0000950170-23-063772.txt : 20231114 0000950170-23-063772.hdr.sgml : 20231114 20231114163133 ACCESSION NUMBER: 0000950170-23-063772 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 75 CONFORMED PERIOD OF REPORT: 20230930 FILED AS OF DATE: 20231114 DATE AS OF CHANGE: 20231114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Vintage Wine Estates, Inc. CENTRAL INDEX KEY: 0001834045 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 871005902 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-40016 FILM NUMBER: 231407053 BUSINESS ADDRESS: STREET 1: 937 TAHOE BOULEVARD STREET 2: SUITE 210 CITY: INCLINE VILLAGE STATE: NV ZIP: 89451 BUSINESS PHONE: 877-289-9463 MAIL ADDRESS: STREET 1: 937 TAHOE BOULEVARD STREET 2: SUITE 210 CITY: INCLINE VILLAGE STATE: NV ZIP: 89451 FORMER COMPANY: FORMER CONFORMED NAME: Bespoke Capital Acquisition Corp DATE OF NAME CHANGE: 20201125 10-Q 1 vwe-20230930.htm 10-Q 10-Q
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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, 2023

OR

 

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

 

For the transition period from _______ to______

Commission file number 001-40016

 

img9437582_0.jpg 

 

Vintage Wine Estates, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

 

 

 

87-1005902

(State or other jurisdiction of incorporation or organization)

 

 

 

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

 

937 Tahoe Boulevard, Suite 210

Incline Village, Nevada 89451

(Address of principal executive offices) (Zip code)

 

Registrant’s telephone number, including area code: (877) 289-9463

 

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, no par value per share

 

VWE

 

The Nasdaq Stock Market LLC

Warrants to purchase common stock

 

VWEWW

 

The Nasdaq Stock Market LLC

 

 

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

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 Act). Yes ☐ No

As of November 7, 2023, 59,626,423 shares of the registrant’s common stock were outstanding.

 


 

 

Part I. Financial Information

1

Item 1. Financial Statements (Unaudited)

1

Condensed Consolidated Balance Sheets

1

Condensed Consolidated Statements of Operations and Comprehensive Income

2

Condensed Consolidated Statements of Stockholders' Equity

3

Condensed Consolidated Statements of Cash Flows

4

Notes to the Condensed Consolidated Financial Statements

5

Note 1: Basis of Presentation and Significant Accounting Policies

5

Note 2: Restructuring

7

Note 3: Fair Value Measurements

7

Note 4: Long-Term and Other Short-Term Obligations

8

Note 5: Stockholders' Equity

9

Note 6: Income Taxes

10

Note 7: Commitments, Contingent Liabilities and Litigation

11

Note 8: Related Party Transactions

12

Note 9: Segments

13

Note 10: Earnings Per Share

15

Note 11: Subsequent Events

15

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

17

Item 3. Quantitative and Qualitative Disclosures About Market Risk

23

Item 4. Controls and Procedures

23

Part II. Other Information

25

Item 1. Legal Proceedings

25

Item 1A. Risk Factors

25

Item 5. Other Information

25

Item 6. Exhibits

26

Signatures

28

 

 


Table of Contents

Part I—Financial Information

Item 1. Financial Statements

VINTAGE WINE ESTATES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

September 30, 2023

 

 

June 30, 2023

 

Assets

 

(Unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,624

 

 

$

18,233

 

Accounts receivable, net

 

 

33,448

 

 

 

24,561

 

Other receivables

 

 

566

 

 

 

507

 

Inventories

 

 

199,402

 

 

 

201,363

 

Assets held for sale, net

 

 

-

 

 

 

511

 

Current interest rate swap asset

 

 

4,715

 

 

 

4,669

 

Prepaid expenses

 

 

8,688

 

 

 

14,895

 

Total current assets

 

 

265,443

 

 

 

264,739

 

Property, plant, and equipment, net

 

 

215,242

 

 

 

215,967

 

Operating lease right-of-use assets

 

 

30,082

 

 

 

32,945

 

Finance lease right-of-use-assets

 

 

606

 

 

 

630

 

Intangible assets, net

 

 

37,476

 

 

 

38,994

 

Interest rate swap asset

 

 

4,167

 

 

 

4,317

 

Other assets

 

 

3,229

 

 

 

3,562

 

Total assets

 

$

556,245

 

 

$

561,154

 

Liabilities, redeemable noncontrolling interest, and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Line of credit

