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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): November 13, 2020
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NewAge,
Inc.
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(Exact
name of registrant as specified in its charter)
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Washington
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001-38014
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27-2432263
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(State
or other jurisdiction
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(Commission
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(I.R.S.
Employer
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of
incorporation)
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File
Number)
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Identification
Number)
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2420
17th Street, Suite 220, Denver,
CO 80202
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(Address
of principal executive offices) (Zip Code)
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(303)
566-3030
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(Registrant’s
telephone number, including area code)
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(Former
name or former address, if changed since last report)
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Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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☐
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Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Trading
Symbol(s)
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Name
of each exchange on which registered
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Common
Stock, par value $0.001 per share
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NBEV
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Nasdaq
Capital Market
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item
1.01 Entry into a Material Definitive Agreement.
On
November 16, 2020 (the “Closing Date”), NewAge, Inc. (the “Company”) entered into a letter agreement (the
“Waiver Letter”), by and among the Company, Frederick W. Cooper in his capacity as the Sellers Agent (the “Sellers
Agent”), and Ariix, LLC (“Ariix”). The Waiver Letter amends the Amended and Restated Agreement and Plan of Merger
(the “Merger Agreement”), dated September 30, 2020, by and among the Company, Ariel Merger Sub, LLC (“Merger
Sub”), Ariel Merger Sub 2, LLC (“Merger Sub 2”), Ariix, certain members of Ariix (the “Sellers”)
and the Sellers Agent, pursuant to which the Company agreed to acquire Ariix, which owns five brands in the e-commerce and direct
selling channels, including Ariix, Zennoa, Limu, MaVie, and Shannen, subject to the conditions and terms set forth therein (the
“Acquisition”). Capitalized terms used but not defined in this Item 1.01 have the respective meanings set forth
in the Merger Agreement.
The
Waiver Letter provides that the Company, the Sellers and the Sellers Agent waive the payment of the Merger Consideration, including
the payment of certain cash and stock consideration on the Closing Date. In lieu thereof, the Merger Consideration is amended
as follows:
(a)
The Company agrees to pay $10,000,000 to the members of Ariix (the “Members”) within two business days of the later
of (x) the date that the Sellers and Ariix satisfy the conditions related to the delivery of financial statements to the Company
as set forth in Sections 7.2(e) and (f) of the Merger Agreement (as modified by the Waiver Letter) (the “Financial Statements
Delivery Date”) and (y) the date that the Company repays its credit facility with East West Bank.
(b)
On the Closing Date, in addition to 16,000,000 shares of the Company’s common stock, par value $0.001 per share (the “Common
Stock”) (as modified by the Waiver Letter, the “Closing Stock Consideration”), the Company shall issue 3,703,703
shares of Common Stock (the “Additional Closing Shares”) to certain Members.
(c)
On the date that is 30 days after Shareholder Approval, in addition to issuing 7,000,000 shares of Common Stock to Frederick W.
Cooper (the Thirty-Day Stock Consideration) and 1,666,667 shares of Common Stock as Severance Stock, the Company shall issue to
certain Members 3,000,000 shares of Common Stock.
(d)
On the six-month anniversary of the Closing Date, the Company shall pay the Six-Month Anniversary Cash Consideration of $10,000,000
to certain Members.
The
Waiver Letter provides that, within 30 days after the Financial Statements Delivery Date and the Company’s filing of a Current
Report on Form 8-K/A containing financial statements, the Company shall file a Registration Statement on Form S-3 to register
the resale of the Additional Closing Shares. In addition, the Company waives Ariix’s and the Sellers’ performance
of the closing conditions in Section 6.1(d), (e), (f), (g), (h) and (l) and Section 7.2(e) and (f) of the Merger Agreement (the
“Conditions”) prior to the Closing Date, provided that the Sellers shall use their best efforts to satisfy the Conditions
as quickly as possible. The Waiver Letter also provides that, subject to certain exceptions, the Sellers shall indemnify the Company
against certain losses arising from or related to their failure to satisfy the Conditions as of the Closing Date or by failing
to use their best efforts to satisfy the Conditions thereafter.
