10-Q

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 September 30, 2020

☐ 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)

Act II Global Acquisition Corp.

745 5th Avenue

New York, New York 10151

(Former name, former address and former fiscal year, if changed since last report)

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 November 13, 2020, there were 38,426,669 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.

WHOLE EARTH BRANDS, INC.

(f/k/a ACT II GLOBAL ACQUISITION CORP.)

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	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

2

PART I - FINANCIAL INFORMATION

Item 1.         Financial Statements.

3

Whole Earth Brands, Inc.

Condensed Consolidated Financial Statements (Unaudited)

For the Quarter Ended September 30, 2020

Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2020 (Successor) and December 31, 2019 (Predecessor)	5
Condensed Consolidated Statements of Operations for the three months ended September 30, 2020 (Successor), the periods June 26, 2020 through September 30, 2020 (Successor), January 1, 2020 through June 25, 2020 (Predecessor), and the three and nine months ended September 30, 2019 (Predecessor)	6
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2020 (Successor), the periods June 26, 2020 through September 30, 2020 (Successor), January 1, 2020 through June 25, 2020 (Predecessor), and the three and nine months ended September 30, 2019 (Predecessor)	7
Condensed Consolidated Statements of Equity for the three months ended September 30, 2020 (Successor), the periods June 26, 2020 through September 30, 2020 (Successor), January 1, 2020 through June 25, 2020 (Predecessor), and the three and nine months ended September 30, 2019 (Predecessor)	8
Condensed Consolidated Statements of Cash Flows for the periods June 26, 2020 through September 30, 2020 (Successor), January 1, 2020 through June 25, 2020 (Predecessor) and the nine months ended September 30, 2019	9
Notes to Condensed Consolidated Financial Statements	10
Note 1: Basis of Presentation and Significant Accounting Policies	10
Note 2: Business Combination	12
Note 3: Leases	14
Note 4: Inventories	15
Note 5: Goodwill and Other Intangible Assets	16
Note 6: Debt	16
Note 7: Fair Value of Financial Instruments	17
Note 8: Commitments and Contingencies	18
Note 9: Income Taxes	18
Note 10: Pension Benefits	19
Note 11: Stock-Based Compensation	20
Note 12: Stockholders’ Equity	20
Note 13: Earnings Per Share	21
Note 14: Accumulated Other Comprehensive Income (loss)	22
Note 15: Related Party Transactions	22
Note 16: Business Segments	23
Note 17: Subsequent Events	24

4

Whole Earth Brands, Inc.
Condensed Consolidated Balance Sheets
(In thousands of dollars, except for share and per share data)
(Unaudited)
	(Successor)		(Predecessor)
	September 30, 2020		December 31, 2019
Assets
Current Assets
Cash and cash equivalents	$	49,081	$	10,395
Accounts receivable (net of allowances of $15 and $2,832, respectively)	54,281		55,031
Inventories	103,546		121,129
Prepaid expenses and other current assets	5,134		7,283
Total current assets	212,042		193,838
Property, Plant and Equipment, net	41,398		20,340
Other Assets
Operating lease right-of-use assets	12,378		—
Goodwill	124,874		130,870
Other intangible assets, net	144,809		251,243
Deferred tax assets, net	1,023		1,368
Other assets	3,772		2,192
Total Assets	$	540,296	$	599,851
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	21,643	$	26,240
Accrued expenses and other current liabilities	29,777		28,040
Current portion of operating lease liabilities	3,423		—
Current portion of long-term debt	7,000		—
Total current liabilities	61,843		54,280
Non-Current Liabilities
Long-term debt	126,281		—
Due to related party	—		8,400
Deferred tax liabilities, net	17,400		31,538
Operating lease liabilities, less current portion	11,659		—
Other liabilities	15,892		17,883
Total Liabilities	233,075		112,101
Commitments and contingencies (Note 8)	—		—
Stockholders’ equity
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding	—		—
Common stock, $0.0001 par value; 220,000,000 shares authorized; 38,426,669 shares issued and outstanding	4		—
Additional paid-in capital	324,417		—
Accumulated deficit	(20,345)		—
Accumulated other comprehensive income	3,145		—
Net parent investment	—		487,750
Total stockholders’ equity	307,221		487,750
Total Liabilities and Stockholders’ Equity	$	540,296	$	599,851

See Notes to Unaudited Consolidated Financial Statements

5

Whole Earth Brands, Inc.
Condensed Consolidated Statements of Operations
(In thousands of dollars, except for share and per share data)
(Unaudited)
	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Product revenues, net	$	67,002	$	71,480	$	128,328	$	64,060	$	203,354
Cost of goods sold	48,357		51,065		77,627		38,173		121,037
Gross profit	18,645		20,415		50,701		25,887		82,317
Selling, general and administrative expenses	14,881		16,827		43,355		14,770		49,020
Amortization of intangible assets	2,700		2,841		4,927		2,656		7,968
Asset impairment charges	—		—		40,600		—		—
Restructuring and other expenses	—		—		—		608		1,150
Operating income (loss)	1,064		747		(38,181)		7,853		24,179
Interest expense, net	(2,045)		(2,161)		(238)		(237)		(342)
Other (expense) income, net	(170)		(232)		801		(716)		(666)
(Loss) income before income taxes	(1,151)		(1,646)		(37,618)		6,900		23,171
Provision (benefit) for income taxes	1,684		1,694		(3,482)		1,627		5,228
Net (loss) income	$	(2,835)	$	(3,340)	$	(34,136)	$	5,273	$	17,943
Net loss per share – Basic and diluted	$	(0.07)	$	(0.09)

See Notes to Unaudited Consolidated Financial Statements

6

Whole Earth Brands, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands of dollars)
(Unaudited)
	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From  January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Net (loss) income	$	(2,835)	$	(3,340)	$	(34,136)	$	5,273	$	17,943
Other comprehensive income (loss), net of tax:
Net change in pension benefit obligations recognized	—		—		318		—		—
Foreign currency translation adjustments	3,130		3,145		(2,286)		(3,013)		(4,067)
Total other comprehensive income (loss), net of tax	3,130		3,145		(1,968)		(3,013)		(4,067)
Comprehensive income (loss)	$	295	$	(195)	$	(36,104)	$	2,260	$	13,876

See Notes to Unaudited Consolidated Financial Statements

7

Whole Earth Brands, Inc.
Condensed Consolidated Statements of Equity
(In thousands of dollars)
(Unaudited)
	(Predecessor)
	Total Equity
Balance at January 1, 2019	$	484,492
Funding to Parent, net	(12,117)
Net income	9,164
Other comprehensive loss, net of tax	(2,439)
Balance at March 31, 2019	$	479,100
Funding to Parent, net	(3,237)
Net income	3,506
Other comprehensive income, net of tax	1,385
Balance at June 30, 2019	$	480,754
Funding to Parent, net	(8,586)
Net income	5,273
Other comprehensive loss, net of tax	(3,013)
Balance at September 30, 2019	$	474,428
Balance at January 1, 2020	$	487,750
Funding to Parent, net	(12,262)
Net loss	(28,655)
Other comprehensive loss, net of tax	(1,836)
Balance at March 31, 2020	$	444,997
Funding to Parent, net	338
Net loss	(5,481)
Other comprehensive loss, net of tax	(132)
Balance at June 25, 2020	$	439,722

	Common Stock			Preferred Stock			Additional Paid-in		Accumulated		Accumulated Other Comprehensive		Total Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Income		Equity
Balance at June 26, 2020	30,926,669	$	3	—	$	—	$	250,366	$	(16,703)	$	—	$	233,666
Issuance of warrants	—	—		—	—		7,895		—		—		7,895
Issuance of common stock	7,500,000	1		—	—		67,104		—		—		67,105
Other comprehensive income, net of tax	—	—		—	—		—		—		15		15
Net loss	—	—		—	—		—		(505)		—		(505)
Balance at June 30, 2020 (Successor)	38,426,669	$	4	—	$	—	$	325,365	$	(17,208)	$	15	$	308,176
Other	—	—		—	—		(948)		(302)		—		(1,250)
Other comprehensive income, net of tax	—	—		—	—		—		—		3,130		3,130
Net loss	—	—		—	—		—		(2,835)		—		(2,835)
Balance at September 30, 2020 (Successor)	38,426,669	$	4	—	$	—	$	324,417	$	(20,345)	$	3,145	$	307,221

See Notes to Unaudited Consolidated Financial Statements

8

Whole Earth Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands of dollars)
(Unaudited)
	(Successor)		(Predecessor)
	From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Nine Months Ended September 30, 2019
Operating activities
Net (loss) income	$	(3,340)	$	(34,136)	$	17,943
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	797		1,334		2,232
Amortization of intangible assets	2,841		4,927		7,968
Deferred income taxes	(3,490)		(5,578)		1,857
Asset impairment charges	—		40,600		—
Pension benefit (credit) expense, net	(154)		126		705
Changes in current assets and liabilities:
Accounts receivable	(6,535)		7,726		2,312
Inventories	5,022		3,576		2,580
Prepaid expenses and other current assets	(2,516)		3,330		(569)
Accounts payable, accrued liabilities and income taxes	(5,618)		507		(6,589)
Other, net	278		(2,504)		(1,870)
Net cash (used in) provided by operating activities	(12,715)		19,908		26,569
Investing activities
Capital expenditures	(2,139)		(3,532)		(2,276)
Acquisitions, net of cash acquired	(376,674)		—		—
Transfer from trust account	178,875		—		—
Net cash used in investing activities	(199,938)		(3,532)		(2,276)
Financing activities
Proceeds from revolving credit facility	—		3,500		—
Repayments of revolving credit facility	—		(8,500)		—
Long-term borrowings	140,000		—		—
Repayments of long-term borrowings	(1,750)		—		—
Debt issuance costs	(7,139)		—		—
Proceeds from sale of common stock and warrants	75,000		—		—
Funding to Parent, net	—		(11,924)		(23,940)
Net cash provided by (used in) financing activities	206,111		(16,924)		(23,940)
Effect of exchange rate changes on cash and cash equivalents	88		215		117
Net change in cash and cash equivalents	(6,454)		(333)		470
Cash and cash equivalents, beginning of period	55,535		10,395		7,205
Cash and cash equivalents, end of period	$	49,081	$	10,062	$	7,675
Supplemental disclosure of cash flow information
Interest paid	$	1,667	$	798	$	—
Taxes paid, net of refunds	$	1,722	$	2,244	$	4,160

See Notes to Unaudited Consolidated Financial Statements

9

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Whole Earth Brands, Inc. and its consolidated subsidiaries (“Whole Earth Brands” or the “Company”) is a global industry-leading platform, focused on the “better for you” consumer packaged goods (“CPG”) and ingredients space. The Company has a global platform of branded products and ingredients, focused on the consumer transition towards natural alternatives and clean label products.

On June 24, 2020, Act II Global Acquisition Corp., a Cayman Islands exempted company (“Act II”), domesticated into a Delaware corporation (the “Domestication”), and on June 25, 2020 (the “Closing”), consummated the indirect acquisition (the “Acquisition”) of (i) all of the issued and outstanding equity interests of Merisant Company (“Merisant”), Merisant Luxembourg Sarl (“Merisant Luxembourg”), Mafco Worldwide LLC (“Mafco Worldwide”), Mafco Shanghai LLC (“Mafco Shanghai”), EVD Holdings LLC (“EVD Holdings”), and Mafco Deutschland GmbH (together with Merisant, Merisant Luxembourg, Mafco Worldwide, Mafco Shanghai, and EVD Holdings, and their respective direct and indirect subsidiaries, “Merisant and Mafco Worldwide”), and (ii) certain assets and liabilities of Merisant and Mafco Worldwide included in the Transferred Assets and Liabilities (as defined in the Purchase Agreement (as hereafter defined)), from Flavors Holdings Inc. (“Flavors Holdings”), MW Holdings I LLC (“MW Holdings I”), MW Holdings III LLC (“MW Holdings III”), and Mafco Foreign Holdings, Inc. (“Mafco Foreign Holdings,” and together with Flavors Holdings, MW Holdings I, and MW Holdings III, the “Sellers”), pursuant to that certain Purchase Agreement (the “Purchase Agreement”) entered into by and among Act II and the Sellers dated as of December 19, 2019, as amended. In connection with the Domestication, Act II changed its name to “Whole Earth Brands, Inc.”

Upon the completion of the Domestication, each of Act II’s then-issued and outstanding ordinary shares converted, on a one-for-one basis, into shares of common stock of Whole Earth Brands. Additionally, immediately after the Acquisition, the Company issued an aggregate of 7,500,000 shares of Whole Earth Brands common stock and 5,263,500 private placement warrants exercisable for 2,631,750 shares of Whole Earth Brands common stock to certain investors. On the date of Closing, the Company’s common stock and warrants began trading on The Nasdaq Stock Market under the symbols “FREE” and “FREEW,” respectively.

As a result of the Acquisition, for accounting purposes, Act II was deemed to be the acquirer and Mafco Worldwide and Merisant Company were deemed to be the acquired parties and, collectively, the accounting predecessor. The Company’s financial statement presentation includes the combined financial statements of Mafco Worldwide and Merisant Company as the “Predecessor” for periods prior to the completion of the Acquisition and includes the consolidation of Mafco Worldwide and Merisant Company, for periods after the Closing (referred to as the “Successor”).

Basis of Presentation—The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. The balance sheet data as of December 31, 2019 was derived from the audited Combined Financial Statements for Mafco Worldwide and Merisant included in the final prospectus and definitive proxy statement (the “proxy statement/prospectus”) filed with the Securities and Exchange Commission on May 13, 2020 by Act II. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited combined financial statements and accompanying notes of Mafco Worldwide and Merisant for each of the two years ended December 31, 2019 and 2018 and the audited financial statements and accompanying notes for Act II for the year ended December 31, 2019, which are included in the proxy statement/prospectus.

In the opinion of management, the financial statements contain all adjustments necessary to state fairly the financial position of the Company as of September 30, 2020 and the results of operations and cash flows for all periods presented. All adjustments reflected in the accompanying unaudited consolidated financial statements, which management believes are necessary to state fairly the financial position, results of operations and cash flows, have been reflected and are of a normal recurring nature. Results of operations for interim periods are not necessarily indicative of results to be expected for the full year. Certain prior year amounts have been reclassified to conform to the current year presentation.

Principles of Consolidation—The consolidated financial statements include the accounts of Whole Earth Brands, Inc., and its indirect and wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

10

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

Recently Adopted Accounting Pronouncements—The Company qualifies as an emerging growth company (an “EGC”) and as such, has elected the extended transition period for complying with certain new or revised accounting pronouncements. During the extended transition period, the Company is not subject to certain new or revised accounting standards applicable to public companies. The accounting pronouncements pending adoption below reflect effective dates for the Company as an EGC with the extended transition period.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-2, “Leases (Topic 842)”, and issued subsequent amendments to the initial guidance. The new guidance requires lessees to recognize assets and liabilities arising from leases as well as extensive quantitative and qualitative disclosures. The lessee needs to recognize on its balance sheet a right-of-use asset and a lease liability for the majority of its leases (other than leases with a term of less than 12 months). The lease liabilities should be equal to the present value of lease payments not yet paid. The right-of-use asset is measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial indirect costs. For public entities, the updated standard is effective for fiscal years beginning after December 15, 2018. This standard is effective for the Company as an EGC for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. Act II adopted the standard as of January 1, 2020. The Company recognized the leases acquired as part of the Acquisition on June 25, 2020, which were recorded pursuant to the aforementioned ASU. Refer to Note 3 for additional details.

In March 2017, the FASB issued ASU 2017-7, “Compensation - Retirement Benefits (Topic 715).” Under the new guidance, employers are required to present the service cost component of net periodic benefit cost in the same statement of operations caption as other employee compensation costs arising from services rendered during the period. Employers are required to present the other components of the net periodic benefit cost separately from the caption that includes the service costs and outside of any subtotal of operating profit and are required to disclose the caption used to present the other components of net periodic benefit cost, if not presented separately on the statement of operations. The Company adopted ASU 2017-7 effective in the second quarter of 2020. The adoption of this standard did not have an effect on the Company’s historically reported net income (loss) but resulted in a presentation reclassification which increased the Company’s historically reported operating profit by $0.1 million for the period from January 1, 2020 to June 25, 2020.

In February 2018, the FASB issued ASU 2018-2, “Income Statement-Reporting Comprehensive Income (Topic 220),” which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-2 was effective for years beginning after December 15, 2018, and early adoption was permitted. On January 1, 2019, the Predecessor elected to adopt this standard on a full retrospective approach and reclassified $2.1 million from accumulated other comprehensive income within net parent investment.

New Accounting Standards—In March 2020, the FASB issued ASU 2020-4, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract modification accounting under existing U.S. GAAP, to address the expected phase out of the London Inter-bank Offered Rate (“LIBOR”) by the end of 2021. The amendments in ASU 2020-4 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating the impact of adopting this standard but does not expect it to have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (ASC 740) - Simplifying the Accounting for Income Taxes.” The standard enhances and simplifies various aspects of the income tax accounting guidance. For public entities, the standard is effective for annual periods and interim periods beginning after December 15, 2020. This standard is effective for the Company as an EGC for the fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2019-12 on its consolidated financial statements.

11

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

In August 2018, the FASB issued ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20).” The standard modifies certain disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans by removing disclosures that are no longer considered cost beneficial, clarifying specific requirements of disclosures, and adding disclosure requirements identified as relevant. This standard is effective for the Company as an EGC for the fiscal years beginning after December 15, 2021. Early adoption is permitted. The amendments in ASU 2018-14 should be applied retrospectively to each period presented. The Company is currently evaluating the impact of adopting ASU 2018-14 on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The standard requires entities to estimate losses on financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss differs from the previous incurred losses model primarily in that the loss recognition threshold of “probable” has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset’s origination for as many as five years. Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This standard is effective for the Company as an EGC for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-13 on its consolidated financial statements.

Stock-Based Compensation—In accordance with ASC Topic 718, “Compensation—Stock Compensation,” the Company recognizes stock-based compensation cost in its Consolidated Statements of Operations. Stock-based compensation cost is measured at the grant date for equity-classified awards and at the end of each reporting period for liability-classified awards based on the estimated fair value of the awards. ASC Topic 718 requires stock-based compensation expense to be recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service. Additional information pertaining to the Company’s stock-based compensation is provided in Note 11.

NOTE 2: BUSINESS COMBINATION

On June 25, 2020, pursuant to the Acquisition, the Company indirectly acquired Merisant and Mafco Worldwide in a transaction accounted for as a business combination under ASC Topic 805, “Business Combinations,” and was accounted for using the acquisition method. Under the acquisition method, the acquisition date fair value of the consideration paid by the Company was allocated to the assets acquired and the liabilities assumed based on their estimated fair values.

The following summarizes the preliminary purchase consideration (in thousands):

Base cash consideration	$	387,500
Closing adjustment estimate	(764)
Total Purchase Price	$	386,736

12

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

The Company preliminarily recorded the fair value of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed as follows (in thousands):

Cash and cash equivalents	$	10,062
Accounts receivable	46,959
Inventories	106,436
Prepaid expenses and other current assets	2,461
Property, plant and equipment, net	39,814
Operating lease right-of-use assets	12,541
Intangible assets	147,650
Deferred tax assets, net	1,202
Other assets	1,585
Total assets acquired	368,710
Accounts payable	19,356
Accrued expenses and other current liabilities	35,728
Current portion of operating lease liabilities	3,007
Operating lease liabilities, less current portion	12,208
Deferred tax liabilities, net	21,082
Other liabilities	15,467
Total liabilities assumed	106,848
Net assets acquired	261,862
Goodwill	124,874
Total Purchase Price	$	386,736

The preliminary values allocated to identifiable intangible assets and their estimated useful lives are as follows:

Identifiable intangible assets	Fair Value (in thousands)		Useful life (in Years)
Customer relationships	$	44,640	0.5 to 10
Tradenames	92,310		25
Product formulations	10,700		Indefinite
	$	147,650

Goodwill represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets acquired and liabilities assumed and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and expected future market opportunities.

The Company’s preliminary allocation of purchase price was based upon preliminary valuations performed to determine the fair value of the net assets as of the acquisition date and is subject to adjustments for up to one year after the closing date of the acquisition to reflect final valuations. These final valuations of the assets and liabilities could have a material impact on the preliminary purchase price allocation disclosed above.