 

$

121,919

 

 

$

115,444

 

Accounts payable

 

 

20,084

 

 

 

20,413

 

Accrued liabilities and other payables

 

 

17,124

 

 

 

19,668

 

Accrued employee compensation

 

 

10,495

 

 

 

6,618

 

Current operating lease liabilities

 

 

6,210

 

 

 

6,243

 

Current finance lease liabilities

 

 

297

 

 

 

304

 

Current maturities of long-term debt

 

 

17,605

 

 

 

14,449

 

Total current liabilities

 

 

193,734

 

 

 

183,139

 

Other long-term liabilities

 

 

7,321

 

 

 

4,196

 

Long-term debt, less current maturities

 

 

170,013

 

 

 

173,409

 

Long-term operating lease liabilities

 

 

25,104

 

 

 

26,792

 

Long-term finance lease liabilities

 

 

317

 

 

 

334

 

Deferred tax liability

 

 

701

 

 

 

506

 

Total liabilities

 

 

397,190

 

 

 

388,376

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Redeemable noncontrolling interest

 

 

255

 

 

 

262

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, no par value, 2,000,000 shares authorized, and none issued and outstanding at September 30, 2023 and June 30, 2023.

 

 

-

 

 

 

-

 

Common stock, no par value, 200,000,000 shares authorized, 62,437,684 issued and 59,565,790 outstanding at September 30, 2023 and 62,234,028 issued and 59,362,134 outstanding at June 30, 2023.

 

 

-

 

 

 

-

 

Additional paid-in capital

 

 

383,064

 

 

 

381,689

 

Treasury stock, at cost: 2,871,894 shares held at September 30, 2023 and June 30, 2023, respectively.

 

 

(26,034

)

 

 

(26,034

)

Accumulated deficit

 

 

(197,366

)

 

 

(182,308

)

Total Vintage Wine Estates, Inc. stockholders' equity

 

 

159,664

 

 

 

173,347

 

Noncontrolling interests

 

 

(864

)

 

 

(831

)

Total stockholders' equity

 

 

158,800

 

 

 

172,516

 

Total liabilities, redeemable noncontrolling interest, and stockholders' equity

 

$

556,245

 

 

$

561,154

 

See notes to unaudited condensed consolidated financial statements.

1


Table of Contents

VINTAGE WINE ESTATES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except per share amounts)

 

 

Three Months Ended September 30,

 

 

 

2023

 

 

2022

 

Net revenue

 

 

 

 

 

 

Wine, spirits and cider

 

$

52,663

 

 

$

52,270

 

Nonwine

 

 

20,611

 

 

 

25,810

 

Total revenue

 

 

73,274

 

 

 

78,080

 

Cost of revenue

 

 

 

 

 

 

Wine, spirits and cider

 

 

34,935

 

 

 

33,021

 

Nonwine

 

 

13,639

 

 

 

15,529

 

Total cost of revenue

 

 

48,574

 

 

 

48,550

 

Gross profit

 

 

24,700

 

 

 

29,530

 

Selling, general, and administrative expenses

 

 

28,749

 

 

 

31,449

 

Amortization expense

 

 

1,636

 

 

 

1,811

 

Loss on remeasurement of contingent liability

 

 

971

 

 

 

185

 

Restructuring expenses

 

 

4,002

 

 

 

-

 

Gain on insurance and litigation proceeds

 

 

-

 

 

 

(530

)

Gain on sale of assets

 

 

(797

)

 

 

-

 

Loss from operations

 

 

(9,861

)

 

 

(3,385

)

Other income (expense)

 

 

 

 

 

 

Interest expense

 

 

(4,925

)

 

 

(3,381

)

Net (loss) gain on interest rate swap agreements

 

 

(95

)

 

 

9,327

 

Other, net

 

 

27

 

 

 

271

 

Total other (expense) income, net

 

 

(4,993

)

 

 

6,217

 

(Loss) income before provision for income taxes

 

 

(14,854

)

 

 

2,832

 

Income tax provision

 

 

244

 

 

 

1,474

 

Net (loss) income

 

 

(15,098

)

 

 

1,358

 

Net loss attributable to the noncontrolling interests

 

 

(40

)

 

 

(174

)

Net (loss) income attributable to common stockholders

 

$

(15,058

)

 

$

1,532

 

 

 

 

 

 

 

 

Net earnings per share allocable to common stockholders

 

 

 

 

 

 

Basic

 

$

(0.25

)

 

$

0.03

 

Diluted

 

$

(0.25

)

 

$

0.03

 

Weighted average shares used in the calculation of earnings per share allocable to common stockholders

 

 

 

 

 

 

Basic

 

 

59,413,048

 

 

 

58,819,160

 

Diluted

 

 

59,413,048

 

 

 

59,137,036

 

See notes to unaudited condensed consolidated financial statements.

