSORY NOTE

(Original Principal Amount $4,769,996)

 

This Amendment No. 1 to Amended and Restated Unsecured Delayed Draw Promissory Note (the "Amendment") is made as of this 28 day of January, 2019, by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (" Maker "), and GOLISANO HOLDINGS LLC, a New York limited liability company (" Holder ").

 

WHEREAS , the Maker is indebted to the Holder under a certain Amended and Restated Unsecured Delayed Draw Promissory Note in the principal amount of Four Million Seven Hundred Sixty-Nine Thousand Nine Hundred Ninety-Six Dollars ($4,769,996), dated August 30, 2017 (the "Note"); and

 

WHEREAS , the Borrower and the Holder have agreed to amend the Note in accordance with this Amendment.

 

NOW , THEREFORE , the parties hereto agree as follows:

 

1.     In the introduction paragraph, the phrase "January 28, 2019" is hereby restated in its entirety to read as "June 30, 2019" such that the Maturity Date shall be June 30, 2019.

 

2.     Except as expressly amended hereby, all terms and conditions of the Note shall remain in full force and effect.

 

3.     Upon the effectiveness of this Amendment, each reference in the Note to "the Note," "this Note," "hereunder," "hereof," "herein," or words of similar import shall mean and be a reference to the Note, as amended by this Amendment.

 

4.     This Amendment constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements between such parties with respect to the subject matter hereof. To the extent of any conflict between the terms and conditions of this Amendment and the Note, the terms and conditions of this Amendment shall govern.

 

5.     This Amendment may be executed in one or more counterparts, including by means of facsimile and/or portable document format, each of which shall be an original and all of which shall together constitute one and the same document.

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

Amendment No. 1 to Amended and Restated

Unsecured Delayed Draw Promissory Note ($4,769,996 - Golisano Holdings)

 

 

 

IN WITNESS WHEREOF, Maker and Holder have executed this Amendment as of the date first above written.

 

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/  Anthony Zolezzi

 

 

 

Anthony Zolezzi

 

 

 

Chief Executive Officer

 

       
       
       
  GOLISANO HOLDINGS LLC
       
       
  By: /s/ B. Thomas Golisano  
    B. Thomas Golisano  
    Member  

 

 

Amendment No. 1 to Amended and Restated

Unsecured Delayed Draw Promissory Note ($4,769,996 - Golisano Holdings)

 

Exhibit 10.197

 

AMENDMENT NO. 1 TO AMENDED AND RESTATED

UNSECURED PROMISSORY NOTE

(Original Principal Amount $2,500,000)

 

This Amendment No. 1 to Amended and Restated Unsecured Promissory Note (the "Amendment") is made as of this 28rd day of January 2019, by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (" Maker "), and GOLISANO HOLDINGS LLC, a New York limited liability company (" Holder ").

 

WHEREAS , the Maker is indebted to the Holder under a certain Amended and Restated Unsecured Promissory Note in the principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000), dated August 30, 2017 (the "Note"); and

 

WHEREAS , the Borrower and the Holder have agreed to amend the Note in accordance with this Amendment.

 

NOW , THEREFORE , the parties hereto agree as follows:

 

1.     In the introduction paragraph, the phrase "January 28, 2019" is hereby restated in its entirety to read as "June 30, 2019" such that the Maturity Date shall be June 30, 2019.

 

2.     Except as expressly amended hereby, all terms and conditions of the Note shall remain in full force and effect.

 

3.     Upon the effectiveness of this Amendment, each reference in the Note to "the Note," "this Note," "hereunder," "hereof," "herein," or words of similar import shall mean and be a reference to the Note, as amended by this Amendment.

 

4.     This Amendment constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements between such parties with respect to the subject matter hereof. To the extent of any conflict between the terms and conditions of this Amendment and the Note, the terms and conditions of this Amendment shall govern.

 

5.     This Amendment may be executed in one or more counterparts, including by means of facsimile and/or portable document format, each of which shall be an original and all of which shall together constitute one and the same document.