13

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

In the third quarter of 2020, the Company recorded measurement period adjustments to its initial allocation of purchase price as a result of ongoing valuation procedures on assets acquired and liabilities assumed, including (i) a decrease in accounts receivable of $0.3 million; (ii) a decrease in inventory of $2.7 million; (iii) a decrease in prepaid expenses and other current assets of $10.4 million (see discussion below); (iv) an increase in property, plant and equipment of $17.9 million due to the valuation of certain real estate; (v) a decrease in operating lease right-of-use assets of $2.7 million to adjust the value of the Company’s leases to market value; (vi) a decrease in intangible assets of $9.8 million; (vii) an increase in other assets of $0.6 million; (viii) an increase in accounts payable of $0.4 million; (ix) a decrease in deferred tax liabilities, net of $2.9 million; (x) a decrease in other liabilities of $1.0 million; and (xi) a decrease to goodwill of $6.2 million due to the incremental period adjustments discussed in items (i) through (x). The impact of measurement period adjustments to the results of operations resulted in an increase in cost of goods sold related to the fair value step-up in inventory acquired that was subsequently sold of $0.8 million for the period of June 26, 2020 to June 30, 2020.

The initial allocation of purchase price reflects a $10.1 million adjustment to prepaid expenses and other current assets as a result of a change to the consideration transferred relative to the initial purchase price allocation. This adjustment was also reflected as a reduction to the estimated closing adjustments, and therefore, the total purchase price.

Direct transaction-related costs consist of costs incurred in connection with the Acquisition. Act II incurred transaction costs of $17.0 million prior to the Acquisition which are reflected within the accumulated deficit within the Condensed Consolidated Statement of Changes in Equity. During the three months ended September 30, 2020, the Company identified $1.2 million of additional Act II transaction costs that had been incurred in connection with the Acquisition. The effect of correcting for these costs decreased additional paid-in capital by $0.9 million and accumulated deficit by $0.3 million.

Pro Forma Financial Information—The following unaudited pro forma financial information summarizes the results of operations for the Company as though the Acquisition had occurred on January 1, 2019 (in thousands):

	Pro Forma Statements of Operations
	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Revenue	$	67,002	$	64,060	$	199,808	$	203,354
Net income (loss)	$	4,971	$	5,037	$	(20,350)	$	4,317

The unaudited pro forma financial information does not include any costs related to the Acquisition. In addition, the unaudited pro forma financial information does not assume any impacts from revenue, cost or other operating synergies that could be generated as a result of the acquisition. The unaudited pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition been consummated on January 1, 2019.

The Successor and Predecessor periods have been combined in the pro forma for the three and nine months ended September 30, 2020 and 2019 and include adjustments to reflect intangible asset amortization based on the economic values derived from definite-lived intangible assets, interest expense on the new debt financing, depreciation expense for certain real estate that has been adjusted to fair value, the release of the inventory fair value step-down into cost of goods sold and the elimination of non-recurring expense related to Predecessor transaction bonuses. These adjustments are net of taxes.

NOTE 3: LEASES

The Company measured Merisant and Mafco’s legacy lease agreements as if the leases were new at the Acquisition date and applied the provisions of Topic 842. This resulted in the recognition of right-of-use assets and operating lease liabilities of $15.2 million as of June 26, 2020. The right-of-use assets and operating lease liabilities at June 26, 2020 also included approximately $0.3 million related to one lease that Act II had applied the provisions of Topic 842 to effective January 1, 2020. In the third quarter of 2020, the Company recorded a measurement period adjustment that reduced the right-of-use assets by $2.7 million to adjust the value of the leases to market value. All leases are classified as operating leases.

The Company’s lease portfolio includes a factory building, office space, warehouses, material handling equipment, vehicles and office equipment.

14

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

Certain leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of lease renewal options is at the Company’s sole discretion. For purposes of calculating operating lease liabilities, lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option.

Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment.

The Company’s lease agreements do not contain any residual value guarantees. Some leases include variable payments that are based on the usage and occupancy of the leased asset. The Company has elected not to record leases with an initial term of twelve months or less on the balance sheet.

For real estate and vehicle leases, the Company elected the practical expedient to not separate lease from non-lease components within the contract. Electing this practical expedient means the Company would account for each lease component and the related non-lease component together as a single component. For equipment leases, the Company has not elected this practical expedient and separates the non-lease components from the lease component.

The right-of-use asset is subsequently measured throughout the lease term at the carrying amount of the lease liability. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease expense for the period from June 26, 2020 through June 30, 2020 was not material. Lease expense for the three months ended September 30, 2020 was $1.1 million.

The following table presents the future maturities of the Company’s lease obligations as of September 30, 2020 (in thousands):

Remainder of 2020	$	1,004
2021	3,738
2022	3,462
2023	3,387
2024	1,865
Thereafter	2,896
Total lease payments	16,352
Less: imputed interest	1,270
Total operating lease liabilities	$	15,082

The weighted-average remaining lease term is 4.9 years and the weighted-average discount rate is 3.42%.

Cash paid for amounts included in the measurement of the lease liability and for supplemental non-cash information for the three months ended September 30, 2020 was $0.9 million and for the period from June 26, 2020 through June 30, 2020 was not material.

NOTE 4: INVENTORIES

Inventories consisted of the following (in thousands):

	(Successor)		(Predecessor)
	September 30, 2020		December 31, 2019
Raw materials and supplies	$	60,418	$	89,611
Work in process	1,122		387
Finished goods	42,006		31,131
Total inventories	$	103,546	$	121,129

15

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

NOTE 5: GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consisted of the following (in thousands):

	(Successor)						(Predecessor)
	September 30, 2020						December 31, 2019
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Other intangible assets subject to amortization
Customer relationships (useful life of 0.5 to 10 years)	$	44,640	$	(1,866)	$	42,774	$	105,000	$	(38,731)	$	66,269
Tradenames (useful life of 25 years)	92,310		(975)		91,335		95,055		(19,939)		75,116
Total	$	136,950	$	(2,841)	$	134,109	$	200,055	$	(58,670)	$	141,385
Other intangible assets not subject to amortization
Product formulations					10,700						109,858
Total other intangible assets, net					144,809						251,243
Goodwill					124,874						130,870
Total goodwill and other intangible assets					$	269,683					$	382,113

The Successor’s amortization expense for intangible assets was $2.7 million and $2.8 million for the three months ended September 30, 2020 and for the period from June 26, 2020 through September 30, 2020, respectively. The Predecessor’s amortization expense for intangible assets was $4.9 million, $2.7 million and $8.0 million for the periods from January 1, 2020 to June 25, 2020 and for the three and nine months ended September 30, 2019, respectively.

Amortization expense relating to amortizable intangible assets as of September 30, 2020 for the next five years is expected to be as follows (in thousands):

Remainder of 2020	$	2,667
2021	9,004
2022	9,004
2023	9,004
2024	9,004
2025	8,963

NOTE 6: DEBT

Debt consisted of the following (in thousands):

	(Successor)		(Predecessor)
	September 30, 2020		December 31, 2019
Term Loan	$	138,250	$	—
Less: current portion	(7,000)		—
Less: debt issuance costs	(4,969)		—
Total non-current borrowings	$	126,281	$	—

16

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

Loan Agreement—The Company entered into a Loan Agreement (the “Loan Agreement”) on June 25, 2020, with Toronto Dominion (Texas) LLC, as administrative agent, BMO Capital Markets Corp. and Truist Bank, as documentation agents, and the other lenders party thereto, which provided (x) a senior secured first lien term loan facility of $140 million that matures in five years on June 25, 2025 and (y) a first lien revolving credit facility of up to $50 million that also matures in five years. Loans outstanding under the first lien term loan facility and the first lien revolving credit facility accrue interest at a rate per annum equal to LIBOR subject to a floor of 1% plus a margin ranging from 3.00% to 3.75% or, at Company’s option, a base rate subject to a floor of 2% plus a margin ranging from 2.00% to 2.75%, depending on the achievement of certain leverage ratios. Undrawn amounts under the first lien revolving credit facility are expected to accrue a commitment fee at a rate per annum of 0.40% on the average daily undrawn portion of the commitments thereunder, with step downs to 0.30% upon achievement of certain leverage ratios. As of September 30, 2020, there were $2.1 million of outstanding letters of credit that reduced the Company’s availability under the revolving credit facility. Additionally, approximately $1.9 million of issuance costs allocated to the revolving credit facility were capitalized as an asset as of June 30, 2020 and are being amortized ratably over the commitment period of five years. There were no borrowings under the revolving credit facility as of September 30, 2020.

The Company converted the base rate term loan to a LIBOR loan on July 1, 2020 at an interest rate of 4.50%. Borrowings under the Loan Agreement are collateralized by substantially all of the Company’s assets, and the Loan Agreement includes restrictive qualitative and quantitative covenants. The Company was in compliance with its covenants under the Loan Agreement on September 30, 2020. The unpaid principal amount of the term loan is payable in quarterly installments on the last day of each fiscal quarter commencing on September 30, 2020. The payment for each of the first 12 fiscal quarters is equal to 1.25% of the beginning principal amount, or $1.75 million, and for the following seven fiscal quarters thereafter is 2.50%, or $3.5 million. The remaining principal payment on the term loan is due upon maturity.

NOTE 7: FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company measures and records in its consolidated financial statements certain assets and liabilities at fair value. ASC Topic 820 “Fair Value Measurement and Disclosures,” establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). This hierarchy consists of the following three levels:

•Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market.

•Level 2 – Assets and liabilities whose values are based on inputs other than those included in Level 1, including quoted market prices in markets that are not active; quoted prices of assets or liabilities with similar attributes in active markets; or valuation models whose inputs are observable or unobservable but corroborated by market data.

•Level 3 – Assets and liabilities whose values are based on valuation models or pricing techniques that utilize unobservable inputs that are significant to the overall fair value measurement.

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Current Assets and Other Financial Assets and Liabilities—Cash and cash equivalents, trade accounts receivable and trade accounts payable are measured at carrying value, which approximates fair value because of the short-term maturities of these instruments.

Debt—The Company measures its first lien term loan and revolving facilities at original carrying value including accrued interest, net of unamortized deferred financing costs and fees. The fair value of the credit facilities approximates carrying value, as they consist of variable rate loans.

17

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

NOTE 8: COMMITMENTS AND CONTINGENCIES

The Company is subject to various claims, pending and possible legal actions for product liability and other damages, and other matters arising out of the conduct of the business. The Company believes, based on current knowledge and consultation with counsel, that the outcome of such claims and actions will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

As of September 30, 2020, the Company had obligations to purchase $22 million of raw materials through 2025; however, it is unable to make reasonably reliable estimates of the timing of such payments.

NOTE 9: INCOME TAXES

For the Successor period, the Company’s provision for income taxes consists of U.S., state and local, and foreign taxes. The Company has significant operations in various locations outside the U.S. The annual effective tax rate is a composite rate reflecting the earnings in the various locations at their applicable statutory tax rates.

For the Predecessor period, income taxes as presented herein attribute current and deferred income taxes of the Company’s financial statements in a manner that is systematic, rational, and consistent with the asset and liability method described by ASC 740, “Income Taxes.” Accordingly, the Company’s income tax provision during the predecessor period was prepared following the separate return method. The separate return method applies ASC 740 to the stand-alone financial statements of each member of the consolidated group as if the group member were a separate taxpayer and a stand-alone enterprise. Use of the separate return method may result in differences when the sum of the amounts allocated to stand-alone tax provisions are compared with amounts presented in consolidated financial statements. In that event, the related deferred tax assets and liabilities could be significantly different from those presented herein. The consolidated financial statements reflect the Company’s portion of income taxes payable as if the Company had been a separate taxpayer.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. The CARES Act made various tax law changes including among other things (i) increased the limitation under IRC Section 163(j) for 2019 and 2020 to permit additional expensing of interest (ii) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k) (iii) made modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhanced recoverability of alternative minimum tax credit carryforwards. The income tax provisions of the CARES Act had limited applicability to the Company and did not have a material impact on the Company’s consolidated financial statements.

The Successor’s income tax provision was $1.7 million for the three months ended September 30, 2020. The effective tax rate for the three months ended September 30, 2020 was an income tax provision of (146.3%) on a pretax loss of $1.2 million which differs from the statutory federal rate of 21% primarily due to the U.S. tax effect of international operations including Global Intangible Low-Taxed Income (“GILTI”) recorded during the period. The Predecessor’s income tax provision for the three months ended September 30, 2019 was $1.6 million. The effective tax rate for the three months ended September 30, 2019 was an income tax provision of 23.6% on pretax income of $6.9 million.

The Successor’s income tax provision was $1.7 million for the period from June 26, 2020 through September 30, 2020. The effective tax rate for the period from June 26, 2020 through September 30, 2020 was computed by applying an estimate of the annual effective tax rate for the Successor period to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. The Successor’s effective tax rate was an income tax provision of (102.9%) on a pretax loss of $1.6 million for the period from June 26, 2020 through September 30, 2020 which differs from the statutory federal rate of 21% primarily due to the U.S. tax effect of international operations including GILTI recorded during the period. The Predecessor’s income tax provision was an income tax benefit of $3.5 million for the period from January 1, 2020 through June 25, 2020. The effective tax rate for the period from January 1, 2020 through June 25, 2020 was computed using a discrete method as if the Company closed its books and records, The Predecessor’s effective tax rate was 9.3% for the period from January 1, 2020 to June 25, 2020 which differs from the statutory federal rate of 21% primarily due to the impact of the impairment charges of non-deductible goodwill and the U.S. tax effect of international operations including GILTI recorded during the period.

18

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

The Predecessor’s income tax provision was $5.2 million for the nine months ended September 30, 2019. The Predecessor’s effective tax rate for the nine months ended September 30, 2019 was 22.6% on pretax income of $23.2 million which differs from the statutory federal rate of 21% primarily due to state and local taxes and the U.S. tax effect of international operations.

As of September 30, 2020, the Company had an uncertain tax position liability of $1.0 million, including interest and penalties. The unrecognized tax benefits include amounts related to various foreign tax issues.

NOTE 10: PENSION BENEFITS

Certain current and former employees of the Company are covered under a funded defined benefit retirement plan. Plan provisions covering certain of the Company’s salaried employees generally provide pension benefits based on years of service and compensation. Plan provisions covering the Company’s union members generally provide stated benefits for each year of credited service. The Company’s funding policy is to contribute annually the statutory required amount as actuarially determined. The Company uses December 31 as a measurement date for the plan. The Company froze the pension plan on December 31, 2019.

The components of net periodic benefit (credit) cost for the Company’s defined benefit pension plan for the Successor and Predecessor were as follows (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Service cost	$	—	$	—	$	—	$	152	$	456
Interest cost	210		210		452		275		841
Expected return on plan assets	(392)		(392)		(818)		(365)		(1,096)
Recognized actuarial loss	—		—		108		276		828
Amortization of prior service cost	—		—		—		21		63
Net periodic benefit (credit) cost	$	(182)	$	(182)	$	(258)	$	359	$	1,092

Net periodic benefit (credit) cost is reflected in the Company’s consolidated financial statements as follows for the Successor and Predecessor periods presented (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Cost of Goods Sold	$	—	$	—	$	—	$	125	$	387
Selling, general and administrative expense	—		—		—		234		705
Other income, net	(182)		(182)		(258)		—		—
Net periodic benefit (credit) cost	$	(182)	$	(182)	$	(258)	$	359	$	1,092

The Company currently does not expect to make contributions to its funded defined benefit pension plan in 2020 due to the funded status.

In addition to the expense shown above, the Company has an unfunded supplemental benefit plan to provide certain salaried employees with additional retirement benefits due to limitations established by U.S. income tax regulation. The net periodic benefit cost for the three months ended September 30, 2020 and 2019 was $0.1 million and $0.2 million, respectively. The net periodic benefit cost for January 1, 2020 to June 25, 2020 and the nine months ended September 30, 2019 was $0.4 million and $0.5 million, respectively. The net periodic benefit cost for the period June 26, 2020 to June 30, 2020 was insignificant.

19

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

NOTE 11: STOCK-BASED COMPENSATION

On June 24, 2020, the Whole Earth Brands, Inc. 2020 Long-Term Incentive Plan (the “Plan”) was approved for the purpose of promoting the long-term financial interests and growth of the Company and its subsidiaries by attracting and retaining management and other personnel and key service providers. The Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance shares, performance units and other stock-based awards to officers, employees and non-employee directors of, and certain other service providers to, the Company and its subsidiaries. Under the terms of the Plan an aggregate of 9,300,000 shares of common stock are authorized for issuance under the Plan.

On September 30, 2020, 719,038 restricted stock units (“RSUs”) and 68,946 restricted stock awards (“RSAs”) were granted and remain outstanding. The RSUs and RSAs have a grant-date fair value equal to the fair market value of the underlying stock on the grant date. The RSUs granted to employees on September 30, 2020 cliff vest over the employee service period of approximately 14 months. The RSAs granted to non-employee board members on September 30, 2020 cliff vest over a service period of approximately 19 months. The Company accounts for forfeitures in the period incurred. As the RSUs and RSAs were granted on September 30, 2020, no stock compensation expense has been recognized for the three months ended September 30, 2020. There were no units or awards vested or forfeited as of September 30, 2020.

The aggregate grant date fair value of RSUs and RSAs granted during the three months ended September 30, 2020 was $6 million and $0.6 million, respectively. The unrecognized compensation costs related to the RSUs and RSAs as of September 30, 2020 was $6.6 million. This amount will be recognized over a weighted average period of 1.18 years.

A summary of activity and weighted average fair values related to the RSUs is as follows:

	Three Months Ended September 30, 2020
	Shares	Weighted Average Fair Value
Outstanding at June 30, 2020	—	$	—
Granted	719,038	8.34
Outstanding and nonvested at September 30, 2020	719,038	$	8.34

A summary of activity and weighted average fair values related to the RSAs is as follows:

	Three Months Ended September 30, 2020
	Shares	Weighted Average Fair Value
Outstanding at June 30, 2020	—	$	—
Granted	68,946	8.34
Outstanding and nonvested at September 30, 2020	68,946	$	8.34

NOTE 12: STOCKHOLDERS' EQUITY

On September 8, 2020, the Company announced that its board of directors had authorized a stock repurchase plan of up to $20 million of shares of the Company’s common stock. The shares may be repurchased from time to time over a 12-month period expiring on September 15, 2021 (or upon the earlier completion of all purchases contemplated by the repurchase plan or the earlier termination of the repurchase plan), in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with U.S. federal securities laws.

During the three months ended September 30, 2020, there were no repurchases of the Company’s common stock under the stock repurchase plan.

20

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

NOTE 13: EARNINGS PER SHARE

Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Warrants issued are not considered outstanding at the date of issuance. Restricted Stock Units and Restricted Stock Awards also are not considered outstanding until the Units and Awards have vested.

Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average shares outstanding assuming dilution. Dilutive common shares outstanding is computed using the treasury stock method and reflects the additional shares that would be outstanding if dilutive warrants were exercised and restricted stock units and restricted stock awards were settled for common shares during the period.

For the three months ended September 30, 2020 and for the period from June 26, 2020 to September 30, 2020, 10,131,748 warrants were excluded from the calculation as these warrants were anti-dilutive.

For the three months ended September 30, 2020 and for the period from June 26, 2020 to September 30, 2020, 719,038 restricted stock units and 68,946 restricted stock awards, respectively, each weighted for the portion of the period for which they were outstanding, were excluded from the computation of diluted earnings per share as the effect was determined to be anti-dilutive.

The computation of basic and diluted loss per common share for the three months ended September 30, 2020 and for the period from June 26, 2020 to September 30, 2020 is shown below (in thousands, except for share and per share data).