This
summary of the Waiver Letter in this Current Report on Form 8-K is qualified by reference to the full text of the Waiver Letter,
which is included as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item
2.01 Completion of Acquisition or Disposition of Assets.
On
the Closing Date, the Company completed its previously announced Acquisition of Ariix, which owns five brands in the e-commerce
and direct selling channels, including Ariix, Zennoa, Limu, MaVie, and Shannen, subject to the conditions and terms set forth
in the Merger Agreement, as amended by the Waiver Letter (the “Amended Merger Agreement”). Pursuant to the Amended
Merger Agreement, on the Closing Date, Ariix merged with Merger Sub, with Ariix as the surviving entity and a wholly-owned subsidiary
of the Company. Subsequently, Ariix merged with and into Merger Sub 2, which was the surviving entity and is a wholly-owned subsidiary
of the Company.
The
consideration for the Acquisition is being paid in a combination of up to $20 million in cash and approximately 58.1 million shares
of Common Stock, subject to certain adjustments and conditions as described further below. On the Closing Date, the Company issued
16 million shares of Common Stock (the Closing Stock Consideration) and 3.7 million shares of Common Stock (the Additional Closing
Shares) to the Members. Within two business days of the later of the Financial Statements Delivery Date and the date that the
Company repays its credit facility, the Company will pay $10 million to the Members. Thirty days after shareholder approval
of the issuance of the post-closing Common Stock, the Company will issue seven million shares of Common Stock to Frederick W.
Cooper, up to 1.67 million shares of Common Stock in severance payments and an additional three million shares of Common Stock
to certain Members. On the six-month anniversary of the Closing Date, the Company will, at its option, pay $10 million in cash
or issue shares of Common Stock with a 5-Day VWAP value of $10 million. On the first anniversary of the Closing Date, subject
to shareholder approval, the Company will issue 25.5 million shares of Common Stock. On the 14-month anniversary of the Closing
Date, subject to shareholder approval, the Company will issue 2.9 million shares of Common Stock. If the Company fails to receive
shareholder approval for the issuance of the Common Stock at three shareholders meetings held for the purpose of obtaining such
approval, the Company will pay, within 90 days of the third shareholders meeting, $141,015,000 to the Members, $12,250,000 to
Frederick W. Cooper, and up to $10,000,000 in severance payments. The number of shares of Common Stock issuable is subject to
adjustment based on the working capital of Ariix at the Closing Date.
The
foregoing description of the Amended Merger Agreement does not purport to be complete and is qualified in its entirety by reference
to the full text of the Merger Agreement, which is filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed
on October 1, 2020, and the Waiver Letter, which is filed as Exhibit 10.1 to this Current Report on Form 8-K, both of which are
incorporated herein by reference.
Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
In
connection with the Amended Merger Agreement, on November 13, 2020, Reginald Kapteyn, who serves on the Audit Committee and Compensation
Committee, advised the Company’s Board of Directors (the “Board”) that, as of the Closing Date, he will resign
from the Board and from all committees of the Board on which he served.
On
November 13, 2020, in connection with the Amended Merger Agreement, the Board appointed Frederick W. Cooper, the chief executive
officer of Ariix, to fill the vacancy on the Board effective as of the Closing Date. Mr. Cooper will receive compensation for
his services on the Board in the form of annual retainers and restricted stock, all as described under the capital “Director
Compensation” of the Company’s proxy statement that was filed on June 1, 2020, or as otherwise determined by the Board.
Item
7.01 Regulation FD Disclosure.
On
the Closing Date, the Company issued a press release announcing the completion of the Acquisition. A copy of the press release
is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The
information under Item 7.01 and in Exhibit 99.1 of this Current Report on Form 8-K is being furnished and shall not be deemed
“filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or otherwise subject to the liabilities of that section. The information under Item 7.01 and in Exhibit 99.1 of this Current Report
on Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange
Act, except as shall be expressly set forth by specific reference in such a filing.
Item
9.01 Financial Statements and Exhibits.
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(a)
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Financial
statements of businesses acquired. The Company intends to file the financial statements required by Item 9.01(a), if required,
in an amendment to this Current Report on Form 8-K no later than 71 days after the required filing date for this Current Report
on Form 8-K.