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

Amendment No. 1 to Amended and Restated

Unsecured Promissory Note ($2,500,000 - Golisano Holdings)

 

 

 

IN WITNESS WHEREOF, Maker and Holder have executed this Amendment as of the date first above written.

 

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/  Anthony Zolezzi

 

 

 

Anthony Zolezzi

 

 

 

Chief Executive Officer

 

       
       
       
  GOLISANO HOLDINGS LLC  
       
       
  By: /s/ B. Thomas Golisano    
    B. Thomas Golisano  
    Member  

 

 

Amendment No. 1 to Amended and Restated

Unsecured Promissory Note ($2,500,000 - Golisano Holdings)

Exhibit 10.198

 

AMENDMENT NO. 1 TO AMENDED AND RESTATED

UNSECURED PROMISSORY NOTE

(Original Principal Amount $7,000,000)

 

This Amendment No. 1 to Amended and Restated Unsecured Promissory Note (the "Amendment") is made as of this 28 day of January, 2019, by and between TWINLAB CONSOLIDATED HOLDINGS, INC., a Nevada corporation (" Maker "), and GOLISANO HOLDINGS LLC, a New York limited liability company (" Holder ").

 

WHEREAS , the Maker is indebted to the Holder under a certain Amended and Restated Unsecured Promissory Note in the principal amount of Seven Million Dollars ($7,000,000) dated August 30, 2017 (the "Note"); and

 

WHEREAS , the Borrower and the Holder have agreed to amend the Note in accordance with this Amendment.

 

NOW , THEREFORE , the parties hereto agree as follows:

 

1.     In the introduction paragraph, the phrase "March 21, 2019" is hereby restated in its entirety to read as "June 30, 2019" such that the Maturity Date shall be June 30, 2019.

 

2.     Except as expressly amended hereby, all terms and conditions of the Note shall remain in full force and effect.

 

3.     Upon the effectiveness of this Amendment, each reference in the Note to "the Note," "this Note," "hereunder," "hereof," "herein," or words of similar import shall mean and be a reference to the Note, as amended by this Amendment.

 

4.     This Amendment constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements between such parties with respect to the subject matter hereof. To the extent of any conflict between the terms and conditions of this Amendment and the Note, the terms and conditions of this Amendment shall govern.

 

5.     This Amendment may be executed in one or more counterparts, including by means of facsimile and/or portable document format, each of which shall be an original and all of which shall together constitute one and the same document.

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

Amendment No. 1 to Amended and Restated

Unsecured Promissory Note ($7,000,000 - Golisano Holdings)

 

 

 

IN WITNESS WHEREOF, Maker and Holder have executed this Amendment as of the date first above written.

 

 

 

TWINLAB CONSOLIDATED HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/  Anthony Zolezzi

 

 

 

Anthony Zolezzi

 

    Chief Executive Officer  
       
   
   
  GOLISANO HOLDINGS LLC
   
       
  By: /s/ B. Thomas Golisano  

 

 

B. Thomas Golisano

 

    Member  

 

 

Amendment No. 1 to Amended and Restated

Unsecured Promissory Note ($7,000,000 - Golisano Holdings)

Exhibit 14.1

 

Twinlab Consolidated Holdings, Inc. Code of Ethics and Business Conduct

 

 

1.     Introduction .

 

1.1     The Board of Directors of Twinlab Consolidated Holdings, Inc. (together with its subsidiaries, the " Company ") has adopted this Code of Ethics and Business Conduct (the " Code ") in order to:

 

(a)     promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest;

 

(b)     promote full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission (the " SEC ") and in other public communications made by the Company;

 

(c)     promote compliance with applicable governmental laws, rules and regulations;

 

(d)     promote the protection of Company assets, including corporate opportunities and confidential information;

 

(e)     promote fair dealing practices;

 

(f)     deter wrongdoing; and

 

(g)     ensure accountability for adherence to the Code.

 

1.2     All directors, officers and employees are required to be familiar with the Code, comply with its provisions and report any suspected violations as described below in Section 10 ., Reporting and Enforcement.