	(Successor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020
EPS numerator:
Net loss attributable to common shareholders	$	(2,835)	$	(3,340)
EPS denominator:
Weighted average shares outstanding - basic	38,426,669		38,426,669
Effect of dilutive securities	—		—
Weighted average shares outstanding - diluted	38,426,669		38,426,669
Net loss per share:
Basic	$	(0.07)	$	(0.09)
Diluted	$	(0.07)	$	(0.09)

21

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

NOTE 14: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes accumulated other comprehensive income (loss) (“AOCI”), net of taxes, by component (in thousands):

	Net Currency Translation Gains (Losses)		Funded Status of Benefit Plans		Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2018 (Predecessor)	$	4,428	$	(10,375)	$	(5,947)
Other comprehensive loss before reclassifications	(2,439)		—		(2,439)
Adoption of ASU 2018-02	—		(2,137)		(2,137)
Balance at March 31, 2019 (Predecessor)	1,989		(12,512)		(10,523)
Other comprehensive income before reclassifications	1,385		—		1,385
Balance at June 30, 2019 (Predecessor)	3,374		(12,512)		(9,138)
Other comprehensive loss before reclassifications	(3,013)		—		(3,013)
Balance at September 30, 2019 (Predecessor)	$	361	$	(12,512)	$	(12,151)
Balance at December 31, 2019 (Predecessor)	$	2,836	$	(10,980)	$	(8,144)
Other comprehensive loss before reclassifications	(1,884)		—		(1,884)
Amounts reclassified from AOCI	—		48		48
Balance at March 31, 2020 (Predecessor)	952		(10,932)		(9,980)
Other comprehensive loss before reclassifications	(402)		—		(402)
Amounts reclassified from AOCI	—		270		270
Balance at June 25, 2020 (Predecessor)	550		(10,662)		(10,112)
Purchase accounting adjustments to eliminate Predecessor’s accumulated other comprehensive loss (income)	(550)		10,662		10,112
Balance at June 26, 2020 (Successor)	—		—		—
Other comprehensive income before reclassifications	15		—		15
Balance at June 30, 2020 (Successor)	15		—		15
Other comprehensive income before reclassifications	3,130		—		3,130
Balance at September 30, 2020 (Successor)	$	3,145	$	—	$	3,145

NOTE 15: RELATED PARTY TRANSACTIONS

The Predecessor participated in MacAndrews & Forbes’ (“MacAndrews”) directors and officer’s insurance program, which covered the Predecessor along with MacAndrews and its other affiliates. The limits of coverage are available on aggregate losses to any or all of the participating companies and their respective directors and officers. For the period January 1, 2020 to June 25, 2020 and the nine months ended September 30, 2019, the Predecessor reimbursed MacAndrews an immaterial amount for its allocable portion of the premiums for such coverage, which the Predecessor believed was more favorable than the premiums that it could have secured were it to secure its own coverage. The Predecessor also participated in certain other insurance programs with MacAndrews under which it paid premiums directly to the insurance broker.

22

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

In March 2018, the Predecessor entered into a revolving credit agreement with Wesco US LLC, an indirect and wholly-owned subsidiary of Merisant. This revolving credit facility, as amended, matured on January 3, 2022 and provided for maximum outstanding borrowings of up $9.0 million. The revolving credit facility was unsecured and bore interest at 3-month LIBOR plus 4.0% and provided for periodic interest payments with all principal due upon maturity. MacAndrews had the right to accept or reject any borrowing request made by the Predecessor pursuant to the revolving credit agreement in its sole discretion. The outstanding balance on the revolving credit agreement at June 25, 2020 was $3.4 million and was forgiven by MacAndrews in connection with the Acquisition. Outstanding borrowings at December 31, 2019 were $8.4 million and the interest rate at December 31, 2019 was 5.95%. The interest expense for the period from January 1, 2020 to June 25, 2020 was approximately $0.2 million. The interest expense for the three and nine months ended September 30, 2019 was approximately $0.1 million and $0.4 million, respectively.

In July 2020, the Company entered into an agreement with Watermill Institutional Trading LLC, a registered broker-dealer (“Watermill”), to act as one of the Company’s financial advisors for a 12-month period commencing July 22, 2020 for total consideration of $0.9 million, of which $0.2 million was expensed in the three months ended September 30, 2020. A former director of Act II is a registered representative of Watermill and is providing services directly to the Company under the agreement.

NOTE 16: BUSINESS SEGMENTS

The Company has two reportable segments: Branded CPG and Flavors & Ingredients. The Branded CPG and Flavors & Ingredients segments are managed and organized through the Company’s indirect and wholly-owned subsidiaries Merisant and Mafco Worldwide, respectively. The Company does not present assets by reportable segments as they are not reviewed by the Chief Operating Decision Maker for purposes of assessing segment performance and allocating resources.

The following table presents selected financial information relating to the Company’s business segments (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Product revenues, net
Branded CPG	$	41,006	$	43,557	$	80,749	$	40,292	$	123,098
Flavors & Ingredients	25,996		27,923		47,579		23,768		80,256
Total product revenues, net	$	67,002	$	71,480	$	128,328	$	64,060	$	203,354
Operating income (loss)
Branded CPG	$	1,499	$	1,393	$	(14,463)	$	3,186	$	7,703
Flavors & Ingredients	(435)		(646)		(23,718)		4,667		16,476
Total operating income (loss)	$	1,064	$	747	$	(38,181)	$	7,853	$	24,179

23

Whole Earth Brands, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)    

The following table presents revenues disaggregated by geographic operating segments (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From  January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Branded CPG:
North America	$	14,642	$	15,515	$	29,926	$	15,203	$	44,967
Europe, Middle East and Africa	19,092		20,197		35,360		17,080		55,013
Asia-Pacific	3,924		4,300		9,584		4,835		13,544
Latin America	3,348		3,545		5,879		3,174		9,574
Flavors & Ingredients	25,996		27,923		47,579		23,768		80,256
Total product revenues, net	$	67,002	$	71,480	$	128,328	$	64,060	$	203,354

NOTE 17: SUBSEQUENT EVENTS

On November 10, 2020, the Company executed and closed a definitive Equity Purchase Agreement (the “Purchase Agreement”) with RF Development, LLC (“RF Development”), Swerve, L.L.C. (“Swerve LLC”) and Swerve IP, L.L.C. (“Swerve IP” and together with Swerve LLC, “Swerve”). Swerve is a manufacturer and marketer of a portfolio of zero sugar, keto-friendly, and plant-based sweeteners and baking mixes. The Company purchased all of the issued and outstanding equity interests of both Swerve LLC and Swerve IP from RF Development for $80 million in cash, subject to customary post-closing adjustments. The transaction was funded through a combination of available cash on hand and approximately $47.9 million under the Company’s $50 million revolving loan facility.

24

Item 2.         Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and the related notes to those statements included under Item 1 hereof and the combined financial statements of Mafco Worldwide & Merisant beginning on page F-1 in the final prospectus and definitive proxy statement, each filed with the Securities and Exchange Commission (the “SEC”) by Act II Global Acquisition Corp. on May 13, 2020. For purposes of this section, “Whole Earth Brands,” the “Company,” “we,” or “our” refer to (i) Mafco Worldwide & Merisant and their subsidiaries (“Predecessor”) for the period from January 1, 2020 through June 25, 2020 and the three and nine month periods ended September 30, 2019 (each referred to herein as a “Predecessor Period”) prior to the consummation of the Acquisition, as defined hereafter, and (ii) Whole Earth Brands, Inc. and its subsidiaries (the “Successor”) for the period from June 26, 2020 through September 30, 2020 (the “Successor Period”) after the consummation of the Acquisition, unless the context otherwise requires. Certain figures have been rounded for ease of presentation and may not sum due to rounding.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act (the “Exchange Act”) concerning us and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of management, as well as assumptions made by, and information currently available to, management.

Forward-looking statements may be accompanied by words such as “achieve,” “aim,” “anticipate,” “believe,” “can,” “continue,” “could,” “drive,” “estimate,” “expect,” “forecast,” “future,” “grow,” “improve,” “increase,” “intend,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or similar words, phrases or expressions. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to achieve or maintain profitability; the extent of the impact of the COVID-19 pandemic, including the duration, spread, severity, and any recurrence of the COVID-19 pandemic, the duration and scope of related government orders and restrictions, the impact on our employees, and the extent of the impact of the COVID-19 pandemic on overall demand for our products; local, regional, national, and international economic conditions that have deteriorated as a result of the COVID-19 pandemic including the risks of a global recession or a recession in one or more of our key markets, and the impact they may have on us and our customers and management’s assessment of that impact; the projected financial information, anticipated growth rate, and market opportunity of our Branded CPG and Flavors & Ingredients business segments; the ability to maintain the listing of our securities on Nasdaq; the potential liquidity and trading of our public securities; our expected capital requirements and the availability of additional financing; our ability to attract or retain highly qualified personnel, including in accounting and finance roles; extensive and evolving government regulations that impact the way we operate; the impact of the COVID-19 pandemic on our suppliers, including disruptions and inefficiencies in the supply chain; factors relating to the business, operations and financial performance of our Branded CPG and Flavors & Ingredients segments; our success in integrating the various operating companies constituting Merisant and MAFCO; our ability to continue to use, maintain, enforce, protect and defend its owned and licensed intellectual property, including the Whole Earth® brand; and such other factors as discussed throughout Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, in Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q and in the section entitled “Risk Factors” in the Closing Form 8-K, including the risk factors incorporated by reference therein.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, our information may be incomplete or limited, and we cannot guarantee future results. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

25

Overview

We are a global industry-leading platform, focused on the “better for you” consumer packaged goods (“CPG”) and ingredients space. We have a global platform of branded products and ingredients, focused on the consumer transition towards natural alternatives and clean label products. We operate a proven platform organized into two reportable segments.

Our Branded CPG and Flavors & Ingredient reportable segments are managed and organized through our indirect and wholly-owned subsidiaries, Merisant Company (collectively with its subsidiaries, “Merisant”) and Mafco Worldwide LLC (collectively with its subsidiaries and affiliates, “Mafco Worldwide,” and together with Merisant, “Merisant and MAFCO”), respectively.

•Branded CPG, comprised of our Merisant division of operating companies, is a global CPG business focused on building a branded portfolio oriented toward serving customers seeking zero-calorie, low-calorie, natural, no-sugar-added and plant-based products. Our Branded CPG business operates leading brands in the low- and zero-calorie sweetener market, such as Whole Earth®, Equal®, Canderel® and Pure Via®, and existing branded adjacencies.

•Flavors & Ingredients, comprised of our Mafco Worldwide division of operating companies, is our global, business-to-business focused operations with a long history as a trusted supplier of essential, functional ingredients to some of the CPG industry’s largest and most demanding customers. Our Flavors & Ingredients segment operates as our licorice-derived products business.

Acquisition

On June 24, 2020, we domesticated into a Delaware corporation and changed our name from “Act II Global Acquisition Corp.” to “Whole Earth Brands, Inc.” On June 25, 2020, we consummated the indirect acquisition (the “Acquisition”) of (i) all of the issued and outstanding equity interests of Merisant Company, Merisant Luxembourg Sarl (“Merisant Luxembourg”), Mafco Worldwide LLC, Mafco Shanghai LLC (“Mafco Shanghai”), EVD Holdings LLC (“EVD Holdings”), and Mafco Deutschland GmbH (together with Merisant Company, Merisant Luxembourg, Mafco Worldwide LLC, Mafco Shanghai, and EVD Holdings, and their respective direct and indirect subsidiaries, “Merisant and Mafco Worldwide”), and (ii) certain assets and liabilities of Merisant and Mafco Worldwide included in the Transferred Assets and Liabilities (as defined in the Purchase Agreement (as hereafter defined)), from Flavors Holdings Inc. (“Flavors Holdings”), MW Holdings I LLC (“MW Holdings I”), MW Holdings III LLC (“MW Holdings III”), and Mafco Foreign Holdings, Inc. (“Mafco Foreign Holdings,” and together with Flavors Holdings, MW Holdings I, and MW Holdings III, the “Sellers”), pursuant to that certain Purchase Agreement (the “Purchase Agreement”) entered into with the Sellers dated as of December 19, 2019, as amended.

As a result of the Acquisition, Act II was deemed to be the acquirer for accounting purposes, and Merisant and MAFCO, which is the business conducted prior to the closing of the Acquisition, was deemed to be the acquiree and accounting Predecessor. The Acquisition was accounted for as a business combination using the acquisition method of accounting, and the Successor’s financial statements reflect a new basis of accounting that is based on the fair value of net assets acquired. As a result of the application of the acquisition method of accounting as of the effective time of the Acquisition, the financial statements for the Predecessor Period and for the Successor Period are presented on different bases. The historical financial information of Act II prior to the Acquisition has not been reflected in the Predecessor Period financial statements.

Covid-19 Impact

COVID-19 surfaced in Wuhan, China in late 2019, and has since spread throughout the rest of the world. In March 2020, COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S. Government. The pandemic has negatively affected the U.S. and global economies, disrupted global supply chains and financial markets, and resulted in significant travel restrictions, including mandated facility closures and shelter-in-place orders.

We have taken measures to protect the health and safety of our employees and implemented work from home arrangements, where possible, social distancing where working from home is not feasible including in our manufacturing facilities, deep cleaning protocols at all of our facilities and travel restrictions, among other measures. We have also taken appropriate measures to work with our customers to minimize potential disruption and to support the communities that we serve to address the challenges posed by the pandemic.

26

While we are currently experiencing stable to increasing consumer and customer demand for our products and have no supply disruptions, we are unable to fully determine the future impact of COVID-19 on demand for our products or our ability to supply our products. The full extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related containment and mitigation actions taken by national, state and local government officials across the world to prevent disease spread. The extent of the pandemic’s impact on us will also depend upon our employees’ ability to work safely in our facilities, our customers’ ability to continue to operate or receive our products, the ability of our suppliers to continue to operate, and the level of activity and demand for the ultimate product and services of our customers or their customers.

Stock Repurchase Plan

On September 8, 2020, we announced that the Company’s board of directors had authorized a stock repurchase plan of up to $20 million of shares of our common stock. The shares may be repurchased from time to time over a 12-month period expiring on September 15, 2021 (or upon the earlier completion of all purchases contemplated by the repurchase plan or the earlier termination of the repurchase plan), in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with U.S. federal securities laws.

The timing and actual number of shares of common stock repurchased under the stock repurchase plan will depend on a number of factors, including the market price of our common stock, general market and economic conditions, applicable legal requirements, compliance with the terms of our outstanding indebtedness, alternate uses for capital and other factors. There is no guarantee as to the number of shares that will be repurchased, and the repurchase plan may be extended, suspended or discontinued at any time without prior notice at our discretion.

During the three months ended September 30, 2020, there were no repurchases of our common stock under the stock repurchase plan.

Subsequent Developments

On November 10, 2020, we executed and closed a definitive Equity Purchase Agreement (the “Purchase Agreement”) with RF Development, LLC (“RF Development”), Swerve, L.L.C. (“Swerve LLC”, and Swerve IP, L.L.C. (“Swerve IP” and together with Swerve LLC, “Swerve”). Swerve is a manufacturer and marketer of a portfolio of zero sugar, keto-friendly, and plant-based sweeteners and baking mixes. We purchased all of the issued and outstanding equity interests of both Swerve LLC and Swerve IP from RF Development for $80 million in cash, subject to customary post-closing adjustments. The transaction was funded through a combination of available cash on hand and approximately $47.9 million under our $50 million revolving loan facility. For additional information about the Transaction, please read the Current Report on Form 8-K filed with the SEC on November 12, 2020.

27

Results of Operations

Consolidated

	(Successor)				(Predecessor)
(In thousands)	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Product revenues, net	$	67,002	$	71,480	$	128,328	$	64,060	$	203,354
Cost of goods sold	48,357		51,065		77,627		38,173		121,037
Gross profit	18,645		20,415		50,701		25,887		82,317
Selling, general and administrative expenses	14,881		16,827		43,355		14,770		49,020
Amortization of intangible assets	2,700		2,841		4,927		2,656		7,968
Asset impairment charges	—		—		40,600		—		—
Restructuring and other expenses	—		—		—		608		1,150
Operating income (loss)	1,064		747		(38,181)		7,853		24,179
Interest expense, net	(2,045)		(2,161)		(238)		(237)		(342)
Other (expense) income, net	(170)		(232)		801		(716)		(666)
(Loss) income before income taxes	(1,151)		(1,646)		(37,618)		6,900		23,171
Provision (benefit) for income taxes	1,684		1,694		(3,482)		1,627		5,228
Net (loss) income	$	(2,835)	$	(3,340)	$	(34,136)	$	5,273	$	17,943

Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Product revenues, net. Product revenues, net for the three months ended September 30, 2020 were $67.0 million, an increase of $2.9 million, or 5%, from $64.1 million for the three months ended September 30, 2019 due to a $2.2 million increase in product revenues at Flavors & Ingredients and a $0.7 million increase in product revenues at Branded CPG, as further described below.

Cost of goods sold. Cost of goods sold for the three months ended September 30, 2020 was $48.4 million, an increase of $10.2 million, or 27%, from $38.2 million for the three months ended September 30, 2019. The increase was primarily driven by $8.7 million of purchase accounting adjustments related to inventory revaluations as well as higher volumes at Flavors & Ingredients, partially offset by favorable product mix within Branded CPG.

Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended September 30, 2020 were $14.9 million, an increase of $0.1 million, or 1%, from $14.8 million for the three months ended September 30, 2019 primarily due to higher professional fees related to being a new public company, largely offset by lower bonus expense of $3.0 million primarily related to the reversal of $2.3 million of bonus expense for certain employees receiving a one-time grant of restricted stock units on September 30, 2020 in lieu of an annual cash bonus for 2020.

Amortization of intangible assets. Amortization of intangible assets for both the three months ended September 30, 2020 and 2019 was $2.7 million.

Restructuring and other expenses. Restructuring and other expenses for the three months ended September 30, 2019 were $0.6 million.

Interest expense, net. Interest expense, net for the three months ended September 30, 2020 was $2.0 million, an increase of $1.8 million from $0.2 million for the three months ended September 30, 2019. The increase was due to interest expense under our new credit facilities and the amortization of debt issuance costs.

28

Other (expense) income, net. Other (expense) income, net for three months ended September 30, 2020 was expense of $0.2 million, a decrease of $0.5 million from $0.7 million for the three months ended September 30, 2019. The decrease was due to lower foreign exchange losses.

Provision (benefit) for income taxes. The provision for income taxes for the three months ended September 30, 2020 was $1.7 million, an increase of $0.1 million from a tax provision for income taxes of $1.6 million for the three months ended September 30, 2019. The effective tax rate for the three months ended September 30, 2020 was an income tax provision of (146.3%), compared to an income tax provision of 23.6% for the three months ended September 30, 2019. The effective tax rate for the three months ended September 30, 2020 differs from the statutory federal rate of 21% primarily due to the U.S. tax effect of international operations including Global Intangible Low-Taxed Income (“GILTI”) recorded during the period.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Product revenues, net. Product revenues, net were $71.5 million for the period from June 26, 2020 through September 30, 2020 and $128.3 million from January 1, 2020 through June 25, 2020. Product revenues, net for the combined nine months ended September 30, 2020 were $199.8 million, a decrease of $3.5 million, or 2%, from $203.4 million for the nine months ended September 30, 2019 due to a decline in product revenues of $4.8 million at Flavors & Ingredients, partially offset by a $1.2 million increase in product revenues at Branded CPG, as further discussed below.

Cost of goods sold. Cost of goods sold was $51.1 million for the period from June 26, 2020 through September 30, 2020 and $77.6 million from January 1, 2020 through June 25, 2020. Cost of goods sold for the combined nine months ended September 30, 2020 was $128.7 million, an increase of $7.7 million, or 6%, from $121.0 million for the nine months ended September 30, 2019. This increase was primarily driven by $8.7 million of purchase accounting adjustments related to inventory revaluations, as well as higher volumes in the Branded CPG segment and $0.4 million of transaction bonuses in 2020, partially offset by lower volumes in the Flavors & Ingredients segment resulting from international tobacco product revenue declines.

Selling, general and administrative expenses. Selling, general and administrative expenses were $16.8 million for the period from June 26, 2020 through September 30, 2020 and $43.4 million from January 1, 2020 through June 25, 2020. Selling, general and administrative expenses for the combined nine months ended September 30, 2020 were $60.2 million, an increase of $11.2 million, or 23%, from $49.0 million for the nine months ended September 30, 2019 primarily due to transaction bonuses of $10.6 million in 2020 and higher professional fees to support being a new public company, partially offset by lower bonus expense of $1 million primarily due to the reversal of certain bonus expense as described above.

Amortization of intangible assets. Amortization of intangible assets was $2.8 million for the period from June 26, 2020 through September 30, 2020 and $4.9 million from January 1, 2020 through June 25, 2020. Amortization of intangible assets for the combined nine months ended September 30, 2020 was $7.8 million, a decrease of $0.2 million, or 3%, from $8.0 million for the nine months ended September 30, 2019.

Asset impairment charges. Asset impairment charges were $40.6 million for the combined nine months ended September 30, 2020 and included an impairment charge of $22.9 million related to indefinite-lived intangible assets and a goodwill impairment charge of $17.7 million. The goodwill impairment charge of $17.7 million was the result of the Flavors & Ingredients and Branded CPG reporting units carrying value exceeding their fair value by $6.6 million and $11.1 million, respectively.

Restructuring and other expenses. Restructuring and other expenses were $1.2 million for the nine months ended September 30, 2019.

Interest expense, net. Interest expense, net was $2.2 million for the period from June 26, 2020 through September 30, 2020 and $0.2 million from January 1, 2020 through June 25, 2020. Interest expense, net for the combined nine months ended September 30, 2020 was $2.4 million, an increase of $2.1 million from $0.3 million for the nine months ended September 30, 2019. The increase was due to interest expense under our new credit facilities and the amortization of debt issuance costs.

