free-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended March 31, 2021


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

For the transition period from to

Commission File No. 001-38880


Whole Earth Brands, Inc.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)						38-4101973 (I.R.S. Employer Identification No.)
125 S. Wacker Drive, Suite 3150 Chicago, Illinois						60606
(Address of Principal Executive Offices)						(Zip Code)


(312) 840-6000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which
registered

Common stock, par value $0.0001 per share

FREE

The NASDAQ Stock Market LLC

Warrants to purchase one-half of one share of common stock

FREEW

The NASDAQ Stock Market LLC

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 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 such files). Yes ☒ No ☐

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.

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 ☒

As of May 11, 2021, there were 38,426,669 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.

TABLE OF CONTENTS

WHOLE EARTH BRANDS, INC.

Quarterly Report on Form 10-Q

TABLE OF CONTENTS


		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
Signatures		39

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

TABLE OF CONTENTS

Whole Earth Brands, Inc.

Condensed Consolidated and Combined Financial Statements (Unaudited)

For the Quarter Ended March 31, 2021


Condensed Consolidated and Combined Financial Statements

Condensed Consolidated Balance Sheets			5

Condensed Consolidated and Combined Statements of Operations			6

Condensed Consolidated and Combined Statements of Comprehensive Income (Loss)			7

Condensed Consolidated and C ombined Statements of Equity			8

Condensed Consolidated and Combined Statements of Cash Flows			9

Notes to Condensed Consolidated and Combined Financial Statements			10
Note 1: Basis of Presentation and Significant Accounting Policies			10
Note 2: Business Combinat ions			12
Note 3: Leases			17
Note 4: Inventories			18
Note 5: Goodwill and Other Intangible Assets			18
Note 6: Debt			19
Note 7: Warrants			20
Note 8 : Fair Value of Financial Instruments			21
Note 9 : Commitments and Contingencies			22
Note 10 : Income Taxes			22
Note 1 1 : Pension Benefits			23
Note 1 2 : Stock-Based Compensation			24
Note 1 3 : Stockholders’ Equity			25
Note 1 4 : Earnings Per Share			25
Note 1 5 : Accumulated Other Comprehensive Income (loss)			26
Note 1 6 : Related Party Transactions			26
Note 1 7 : Business Segments			26

TABLE OF CONTENTS


Whole Earth Brands, Inc.
Condensed Consolidated Balance Sheets
(In thousands of dollars, except for share and per share data)
(Unaudited)

	March 31, 2021		December 31, 2020
Assets
Current Assets
Cash and cash equivalents	$	27,806	$	16,898
Accounts receivable (net of allowances of $723 and $955, respectively)	72,205		56,423
Inventories	191,837		111,699
Prepaid expenses and other current assets	11,807		5,045
Total current assets	303,655		190,065

Property, Plant and Equipment, net	49,752		47,285

Other Assets
Operating lease right-of-use assets	18,749		12,193
Goodwill	236,895		153,537
Other intangible assets, net	283,845		184,527
Deferred tax assets, net	2,479		2,671
Other assets	6,926		6,260
Total Assets	$	902,301	$	596,538

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	36,915	$	25,200
Accrued expenses and other current liabilities	34,616		29,029
Contingent consideration payable	52,672		—
Current portion of operating lease liabilities	5,074		3,623
Current portion of long-term debt	3,750		7,000
Total current liabilities	133,027		64,852
Non-Current Liabilities
Long-term debt	385,257		172,662
Warrant liabilities	7,999		—
Deferred tax liabilities, net	52,722		23,297
Operating lease liabilities, less current portion	16,281		11,324
Other liabilities	16,230		15,557
Total Liabilities	611,516		287,692
Commitments and Contingencies (Note 9)	—		—
Stockholders’ Equity
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at March 31, 2021 and December 31, 2020	—		—
Common stock, $0.0001 par value; 220,000,000 shares authorized; 38,426,669 shares issued and outstanding at March 31, 2021 and December 31, 2020	4		4
Additional paid-in capital	322,758		325,679
Accumulated deficit	(38,544)		(25,442)
Accumulated other comprehensive income	6,567		8,605
Total stockholders’ equity	290,785		308,846
Total Liabilities and Stockholders’ Equity	$	902,301	$	596,538

See Notes to Unaudited Consolidated and Combined Financial Statements

TABLE OF CONTENTS


Whole Earth Brands, Inc.
Condensed Consolidated and Combined Statements of Operations
(In thousands of dollars, except for share and per share data)
(Unaudited)

	(Successor)		(Predecessor)
	Three Months Ended March 31, 2021			Three Months Ended March 31, 2020
Product revenues, net	$	105,825		$	65,972
Cost of goods sold	70,174			40,112
Gross profit	35,651			25,860

Selling, general and administrative expenses	32,907			16,048
Amortization of intangible assets	4,151			2,534
Asset impairment charges	—			40,600
Restructuring and other expenses	1,657			—

Operating loss	(3,064)			(33,322)

Change in fair value of warrant liabilities	(2,362)			—
Interest expense, net	(5,078)			(172)
Loss on extinguishment and debt transaction costs	(5,513)			—
Other income, net

SEC Form 10-Q filed by Whole Earth Brands, Inc.