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VINTAGE WINE ESTATES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share amounts)

 

 

Redeemable Non-Controlling
Interest Amount

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional
Paid-In Capital

 

 

Accumulated
Deficit

 

 

Non-Controlling
Interests

 

 

Total Stockholders' Equity

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2023

 

$

262

 

 

 

62,234,028

 

 

$

-

 

 

 

2,871,894

 

 

$

(26,034

)

 

$

381,689

 

 

$

(182,308

)

 

$

(831

)

 

$

172,516

 

Stock-based compensation expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,269

 

 

 

-

 

 

 

-

 

 

 

1,269

 

Restricted stock units vested

 

 

-

 

 

 

233,311

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

129

 

 

 

-

 

 

 

-

 

 

 

129

 

Taxes paid related to net share settlement of equity awards

 

 

-

 

 

 

(29,655

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(23

)

 

 

-

 

 

 

-

 

 

 

(23

)

Net loss

 

 

(7

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(15,058

)

 

 

(33

)

 

 

(15,091

)

Balance, September 30, 2023

 

$

255

 

 

 

62,437,684

 

 

$

-

 

 

 

2,871,894

 

 

$

(26,034

)

 

$

383,064

 

 

$

(197,366

)

 

$

(864

)

 

$

158,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Non-Controlling
Interest Amount

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional
Paid-In Capital

 

 

(Accumulated Deficit) Retained
Earnings

 

 

Non-Controlling
Interests

 

 

Total Stockholders' Equity

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2022

 

$

1,494

 

 

 

61,691,054

 

 

$

-

 

 

 

2,871,894

 

 

$

(26,034

)

 

$

376,099

 

 

$

(1,092

)

 

$

(735

)

 

$

348,238

 

Adoption of ASC 842

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

7,752

 

 

 

-

 

 

 

7,752

 

Stock-based compensation expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,440

 

 

 

-

 

 

 

-

 

 

 

3,440

 

Repurchase of public warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(172

)

 

 

-

 

 

 

-

 

 

 

(172

)

Shareholder distribution

 

 

(66

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net income (loss)

 

 

(146

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,532

 

 

 

(28

)

 

 

1,504

 

Balance, September 30, 2022

 

$

1,282

 

 

 

61,691,054

 

 

$

-

 

 

 

2,871,894

 

 

$

(26,034

)

 

$

379,367

 

 

$

8,192

 

 

$

(763

)

 

$

360,762

 

See notes to unaudited condensed consolidated financial statements.

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VINTAGE WINE ESTATES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

 

Three months ended September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net (loss) income

 

$

(15,098

)

 

$

1,358

 

Adjustments to reconcile net (loss) income to net cash from operating activities:

 

 

 

 

 

 

Depreciation expense

 

 

4,131

 

 

 

3,996

 

Non-cash operating lease expense

 

 

1,387

 

 

 

37

 

Amortization expense

 

 

1,714

 

 

 

1,880

 

Amortization of deferred loan fees and line of credit fees

 

 

236

 

 

 

98

 

Stock-based compensation expense

 

 

1,269

 

 

 

3,440

 

Provision for credit losses

 

 

(17

)

 

 

(8

)

Provision for inventory reserves

 

 

110

 

 

 

-

 

Remeasurement of contingent consideration liabilities

 

 

971

 

 

 

185

 

Net loss (gain) on interest rate swap agreements

 

 

95

 

 

 

(9,327

)

Provision for deferred income tax

 

 

195

 

 

 

2,296

 

Gain on sale of assets

 

 

(797

)

 

 

-

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(8,870

)

 

 

(547

)

Other receivables

 

 

(59

)

 

 

(8

)

Inventories

 

 

1,851

 

 

 

(6,953

)

Prepaid expenses and other current assets

 

 

6,207

 

 

 

2,388

 

Other assets

 

 

68

 

 

 

(1,861

)

Accounts payable

 

 

(1,452

)

 

 

2,103

 