29

Other (expense) income, net. Other (expense) income, net was expense of $0.2 million for the period from June 26, 2020 through September 30, 2020 and income of $0.8 million from January 1, 2020 through June 25, 2020. Other (expense) income, net for the combined nine months ended September 30, 2020 was income of $0.6 million, an increase of $1.2 million from expense of $0.7 million for the nine months ended September 30, 2019. The increase was the result of higher foreign exchange gains.

Provision (benefit) for income taxes. The provision for income taxes was $1.7 million for the period from June 26, 2020 through September 30, 2020 and an income tax benefit of $3.5 million from January 1, 2020 through June 25, 2020. The provision for income taxes for the nine months ended September 30, 2019 was $5.2 million. The effective tax rate from June 26, 2020 through September 30, 2020 was an income tax provision of (102.9%). The effective tax rate for the period from June 26, 2020 through September 30, 2020 differs from the statutory federal rate of 21% primarily due to the U.S. tax effect of international operations including GILTI recorded during the period. The effective tax rate for the nine months ended September 30, 2019 was an income tax provision of 22.6% which differs from the statutory federal rate of 21% primarily due to state and local taxes and the U.S. tax effect of international operations.

Results of Operations by Segment

Branded CPG

	(Successor)				(Predecessor)
(In thousands)	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Product revenues, net	$	41,006	$	43,557	$	80,749	$	40,292	$	123,098
Operating income (loss)	$	1,499	$	1,393	$	(14,463)	$	3,186	$	7,703

Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Segment Product Revenues, net. Product revenues, net for Branded CPG for the three months ended September 30, 2020 were $41.0 million, an increase of $0.7 million, or 2%, from $40.3 million for three months ended September 30, 2019 primarily driven by the positive impact of foreign exchange. Strong growth in product revenues in Western Europe were offset by a decline in North America due to softness in the food service channel and lower product revenues in Asia-Pacific due to timing of shipments and retailer and distributor inventories.

Segment Operating Income. Operating income for Branded CPG for the three months ended September 30, 2020 was $1.5 million, a decrease of $1.7 million from $3.2 million for the three months ended September 30, 2019. This decrease was primarily due to higher operating costs including $3.5 million of purchase accounting adjustments related to inventory revaluations and higher professional fees to support being a new public company, partially offset by a decline in amortization expense of $1.3 million due to purchase accounting revaluations and lower bonus expense of $2.5 million primarily due to the reversal of $1.7 million of bonus expense related to certain employees receiving a one-time grant of restricted stock units on September 30, 2020 in lieu of an annual cash bonus for 2020.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Segment Product Revenues, net. Product revenues, net for Branded CPG were $43.6 million for the period from June 26, 2020 through September 30, 2020 and $80.7 million from January 1, 2020 through June 25, 2020. Product revenues, net for Branded CPG for the combined nine months ended September 30, 2020 were $124.3 million, an increase of $1.2 million, or 1%, from $123.1 million for the nine months ended September 30, 2019 primarily due to strong growth in Western Europe and Asia-Pacific, partially offset by the negative impact of foreign exchange.

30

Segment Operating Income (Loss). Operating income for Branded CPG was $1.4 million for the period from June 26, 2020 through September 30, 2020 and an operating loss of $14.5 million from January 1, 2020 through June 25, 2020. Operating loss for Branded CPG for the combined nine months ended September 30, 2020 was $13.1 million, a decrease of $20.8 million as compared to operating income of $7.7 million for the nine months ended September 30, 2019. The decline was primarily due to transaction bonuses of $7.2 million, $3.5 million of purchase accounting adjustments related to inventory revaluations, a goodwill impairment charge of $11.1 million recorded in the first quarter of 2020 and higher professional fees, partially offset by a decline in amortization expense of $1.5 million due to purchase accounting revaluations and lower bonus expense of $1.0 million.

Flavors & Ingredients

	(Successor)				(Predecessor)
(In thousands)	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Product revenues, net	$	25,996	$	27,923	$	47,579	$	23,768	$	80,256
Operating (loss) income	$	(435)	$	(646)	$	(23,718)	$	4,667	$	16,476

Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

Segment Product Revenues, net. Product revenues, net for Flavors & Ingredients for the three months ended September 30, 2020 were $26.0 million, an increase of $2.2 million, or 9%, from $23.8 million for the three months ended September 30, 2019, primarily driven by growth in the licorice derivatives business and domestic tobacco revenues, partially offset by lower international tobacco revenues.

Segment Operating (Loss) Income. Operating loss for Flavors & Ingredients for the three months ended September 30, 2020 was $0.4 million a decline of $5.1 million, from operating income of $4.7 million in the three months ended September 30, 2019, primarily driven by higher operating costs including $5.2 million of purchase accounting adjustments related to inventory revaluations and a $1.3 million increase in amortization expense due to purchase accounting revaluations, partially offset by lower bonus expense of $0.5 million.

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

Segment Product Revenues, net. Product revenues, net for Flavors & Ingredients was were $27.9 million for the period from June 26, 2020 through September 30, 2020 and $47.6 million from January 1, 2020 through June 25, 2020. Product revenues, net for Flavors & Ingredients for the combined nine months ended September 30, 2020 were $75.5 million, a decrease of $4.8 million, or 6%, from $80.3 million for the nine months ended September 30, 2019, primarily driven by the decline in international tobacco revenues, partially offset by growth in the licorice derivatives business.

Segment Operating (Loss) Income. Operating loss for Flavors & Ingredients was $0.6 million for the period from June 26, 2020 through September 30, 2020 and $23.7 million from January 1, 2020 through June 25, 2020. Operating loss for Flavors & Ingredients for the combined nine months ended September 30, 2020 was $24.4 million, a decrease of $40.8 million as compared to operating income of $16.5 million for the nine months ended September 30, 2019. The decline was primarily due to asset impairment charges totaling $29.5 million recorded in the first quarter of 2020, $5.2 million of purchase accounting adjustments related to inventory revaluations, $1.3 million of higher amortization expense due to purchase accounting revaluations, lower revenues, and transaction bonuses of $3.8 million in 2020.

31

Liquidity and Capital Resources

The Predecessor has historically funded operations with cash flow from operations and, when needed, with borrowings, which are described below.

We believe our sources of liquidity and capital, and new Loan Agreement will be sufficient to finance our continued operations, growth strategy and additional expenses we expect to incur for at least the next twelve months.

The following table shows summary cash flow information for the periods from June 26, 2020 through September 30, 2020, January 1, 2020 through June 25, 2020 and the nine months ended September 30, 2019 (in thousands).

	(Successor)		(Predecessor)
	From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Nine Months Ended September 30, 2019
Net cash (used in) provided by operating activities	$	(12,715)	$	19,908	$	26,569
Net cash used in investing activities	(199,938)		(3,532)		(2,276)
Net cash provided by (used in) financing activities	206,111		(16,924)		(23,940)
Effect of exchange rates on cash and cash equivalents	88		215		117
Net change in cash and cash equivalents	$	(6,454)	$	(333)	$	470

Operating activities. Net cash used in operating activities was $12.7 million in the period from June 26, 2020 through September 30, 2020. Net cash provided by operating activities was $19.9 million from January 1, 2020 through June 25, 2020. Net cash provided by operating activities for the combined nine month period ended September 30, 2020 was $7.2 million compared to $26.6 million for the nine months ended September 30, 2019. The decrease was primarily attributable to lower cash flow from operating results, unfavorable working capital changes and higher interest payments.

Investing activities. Net cash used in investing activities was $199.9 million in the period from June 26, 2020 through September 30, 2020 which included cash paid of $376.7 million, net of cash acquired, related to the Acquisition, $178.9 million of cash transferred from the trust account and capital expenditures of $2.1 million. Net cash used in investing activities was $3.5 million from January 1, 2020 through June 25, 2020 and was entirely related to capital expenditures. Net cash used in investing activities was $2.3 million in the nine months ended September 30, 2019 and was entirely related to capital expenditures.

Financing activities. Net cash provided by financing activities was $206.1 million in the period from June 26, 2020 through September 30, 2020 and reflects $140 million of proceeds from the Loan Agreement (as defined and described below), net of debt issuance costs of $7.1 million, proceeds from the sale of common stock and warrants of $75 million and repayments of long-term debt of $1.8 million. Net cash used in financing activities was $16.9 million from January 1, 2020 through June 25, 2020 due to $8.5 million of repayments, offset by $3.5 million of borrowings related to the prior revolving credit facility and $11.9 million due to funding to the parent. Net cash used by financing activities was $23.9 million in the nine months ended September 30, 2019 due to funding to the parent.

Indebtedness

Loan Agreement

In connection with the Acquisition, on June 25, 2020, we entered into a senior secured loan agreement (the “Loan Agreement”) which contained a Revolving Credit Facility and a Term Loan Facility with Toronto Dominion (Texas) LLC, as administrative agent, BOFA Securities Inc., as Syndication Agent, BMO Capital Markets Corp. and Truist Bank, as documentation agents, and the other lenders party thereto. For more information on the Loan Agreement, see the section entitled “Item 1.01 — Entry into Material Definitive Agreement — Credit Agreement” in the first Current Report on Form 8-K we filed with the SEC on June 30, 2020 (the “Closing Form 8-K”).

The Loan Agreement provides for a term loan facility of $140 million and a revolving credit facility of up to $50 million. As of September 30, 2020, there were $2.1 million outstanding letters of credit that reduced our availability under the revolving credit facility. 

32

As of September 30, 2020, we had term loan borrowings of $133.3 million, net of debt issuance costs under the Loan Agreement and were in compliance with the related financial covenants. Additionally, there were no borrowings under the revolving credit facility as of September 30, 2020.

The Loan Agreement requires us to make certain mandatory prepayments, with (i) 100% of net cash proceeds of all non-ordinary course asset sales or other dispositions of property in excess of $5,000,000 in any fiscal year, subject to the ability to reinvest such proceeds and certain other exceptions, (ii) 100% of the net cash proceeds of any debt incurrence, other than debt permitted under the definitive agreements (but excluding debt incurred to refinance the Loan Agreement) and (iii) 50% of “Excess Cash Flow,” as defined in the Loan Agreement which is included as an exhibit to this Quarterly Report on Form 10-Q, with a reduction to 25% if the total net leverage ratio for the fiscal year is less than or equal to 2.50 to 1.00 but greater than 2.00 to 1.00, and a reduction to 0% if the total net leverage ratio for the fiscal year is less than or equal to 2.00 to 1.00. We are also required to make quarterly amortization payments equal to (i) 1.25% per annum of the original principal amount of the Term Loan Facility during the first, second and third years after the closing date of the Credit Facilities, commencing after the first full fiscal quarter after the closing date of the Loan Agreement, and (ii) 2.50% per annum of the original principal amount of the term loan facility during the fourth and fifth years after the closing date of the Loan Agreement (subject to reductions by optional and mandatory prepayments of the loans). We may prepay the term loan facility at any time without premium or penalty, subject to payment of customary breakage costs.

The Loan Agreement contains financial covenants and a number of traditional negative covenants including negative covenants related to the following subjects: consolidations, mergers, and sales of assets; limitations on the incurrence of certain liens; limitations on certain indebtedness; limitations on the ability to pay dividends; and certain affiliate transactions.

The Loan Agreement also contains certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under the Loan Agreement are entitled to take various actions, including the acceleration of amounts due under the loan and all actions permitted to be taken by a secured creditor.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, changes in financial condition, income or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

The following table summarizes certain of our obligations as of September 30, 2020 and the estimated timing and effect that such obligations are expected to have on liquidity and cash flows in future periods (in thousands):

	Total		2020		2021		2022		2023		2024		Thereafter
Debt	$	138,250	$	1,750	$	7,000	$	7,000	$	10,500	$	14,000	$	98,000
Interest on debt	25,935		1,590		6,107		5,788		5,448		4,883		2,119
Minimum lease obligations(a)	16,352		1,004		3,738		3,462		3,387		1,865		2,896
Total	$	180,537	$	4,344	$	16,845	$	16,250	$	19,335	$	20,748	$	103,015

(a) Minimum lease obligations do not include sublease rental income.

In addition, as of September 30, 2020, Mafco Worldwide had obligations to purchase $22.0 million of raw materials; however, we are unable to make reasonably reliable estimates of the timing of such payments and, therefore, the related commitment has been excluded from the table above.

33

Critical Accounting Policies and Recently Issued Accounting Pronouncements

Leasing

As of the Acquisition date, we account for leases pursuant to Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). Under the new standard, a right-of-use asset and a lease liability is recorded for all leases with a term greater than 12 months. Lease right-of-use assets and lease liabilities are initially recognized based on the present value of the future minimum lease payments over the lease term at commencement date calculated using our incremental borrowing rate applicable to the lease asset, unless the implicit rate is readily determinable.

Our lease portfolio includes a factory building, office space, warehouses, material handling equipment, vehicles and office equipment. All of our leases are classified as operating leases as of September 30, 2020.

Stock-Based Compensation

In accordance with ASC Topic 718, “Compensation—Stock Compensation,” the Company recognizes stock-based compensation cost in its Consolidated Statements of Operations. Stock-based compensation cost is measured at the grant date for equity-classified awards and at the end of each reporting period for liability-classified awards based on the estimated fair value of the awards. ASC Topic 718 requires stock-based compensation expense to be recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service.

For information regarding our other critical accounting policies and recently issued accounting pronouncements, see our unaudited condensed consolidated financial statements and the related notes to those statements included under Item 1 hereof and our audited combined financial statements and accompanying notes of Mafco Worldwide and Merisant for each of the two years ended December 31, 2019 and 2018 and the audited financial statements and accompanying notes for Act II for the year ended December 31, 2019, which are included in the final prospectus and definitive proxy statement filed with the Securities and Exchange Commission by Act II on May 13, 2020.

Item 3.       Quantitative and Qualitative Disclosures About Market Risk

Not applicable as a smaller reporting company.

Item 4.       Controls and Procedures

Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted 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 in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on the evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2020, our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

34

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended September 30, 2020, we completed the Acquisition and the internal controls of Merisant and MAFCO became our internal controls. We are engaged in the process of the design and implementation of our internal control over financial reporting in a manner commensurate with the scale of our operations subsequent to the Acquisition.

PART II - OTHER INFORMATION

Item 1.       Legal Proceedings.

There have been no material developments in our legal proceedings since we filed our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020. Refer to “Part II. Item 1. Legal Proceedings” in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020 for additional information regarding legal proceedings.

Item 1A.   Risk Factors.

There have been no material changes from the risk factors previously disclosed in the section entitled “Risk Factors” in the Closing Form 8-K, including the risk factors incorporated by reference therein, other than those listed in this section.

Stock repurchases could increase the volatility of the trading price of our common stock and diminish our cash reserves, and we cannot guarantee that our stock repurchase plan will enhance long-term stockholder value.

In September 2020, our board of directors adopted a stock repurchase plan for up to $20 million of our common stock. The stock repurchase plan is currently expected to have a term of up to 12 months. The shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with U.S. federal securities laws. The actual timing, number and value of shares repurchased under the plan will be determined by management and will depend on a number of factors, including the market price of our common stock, general market and economic conditions, applicable legal requirements, compliance with the terms of our outstanding indebtedness, alternate uses for capital and other factors.

Repurchases of our shares could increase the volatility of the trading price of our stock, which could have a negative impact on the trading price of our stock. Similarly, the future announcement of the termination or suspension of the stock repurchase plan, or our decision not to utilize the full authorized repurchase amount under the stock repurchase plan, could result in a decrease in the trading price of our stock. In addition, the stock repurchase plan could have the impact of diminishing our cash reserves, which may impact our ability to finance our growth, complete acquisitions and execute our strategic plan. There can be no assurance that any stock repurchases we do elect to make will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased our shares. Although our stock repurchase plan is intended to enhance long-term stockholder value, we cannot guarantee that it will do so and short-term stock price fluctuations could reduce the effectiveness of the stock repurchase plan.

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.       Defaults Upon Senior Securities.

None.

Item 4.       Mine Safety Disclosures.

Not applicable.

Item 5.       Other Information.

None.

35

Item 6.        Exhibits.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

No.	Description of Exhibit
10.1+	Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 6, 2020).
10.2+	Form of Restricted Stock Unit Agreement for Non-U.S. Participants (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 6, 2020).
10.3+	Form of Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on October 6, 2020).
10.4+	Form of Nonstatutory Stock Option Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on October 6, 2020).
10.5+	Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on October 6, 2020).
31.1*	Certification of Principal Executive Officer, pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial Officer, pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document
104*	The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101

*	Filed herewith.
**	Furnished herewith.
+	Indicates a management or compensatory plan

36

SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Whole Earth Brands, Inc.
		/s/ Albert Manzone
Date: November 16, 2020	Name:	Albert Manzone
	Title:	Chief Executive Officer
		(Principal Executive Officer)
		/s/ Andrew Rusie
Date: November 16, 2020	Name:	Andrew Rusie
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

37

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Albert Manzone, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Whole Earth Brands, 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 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 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: November 16, 2020	/s/ Albert Manzone
	Albert Manzone Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Andrew Rusie, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Whole Earth Brands, 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 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 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: November 16, 2020	/s/ Andrew Rusie
	Andrew Rusie Chief Financial Officer (Principal Financial Officer)

EX-32.1

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 Quarterly Report of Whole Earth Brands, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2020, as filed with the Securities and Exchange Commission (the “Report”), I, Albert Manzone, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; 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: November 16, 2020	/s/ Albert Manzone
	Albert Manzone Chief Executive Officer (Principal Executive Officer)

EX-32.2

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 Quarterly Report of Whole Earth Brands, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2020, as filed with the Securities and Exchange Commission (the “Report”), I, Andrew Rusie, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; 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: November 16, 2020	/s/ Andrew Rusie
	Andrew Rusie Chief Financial Officer (Principal Financial Officer)

XML

COVER PAGE - shares	9 Months Ended
	Sep. 30, 2020	Nov. 13, 2020
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	001-38880
Entity Registrant Name	Whole Earth Brands, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	38-4101973
Entity Address, Address Line One	125 S. Wacker Drive
Entity Address, Address Line Two	Suite 3150
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60606
City Area Code	312
Local Phone Number	840-6000
Entity Information, Former Legal or Registered Name	Act II Global Acquisition Corp.
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		38,426,669
Entity Central Index Key	0001753706
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false
Common Stock
Document Information [Line Items]
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	FREE
Security Exchange Name	NASDAQ
Warrant
Document Information [Line Items]
Title of 12(b) Security	Warrants to purchase one-half of one share of common stock
Trading Symbol	FREEW
Security Exchange Name	NASDAQ
Former Address
Document Information [Line Items]
Entity Address, Address Line One	745 5th Avenue
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10151

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current Assets
Cash and cash equivalents	$ 49,081	$ 10,395
Accounts receivable (net of allowances of $15 and $2,832, respectively)	54,281	55,031
Inventories	103,546	121,129
Prepaid expenses and other current assets	5,134	7,283
Total current assets	212,042	193,838
Property, Plant and Equipment, net	41,398	20,340
Other Assets
Operating lease right-of-use assets	12,378	0
Goodwill	124,874	130,870
Other intangible assets, net	144,809	251,243
Deferred tax assets, net	1,023	1,368
Other assets	3,772	2,192
Total Assets	540,296	599,851
Current Liabilities
Accounts payable	21,643	26,240
Accrued expenses and other current liabilities	29,777	28,040
Current portion of operating lease liabilities	3,423	0
Current portion of long-term debt	7,000	0
Total current liabilities	61,843	54,280
Non-Current Liabilities
Long-term debt	126,281	0
Due to related party	0	8,400
Deferred tax liabilities, net	17,400	31,538
Operating lease liabilities, less current portion	11,659	0
Other liabilities	15,892	17,883
Total Liabilities	233,075	112,101
Commitments and contingencies (Note 8)	0	0
Stockholders’ equity
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding	0	0
Common stock, $0.0001 par value; 220,000,000 shares authorized; 38,426,669 shares issued and outstanding	4	0
Additional paid-in capital	324,417	0
Accumulated deficit	(20,345)	0
Accumulated other comprehensive income	3,145	0
Net parent investment	0	487,750
Total stockholders’ equity	307,221	487,750
Total Liabilities and Stockholders’ Equity	$ 540,296	$ 599,851

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Accounts receivable, allowances	$ 15	$ 2,832
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	220,000,000	220,000,000
Common stock, shares issued (in shares)	38,426,669	38,426,669
Common stock, shares outstanding (in shares)	38,426,669	38,426,669