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(b)
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Pro
forma financial information. The Company intends to file the pro forma financial information required by Item 9.01(b),
if required, in an amendment to this Current Report on Form 8-K no later than 71 days after the required filing date for this
Current Report on Form 8-K.
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(d)
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Exhibits.
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Number
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Description
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10.1
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Letter Agreement, dated November 16, 2020, by and among NewAge, Inc., Frederick Cooper as the Sellers Agent, and Ariix, LLC.
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99.1
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Press Release, dated November 16, 2020
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104
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Cover
Page Interactive Data File, formatted in Inline XBRL
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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NewAge,
Inc.
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Date:
November 16, 2020
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By:
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/s/
Gregory A. Gould
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Gregory
A. Gould
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Chief
Financial Officer
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Exhibit
10.1
November
16, 2020
NewAge,
Inc.
2420
17th Street, Suite 220
Denver,
Colorado 80202
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Re:
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Amended
and Restated Agreement and Plan of Merger dated September 30, 2020
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Ladies
and Gentlemen:
This
letter agreement (this “Agreement”) is made by the undersigned under the Amended and Restated Agreement and
Plan of Merger dated September 30, 2020 (the “Merger Agreement”), by and among NewAge, Inc., a Washington corporation
(“Parent”), Ariel Merger Sub, LLC, a Utah limited liability company, Ariel Merger Sub 2, LLC, a Utah limited
liability company, Ariix, LLC, a Utah limited liability company (the “Company”), the “Sellers”
identified therein, and Frederick W. Cooper solely in his capacity as Sellers Agent thereunder (“Sellers Agent”).
This Agreement waives certain provisions in and amends the Merger Agreement. Capitalized terms used but not defined in this Agreement
have the respective meanings set forth in the Merger Agreement.
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1.
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Closing
Cash Consideration. The Company, the Sellers, and Sellers Agent hereby waive payment of the Merger Consideration under
the Merger Agreement, including the payment of the Closing Cash Consideration and the Closing Stock Consideration at Closing.
In lieu thereof,
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a.
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Parent
shall pay $10,000,000 to the Members by wire transfer of immediately available funds in the amounts and to the accounts set
forth on the Payment Schedule within two Business Days of the later of (x) the date Sellers and the Company satisfy the conditions
in Section 7.2(e) and (f) of the Merger Agreement, except that the interim financial statements under Section 7.2(f)(1) of
the Merger Agreement will be for the nine months ended September 30, 2020 (the “Financial Statements Delivery Date”)
and (y) the date Parent repays its credit facility with East West Bank.
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b.
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On
the date hereof, in addition to the Closing Stock Consideration issuable under Section 2.4(a) of the Merger Agreement, Parent
shall issue and deliver to certain Members, 3,703,703 shares of Common Stock (the “Additional Closing Shares”),
as determined in accordance with the Payment Schedule, free and clear of all Encumbrances (other than those arising under
securities Laws and under the Lock-Up Letter). “Closing Stock Consideration” means 16,000,000 shares of
Common Stock.
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c.
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On
the date that is 30 days after Shareholder Approval, in addition to the Thirty-Day Stock Consideration issuable under Section
2.4(c) of the Merger Agreement and the Severance Stock issuable under Section 5.13 of the Merger Agreement, Parent shall issue
and deliver to certain Members, 3,000,000 shares of Common Stock (the “Additional Thirty-Day Stock Consideration”),
as determined in accordance with the Payment Schedule, free and clear of all Encumbrances (other than those arising under
securities Laws and under the Lock-Up Letter). “Stock Consideration” means 58,103,703 shares of Common
Stock, subject to adjustment, comprising the Closing Stock Consideration, the Additional Closing Shares, the Thirty-Day Stock
Consideration, the additional Thirty-Day Stock Consideration, and First Anniversary Stock Consideration Payments.
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d.
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On
the six month anniversary of the Closing, Parent shall pay or cause to be paid the Six-Month Anniversary Cash Consideration
as described in Section 2.4(b) and as adjusted under Section 2.5 of the Merger Agreement.