Accrued liabilities and other payables

 

 

3,853

 

 

 

3,702

 

Net change in lease assets and liabilities

 

 

(245

)

 

 

(791

)

Net cash (used in) provided by operating activities

 

 

(4,451

)

 

 

1,988

 

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from sale of assets

 

 

1,364

 

 

 

-

 

Purchases of property, plant and equipment

 

 

(3,462

)

 

 

(3,454

)

Net cash used in investing activities

 

 

(2,098

)

 

 

(3,454

)

Cash flows from financing activities

 

 

 

 

 

 

Principal payments on line of credit

 

 

(2,519

)

 

 

(34,466

)

Proceeds from line of credit

 

 

8,995

 

 

 

30,317

 

Change in outstanding checks in excess of cash

 

 

1,123

 

 

 

6,074

 

Principal payments on long-term debt

 

 

(328

)

 

 

(3,753

)

Principal payments on finance leases

 

 

(78

)

 

 

(67

)

Payments of minimum tax withholdings on stock-based payment awards

 

 

(23

)

 

 

-

 

Distributions to noncontrolling interest

 

 

-

 

 

 

(66

)

Repurchase of public warrants

 

 

-

 

 

 

(172

)

Payments on acquisition earnout

 

 

(230

)

 

 

(39

)

Net cash provided by (used in) financing activities

 

 

6,940

 

 

 

(2,172

)

Net change in cash, cash equivalents and restricted cash

 

 

391

 

 

 

(3,638

)

Cash, cash equivalents and restricted cash, beginning of year

 

 

18,233

 

 

 

49,558

 

Cash and cash equivalents, end of year

 

$

18,624

 

 

$

45,920

 

Supplemental cash flow information

 

 

 

 

 

 

Noncash investing and financing activities:

 

 

 

 

 

 

Increase in operating lease assets and liabilities upon adoption of ASC 842

 

$

-

 

 

$

36,776

 

Increase in finance lease assets and liabilities upon adoption of ASC 842

 

$

-

 

 

$

67

 

Operating lease assets obtained in exchange for operating lease liabilities

 

$

5

 

 

$

-

 

Finance lease assets obtained in exchange for finance lease obligations

 

$

81

 

 

$

-

 

Issuance of shares in lieu of payment to consultant

 

$

129

 

 

$

-

 

See notes to unaudited condensed consolidated financial statements.

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Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements include the accounts of all majority-owned or controlled subsidiaries, and all significant intercompany transactions and amounts have been eliminated. The results of businesses acquired or disposed of are included in the condensed consolidated financial statements from the date of the acquisition or up to the date of disposal, respectively.

References to the "Company," "we," "our," "us," and similar pronouns in this Quarterly Report on Form 10-Q for the three months ended September 30, 2023 (this "Form 10-Q") refer to Vintage Wine Estates, Inc., a Nevada corporation, and its majority owned subsidiaries or controlled subsidiaries unless the context requires otherwise.

Our fiscal year ends on June 30. References to fiscal 2024 in these condensed consolidated financial statements are to the fiscal year ending June 30, 2024.

Our unaudited condensed consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission ("SEC") instructions to Quarterly Reports on Form 10-Q and include the information and disclosures required by accounting principles generally accepted in the United States ("GAAP") for interim financial reporting.

In the opinion of management, all adjustments necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included in this Form 10-Q. Except as disclosed elsewhere in this Form 10-Q, all such adjustments are of a normal and recurring nature. In addition, financial results presented for this fiscal 2024 interim period are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2024 or any other future interim or annual period. These condensed consolidated financial statements are unaudited and accordingly, should be read in conjunction with the audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, filed with the SEC on October 13, 2023. The June 30, 2023 condensed consolidated balance sheet was derived from the audited consolidated financial statements as of that date.

Restatement of Previously Issued Condensed Consolidated Financial Statements

The Company restated its unaudited quarterly financial data, on October 13, 2023, for the periods ended September 30, 2022, December 31, 2022 and March 31, 2023. All amounts in this quarterly report on Form 10-Q affected by the restatement, including but not limited to the three months ended September 30, 2022, reflect such restated amounts.

Significant Accounting Policies

A description of the Company’s significant accounting policies is included in the audited financial statements within its Annual Report on Form 10-K for the fiscal year ended June 30, 2023. There have been no material changes in the Company’s significant accounting policies during the three months ended September 30, 2023.