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Jun. 25, 2020	Sep. 30, 2019
Income Statement [Abstract]
Product revenues, net	$ 71,480	$ 67,002	$ 64,060	$ 128,328	$ 203,354
Cost of goods sold	51,065	48,357	38,173	77,627	121,037
Gross profit	20,415	18,645	25,887	50,701	82,317
Selling, general and administrative expenses	16,827	14,881	14,770	43,355	49,020
Amortization of intangible assets	2,841	2,700	2,656	4,927	7,968
Asset impairment charges	0	0	0	40,600	0
Restructuring and other expenses	0	0	608	0	1,150
Operating income (loss)	747	1,064	7,853	(38,181)	24,179
Interest expense, net	(2,161)	(2,045)	(237)	(238)	(342)
Other (expense) income, net	(232)	(170)	(716)	801	(666)
(Loss) income before income taxes	(1,646)	(1,151)	6,900	(37,618)	23,171
Provision (benefit) for income taxes	1,694	1,684	1,627	(3,482)	5,228
Net (loss) income	$ (3,340)	$ (2,835)	$ 5,273	$ (34,136)	$ 17,943
Net loss per share - Basic and diluted (in dollars per share)	$ (0.09)	$ (0.07)

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Jun. 25, 2020	Sep. 30, 2019
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (3,340)	$ (2,835)	$ 5,273	$ (34,136)	$ 17,943
Other comprehensive income (loss), net of tax:
Net change in pension benefit obligations recognized	0	0	0	318	0
Foreign currency translation adjustments	3,145	3,130	(3,013)	(2,286)	(4,067)
Total other comprehensive income (loss), net of tax	3,145	3,130	(3,013)	(1,968)	(4,067)
Comprehensive income (loss)	$ (195)	$ 295	$ 2,260	$ (36,104)	$ 13,876

XML

Condensed Consolidated Statements of Equity - USD ($) $ in Thousands	Total	Predecessors	Common Stock	Preferred Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Accumulated Other Comprehensive Income Predecessors
Beginning balance at Dec. 31, 2018	$ 484,492						$ (5,947)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Funding to Parent, net	(12,117)
Other comprehensive income (loss), net of tax	(2,439)
Net (loss) income	9,164
Ending balance at Mar. 31, 2019	479,100						(10,523)
Beginning balance at Dec. 31, 2018	484,492						(5,947)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income (loss), net of tax	(4,067)
Net (loss) income	17,943
Ending balance at Sep. 30, 2019	474,428						(12,151)
Beginning balance at Mar. 31, 2019	479,100						(10,523)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Funding to Parent, net	(3,237)
Other comprehensive income (loss), net of tax	1,385
Net (loss) income	3,506
Ending balance at Jun. 30, 2019	480,754						(9,138)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Funding to Parent, net	(8,586)
Other comprehensive income (loss), net of tax	(3,013)
Net (loss) income	5,273
Ending balance at Sep. 30, 2019	474,428						(12,151)
Beginning balance at Dec. 31, 2019	487,750						(8,144)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Funding to Parent, net	(12,262)
Other comprehensive income (loss), net of tax	(1,836)
Net (loss) income	(28,655)
Ending balance at Mar. 31, 2020	444,997						(9,980)
Beginning balance at Dec. 31, 2019	487,750						(8,144)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income (loss), net of tax	(1,968)
Net (loss) income	(34,136)
Ending balance at Jun. 25, 2020	233,666	$ 439,722	$ 3	$ 0	$ 250,366	$ (16,703)	0	$ (10,112)
Ending balance (in shares) at Jun. 25, 2020			30,926,669	0
Beginning balance at Mar. 31, 2020	444,997						(9,980)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Funding to Parent, net	338
Other comprehensive income (loss), net of tax	(132)
Net (loss) income	(5,481)
Ending balance at Jun. 25, 2020	233,666	439,722	$ 3	$ 0	250,366	(16,703)	0	(10,112)
Ending balance (in shares) at Jun. 25, 2020			30,926,669	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of warrants	7,895				7,895
Issuance of common stock	67,105		$ 1		67,104
Issuance of common stock (shares)			7,500,000
Other comprehensive income (loss), net of tax	15						15
Net (loss) income	(505)					(505)
Ending balance at Jun. 30, 2020	308,176		$ 4	$ 0	325,365	(17,208)	15
Ending balance (in shares) at Jun. 30, 2020			38,426,669	0
Beginning balance at Jun. 25, 2020	233,666	$ 439,722	$ 3	$ 0	250,366	(16,703)	0	$ (10,112)
Beginning balance (in shares) at Jun. 25, 2020			30,926,669	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other comprehensive income (loss), net of tax	3,145
Net (loss) income	(3,340)
Ending balance at Sep. 30, 2020	307,221		$ 4	$ 0	324,417	(20,345)	3,145
Ending balance (in shares) at Sep. 30, 2020			38,426,669	0
Beginning balance at Jun. 30, 2020	308,176		$ 4	$ 0	325,365	(17,208)	15
Beginning balance (in shares) at Jun. 30, 2020			38,426,669	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Other	(1,250)				(948)	(302)
Other comprehensive income (loss), net of tax	3,130						3,130
Net (loss) income	(2,835)					(2,835)
Ending balance at Sep. 30, 2020	$ 307,221		$ 4	$ 0	$ 324,417	$ (20,345)	$ 3,145
Ending balance (in shares) at Sep. 30, 2020			38,426,669	0

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	9 Months Ended
	Sep. 30, 2020	Jun. 25, 2020	Sep. 30, 2019
Operating activities
Net (loss) income	$ (3,340)	$ (34,136)	$ 17,943
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	797	1,334	2,232
Amortization of intangible assets	2,841	4,927	7,968
Deferred income taxes	(3,490)	(5,578)	1,857
Asset impairment charges	0	40,600	0
Pension benefit (credit) expense, net	(154)	126	705
Changes in current assets and liabilities:
Accounts receivable	(6,535)	7,726	2,312
Inventories	5,022	3,576	2,580
Prepaid expenses and other current assets	(2,516)	3,330	(569)
Accounts payable, accrued liabilities and income taxes	(5,618)	507	(6,589)
Other, net	278	(2,504)	(1,870)
Net cash (used in) provided by operating activities	(12,715)	19,908	26,569
Investing activities
Capital expenditures	(2,139)	(3,532)	(2,276)
Acquisitions, net of cash acquired	(376,674)	0	0
Transfer from trust account	178,875	0	0
Net cash used in investing activities	(199,938)	(3,532)	(2,276)
Financing activities
Proceeds from revolving credit facility	0	3,500	0
Repayments of revolving credit facility	0	(8,500)	0
Long-term borrowings	140,000	0	0
Repayments of long-term borrowings	(1,750)	0	0
Debt issuance costs	(7,139)	0	0
Proceeds from sale of common stock and warrants	75,000	0	0
Funding to Parent, net	0	(11,924)	(23,940)
Net cash provided by (used in) financing activities	206,111	(16,924)	(23,940)
Effect of exchange rate changes on cash and cash equivalents	88	215	117
Net change in cash and cash equivalents	(6,454)	(333)	470
Cash and cash equivalents, beginning of period	55,535	10,395	7,205
Cash and cash equivalents, end of period	49,081	55,535	7,675
Supplemental disclosure of cash flow information
Interest paid	1,667	798	0
Taxes paid, net of refunds	1,722	2,244	$ 4,160
Predecessors
Financing activities
Cash and cash equivalents, beginning of period	$ 10,062
Cash and cash equivalents, end of period		$ 10,062

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2020

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Whole Earth Brands, Inc. and its consolidated subsidiaries (“Whole Earth Brands” or the “Company”) is a global industry-leading platform, focused on the “better for you” consumer packaged goods (“CPG”) and ingredients space. The Company has a global platform of branded products and ingredients, focused on the consumer transition towards natural alternatives and clean label products.

On June 24, 2020, Act II Global Acquisition Corp., a Cayman Islands exempted company (“Act II”), domesticated into a Delaware corporation (the “Domestication”), and on June 25, 2020 (the “Closing”), consummated the indirect acquisition (the “Acquisition”) of (i) all of the issued and outstanding equity interests of Merisant Company (“Merisant”), Merisant Luxembourg Sarl (“Merisant Luxembourg”), Mafco Worldwide LLC (“Mafco Worldwide”), Mafco Shanghai LLC (“Mafco Shanghai”), EVD Holdings LLC (“EVD Holdings”), and Mafco Deutschland GmbH (together with Merisant, Merisant Luxembourg, Mafco Worldwide, Mafco Shanghai, and EVD Holdings, and their respective direct and indirect subsidiaries, “Merisant and Mafco Worldwide”), and (ii) certain assets and liabilities of Merisant and Mafco Worldwide included in the Transferred Assets and Liabilities (as defined in the Purchase Agreement (as hereafter defined)), from Flavors Holdings Inc. (“Flavors Holdings”), MW Holdings I LLC (“MW Holdings I”), MW Holdings III LLC (“MW Holdings III”), and Mafco Foreign Holdings, Inc. (“Mafco Foreign Holdings,” and together with Flavors Holdings, MW Holdings I, and MW Holdings III, the “Sellers”), pursuant to that certain Purchase Agreement (the “Purchase Agreement”) entered into by and among Act II and the Sellers dated as of December 19, 2019, as amended. In connection with the Domestication, Act II changed its name to “Whole Earth Brands, Inc.”

Upon the completion of the Domestication, each of Act II’s then-issued and outstanding ordinary shares converted, on a one-for-one basis, into shares of common stock of Whole Earth Brands. Additionally, immediately after the Acquisition, the Company issued an aggregate of 7,500,000 shares of Whole Earth Brands common stock and 5,263,500 private placement warrants exercisable for 2,631,750 shares of Whole Earth Brands common stock to certain investors. On the date of Closing, the Company’s common stock and warrants began trading on The Nasdaq Stock Market under the symbols “FREE” and “FREEW,” respectively.

As a result of the Acquisition, for accounting purposes, Act II was deemed to be the acquirer and Mafco Worldwide and Merisant Company were deemed to be the acquired parties and, collectively, the accounting predecessor. The Company’s financial statement presentation includes the combined financial statements of Mafco Worldwide and Merisant Company as the “Predecessor” for periods prior to the completion of the Acquisition and includes the consolidation of Mafco Worldwide and Merisant Company, for periods after the Closing (referred to as the “Successor”).

Basis of Presentation—The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. The balance sheet data as of December 31, 2019 was derived from the audited Combined Financial Statements for Mafco Worldwide and Merisant included in the final prospectus and definitive proxy statement (the “proxy statement/prospectus”) filed with the Securities and Exchange Commission on May 13, 2020 by Act II. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited combined financial statements and accompanying notes of Mafco Worldwide and Merisant for each of the two years ended December 31, 2019 and 2018 and the audited financial statements and accompanying notes for Act II for the year ended December 31, 2019, which are included in the proxy statement/prospectus.

In the opinion of management, the financial statements contain all adjustments necessary to state fairly the financial position of the Company as of September 30, 2020 and the results of operations and cash flows for all periods presented. All adjustments reflected in the accompanying unaudited consolidated financial statements, which management believes are necessary to state fairly the financial position, results of operations and cash flows, have been reflected and are of a normal recurring nature. Results of operations for interim periods are not necessarily indicative of results to be expected for the full year. Certain prior year amounts have been reclassified to conform to the current year presentation.

Principles of Consolidation—The consolidated financial statements include the accounts of Whole Earth Brands, Inc., and its indirect and wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

Recently Adopted Accounting Pronouncements—The Company qualifies as an emerging growth company (an “EGC”) and as such, has elected the extended transition period for complying with certain new or revised accounting pronouncements. During the extended transition period, the Company is not subject to certain new or revised accounting standards applicable to public companies. The accounting pronouncements pending adoption below reflect effective dates for the Company as an EGC with the extended transition period.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-2, “Leases (Topic 842)”, and issued subsequent amendments to the initial guidance. The new guidance requires lessees to recognize assets and liabilities arising from leases as well as extensive quantitative and qualitative disclosures. The lessee needs to recognize on its balance sheet a right-of-use asset and a lease liability for the majority of its leases (other than leases with a term of less than 12 months). The lease liabilities should be equal to the present value of lease payments not yet paid. The right-of-use asset is measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial indirect costs. For public entities, the updated standard is effective for fiscal years beginning after December 15, 2018. This standard is effective for the Company as an EGC for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. Act II adopted the standard as of January 1, 2020. The Company recognized the leases acquired as part of the Acquisition on June 25, 2020, which were recorded pursuant to the aforementioned ASU. Refer to Note 3 for additional details.

In March 2017, the FASB issued ASU 2017-7, “Compensation - Retirement Benefits (Topic 715).” Under the new guidance, employers are required to present the service cost component of net periodic benefit cost in the same statement of operations caption as other employee compensation costs arising from services rendered during the period. Employers are required to present the other components of the net periodic benefit cost separately from the caption that includes the service costs and outside of any subtotal of operating profit and are required to disclose the caption used to present the other components of net periodic benefit cost, if not presented separately on the statement of operations. The Company adopted ASU 2017-7 effective in the second quarter of 2020. The adoption of this standard did not have an effect on the Company’s historically reported net income (loss) but resulted in a presentation reclassification which increased the Company’s historically reported operating profit by $0.1 million for the period from January 1, 2020 to June 25, 2020.

In February 2018, the FASB issued ASU 2018-2, “Income Statement-Reporting Comprehensive Income (Topic 220),” which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-2 was effective for years beginning after December 15, 2018, and early adoption was permitted. On January 1, 2019, the Predecessor elected to adopt this standard on a full retrospective approach and reclassified $2.1 million from accumulated other comprehensive income within net parent investment.

New Accounting Standards—In March 2020, the FASB issued ASU 2020-4, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract modification accounting under existing U.S. GAAP, to address the expected phase out of the London Inter-bank Offered Rate (“LIBOR”) by the end of 2021. The amendments in ASU 2020-4 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating the impact of adopting this standard but does not expect it to have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (ASC 740) - Simplifying the Accounting for Income Taxes.” The standard enhances and simplifies various aspects of the income tax accounting guidance. For public entities, the standard is effective for annual periods and interim periods beginning after December 15, 2020. This standard is effective for the Company as an EGC for the fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2019-12 on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20).” The standard modifies certain disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans by removing disclosures that are no longer considered cost beneficial, clarifying specific requirements of disclosures, and adding disclosure requirements identified as relevant. This standard is effective for the Company as an EGC for the fiscal years beginning after December 15, 2021. Early adoption is permitted. The amendments in ASU 2018-14 should be applied retrospectively to each period presented. The Company is currently evaluating the impact of adopting ASU 2018-14 on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The standard requires entities to estimate losses on financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss differs from the previous incurred losses model primarily in that the loss recognition threshold of “probable” has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset’s origination for as many as five years. Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This standard is effective for the Company as an EGC for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-13 on its consolidated financial statements.

Stock-Based Compensation—In accordance with ASC Topic 718, “Compensation—Stock Compensation,” the Company recognizes stock-based compensation cost in its Consolidated Statements of Operations. Stock-based compensation cost is measured at the grant date for equity-classified awards and at the end of each reporting period for liability-classified awards based on the estimated fair value of the awards. ASC Topic 718 requires stock-based compensation expense to be recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service. Additional information pertaining to the Company’s stock-based compensation is provided in Note 11.

XML

BUSINESS COMBINATION

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

BUSINESS COMBINATION

NOTE 2: BUSINESS COMBINATION

On June 25, 2020, pursuant to the Acquisition, the Company indirectly acquired Merisant and Mafco Worldwide in a transaction accounted for as a business combination under ASC Topic 805, “Business Combinations,” and was accounted for using the acquisition method. Under the acquisition method, the acquisition date fair value of the consideration paid by the Company was allocated to the assets acquired and the liabilities assumed based on their estimated fair values.

The following summarizes the preliminary purchase consideration (in thousands):

Base cash consideration	$	387,500
Closing adjustment estimate	(764)
Total Purchase Price	$	386,736

The Company preliminarily recorded the fair value of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed as follows (in thousands):

Cash and cash equivalents	$	10,062
Accounts receivable	46,959
Inventories	106,436
Prepaid expenses and other current assets	2,461
Property, plant and equipment, net	39,814
Operating lease right-of-use assets	12,541
Intangible assets	147,650
Deferred tax assets, net	1,202
Other assets	1,585
Total assets acquired	368,710
Accounts payable	19,356
Accrued expenses and other current liabilities	35,728
Current portion of operating lease liabilities	3,007
Operating lease liabilities, less current portion	12,208
Deferred tax liabilities, net	21,082
Other liabilities	15,467
Total liabilities assumed	106,848
Net assets acquired	261,862
Goodwill	124,874
Total Purchase Price	$	386,736

The preliminary values allocated to identifiable intangible assets and their estimated useful lives are as follows:

Identifiable intangible assets	Fair Value (in thousands)		Useful life (in Years)
Customer relationships	$	44,640	0.5 to 10
Tradenames	92,310		25
Product formulations	10,700		Indefinite
	$	147,650

Goodwill represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets acquired and liabilities assumed and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce and expected future market opportunities.

The Company’s preliminary allocation of purchase price was based upon preliminary valuations performed to determine the fair value of the net assets as of the acquisition date and is subject to adjustments for up to one year after the closing date of the acquisition to reflect final valuations. These final valuations of the assets and liabilities could have a material impact on the preliminary purchase price allocation disclosed above.

In the third quarter of 2020, the Company recorded measurement period adjustments to its initial allocation of purchase price as a result of ongoing valuation procedures on assets acquired and liabilities assumed, including (i) a decrease in accounts receivable of $0.3 million; (ii) a decrease in inventory of $2.7 million; (iii) a decrease in prepaid expenses and other current assets of $10.4 million (see discussion below); (iv) an increase in property, plant and equipment of $17.9 million due to the valuation of certain real estate; (v) a decrease in operating lease right-of-use assets of $2.7 million to adjust the value of the Company’s leases to market value; (vi) a decrease in intangible assets of $9.8 million; (vii) an increase in other assets of $0.6 million; (viii) an increase in accounts payable of $0.4 million; (ix) a decrease in deferred tax liabilities, net of $2.9 million; (x) a decrease in other liabilities of $1.0 million; and (xi) a decrease to goodwill of $6.2 million due to the incremental period adjustments discussed in items (i) through (x). The impact of measurement period adjustments to the results of operations resulted in an increase in cost of goods sold related to the fair value step-up in inventory acquired that was subsequently sold of $0.8 million for the period of June 26, 2020 to June 30, 2020.

The initial allocation of purchase price reflects a $10.1 million adjustment to prepaid expenses and other current assets as a result of a change to the consideration transferred relative to the initial purchase price allocation. This adjustment was also reflected as a reduction to the estimated closing adjustments, and therefore, the total purchase price.

Direct transaction-related costs consist of costs incurred in connection with the Acquisition. Act II incurred transaction costs of $17.0 million prior to the Acquisition which are reflected within the accumulated deficit within the Condensed Consolidated Statement of Changes in Equity. During the three months ended September 30, 2020, the Company identified $1.2 million of additional Act II transaction costs that had been incurred in connection with the Acquisition. The effect of correcting for these costs decreased additional paid-in capital by $0.9 million and accumulated deficit by $0.3 million.

Pro Forma Financial Information—The following unaudited pro forma financial information summarizes the results of operations for the Company as though the Acquisition had occurred on January 1, 2019 (in thousands):

	Pro Forma Statements of Operations
	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Revenue	$	67,002	$	64,060	$	199,808	$	203,354
Net income (loss)	$	4,971	$	5,037	$	(20,350)	$	4,317

The unaudited pro forma financial information does not include any costs related to the Acquisition. In addition, the unaudited pro forma financial information does not assume any impacts from revenue, cost or other operating synergies that could be generated as a result of the acquisition. The unaudited pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition been consummated on January 1, 2019.

The Successor and Predecessor periods have been combined in the pro forma for the three and nine months ended September 30, 2020 and 2019 and include adjustments to reflect intangible asset amortization based on the economic values derived from definite-lived intangible assets, interest expense on the new debt financing, depreciation expense for certain real estate that has been adjusted to fair value, the release of the inventory fair value step-down into cost of goods sold and the elimination of non-recurring expense related to Predecessor transaction bonuses. These adjustments are net of taxes.

XML

LEASES

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

LEASES

NOTE 3: LEASES

The Company measured Merisant and Mafco’s legacy lease agreements as if the leases were new at the Acquisition date and applied the provisions of Topic 842. This resulted in the recognition of right-of-use assets and operating lease liabilities of $15.2 million as of June 26, 2020. The right-of-use assets and operating lease liabilities at June 26, 2020 also included approximately $0.3 million related to one lease that Act II had applied the provisions of Topic 842 to effective January 1, 2020. In the third quarter of 2020, the Company recorded a measurement period adjustment that reduced the right-of-use assets by $2.7 million to adjust the value of the leases to market value. All leases are classified as operating leases.