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e.
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Registration
Rights. Within 30 days after the Financial Statements Delivery Date and the filing by Parent of the Current Report on
Form 8-K/A containing the financial statements, Parent shall prepare and file (at Parent’s expense) a Registration Statement
on Form S-3 with the Securities and Exchange Commission covering the resale of the Additional Closing Shares. Each Seller
holding Additional Closing Shares shall furnish to the Parent such information regarding itself, the securities held by it,
and the intended method of disposition of such Additional Closing Shares as is reasonably required to effect the registration
of the resale of such Seller’s Additional Closing Shares.
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2.
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Closing
Deliveries and Closing Conditions. The Company and Sellers have not satisfied certain of their conditions to Closing in
the Merger Agreement, including those in Section 6.1(d), (e), (f), (g), (h), and (l) and Section 7.2(e) and (f) (collectively,
the “Conditions”).
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3.
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Waiver.
For the limited purpose of Closing, Parent waives performance of the Conditions.
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4.
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Continued
Obligation to Perform. Following the Closing, the Sellers shall use their best efforts (including the expenditure of fees
and expenses and cooperating with the Company and Parent) to satisfy the Conditions as quickly as possible.
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5.
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Indemnification.
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a.
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In
addition to the indemnification obligations under the Merger Agreement, Sellers shall indemnify, defend, and hold harmless
Parent and their Other Indemnified Persons from and against all Losses and shall pay to Parent and their Other Indemnified
Persons the amount of such Losses to the extent arising or resulting from, related to, or in connection with, the failure
to satisfy the Conditions as of Closing or failure to comply with Section 4 of this Agreement. For the avoidance of doubt,
Sellers shall indemnify, defend, and hold harmless Parent and their Other Indemnified Persons from and against all Losses
arising or resulting from, related to, or in connection with any breach, termination or dispute arising under any of the contracts
identified on Exhibit 6.1(d) of the Merger Agreement due to a failure by Sellers or the Company to obtain consents for such
contracts.
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b.
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This
Section 5 is not subject to the limitations in Section 8.6 of the Merger Agreement.
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c.
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Sellers
are not obligated to indemnify, defend, or hold harmless Parent or their Other Indemnified Persons from and against any Losses
arising or resulting from a default under the Company’s loan with Bank of America under the Paycheck Protection Program
to the extent such Losses constitute current liabilities of the Company used in calculating Closing Working Capital.
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6.
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Amendment
and Modification, Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed
by the parties hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth
in writing and signed by the party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or
delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a
waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or privilege.
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7.
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Effectiveness
of this Agreement. Notwithstanding the earlier execution and delivery of this Agreement the effectiveness of this Agreement
is conditioned on the Closing of the transactions contemplated by the Merger Agreement. If the Closing shall occur, this Agreement
shall become effective concurrently with the Closing on the Closing Date. If the Merger Agreement is terminated for any reason
in accordance therewith this Agreement shall be null and void ab initio.
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Very
truly yours,
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/s/ Frederick Cooper
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Frederick Cooper, as Sellers Agent
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ARIIX,
LLC
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By:
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/s/
Frederick Cooper
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Name:
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Frederick Cooper
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Its:
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Manager
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By:
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/s/
Jeffrey Yates
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Name:
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Jeffrey Yates
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Its:
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Manager
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By:
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/s/
Riley Timmer
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Name:
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Riley Timmer
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Its:
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Manager
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Accepted
and agreed:
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NEWAGE,
INC.
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By:
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/s/
Brent Willis
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Name:
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Brent
Willis
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Its:
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Chief
Executive Officer
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Signature
Page to Waiver Letter
Exhibit
99.1
NEWAGE
AND ARIIX CLOSE MERGER
Combined
company exceeds $500 million in expected annualized net revenue
Enhanced
profitability expected to materialize immediately
>$20
million of anticipated annualized synergies from merger
DENVER,
COLORADO, November 16, 2020 – NewAge, Inc. (Nasdaq: NBEV), the Colorado-based social selling and distribution company
with a network of independent business owners across 75 countries worldwide, today announced that it has finalized and closed
the merger agreement for the acquisition of ARIIX.