Use of Estimates

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of assets and liabilities that are not readily apparent from other sources. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. Significant estimates include, but are not limited to the net realizable value of inventory, estimated fair values of intangible assets in acquisitions, intangible assets for impairment, amortization methods and periods, contingent consideration, stock-based compensation, and accounting for income taxes, as applicable. Actual results could differ materially from those estimates.

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Specifically, we reclassified $6.6 million of accrued employee compensation from accrued liabilities and other payables to accrued employee compensation as of June 30, 2023.

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Table of Contents

Allowance for Credit Losses

The provision for credit losses for the periods ended September 30, 2023 and June 30, 2023, was immaterial. We do not accrue interest on past-due amounts. Bad debt expense was immaterial for all reporting periods presented.

Disaggregation of Revenue

The following table summarizes revenue by geographic region:

 

 

September 30,

 

(in thousands)

 

2023

 

 

2022

 

United States

 

$

72,825

 

 

$

76,373

 

International

 

 

449

 

 

 

1,707

 

Total net revenue

 

$

73,274

 

 

$

78,080

 

The following table provides a disaggregation of revenue based on the pattern of revenue recognition:

 

 

September 30,

 

(in thousands)

 

2023

 

 

2022

 

Point in time

 

$

61,497

 

 

$

66,431

 

Over time

 

 

11,777

 

 

 

11,649

 

Total net revenue

 

$

73,274

 

 

$

78,080

 

Inventories

Inventory consists of the following:

(in thousands)

 

September 30, 2023

 

 

June 30, 2023

 

Bulk wine, spirits and cider

 

$

78,873

 

 

$

84,602

 

Bottled wine, spirits and cider

 

 

105,870

 

 

 

100,075

 

Bottling and packaging supplies

 

 

13,455

 

 

 

15,690

 

Nonwine inventory

 

 

1,204

 

 

 

996

 

Total inventories

 

$

199,402

 

 

$

201,363

 

Inventories of bulk and bottled wines, spirits, and ciders and inventories of non-wine products and bottling and packaging supplies are valued at the lower of cost using the FIFO method or net realizable value. Costs associated with winemaking, and other costs associated with the manufacturing of products for resale, are recorded as inventory. Net realizable value is the value of an asset that can be realized upon the sale of the asset, less a reasonable estimate of the costs associated with either the eventual sale or the disposal of the asset in question. Inventories are classified as current assets in accordance with recognized industry practice, although most wines and spirits are aged for periods longer than one year. The inventory reserve for the three months ended September 30, 2023 and 2022 was immaterial.

Indefinite-Lived Intangible Assets

During the three months ended September 30, 2023 and 2022, the Company did not identify any impairment triggers.

Casualty Gains

In relation to various weather and wildfire events, the Company received insurance and litigation proceeds of zero and $0.5 million during the three months ended September 30, 2023 and 2022, respectively.

Segment Information

We operate in three reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker (“CODM”), our Interim Chief Executive Officer for the three months ended September 30, 2023, allocates resources and assesses performance based upon discrete financial information at the segment level.

Earnings Per Share

Basic net income (loss) per share is calculated by dividing the net income (loss) allocable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. For purposes of the calculation of diluted net income (loss) per share, stock options, warrants to purchase common stock and restricted stock units are considered potentially dilutive securities but are excluded from the calculation of

6


Table of Contents

diluted net income (loss) per share when their effect is antidilutive. As a result, in certain periods, diluted net income (loss) per share is the same as the basic net income (loss) per share.

The Company does not pay dividends or have participating shares outstanding.

Emerging Growth Company Status

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act

2. Restructuring

On July 20, 2023, the Company's executive officers, authorized by the Board of Directors (the "Board") to take such action, approved an organizational restructuring plan (the "Plan") intended to expand margin through simplification and improved execution, measurably reduce costs, improve cash management, monetize assets, reduce debt and grow revenue of its key brands. As part of the Plan, there was a reduction in force affecting approximately 25 roles, or 4% of the workforce. The total restructuring expense, shown on a separate line in the Company's condensed consolidated statements of operations and comprehensive income, for the three months ended September 30, 2023 was $4.0 million, substantially all of which was related to employee severance and related benefit costs. The amount is expected to be paid over the next 24 months.

The following table presents the changes in the Company's restructuring-related accrued employee compensation liabilities:

(in thousands)

 

 

 

Balance at June 30, 2023

 

$