The Company’s lease portfolio includes a factory building, office space, warehouses, material handling equipment, vehicles and office equipment.

Certain leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of lease renewal options is at the Company’s sole discretion. For purposes of calculating operating lease liabilities, lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option.

Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment.

The Company’s lease agreements do not contain any residual value guarantees. Some leases include variable payments that are based on the usage and occupancy of the leased asset. The Company has elected not to record leases with an initial term of twelve months or less on the balance sheet.

For real estate and vehicle leases, the Company elected the practical expedient to not separate lease from non-lease components within the contract. Electing this practical expedient means the Company would account for each lease component and the related non-lease component together as a single component. For equipment leases, the Company has not elected this practical expedient and separates the non-lease components from the lease component.

The right-of-use asset is subsequently measured throughout the lease term at the carrying amount of the lease liability. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease expense for the period from June 26, 2020 through June 30, 2020 was not material. Lease expense for the three months ended September 30, 2020 was $1.1 million.

The following table presents the future maturities of the Company’s lease obligations as of September 30, 2020 (in thousands):

Remainder of 2020	$	1,004
2021	3,738
2022	3,462
2023	3,387
2024	1,865
Thereafter	2,896
Total lease payments	16,352
Less: imputed interest	1,270
Total operating lease liabilities	$	15,082

The weighted-average remaining lease term is 4.9 years and the weighted-average discount rate is 3.42%.

Cash paid for amounts included in the measurement of the lease liability and for supplemental non-cash information for the three months ended September 30, 2020 was $0.9 million and for the period from June 26, 2020 through June 30, 2020 was not material.

XML

INVENTORIES

9 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 4: INVENTORIES

Inventories consisted of the following (in thousands):

	(Successor)		(Predecessor)
	September 30, 2020		December 31, 2019
Raw materials and supplies	$	60,418	$	89,611
Work in process	1,122		387
Finished goods	42,006		31,131
Total inventories	$	103,546	$	121,129

XML

GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 5: GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consisted of the following (in thousands):

	(Successor)						(Predecessor)
	September 30, 2020						December 31, 2019
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Other intangible assets subject to amortization
Customer relationships (useful life of 0.5 to 10 years)	$	44,640	$	(1,866)	$	42,774	$	105,000	$	(38,731)	$	66,269
Tradenames (useful life of 25 years)	92,310		(975)		91,335		95,055		(19,939)		75,116
Total	$	136,950	$	(2,841)	$	134,109	$	200,055	$	(58,670)	$	141,385
Other intangible assets not subject to amortization
Product formulations					10,700						109,858
Total other intangible assets, net					144,809						251,243
Goodwill					124,874						130,870
Total goodwill and other intangible assets					$	269,683					$	382,113

The Successor’s amortization expense for intangible assets was $2.7 million and $2.8 million for the three months ended September 30, 2020 and for the period from June 26, 2020 through September 30, 2020, respectively. The Predecessor’s amortization expense for intangible assets was $4.9 million, $2.7 million and $8.0 million for the periods from January 1, 2020 to June 25, 2020 and for the three and nine months ended September 30, 2019, respectively.

Amortization expense relating to amortizable intangible assets as of September 30, 2020 for the next five years is expected to be as follows (in thousands):

Remainder of 2020	$	2,667
2021	9,004
2022	9,004
2023	9,004
2024	9,004
2025	8,963

XML

DEBT

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

DEBT

NOTE 6: DEBT

Debt consisted of the following (in thousands):

	(Successor)		(Predecessor)
	September 30, 2020		December 31, 2019
Term Loan	$	138,250	$	—
Less: current portion	(7,000)		—
Less: debt issuance costs	(4,969)		—
Total non-current borrowings	$	126,281	$	—

Loan Agreement—The Company entered into a Loan Agreement (the “Loan Agreement”) on June 25, 2020, with Toronto Dominion (Texas) LLC, as administrative agent, BMO Capital Markets Corp. and Truist Bank, as documentation agents, and the other lenders party thereto, which provided (x) a senior secured first lien term loan facility of $140 million that matures in five years on June 25, 2025 and (y) a first lien revolving credit facility of up to $50 million that also matures in five years. Loans outstanding under the first lien term loan facility and the first lien revolving credit facility accrue interest at a rate per annum equal to LIBOR subject to a floor of 1% plus a margin ranging from 3.00% to 3.75% or, at Company’s option, a base rate subject to a floor of 2% plus a margin ranging from 2.00% to 2.75%, depending on the achievement of certain leverage ratios. Undrawn amounts under the first lien revolving credit facility are expected to accrue a commitment fee at a rate per annum of 0.40% on the average daily undrawn portion of the commitments thereunder, with step downs to 0.30% upon achievement of certain leverage ratios. As of September 30, 2020, there were $2.1 million of outstanding letters of credit that reduced the Company’s availability under the revolving credit facility. Additionally, approximately $1.9 million of issuance costs allocated to the revolving credit facility were capitalized as an asset as of June 30, 2020 and are being amortized ratably over the commitment period of five years. There were no borrowings under the revolving credit facility as of September 30, 2020.

The Company converted the base rate term loan to a LIBOR loan on July 1, 2020 at an interest rate of 4.50%. Borrowings under the Loan Agreement are collateralized by substantially all of the Company’s assets, and the Loan Agreement includes restrictive qualitative and quantitative covenants. The Company was in compliance with its covenants under the Loan Agreement on September 30, 2020. The unpaid principal amount of the term loan is payable in quarterly installments on the last day of each fiscal quarter commencing on September 30, 2020. The payment for each of the first 12 fiscal quarters is equal to 1.25% of the beginning principal amount, or $1.75 million, and for the following seven fiscal quarters thereafter is 2.50%, or $3.5 million. The remaining principal payment on the term loan is due upon maturity.

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 7: FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company measures and records in its consolidated financial statements certain assets and liabilities at fair value. ASC Topic 820 “Fair Value Measurement and Disclosures,” establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). This hierarchy consists of the following three levels:

•Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market.

•Level 2 – Assets and liabilities whose values are based on inputs other than those included in Level 1, including quoted market prices in markets that are not active; quoted prices of assets or liabilities with similar attributes in active markets; or valuation models whose inputs are observable or unobservable but corroborated by market data.

•Level 3 – Assets and liabilities whose values are based on valuation models or pricing techniques that utilize unobservable inputs that are significant to the overall fair value measurement.

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Current Assets and Other Financial Assets and Liabilities—Cash and cash equivalents, trade accounts receivable and trade accounts payable are measured at carrying value, which approximates fair value because of the short-term maturities of these instruments.

Debt—The Company measures its first lien term loan and revolving facilities at original carrying value including accrued interest, net of unamortized deferred financing costs and fees. The fair value of the credit facilities approximates carrying value, as they consist of variable rate loans.

XML

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8: COMMITMENTS AND CONTINGENCIES

The Company is subject to various claims, pending and possible legal actions for product liability and other damages, and other matters arising out of the conduct of the business. The Company believes, based on current knowledge and consultation with counsel, that the outcome of such claims and actions will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

As of September 30, 2020, the Company had obligations to purchase $22 million of raw materials through 2025; however, it is unable to make reasonably reliable estimates of the timing of such payments.

XML

INCOME TAXES

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 9: INCOME TAXES

For the Successor period, the Company’s provision for income taxes consists of U.S., state and local, and foreign taxes. The Company has significant operations in various locations outside the U.S. The annual effective tax rate is a composite rate reflecting the earnings in the various locations at their applicable statutory tax rates.

For the Predecessor period, income taxes as presented herein attribute current and deferred income taxes of the Company’s financial statements in a manner that is systematic, rational, and consistent with the asset and liability method described by ASC 740, “Income Taxes.” Accordingly, the Company’s income tax provision during the predecessor period was prepared following the separate return method. The separate return method applies ASC 740 to the stand-alone financial statements of each member of the consolidated group as if the group member were a separate taxpayer and a stand-alone enterprise. Use of the separate return method may result in differences when the sum of the amounts allocated to stand-alone tax provisions are compared with amounts presented in consolidated financial statements. In that event, the related deferred tax assets and liabilities could be significantly different from those presented herein. The consolidated financial statements reflect the Company’s portion of income taxes payable as if the Company had been a separate taxpayer.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. The CARES Act made various tax law changes including among other things (i) increased the limitation under IRC Section 163(j) for 2019 and 2020 to permit additional expensing of interest (ii) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k) (iii) made modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes and (iv) enhanced recoverability of alternative minimum tax credit carryforwards. The income tax provisions of the CARES Act had limited applicability to the Company and did not have a material impact on the Company’s consolidated financial statements.

The Successor’s income tax provision was $1.7 million for the three months ended September 30, 2020. The effective tax rate for the three months ended September 30, 2020 was an income tax provision of (146.3%) on a pretax loss of $1.2 million which differs from the statutory federal rate of 21% primarily due to the U.S. tax effect of international operations including Global Intangible Low-Taxed Income (“GILTI”) recorded during the period. The Predecessor’s income tax provision for the three months ended September 30, 2019 was $1.6 million. The effective tax rate for the three months ended September 30, 2019 was an income tax provision of 23.6% on pretax income of $6.9 million.

The Successor’s income tax provision was $1.7 million for the period from June 26, 2020 through September 30, 2020. The effective tax rate for the period from June 26, 2020 through September 30, 2020 was computed by applying an estimate of the annual effective tax rate for the Successor period to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. The Successor’s effective tax rate was an income tax provision of (102.9%) on a pretax loss of $1.6 million for the period from June 26, 2020 through September 30, 2020 which differs from the statutory federal rate of 21% primarily due to the U.S. tax effect of international operations including GILTI recorded during the period. The Predecessor’s income tax provision was an income tax benefit of $3.5 million for the period from January 1, 2020 through June 25, 2020. The effective tax rate for the period from January 1, 2020 through June 25, 2020 was computed using a discrete method as if the Company closed its books and records, The Predecessor’s effective tax rate was 9.3% for the period from January 1, 2020 to June 25, 2020 which differs from the statutory federal rate of 21% primarily due to the impact of the impairment charges of non-deductible goodwill and the U.S. tax effect of international operations including GILTI recorded during the period.

The Predecessor’s income tax provision was $5.2 million for the nine months ended September 30, 2019. The Predecessor’s effective tax rate for the nine months ended September 30, 2019 was 22.6% on pretax income of $23.2 million which differs from the statutory federal rate of 21% primarily due to state and local taxes and the U.S. tax effect of international operations.

As of September 30, 2020, the Company had an uncertain tax position liability of $1.0 million, including interest and penalties. The unrecognized tax benefits include amounts related to various foreign tax issues.

XML

PENSION BENEFITS

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

PENSION BENEFITS

NOTE 10: PENSION BENEFITS

Certain current and former employees of the Company are covered under a funded defined benefit retirement plan. Plan provisions covering certain of the Company’s salaried employees generally provide pension benefits based on years of service and compensation. Plan provisions covering the Company’s union members generally provide stated benefits for each year of credited service. The Company’s funding policy is to contribute annually the statutory required amount as actuarially determined. The Company uses December 31 as a measurement date for the plan. The Company froze the pension plan on December 31, 2019.

The components of net periodic benefit (credit) cost for the Company’s defined benefit pension plan for the Successor and Predecessor were as follows (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Service cost	$	—	$	—	$	—	$	152	$	456
Interest cost	210		210		452		275		841
Expected return on plan assets	(392)		(392)		(818)		(365)		(1,096)
Recognized actuarial loss	—		—		108		276		828
Amortization of prior service cost	—		—		—		21		63
Net periodic benefit (credit) cost	$	(182)	$	(182)	$	(258)	$	359	$	1,092

Net periodic benefit (credit) cost is reflected in the Company’s consolidated financial statements as follows for the Successor and Predecessor periods presented (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Cost of Goods Sold	$	—	$	—	$	—	$	125	$	387
Selling, general and administrative expense	—		—		—		234		705
Other income, net	(182)		(182)		(258)		—		—
Net periodic benefit (credit) cost	$	(182)	$	(182)	$	(258)	$	359	$	1,092

The Company currently does not expect to make contributions to its funded defined benefit pension plan in 2020 due to the funded status.

In addition to the expense shown above, the Company has an unfunded supplemental benefit plan to provide certain salaried employees with additional retirement benefits due to limitations established by U.S. income tax regulation. The net periodic benefit cost for the three months ended September 30, 2020 and 2019 was $0.1 million and $0.2 million, respectively. The net periodic benefit cost for January 1, 2020 to June 25, 2020 and the nine months ended September 30, 2019 was $0.4 million and $0.5 million, respectively. The net periodic benefit cost for the period June 26, 2020 to June 30, 2020 was insignificant.

XML

STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 11: STOCK-BASED COMPENSATION

On June 24, 2020, the Whole Earth Brands, Inc. 2020 Long-Term Incentive Plan (the “Plan”) was approved for the purpose of promoting the long-term financial interests and growth of the Company and its subsidiaries by attracting and retaining management and other personnel and key service providers. The Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance shares, performance units and other stock-based awards to officers, employees and non-employee directors of, and certain other service providers to, the Company and its subsidiaries. Under the terms of the Plan an aggregate of 9,300,000 shares of common stock are authorized for issuance under the Plan.

On September 30, 2020, 719,038 restricted stock units (“RSUs”) and 68,946 restricted stock awards (“RSAs”) were granted and remain outstanding. The RSUs and RSAs have a grant-date fair value equal to the fair market value of the underlying stock on the grant date. The RSUs granted to employees on September 30, 2020 cliff vest over the employee service period of approximately 14 months. The RSAs granted to non-employee board members on September 30, 2020 cliff vest over a service period of approximately 19 months. The Company accounts for forfeitures in the period incurred. As the RSUs and RSAs were granted on September 30, 2020, no stock compensation expense has been recognized for the three months ended September 30, 2020. There were no units or awards vested or forfeited as of September 30, 2020.

The aggregate grant date fair value of RSUs and RSAs granted during the three months ended September 30, 2020 was $6 million and $0.6 million, respectively. The unrecognized compensation costs related to the RSUs and RSAs as of September 30, 2020 was $6.6 million. This amount will be recognized over a weighted average period of 1.18 years.

A summary of activity and weighted average fair values related to the RSUs is as follows:

	Three Months Ended September 30, 2020
	Shares	Weighted Average Fair Value
Outstanding at June 30, 2020	—	$	—
Granted	719,038	8.34
Outstanding and nonvested at September 30, 2020	719,038	$	8.34

A summary of activity and weighted average fair values related to the RSAs is as follows:

	Three Months Ended September 30, 2020
	Shares	Weighted Average Fair Value
Outstanding at June 30, 2020	—	$	—
Granted	68,946	8.34
Outstanding and nonvested at September 30, 2020	68,946	$	8.34

XML

STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 12: STOCKHOLDERS' EQUITY

On September 8, 2020, the Company announced that its board of directors had authorized a stock repurchase plan of up to $20 million of shares of the Company’s common stock. The shares may be repurchased from time to time over a 12-month period expiring on September 15, 2021 (or upon the earlier completion of all purchases contemplated by the repurchase plan or the earlier termination of the repurchase plan), in open market transactions at prevailing market prices, in privately negotiated transactions, or by other means in accordance with U.S. federal securities laws.

During the three months ended September 30, 2020, there were no repurchases of the Company’s common stock under the stock repurchase plan.

XML

EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 13: EARNINGS PER SHARE

Basic earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Warrants issued are not considered outstanding at the date of issuance. Restricted Stock Units and Restricted Stock Awards also are not considered outstanding until the Units and Awards have vested.

Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average shares outstanding assuming dilution. Dilutive common shares outstanding is computed using the treasury stock method and reflects the additional shares that would be outstanding if dilutive warrants were exercised and restricted stock units and restricted stock awards were settled for common shares during the period.

For the three months ended September 30, 2020 and for the period from June 26, 2020 to September 30, 2020, 10,131,748 warrants were excluded from the calculation as these warrants were anti-dilutive.

For the three months ended September 30, 2020 and for the period from June 26, 2020 to September 30, 2020, 719,038 restricted stock units and 68,946 restricted stock awards, respectively, each weighted for the portion of the period for which they were outstanding, were excluded from the computation of diluted earnings per share as the effect was determined to be anti-dilutive.

The computation of basic and diluted loss per common share for the three months ended September 30, 2020 and for the period from June 26, 2020 to September 30, 2020 is shown below (in thousands, except for share and per share data).

	(Successor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020
EPS numerator:
Net loss attributable to common shareholders	$	(2,835)	$	(3,340)
EPS denominator:
Weighted average shares outstanding - basic	38,426,669		38,426,669
Effect of dilutive securities	—		—
Weighted average shares outstanding - diluted	38,426,669		38,426,669
Net loss per share:
Basic	$	(0.07)	$	(0.09)
Diluted	$	(0.07)	$	(0.09)

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

9 Months Ended

Sep. 30, 2020

AOCI Attributable to Parent [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 14: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes accumulated other comprehensive income (loss) (“AOCI”), net of taxes, by component (in thousands):

	Net Currency Translation Gains (Losses)		Funded Status of Benefit Plans		Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2018 (Predecessor)	$	4,428	$	(10,375)	$	(5,947)
Other comprehensive loss before reclassifications	(2,439)		—		(2,439)
Adoption of ASU 2018-02	—		(2,137)		(2,137)
Balance at March 31, 2019 (Predecessor)	1,989		(12,512)		(10,523)
Other comprehensive income before reclassifications	1,385		—		1,385
Balance at June 30, 2019 (Predecessor)	3,374		(12,512)		(9,138)
Other comprehensive loss before reclassifications	(3,013)		—		(3,013)
Balance at September 30, 2019 (Predecessor)	$	361	$	(12,512)	$	(12,151)
Balance at December 31, 2019 (Predecessor)	$	2,836	$	(10,980)	$	(8,144)
Other comprehensive loss before reclassifications	(1,884)		—		(1,884)
Amounts reclassified from AOCI	—		48		48
Balance at March 31, 2020 (Predecessor)	952		(10,932)		(9,980)
Other comprehensive loss before reclassifications	(402)		—		(402)
Amounts reclassified from AOCI	—		270		270
Balance at June 25, 2020 (Predecessor)	550		(10,662)		(10,112)
Purchase accounting adjustments to eliminate Predecessor’s accumulated other comprehensive loss (income)	(550)		10,662		10,112
Balance at June 26, 2020 (Successor)	—		—		—
Other comprehensive income before reclassifications	15		—		15
Balance at June 30, 2020 (Successor)	15		—		15
Other comprehensive income before reclassifications	3,130		—		3,130
Balance at September 30, 2020 (Successor)	$	3,145	$	—	$	3,145

XML

RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 15: RELATED PARTY TRANSACTIONS

The Predecessor participated in MacAndrews & Forbes’ (“MacAndrews”) directors and officer’s insurance program, which covered the Predecessor along with MacAndrews and its other affiliates. The limits of coverage are available on aggregate losses to any or all of the participating companies and their respective directors and officers. For the period January 1, 2020 to June 25, 2020 and the nine months ended September 30, 2019, the Predecessor reimbursed MacAndrews an immaterial amount for its allocable portion of the premiums for such coverage, which the Predecessor believed was more favorable than the premiums that it could have secured were it to secure its own coverage. The Predecessor also participated in certain other insurance programs with MacAndrews under which it paid premiums directly to the insurance broker.

In March 2018, the Predecessor entered into a revolving credit agreement with Wesco US LLC, an indirect and wholly-owned subsidiary of Merisant. This revolving credit facility, as amended, matured on January 3, 2022 and provided for maximum outstanding borrowings of up $9.0 million. The revolving credit facility was unsecured and bore interest at 3-month LIBOR plus 4.0% and provided for periodic interest payments with all principal due upon maturity. MacAndrews had the right to accept or reject any borrowing request made by the Predecessor pursuant to the revolving credit agreement in its sole discretion. The outstanding balance on the revolving credit agreement at June 25, 2020 was $3.4 million and was forgiven by MacAndrews in connection with the Acquisition. Outstanding borrowings at December 31, 2019 were $8.4 million and the interest rate at December 31, 2019 was 5.95%. The interest expense for the period from January 1, 2020 to June 25, 2020 was approximately $0.2 million. The interest expense for the three and nine months ended September 30, 2019 was approximately $0.1 million and $0.4 million, respectively.In July 2020, the Company entered into an agreement with Watermill Institutional Trading LLC, a registered broker-dealer (“Watermill”), to act as one of the Company’s financial advisors for a 12-month period commencing July 22, 2020 for total consideration of $0.9 million, of which $0.2 million was expensed in the three months ended September 30, 2020. A former director of Act II is a registered representative of Watermill and is providing services directly to the Company under the agreement.