 

2.     Honest and Ethical Conduct .

 

2.1     The Company's policy is to promote high standards of integrity by conducting its affairs honestly and ethically.

 

2.2     Each director, officer and employee must act with integrity and observe the highest ethical standards of business conduct in his or her dealings with the Company's customers, suppliers, partners, service providers, competitors, employees and anyone else with whom he or she has contact in the course of performing his or her job.

 

 

 

 

3.     Conflicts of Interest .

 

3.1     A conflict of interest occurs when an individual's private interest (or the interest of a member of his or her family) interferes, or even appears to interfere, with the interests of the Company as a whole. A conflict of interest can arise when an employee, officer or director (or a member of his or her family) takes actions or has interests that may make it difficult to perform his or her work for the Company objectively and effectively. Conflicts of interest also arise when an employee, officer or director (or a member of his or her family) receives improper personal benefits as a result of his or her position in the Company.

 

3.2     Loans by the Company to, or guarantees by the Company of obligations of, employees or their family members are of special concern and could constitute improper personal benefits to the recipients of such loans or guarantees, depending on the facts and circumstances. Loans by the Company to, or guarantees by the Company of obligations of, any director or officer or their family members are expressly prohibited.

 

3.3     Whether or not a conflict of interest exists or will exist can be unclear. Conflicts of interest should be avoided unless specifically authorized as described in Section 3.4 .

 

3.4     Persons other than directors and executive officers who have questions about a potential conflict of interest or who become aware of an actual or potential conflict should discuss the matter with, and seek a determination and prior authorization or approval from, their supervisor or the Chief Legal Officer. A supervisor may not authorize or approve conflict of interest matters or make determinations as to whether a problematic conflict of interest exists without first providing the Chief Legal Officer with a written description of the activity and seeking the Chief Legal Officer's written approval. If the supervisor is himself involved in the potential or actual conflict, the matter should instead be discussed directly with the Chief Legal Officer.

 

Directors and executive officers must seek determinations and prior authorizations or approvals of potential conflicts of interest exclusively from the Audit Committee. In the event the Company does not have a separate standing Audit Committee, the entire Board of Directors shall function as the Audit Committee for purposes of the Code.

 

4.     Compliance .

 

4.1     Employees, officers and directors should comply, both in letter and spirit, with all applicable laws, rules and regulations in the cities, states and countries in which the Company operates.

 

4.2     Although not all employees, officers and directors are expected to know the details of all applicable laws, rules and regulations, it is important to know enough to determine when to seek advice from appropriate personnel. Questions about compliance should be addressed to the Legal Department.

 

2

 

 

4.3     No director, officer or employee may purchase or sell any Company securities while in possession of material non-public information regarding the Company, nor may any director, officer or employee purchase or sell another company's securities while in possession of material non-public information regarding that company. It is against Company policies and illegal for any director, officer or employee to use material non-public information regarding the Company or any other company to:

 

(a)     obtain profit for himself or herself; or

 

(b)     directly or indirectly "tip" others who might make an investment decision on the basis of that information.

 

5.     Disclosure .

 

5.1     The Company's periodic reports and other documents filed with the SEC, including all financial statements and other financial information, must comply with applicable federal securities laws and SEC rules.

 

5.2     Each director, officer and employee who contributes in any way to the preparation or verification of the Company's financial statements and other financial information must ensure that the Company's books, records and accounts are accurately maintained. Each director, officer and employee must cooperate fully with the Company's accounting and internal audit departments, as well as the Company's independent public accountants and counsel.

 

5.3     Each director, officer and employee who is involved in the Company's disclosure process must:

 

(a)     be familiar with and comply with the Company's disclosure controls and procedures and its internal control over financial reporting; and

 

(b)     take all necessary steps to ensure that all filings with the SEC and all other public communications about the financial and business condition of the Company provide full, fair, accurate, timely and understandable disclosure.

