Item 1.01 Entry into a Material Definitive Agreement.
On November 30, 2020, NewAge, Inc. (the "Company") entered into a Securities
Purchase Agreement (the "SPA") between Company, and the Subsidiary Guarantors
named therein, and certain Purchasers named therein pursuant to which the
Company agreed to sell to the Purchasers, in a private placement (the "Private
Placement") pursuant to Section 4(a)(2) and Regulation D under the Securities
Act of 1933, as amended (the "Act"), (a) 8.00% Original Issue Discount Senior
Secured Notes with an initial principal balance of $32,432,000 (the "Notes"),
(b) 800,000 shares of common stock (the "Commitment Shares"), (c) Class A
Warrants to purchase 750,000 shares of Common Stock (the "Class A Warrants"),
and (d) Class B Warrants to purchase 750,000 shares of Common Stock (the "Class
B Warrants," and together with the Class A Warrants, the "Warrants"). The
Company received gross proceeds of $30,000,000. The Notes are secured under the
Security Agreement (the "Security Agreement") with the Purchasers. The Private
Placement closed on December 1, 2020.
On January 4, 2021, the Company and the Purchasers entered into an Amendment
Agreement (the "Amendment Agreement") that, among other things, amends Section
2.4(g) of SPA to change the delivery date of certain financial Statements of
ARIIX, LLC from January 4, 2021 to January 31, 2021. In consideration for the
amendment, the Company issued 400,000 shares of Common Stock (the "Amendment
Shares") to the Purchasers. The Amendment Shares will be treated as Commitment
Shares under the SPA.
The summary of the Amendment Agreement in this Current Report on Form 8-K is
qualified by reference to the full text of the Amendment Agreement, which is
included as Exhibit 10.1 to this Current Report on Form 8-K and incorporated
herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information provided in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference in this Item 3.02. The Amendment Shares were offered
and sold in reliance upon exemptions from registration pursuant to Section
4(a)(2) of the Securities Act of 1933, as amended ("Securities Act") and Rule
506 of Regulation D promulgated thereunder.
Item 8.01 Other Events.
Company policy prohibits sales of CBD ingestible products in the U.S. until the
sales can be made in compliance with all applicable laws. As part of its
year-end procedures, the Company discovered cannabidiol (CBD)-infused beverages
in its inventory. Further investigation revealed that the Company distributed
CBD-infused beverages on behalf of third-party manufacturers without proper
authorization. The Company distributed the CBD-infused beverages exclusively in
the State of Colorado, resulting in revenues to the Company of less than
$400,000 in 2020. Upon learning of the unauthorized distribution arrangements,
the Company's executive officers immediately notified the Company's audit
committee. The Company's executive officers and audit committee caused the
Company to immediately cease distribution of the beverages, return or destroy
all remaining inventory, enhance internal controls procedures to prevent such
distribution arrangements from being entered into without the knowledge of the
Company's executive officers, and institute new enhanced training for employees
that emphasize the prohibition on distribution of CBD ingestible products in the
U.S. The Company does not intend to market or sell CBD ingestible products in
the U.S. until it can do so in compliance with all applicable laws.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1* Amendment Agreement, dated January 4, 2021
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