Details
of the final agreement and plan of merger are included in the Company’s Current Report on Form 8-K filed on November 16,
2020.
Brent
Willis, Chief Executive Officer of NewAge, commented, “We are very pleased to be able to fully converge these great companies
now that the merger is complete. Both the revenue and cost synergies of the combined organization will start to be recognized
immediately in Q4, in our financial results. Importantly, this merger represents a major strengthening for NewAge in its direct-to-consumer
model where we see the most significant opportunities for growth and profitability. We believe we now have the scale, the team,
the brands, and the financial strength to drive excellent growth and return for shareholders and all of our valued independent
representatives and consultants worldwide.”
NewAge
continues to expect to capture approximately $20 million in additional annualized EBITDA in the first 18 months and revenue synergies
in the areas of cost of goods sold, manufacturing efficiencies and scale, operational redundancy, cross-pollination of brands,
and market and channel expansion. NewAge has already captured more than $10 million in headcount related savings over the past
six months, and expects significant further benefits across all its identified synergy workstreams.
Fred
Cooper, CEO of ARIIX, who is now joining the NewAge Board of Directors said, “Completing this merger with NewAge is a tremendous
milestone for all of our independent representatives, employees, and customers who have been a part of ARIIX over the last nine
years. We are better positioned than ever before to continue to disrupt the industry and further our strategy to become the world’s
leading social selling and distribution company. We believe providing our representatives with access to more markets, more products,
and more opportunities will accelerate our organic growth and incentivize our leaders to grow their businesses at an even faster
pace. We believe we are very well positioned to take advantage of global consumer trends to buy direct and capture additional
market share.”
On
July 20, 2020, NewAge, Inc., announced the signing of an agreement to acquire ARIIX and four other e-commerce/direct selling companies.
The definitive agreement was amended and restated on September 30, 2020. The combination is expected to create a company with
expected annual revenues of more than $500 million, a blended gross margin of 70%, and expected EBITDA of more than $30 million.
About
NewAge, Inc. (NASDAQ: NBEV)
NewAge
is a Colorado-based organic and healthy products company dedicated to inspiring and educating consumers to “Live Healthy.”
The Company is a social selling and distribution company with access to e-commerce, direct-to-consumer, and medical channels across
more than 75 countries worldwide when combined with ARIIX. NewAge markets a portfolio of better-for-you products including the
brands Tahitian Noni, TeMana, ‘Nhanced and others. The Company operates the websites www.newage.com, www.noninewage.com,
and a number of other individual brand websites.
Safe
Harbor Disclosure
This
press release contains forward-looking statements that are made under the safe harbor provisions 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. Forward-looking
statements are any statement reflecting management’s expectations regarding future results of operations, economic performance,
financial condition, the acquisition of ARIIX, statements about the benefit of the ARIIX transaction, and the extent and duration
of COVID-19 on its business. The forward-looking statements are based on the assumption that operating performance and results
will continue in line with historical results. Management believes these assumptions to be reasonable, but there is no assurance
they will prove to be accurate. Forward-looking statements, specifically those concerning future performance, are subject to certain
risks and uncertainties, and actual results may differ materially. NewAge competes in a rapidly growing and transforming industry,
and risk factors, including those disclosed in the Company’s filings with the Securities and Exchange Commission, might
affect the Company’s operations. Unless required by applicable law, the Company undertakes no obligation to update or revise
any forward-looking statements.
For
investor inquiries about NewAge please contact:
NewAge
Investor Relations:
Riley
Timmer
Vice
President, Investor Relations
Tel:
1-801-870-8685
Riley_Timmer@NewAge.com
Investor
Relations Counsel:
John
Mills/Scott Van Winkle
ICR
– Strategic Communications and Advisory
Tel:
1-646-277-1254/1-617-956-6736
newage@icrinc.com
NewAge,
Inc.:
Gregory
A. Gould
Chief
Financial Officer
Tel:
1-303-566-3030
Greg_Gould@NewAge.com