 

6.     Protection and Proper Use of Company Assets .

 

6.1     All directors, officers and employees should protect the Company's assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company's profitability and are prohibited.

 

3

 

 

6.2     All Company assets should be used only for legitimate business purposes, though incidental personal use may be permitted. Any suspected incident of fraud or theft should be reported for investigation immediately.

 

6.3     The obligation to protect Company assets includes the Company's proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and copyrights, as well as business and marketing plans, engineering and manufacturing ideas, designs, databases, records and any non-public financial data or reports. Unauthorized use or distribution of this information is prohibited and could also be illegal and result in civil or criminal penalties.

 

7.     Corporate Opportunities . All directors, officers and employees owe a duty to the Company to advance its interests when the opportunity arises. Directors, officers and employees are prohibited from taking for themselves personally (or for the benefit of friends or family members) opportunities that are discovered through the use of Company assets, property, information or position. Directors, officers and employees may not use Company assets, property, information or position for personal gain (including gain of friends or family members). In addition, no director, officer or employee may compete with the Company.

 

8.     Confidentiality . Directors, officers and employees should maintain the confidentiality of information entrusted to them by the Company or by its customers, suppliers or partners, except when disclosure is expressly authorized or legally required. Confidential information includes all non-public information (regardless of its source) that might be of use to the Company's competitors or harmful to the Company or its customers, suppliers or partners if disclosed.

 

9.     Fair Dealing . Each director, officer and employee must deal fairly with the Company's customers, suppliers, partners, service providers, competitors, employees and anyone else with whom he or she has contact in the course of performing his or her job. No director, officer or employee may take unfair advantage of anyone through manipulation, concealment, abuse or privileged information, misrepresentation of facts or any other unfair dealing practice.

 

10.   Reporting and Enforcement .

 

10.1     Reporting and Investigation of Violations.

 

(a)     Actions prohibited by this code involving directors or executive officers must be reported to the Audit Committee.

 

(b)     Actions prohibited by this code involving any other person must be reported to the reporting person's supervisor or the Chief Legal Officer.

 

4

 

 

(c)     After receiving a report of an alleged prohibited action, the Audit Committee, the relevant supervisor or the Chief Legal Officer must promptly take all appropriate actions necessary to investigate.

 

(d)     All directors, officers and employees are expected to cooperate in any internal investigation of misconduct.

 

10.2   Enforcement.

 

(a)     The Company must ensure prompt and consistent action against violations of this Code.

 

(b)     If, after investigating a report of an alleged prohibited action by a director or executive officer, the Audit Committee determines that a violation of this Code has occurred, the Audit Committee will report such determination to the Board of Directors.

 

(c)     If, after investigating a report of an alleged prohibited action by any other person, the relevant supervisor or the Chief Legal Officer determines that a violation of this Code has occurred, the supervisor or Chief Legal Officer will report such determination to the Chief Legal Officer or, if the Chief Legal Officer is the reporting person, to the Chief Executive Officer.

 

(d)     Upon receipt of a determination that there has been a violation of this Code, the Board of Directors or the Chief Legal Officer will take such preventative or disciplinary action as it deems appropriate, including, but not limited to, reassignment, demotion, dismissal and, in the event of criminal conduct or other serious violations of the law, notification of appropriate governmental authorities.

 

10.3   Waivers.

 

(a)     Each of the Board of Directors (in the case of a violation by a director or executive officer) and the Chief Legal Officer (in the case of a violation by any other person) may, in its discretion, waive any violation of this Code.

 

(b)     Any waiver for a director or an executive officer shall be disclosed as required by SEC and applicable stock exchange rules.

 

10.4   Prohibition on Retaliation.

 

The Company does not tolerate acts of retaliation against any director, officer or employee who makes a good faith report of known or suspected acts of misconduct or other violations of this Code.

 

5

 

 

Acknowledgment of Receipt and Review

 

To be signed and returned to the Chief Legal Officer.

 

I, _______________________, acknowledge that I have received and read a copy of the Twinlab Consolidated Holdings, Inc. Code of Ethics and Business Conduct (the “Code”). I understand the contents of the Code and I agree to comply with the policies and procedures set out in the Code.