XML

BUSINESS SEGMENTS

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

BUSINESS SEGMENTS

NOTE 16: BUSINESS SEGMENTS

The Company has two reportable segments: Branded CPG and Flavors & Ingredients. The Branded CPG and Flavors & Ingredients segments are managed and organized through the Company’s indirect and wholly-owned subsidiaries Merisant and Mafco Worldwide, respectively. The Company does not present assets by reportable segments as they are not reviewed by the Chief Operating Decision Maker for purposes of assessing segment performance and allocating resources.

The following table presents selected financial information relating to the Company’s business segments (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Product revenues, net
Branded CPG	$	41,006	$	43,557	$	80,749	$	40,292	$	123,098
Flavors & Ingredients	25,996		27,923		47,579		23,768		80,256
Total product revenues, net	$	67,002	$	71,480	$	128,328	$	64,060	$	203,354
Operating income (loss)
Branded CPG	$	1,499	$	1,393	$	(14,463)	$	3,186	$	7,703
Flavors & Ingredients	(435)		(646)		(23,718)		4,667		16,476
Total operating income (loss)	$	1,064	$	747	$	(38,181)	$	7,853	$	24,179

The following table presents revenues disaggregated by geographic operating segments (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From  January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Branded CPG:
North America	$	14,642	$	15,515	$	29,926	$	15,203	$	44,967
Europe, Middle East and Africa	19,092		20,197		35,360		17,080		55,013
Asia-Pacific	3,924		4,300		9,584		4,835		13,544
Latin America	3,348		3,545		5,879		3,174		9,574
Flavors & Ingredients	25,996		27,923		47,579		23,768		80,256
Total product revenues, net	$	67,002	$	71,480	$	128,328	$	64,060	$	203,354

XML

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 17: SUBSEQUENT EVENTS

On November 10, 2020, the Company executed and closed a definitive Equity Purchase Agreement (the “Purchase Agreement”) with RF Development, LLC (“RF Development”), Swerve, L.L.C. (“Swerve LLC”) and Swerve IP, L.L.C. (“Swerve IP” and together with Swerve LLC, “Swerve”). Swerve is a manufacturer and marketer of a portfolio of zero sugar, keto-friendly, and plant-based sweeteners and baking mixes. The Company purchased all of the issued and outstanding equity interests of both Swerve LLC and Swerve IP from RF Development for $80 million in cash, subject to customary post-closing adjustments. The transaction was funded through a combination of available cash on hand and approximately $47.9 million under the Company’s $50 million revolving loan facility.

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2020

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation—The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting. The balance sheet data as of December 31, 2019 was derived from the audited Combined Financial Statements for Mafco Worldwide and Merisant included in the final prospectus and definitive proxy statement (the “proxy statement/prospectus”) filed with the Securities and Exchange Commission on May 13, 2020 by Act II. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited combined financial statements and accompanying notes of Mafco Worldwide and Merisant for each of the two years ended December 31, 2019 and 2018 and the audited financial statements and accompanying notes for Act II for the year ended December 31, 2019, which are included in the proxy statement/prospectus.

In the opinion of management, the financial statements contain all adjustments necessary to state fairly the financial position of the Company as of September 30, 2020 and the results of operations and cash flows for all periods presented. All adjustments reflected in the accompanying unaudited consolidated financial statements, which management believes are necessary to state fairly the financial position, results of operations and cash flows, have been reflected and are of a normal recurring nature. Results of operations for interim periods are not necessarily indicative of results to be expected for the full year. Certain prior year amounts have been reclassified to conform to the current year presentation.

Principles of Consolidation

Principles of Consolidation—The consolidated financial statements include the accounts of Whole Earth Brands, Inc., and its indirect and wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

Recently Adopted Accounting Pronouncements and New Accounting Standards

Recently Adopted Accounting Pronouncements—The Company qualifies as an emerging growth company (an “EGC”) and as such, has elected the extended transition period for complying with certain new or revised accounting pronouncements. During the extended transition period, the Company is not subject to certain new or revised accounting standards applicable to public companies. The accounting pronouncements pending adoption below reflect effective dates for the Company as an EGC with the extended transition period.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-2, “Leases (Topic 842)”, and issued subsequent amendments to the initial guidance. The new guidance requires lessees to recognize assets and liabilities arising from leases as well as extensive quantitative and qualitative disclosures. The lessee needs to recognize on its balance sheet a right-of-use asset and a lease liability for the majority of its leases (other than leases with a term of less than 12 months). The lease liabilities should be equal to the present value of lease payments not yet paid. The right-of-use asset is measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial indirect costs. For public entities, the updated standard is effective for fiscal years beginning after December 15, 2018. This standard is effective for the Company as an EGC for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. Act II adopted the standard as of January 1, 2020. The Company recognized the leases acquired as part of the Acquisition on June 25, 2020, which were recorded pursuant to the aforementioned ASU. Refer to Note 3 for additional details.

In March 2017, the FASB issued ASU 2017-7, “Compensation - Retirement Benefits (Topic 715).” Under the new guidance, employers are required to present the service cost component of net periodic benefit cost in the same statement of operations caption as other employee compensation costs arising from services rendered during the period. Employers are required to present the other components of the net periodic benefit cost separately from the caption that includes the service costs and outside of any subtotal of operating profit and are required to disclose the caption used to present the other components of net periodic benefit cost, if not presented separately on the statement of operations. The Company adopted ASU 2017-7 effective in the second quarter of 2020. The adoption of this standard did not have an effect on the Company’s historically reported net income (loss) but resulted in a presentation reclassification which increased the Company’s historically reported operating profit by $0.1 million for the period from January 1, 2020 to June 25, 2020.

In February 2018, the FASB issued ASU 2018-2, “Income Statement-Reporting Comprehensive Income (Topic 220),” which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-2 was effective for years beginning after December 15, 2018, and early adoption was permitted. On January 1, 2019, the Predecessor elected to adopt this standard on a full retrospective approach and reclassified $2.1 million from accumulated other comprehensive income within net parent investment.

New Accounting Standards—In March 2020, the FASB issued ASU 2020-4, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract modification accounting under existing U.S. GAAP, to address the expected phase out of the London Inter-bank Offered Rate (“LIBOR”) by the end of 2021. The amendments in ASU 2020-4 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company is currently evaluating the impact of adopting this standard but does not expect it to have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (ASC 740) - Simplifying the Accounting for Income Taxes.” The standard enhances and simplifies various aspects of the income tax accounting guidance. For public entities, the standard is effective for annual periods and interim periods beginning after December 15, 2020. This standard is effective for the Company as an EGC for the fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2019-12 on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20).” The standard modifies certain disclosure requirements for employers that sponsor defined benefit pension and other postretirement benefit plans by removing disclosures that are no longer considered cost beneficial, clarifying specific requirements of disclosures, and adding disclosure requirements identified as relevant. This standard is effective for the Company as an EGC for the fiscal years beginning after December 15, 2021. Early adoption is permitted. The amendments in ASU 2018-14 should be applied retrospectively to each period presented. The Company is currently evaluating the impact of adopting ASU 2018-14 on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The standard requires entities to estimate losses on financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss differs from the previous incurred losses model primarily in that the loss recognition threshold of “probable” has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset’s origination for as many as five years. Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. This standard is effective for the Company as an EGC for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting ASU 2016-13 on its consolidated financial statements.

Stock-Based Compensation

Stock-Based Compensation—In accordance with ASC Topic 718, “Compensation—Stock Compensation,” the Company recognizes stock-based compensation cost in its Consolidated Statements of Operations. Stock-based compensation cost is measured at the grant date for equity-classified awards and at the end of each reporting period for liability-classified awards based on the estimated fair value of the awards. ASC Topic 718 requires stock-based compensation expense to be recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service. Additional information pertaining to the Company’s stock-based compensation is provided in Note 11.

Fair Value Measurements

The Company measures and records in its consolidated financial statements certain assets and liabilities at fair value. ASC Topic 820 “Fair Value Measurement and Disclosures,” establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). This hierarchy consists of the following three levels:

•Level 1 – Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market.

•Level 2 – Assets and liabilities whose values are based on inputs other than those included in Level 1, including quoted market prices in markets that are not active; quoted prices of assets or liabilities with similar attributes in active markets; or valuation models whose inputs are observable or unobservable but corroborated by market data.

•Level 3 – Assets and liabilities whose values are based on valuation models or pricing techniques that utilize unobservable inputs that are significant to the overall fair value measurement.

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Current Assets and Other Financial Assets and Liabilities—Cash and cash equivalents, trade accounts receivable and trade accounts payable are measured at carrying value, which approximates fair value because of the short-term maturities of these instruments.

Debt—The Company measures its first lien term loan and revolving facilities at original carrying value including accrued interest, net of unamortized deferred financing costs and fees. The fair value of the credit facilities approximates carrying value, as they consist of variable rate loans.

XML

BUSINESS COMBINATION (Tables)

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Summary of preliminary purchase consideration

The following summarizes the preliminary purchase consideration (in thousands):

Base cash consideration	$	387,500
Closing adjustment estimate	(764)
Total Purchase Price	$	386,736

Summary of preliminary allocation of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed

The Company preliminarily recorded the fair value of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed as follows (in thousands):

Cash and cash equivalents	$	10,062
Accounts receivable	46,959
Inventories	106,436
Prepaid expenses and other current assets	2,461
Property, plant and equipment, net	39,814
Operating lease right-of-use assets	12,541
Intangible assets	147,650
Deferred tax assets, net	1,202
Other assets	1,585
Total assets acquired	368,710
Accounts payable	19,356
Accrued expenses and other current liabilities	35,728
Current portion of operating lease liabilities	3,007
Operating lease liabilities, less current portion	12,208
Deferred tax liabilities, net	21,082
Other liabilities	15,467
Total liabilities assumed	106,848
Net assets acquired	261,862
Goodwill	124,874
Total Purchase Price	$	386,736

Summary of preliminary values allocated to identifiable intangible assets and their estimated useful lives

The preliminary values allocated to identifiable intangible assets and their estimated useful lives are as follows:

Identifiable intangible assets	Fair Value (in thousands)		Useful life (in Years)
Customer relationships	$	44,640	0.5 to 10
Tradenames	92,310		25
Product formulations	10,700		Indefinite
	$	147,650

Summary of pro forma financial information

Pro Forma Financial Information—The following unaudited pro forma financial information summarizes the results of operations for the Company as though the Acquisition had occurred on January 1, 2019 (in thousands):

	Pro Forma Statements of Operations
	Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Revenue	$	67,002	$	64,060	$	199,808	$	203,354
Net income (loss)	$	4,971	$	5,037	$	(20,350)	$	4,317

XML

LEASES (Tables)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Schedule of future maturities of the Company's lease obligations

The following table presents the future maturities of the Company’s lease obligations as of September 30, 2020 (in thousands):

Remainder of 2020	$	1,004
2021	3,738
2022	3,462
2023	3,387
2024	1,865
Thereafter	2,896
Total lease payments	16,352
Less: imputed interest	1,270
Total operating lease liabilities	$	15,082

XML

INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

Summary of Inventories

Inventories consisted of the following (in thousands):

	(Successor)		(Predecessor)
	September 30, 2020		December 31, 2019
Raw materials and supplies	$	60,418	$	89,611
Work in process	1,122		387
Finished goods	42,006		31,131
Total inventories	$	103,546	$	121,129

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of components of goodwill and other intangible assets

Goodwill and other intangible assets consisted of the following (in thousands):

	(Successor)						(Predecessor)
	September 30, 2020						December 31, 2019
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Other intangible assets subject to amortization
Customer relationships (useful life of 0.5 to 10 years)	$	44,640	$	(1,866)	$	42,774	$	105,000	$	(38,731)	$	66,269
Tradenames (useful life of 25 years)	92,310		(975)		91,335		95,055		(19,939)		75,116
Total	$	136,950	$	(2,841)	$	134,109	$	200,055	$	(58,670)	$	141,385
Other intangible assets not subject to amortization
Product formulations					10,700						109,858
Total other intangible assets, net					144,809						251,243
Goodwill					124,874						130,870
Total goodwill and other intangible assets					$	269,683					$	382,113

Schedule of amortization expense

Amortization expense relating to amortizable intangible assets as of September 30, 2020 for the next five years is expected to be as follows (in thousands):

Remainder of 2020	$	2,667
2021	9,004
2022	9,004
2023	9,004
2024	9,004
2025	8,963

XML

DEBT (Tables)

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Schedule of components of debt

Debt consisted of the following (in thousands):

	(Successor)		(Predecessor)
	September 30, 2020		December 31, 2019
Term Loan	$	138,250	$	—
Less: current portion	(7,000)		—
Less: debt issuance costs	(4,969)		—
Total non-current borrowings	$	126,281	$	—

XML

PENSION BENEFITS (Tables)

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Schedule of components of net periodic benefit (credit) cost and net periodic benefit costs

The components of net periodic benefit (credit) cost for the Company’s defined benefit pension plan for the Successor and Predecessor were as follows (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Service cost	$	—	$	—	$	—	$	152	$	456
Interest cost	210		210		452		275		841
Expected return on plan assets	(392)		(392)		(818)		(365)		(1,096)
Recognized actuarial loss	—		—		108		276		828
Amortization of prior service cost	—		—		—		21		63
Net periodic benefit (credit) cost	$	(182)	$	(182)	$	(258)	$	359	$	1,092

Net periodic benefit (credit) cost is reflected in the Company’s consolidated financial statements as follows for the Successor and Predecessor periods presented (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Cost of Goods Sold	$	—	$	—	$	—	$	125	$	387
Selling, general and administrative expense	—		—		—		234		705
Other income, net	(182)		(182)		(258)		—		—
Net periodic benefit (credit) cost	$	(182)	$	(182)	$	(258)	$	359	$	1,092

XML

STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Summary of Activity Related to RSUs and RSAs

A summary of activity and weighted average fair values related to the RSUs is as follows:

	Three Months Ended September 30, 2020
	Shares	Weighted Average Fair Value
Outstanding at June 30, 2020	—	$	—
Granted	719,038	8.34
Outstanding and nonvested at September 30, 2020	719,038	$	8.34

A summary of activity and weighted average fair values related to the RSAs is as follows:

	Three Months Ended September 30, 2020
	Shares	Weighted Average Fair Value
Outstanding at June 30, 2020	—	$	—
Granted	68,946	8.34
Outstanding and nonvested at September 30, 2020	68,946	$	8.34

XML

EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Computation of basic and diluted (loss) earnings per common share

The computation of basic and diluted loss per common share for the three months ended September 30, 2020 and for the period from June 26, 2020 to September 30, 2020 is shown below (in thousands, except for share and per share data).

	(Successor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020
EPS numerator:
Net loss attributable to common shareholders	$	(2,835)	$	(3,340)
EPS denominator:
Weighted average shares outstanding - basic	38,426,669		38,426,669
Effect of dilutive securities	—		—
Weighted average shares outstanding - diluted	38,426,669		38,426,669
Net loss per share:
Basic	$	(0.07)	$	(0.09)
Diluted	$	(0.07)	$	(0.09)

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

9 Months Ended

Sep. 30, 2020

AOCI Attributable to Parent [Abstract]

Summary of change in the components of accumulated other comprehensive loss, net of tax

The following table summarizes accumulated other comprehensive income (loss) (“AOCI”), net of taxes, by component (in thousands):

	Net Currency Translation Gains (Losses)		Funded Status of Benefit Plans		Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2018 (Predecessor)	$	4,428	$	(10,375)	$	(5,947)
Other comprehensive loss before reclassifications	(2,439)		—		(2,439)
Adoption of ASU 2018-02	—		(2,137)		(2,137)
Balance at March 31, 2019 (Predecessor)	1,989		(12,512)		(10,523)
Other comprehensive income before reclassifications	1,385		—		1,385
Balance at June 30, 2019 (Predecessor)	3,374		(12,512)		(9,138)
Other comprehensive loss before reclassifications	(3,013)		—		(3,013)
Balance at September 30, 2019 (Predecessor)	$	361	$	(12,512)	$	(12,151)
Balance at December 31, 2019 (Predecessor)	$	2,836	$	(10,980)	$	(8,144)
Other comprehensive loss before reclassifications	(1,884)		—		(1,884)
Amounts reclassified from AOCI	—		48		48
Balance at March 31, 2020 (Predecessor)	952		(10,932)		(9,980)
Other comprehensive loss before reclassifications	(402)		—		(402)
Amounts reclassified from AOCI	—		270		270
Balance at June 25, 2020 (Predecessor)	550		(10,662)		(10,112)
Purchase accounting adjustments to eliminate Predecessor’s accumulated other comprehensive loss (income)	(550)		10,662		10,112
Balance at June 26, 2020 (Successor)	—		—		—
Other comprehensive income before reclassifications	15		—		15
Balance at June 30, 2020 (Successor)	15		—		15
Other comprehensive income before reclassifications	3,130		—		3,130
Balance at September 30, 2020 (Successor)	$	3,145	$	—	$	3,145

XML

BUSINESS SEGMENTS (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Schedule of selected financial information relating to the Business' reportable segments

The following table presents selected financial information relating to the Company’s business segments (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Product revenues, net
Branded CPG	$	41,006	$	43,557	$	80,749	$	40,292	$	123,098
Flavors & Ingredients	25,996		27,923		47,579		23,768		80,256
Total product revenues, net	$	67,002	$	71,480	$	128,328	$	64,060	$	203,354
Operating income (loss)
Branded CPG	$	1,499	$	1,393	$	(14,463)	$	3,186	$	7,703
Flavors & Ingredients	(435)		(646)		(23,718)		4,667		16,476
Total operating income (loss)	$	1,064	$	747	$	(38,181)	$	7,853	$	24,179

Summary of revenue disaggregated by geographic operating segments

The following table presents revenues disaggregated by geographic operating segments (in thousands):

	(Successor)				(Predecessor)
	Three Months Ended September 30, 2020		From June 26, 2020 to September 30, 2020		From  January 1, 2020 to June 25, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Branded CPG:
North America	$	14,642	$	15,515	$	29,926	$	15,203	$	44,967
Europe, Middle East and Africa	19,092		20,197		35,360		17,080		55,013
Asia-Pacific	3,924		4,300		9,584		4,835		13,544
Latin America	3,348		3,545		5,879		3,174		9,574
Flavors & Ingredients	25,996		27,923		47,579		23,768		80,256
Total product revenues, net	$	67,002	$	71,480	$	128,328	$	64,060	$	203,354

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended			6 Months Ended	9 Months Ended
	Jun. 25, 2020	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Jun. 25, 2020	Sep. 30, 2019	Dec. 31, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Conversion basis for conversion of the then-issued and outstanding ordinary shares of predecessor into successor shares (in shares)	1
Shares issued (in shares)	7,500,000
Private placement warrants issued (in shares)	5,263,500
Shares called upon by private placement warrants (in shares)	2,631,750				2,631,750
Operating profit		$ 747	$ 1,064	$ 7,853	$ (38,181)	$ 24,179
Reclassification from accumulated other comprehensive income		$ (3,145)	$ (3,145)				$ 0
Restatement adjustment | ASU 2017-07
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating profit					$ 100
Restatement adjustment | ASU 2018-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reclassification from accumulated other comprehensive income								$ 2,100

XML

BUSINESS COMBINATION - Preliminary purchase consideration (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended	9 Months Ended
	Jun. 25, 2020	Sep. 30, 2020	Sep. 30, 2020	Jun. 25, 2020	Sep. 30, 2019
Business Acquisition [Line Items]
Base cash consideration		$ 376,674		$ 0	$ 0
Merisant and Mafco Worldwide
Business Acquisition [Line Items]
Base cash consideration	$ 387,500
Closing adjustment estimate	(764)		$ (10,100)
Total Purchase Price	$ 386,736

XML

BUSINESS COMBINATION - Preliminary allocation of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands	Jun. 25, 2020	Sep. 30, 2020	Dec. 31, 2019
Business Acquisition [Line Items]
Intangible assets	$ 147,650
Goodwill		$ 124,874	$ 130,870
Merisant and Mafco Worldwide
Business Acquisition [Line Items]
Cash and cash equivalents	10,062
Accounts receivable	46,959
Inventories	106,436
Prepaid expenses and other current assets	2,461
Property, plant and equipment, net	39,814
Operating lease right-of-use assets	12,541
Intangible assets	147,650
Deferred tax assets, net	1,202
Other assets	1,585
Total assets acquired	368,710
Accounts payable	19,356
Accrued expenses and other current liabilities	35,728
Current portion of operating lease liabilities	3,007
Operating lease liabilities, less current portion	12,208
Deferred tax liabilities, net	21,082
Other liabilities	15,467
Total liabilities assumed	106,848
Net assets acquired	261,862
Goodwill	124,874
Total Purchase Price	$ 386,736