 

I understand that I should approach the Chief Legal Officer if I have any questions about the Code generally or any questions about reporting a suspected conflict of interest or other violation of the Code.

 

 

  ________________________
  [NAME]
   
   
  ________________________
  [PRINTED NAME]
   
   
  ________________________
  [DATE]

 

 

6

 

Exhibit 21.1

 

List of Subsidiaries

 

Twinlab Consolidation Corporation, a wholly owned subsidiary of Twinlab Consolidated Holdings, Inc.

 

Twinlab Holdings, Inc., a wholly owned subsidiary of Twinlab Consolidation Corporation

 

ISI Brands Inc., a wholly owned subsidiary of Twinlab Holdings, Inc.

 

Twinlab Corporation., a wholly owned subsidiary of Twinlab Holdings, Inc.

 

NutraScience Labs, Inc., a wholly owned subsidiary of Twinlab Consolidation Corporation

 

Nutrascience Labs IP Corporation, a wholly owned subsidiary of Twinlab Consolidation Corporation

 

Organic Holdings LLC, a wholly owned subsidiary of Twinlab Consolidation Corporation

 

CocoaWell, LLC, a wholly owned subsidiary of Organic Holdings LLC

 

Fembody, LLC, a wholly owned subsidiary of Organic Holdings LLC

 

InnoVitamin Organics, LLC, a wholly owned subsidiary of Organic Holdings LLC

 

Joie Essance, LLC, a wholly owned subsidiary of Organic Holdings LLC

 

Organics Management LLC, a wholly owned subsidiary of Organic Holdings LLC

 

Re-Body, LLC, a wholly owned subsidiary of Organic Holdings LLC

 

Reserve Life Organics, LLC, a wholly owned subsidiary of Organic Holdings LLC

 

ResVitale, LLC, a wholly owned subsidiary of Organic Holdings LLC

 

Reserve Life Nutrition, L.L.C., a wholly owned subsidiary of Organic Holdings LLC

 

Innovita Specialty Distribution LLC, a wholly owned subsidiary of Organic Holdings LLC

 

Exhibit 23.1

 

 

 

EXHIBIT 31.1

CERTIFICATION

 

I, Anthony Zolezzi, certify that:

 

1.

I have reviewed this Annual Report on Form 10-K of Twinlab Consolidated Holdings, Inc.;

   

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

   

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

   

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     
 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     
 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     
 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     
 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: April 16, 2019

 

/s/ Anthony Zolezzi

 

Anthony Zolezzi

 

Chief Executive Officer (principal executive officer)

 

EXHIBIT 31.2

CERTIFICATION

 

I, Carla Goffstein, certify that:

 

1.

I have reviewed this Annual Report on Form 10-K of Twinlab Consolidated Holdings, Inc.;

   

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

   

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

   

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     
 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     
 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     
 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     
 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: April 16, 2019

 

/s/ Carla Goffstein

 

Carla Goffstein

 

Interim Chief Financial Officer (principal financial officer)

 

EXHIBIT 32.1

 

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Twinlab Consolidated Holdings, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Anthony Zolezzi, Chief Executive Officer (principal executive officer) of the Company, certify, pursuant to 18 U.S.C.§1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

 

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     
 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date: April 16, 2019

 

/s/ Anthony Zolezzi

 

 

Anthony Zolezzi

 

 

Chief Executive Officer (principal executive officer)

     

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Twinlab Consolidated Holdings, Inc. and will be retained by Twinlab Consolidated Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2

 

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Twinlab Consolidated Holdings, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Carla Goffstein, interim Chief Financial Officer (principal financial officer) of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

 

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     
 

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date: April 16, 2019

 

/s/ Carla Goffstein

 

 

Carla Goffstein

 

 

Interim Chief Financial Officer (principal financial officer)

     

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Twinlab Consolidated Holdings, Inc. and will be retained by Twinlab Consolidated Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.