XML

BUSINESS COMBINATION - Preliminary values allocated to identifiable intangible assets and their estimated useful lives (Details) $ in Thousands	Jun. 25, 2020 USD ($)
Business Acquisition [Line Items]
Intangible assets	$ 147,650
Merisant and Mafco Worldwide
Business Acquisition [Line Items]
Intangible assets	147,650
Merisant and Mafco Worldwide | Product formulations
Business Acquisition [Line Items]
Intangible assets	10,700
Merisant and Mafco Worldwide | Customer relationships
Business Acquisition [Line Items]
Intangible assets	$ 44,640
Merisant and Mafco Worldwide | Customer relationships | Minimum
Business Acquisition [Line Items]
Useful life (in Years)	6 months
Merisant and Mafco Worldwide | Customer relationships | Maximum
Business Acquisition [Line Items]
Useful life (in Years)	10 years
Merisant and Mafco Worldwide | Tradenames
Business Acquisition [Line Items]
Intangible assets	$ 92,310
Useful life (in Years)	25 years

XML

BUSINESS COMBINATION - Narrative (Details) - Merisant and Mafco Worldwide - USD ($) $ in Thousands			3 Months Ended
	Jun. 30, 2020	Jun. 25, 2020	Sep. 30, 2020
Business Acquisition [Line Items]
Closing adjustment period		1 year
Increase (decrease) in accounts receivable			$ (300)
Increase (decrease) in inventory			(2,700)
Increase (decrease) in prepaid expenses and other current assets			(10,400)
Increase (decrease) in property, plant and equipment			17,900
Increase (decrease) in right-of-use asset			(2,700)
Increase (decrease) in intangible assets			(9,800)
Increase (decrease) in other assets			600
Increase (decrease) in accounts payable			400
Increase (decrease) in deferred tax liabilities			(2,900)
Increase (decrease) in cost of goods sold	$ 800
Increase (decrease) in goodwill			(6,200)
Increase (decrease) in other liabilities			(1,000)
Closing adjustment estimate		$ (764)	(10,100)
Act II Global Acquisition Corp
Business Acquisition [Line Items]
Transaction costs		$ 17,000	1,200
Increase (decrease) in additional paid in capital			(900)
Increase (decrease) in accumulated deficit			$ (300)

XML

BUSINESS COMBINATION - Pro forma financial information (Details) - Merisant and Mafco Worldwide - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Business Acquisition [Line Items]
Revenue	$ 67,002	$ 64,060	$ 199,808	$ 203,354
Net (loss) income	$ 4,971	$ 5,037	$ (20,350)	$ 4,317

XML

LEASES - Narrative (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2020 USD ($)	Jun. 26, 2020 USD ($) lease	Dec. 31, 2019 USD ($)
Lessee, Lease, Description [Line Items]
Operating lease right-of-use assets	$ 12,378	$ 15,200	$ 0
Operating lease, lease liabilities	15,082	15,200
Lease expense	$ 1,100
Weighted-average remaining lease term (in years)	4 years 10 months 24 days
Weighted-average discount rate (as a percent)	3.42%
Operating lease payments	$ 900
Merisant and Mafco Worldwide
Lessee, Lease, Description [Line Items]
Increase (decrease) in right-of-use asset	$ (2,700)
Minimum
Lessee, Lease, Description [Line Items]
Extended lease term (in years)	1 year
Maximum
Lessee, Lease, Description [Line Items]
Extended lease term (in years)	5 years
Act II Global Acquisition Corp
Lessee, Lease, Description [Line Items]
Operating lease right-of-use assets		300
Operating lease, lease liabilities		$ 300
Operating lease, number of leases | lease		1

XML

LEASES - Future maturities of the Company's lease obligations (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jun. 26, 2020
Leases [Abstract]
Remainder of 2020	$ 1,004
2021	3,738
2022	3,462
2023	3,387
2024	1,865
Thereafter	2,896
Total lease payments	16,352
Less: imputed interest	1,270
Total operating lease liabilities	$ 15,082	$ 15,200

XML

INVENTORIES - Summary of Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Raw materials and supplies	$ 60,418	$ 89,611
Work in process	1,122	387
Finished goods	42,006	31,131
Total inventories	$ 103,546	$ 121,129

XML

GOODWILL AND OTHER INTANGIBLE ASSETS - Components of goodwill and other intangible assets (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
GOODWILL AND OTHER INTANGIBLE ASSETS
Other intangible assets subject to amortization, Gross	$ 136,950	$ 200,055
Other intangible assets subject to amortization, Accumulated Amortization	(2,841)	(58,670)
Other intangible assets subject to amortization, Net	134,109	141,385
Total other intangible assets, net	144,809	251,243
Goodwill	124,874	130,870
Total goodwill and other intangible assets	269,683	382,113
Product formulations
GOODWILL AND OTHER INTANGIBLE ASSETS
Other intangible assets not subject to amortization	10,700	109,858
Total other intangible assets, net	144,809	251,243
Goodwill	124,874	130,870
Customer relationships
GOODWILL AND OTHER INTANGIBLE ASSETS
Other intangible assets subject to amortization, Gross	44,640	105,000
Other intangible assets subject to amortization, Accumulated Amortization	(1,866)	(38,731)
Other intangible assets subject to amortization, Net	$ 42,774	66,269
Customer relationships | Minimum
GOODWILL AND OTHER INTANGIBLE ASSETS
Other intangible assets subject to amortization, Useful life (in years)	6 months
Customer relationships | Maximum
GOODWILL AND OTHER INTANGIBLE ASSETS
Other intangible assets subject to amortization, Useful life (in years)	10 years
Tradenames
GOODWILL AND OTHER INTANGIBLE ASSETS
Other intangible assets subject to amortization, Gross	$ 92,310	95,055
Other intangible assets subject to amortization, Accumulated Amortization	(975)	(19,939)
Other intangible assets subject to amortization, Net	$ 91,335	$ 75,116
Other intangible assets subject to amortization, Useful life (in years)	25 years

XML

GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Jun. 25, 2020	Sep. 30, 2019
Statement of Financial Position [Abstract]
Amortization of intangible assets	$ 2,841	$ 2,700	$ 2,656	$ 4,927	$ 7,968

XML

GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization expense (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Remainder of 2020	$ 2,667
2021	9,004
2022	9,004
2023	9,004
2024	9,004
2025	$ 8,963

XML

DEBT - Components of debt (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Debt Disclosure [Abstract]
Term Loan	$ 138,250	$ 0
Less: current portion	(7,000)	0
Less: debt issuance costs	(4,969)	0
Long-term debt	$ 126,281	$ 0

XML

DEBT - Narrative (Details)	Sep. 30, 2020 USD ($) quarter	Jul. 01, 2020	Jun. 25, 2020 USD ($)	Dec. 31, 2019 USD ($)
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 50,000,000
Issuance costs, commitment period (in years)	5 years
Borrowings	$ 138,250,000			$ 0
Interest rate on conversion (as a percent)		4.50%
Senior secured first lien term loan facility
Debt Instrument [Line Items]
Face amount			$ 140,000,000
Term of debt			5 years
First lien revolving loan facility
Debt Instrument [Line Items]
Term of debt			5 years
Maximum borrowing capacity			$ 50,000,000
Commitment fee (as a percent)			0.40%
Commitment fee upon achievement of certain leverage ratios (as a percent)			0.30%
Outstanding letter of credit	2,100,000
Issuance costs capitalized	1,900,000
Borrowings	$ 0
LIBOR | First lien revolving loan facility
Debt Instrument [Line Items]
Floor rate (as a percent)			1.00%
LIBOR | Minimum | First lien revolving loan facility
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)			3.00%
LIBOR | Maximum | First lien revolving loan facility
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)			3.75%
Base Rate | First lien revolving loan facility
Debt Instrument [Line Items]
Floor rate (as a percent)			2.00%
Base Rate | Minimum | First lien revolving loan facility
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)			2.00%
Base Rate | Maximum | First lien revolving loan facility
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)			2.75%
First 12 fiscal quarters
Debt Instrument [Line Items]
Number of fiscal quarters for repayment | quarter	12
Percentage of beginning principal amount repaid	1.25%
Periodic repayment amount	$ 1,750,000
Following seven fiscal quarters
Debt Instrument [Line Items]
Number of fiscal quarters for repayment | quarter	7
Percentage of beginning principal amount repaid	2.50%
Periodic repayment amount	$ 3,500,000

XML

COMMITMENTS AND CONTINGENCIES - Narrative (Details) $ in Millions	Sep. 30, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Obligations to purchase raw materials	$ 22.0

XML

INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Jun. 25, 2020	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Provision (benefit) for income taxes	$ 1,694	$ 1,684	$ 1,627	$ (3,482)	$ 5,228
Effective tax rate (as a percent)	(102.90%)	(146.30%)	23.60%	9.30%	22.60%
Pretax income (loss)	$ (1,646)	$ (1,151)	$ 6,900	$ (37,618)	$ 23,171
Uncertain tax position liability	$ 1,000	$ 1,000

XML

PENSION BENEFITS - Components of net periodic benefit (credit) expense (Details) - Pension Plan - USD ($) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Jun. 25, 2020	Sep. 30, 2019
Defined Benefit Plan Disclosure
Service cost	$ 0	$ 0	$ 152	$ 0	$ 456
Interest cost	210	210	275	452	841
Expected return on plan assets	(392)	(392)	(365)	(818)	(1,096)
Recognized actuarial loss	0	0	276	108	828
Amortization of prior service cost	0	0	21	0	63
Net periodic benefit (credit) cost	$ (182)	$ (182)	$ 359	$ (258)	$ 1,092

XML

PENSION BENEFITS - Net periodic benefit costs reflected in the Company's Financial Statements (Details) - Pension Plan - USD ($) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Jun. 25, 2020	Sep. 30, 2019
Defined Benefit Plan Disclosure
Net periodic benefit (credit) cost	$ (182)	$ (182)	$ 359	$ (258)	$ 1,092
Cost of Goods Sold
Defined Benefit Plan Disclosure
Net periodic benefit (credit) cost	0	0	125	0	387
Selling, general and administrative expense
Defined Benefit Plan Disclosure
Net periodic benefit (credit) cost	0	0	234	0	705
Other income, net
Defined Benefit Plan Disclosure
Net periodic benefit (credit) cost	$ (182)	$ (182)	$ 0	$ (258)	$ 0

XML

PENSION BENEFITS - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Jun. 25, 2020	Sep. 30, 2019
Supplemental Employee Retirement Plan
Defined Benefit Plan Disclosure
Net periodic benefit cost	$ 0.1	$ 0.2	$ 0.4	$ 0.5

XML

STOCK-BASED COMPENSATION (Details) - USD ($)			3 Months Ended
	Sep. 30, 2020	Jun. 24, 2020	Sep. 30, 2020	Jun. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense			$ 0
Forfeited during period (in shares)			0
Vested during period (in shares)			0
Unrecognized compensation costs	$ 6,600,000		$ 6,600,000
Weighted average recognition period of unrecognized compensation costs	1 year 2 months 4 days
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units outstanding (in shares)	719,038		719,038	0
Award vesting period	14 months
Aggregate grant date fair value	$ 6,000,000		$ 6,000,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units outstanding (in shares)	68,946		68,946	0
Award vesting period	19 months
Aggregate grant date fair value	$ 600,000		$ 600,000
2020 Long-Term Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common shares authorized (in shares)		9,300,000

XML

STOCK-BASED COMPENSATION - Summary of Activity Related to RSUs and RSAs (Details)	3 Months Ended
	Sep. 30, 2020 $ / shares shares
Restricted Stock Units (RSUs)
Shares
Beginning balance, outstanding (in shares) | shares	0
Granted (in shares) | shares	719,038
Ending balance, outstanding and nonvested (in shares) | shares	719,038
Weighted Average Fair Value
Beginning balance, outstanding (in dollars per share) | $ / shares	$ 0
Granted (in dollars per share) | $ / shares	8.34
Ending balance, outstanding and nonvested (in dollars per share) | $ / shares	$ 8.34
Restricted Stock
Shares
Beginning balance, outstanding (in shares) | shares	0
Granted (in shares) | shares	68,946
Ending balance, outstanding and nonvested (in shares) | shares	68,946
Weighted Average Fair Value
Beginning balance, outstanding (in dollars per share) | $ / shares	$ 0
Granted (in dollars per share) | $ / shares	8.34
Ending balance, outstanding and nonvested (in dollars per share) | $ / shares	$ 8.34

XML

STOCKHOLDERS' EQUITY (Details) - USD ($)		3 Months Ended
	Sep. 08, 2020	Sep. 30, 2020
Equity [Abstract]
Stock repurchase program, authorized amount	$ 20,000,000
Stock repurchase program, period in force	12 months
Stock repurchased during period		$ 0

XML

EARNINGS PER SHARE - Narrative (Details) - shares	3 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	10,131,748
Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)		10,131,748
Restricted Stock Units (RSUs)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	68,946	719,038

XML

EARNINGS PER SHARE - Computation of basic and diluted (loss) earnings per common share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended							6 Months Ended	9 Months Ended
	Jun. 30, 2020	Sep. 30, 2020	Sep. 30, 2020	Jun. 25, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Jun. 25, 2020	Sep. 30, 2019
EPS numerator:
Net (loss) income	$ (505)	$ (3,340)	$ (2,835)	$ (5,481)	$ (28,655)	$ 5,273	$ 3,506	$ 9,164	$ (34,136)	$ 17,943
EPS denominator:
Weighted average shares outstanding - basic		38,426,669	38,426,669
Effect of dilutive securities		0	0
Weighted average shares outstanding - diluted		38,426,669	38,426,669
Net loss per share:
Basic (in dollars per share)		$ (0.09)	$ (0.07)
Diluted (in dollars per share)		$ (0.09)	$ (0.07)

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands			3 Months Ended
	Jun. 30, 2020	Jun. 26, 2020	Sep. 30, 2020	Jun. 25, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019
AOCI Attributable to Parent, Net of Tax
Beginning balance		$ 233,666	$ 308,176	$ 444,997	$ 487,750	$ 480,754	$ 479,100	$ 484,492
Other comprehensive income (loss) before reclassifications	$ 15		3,130	(402)	(1,884)	(3,013)	1,385	(2,439)
Adoption of ASU 2018-02								(2,137)
Amounts reclassified from AOCI				270	48
Purchase accounting adjustments to eliminate Predecessor’s accumulated other comprehensive loss (income)		10,112
Ending balance	308,176		307,221	233,666	444,997	474,428	480,754	479,100
Predecessors
AOCI Attributable to Parent, Net of Tax
Beginning balance		439,722
Ending balance				439,722
Total Accumulated Other Comprehensive Income (Loss)
AOCI Attributable to Parent, Net of Tax
Beginning balance	0	0	15	(9,980)	(8,144)	(9,138)	(10,523)	(5,947)
Ending balance	15	0	3,145	0	(9,980)	(12,151)	(9,138)	(10,523)
Total Accumulated Other Comprehensive Income (Loss) | Predecessors
AOCI Attributable to Parent, Net of Tax
Beginning balance		(10,112)
Ending balance				(10,112)
Net Currency Translation Gains (Losses)
AOCI Attributable to Parent, Net of Tax
Beginning balance	0		15	952	2,836	3,374	1,989	4,428
Other comprehensive income (loss) before reclassifications	15		3,130	(402)	(1,884)	(3,013)	1,385	(2,439)
Adoption of ASU 2018-02								0
Amounts reclassified from AOCI				0	0
Purchase accounting adjustments to eliminate Predecessor’s accumulated other comprehensive loss (income)		(550)
Ending balance	15	0	3,145		952	361	3,374	1,989
Net Currency Translation Gains (Losses) | Predecessors
AOCI Attributable to Parent, Net of Tax
Beginning balance		550
Ending balance				550
Funded Status of Benefit Plans
AOCI Attributable to Parent, Net of Tax
Beginning balance	0		0	(10,932)	(10,980)	(12,512)	(12,512)	(10,375)
Other comprehensive income (loss) before reclassifications	0		0	0	0	0	0	0
Adoption of ASU 2018-02								(2,137)
Amounts reclassified from AOCI				270	48
Purchase accounting adjustments to eliminate Predecessor’s accumulated other comprehensive loss (income)		10,662
Ending balance	$ 0	0	$ 0		$ (10,932)	$ (12,512)	$ (12,512)	$ (12,512)
Funded Status of Benefit Plans | Predecessors
AOCI Attributable to Parent, Net of Tax
Beginning balance		$ (10,662)
Ending balance				$ (10,662)

XML

RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended	9 Months Ended
	Mar. 31, 2018	Sep. 30, 2020	Sep. 30, 2019	Jun. 25, 2020	Sep. 30, 2019	Dec. 31, 2019
Related Party Transaction [Line Items]
Maximum outstanding borrowings				$ 50,000,000
Outstanding borrowings		$ 0				$ 8,400,000
Wesco US LLC
Related Party Transaction [Line Items]
Maximum outstanding borrowings	$ 9,000,000.0
Remaining balance forgiven				3,400,000
Outstanding borrowings						$ 8,400,000
Interest rate (as a percent)						5.95%
Interest expense			$ 100,000	$ 200,000	$ 400,000
Wesco US LLC | LIBOR
Related Party Transaction [Line Items]
Basis spread on variable rate (as a percent)	4.00%
Watermill
Related Party Transaction [Line Items]
Due to related parties		900,000
Repayments of related party debt		$ 200,000

XML

BUSINESS SEGMENTS - Narrative (Details)	9 Months Ended
	Sep. 30, 2020 segment
Segment Reporting [Abstract]
Number of reportable segments	2

XML

BUSINESS SEGMENTS - Schedule of selected financial information relating to the Business' reportable segments (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Jun. 25, 2020	Sep. 30, 2019
Segment Reporting Information [Line Items]
Product revenues, net	$ 71,480	$ 67,002	$ 64,060	$ 128,328	$ 203,354
Operating income (loss)	747	1,064	7,853	(38,181)	24,179
Branded CPG
Segment Reporting Information [Line Items]
Product revenues, net	43,557	41,006	40,292	80,749	123,098
Operating income (loss)	1,393	1,499	3,186	(14,463)	7,703
Flavors & Ingredients
Segment Reporting Information [Line Items]
Product revenues, net	27,923	25,996	23,768	47,579	80,256
Operating income (loss)	$ (646)	$ (435)	$ 4,667	$ (23,718)	$ 16,476

XML

BUSINESS SEGMENTS - Revenues disaggregated by geographic operating segments (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Jun. 25, 2020	Sep. 30, 2019
Segment Reporting Information [Line Items]
Product revenues, net	$ 71,480	$ 67,002	$ 64,060	$ 128,328	$ 203,354
Branded CPG
Segment Reporting Information [Line Items]
Product revenues, net	43,557	41,006	40,292	80,749	123,098
Branded CPG | North America
Segment Reporting Information [Line Items]
Product revenues, net	15,515	14,642	15,203	29,926	44,967
Branded CPG | Europe, Middle East and Africa
Segment Reporting Information [Line Items]
Product revenues, net	20,197	19,092	17,080	35,360	55,013
Branded CPG | Asia-Pacific
Segment Reporting Information [Line Items]
Product revenues, net	4,300	3,924	4,835	9,584	13,544
Branded CPG | Latin America
Segment Reporting Information [Line Items]
Product revenues, net	3,545	3,348	3,174	5,879	9,574
Flavors & Ingredients
Segment Reporting Information [Line Items]
Product revenues, net	$ 27,923	$ 25,996	$ 23,768	$ 47,579	$ 80,256

XML

SUBSEQUENT EVENTS - Narrative (Details) - USD ($)		3 Months Ended	6 Months Ended	9 Months Ended
	Nov. 10, 2020	Sep. 30, 2020	Jun. 25, 2020	Sep. 30, 2019
Subsequent Event [Line Items]
Payments to acquire businesses, gross		$ 376,674,000	$ 0	$ 0
Maximum outstanding borrowings			$ 50,000,000
Subsequent Event
Subsequent Event [Line Items]
Remaining borrowing capacity	$ 47,900,000
Swerve | Subsequent Event
Subsequent Event [Line Items]
Payments to acquire businesses, gross	$ 80,000,000