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RELATED PARTY TRANSACTIONS
 12 Months Ended
Dec. 31, 2022
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

 

13.RELATED PARTY TRANSACTIONS

 

Transactions with PepsiCo, Inc.

 

As further described in Note 14 Mezzanine Equity, on August 1, 2022, the Company issued 1,466,666 shares of non-voting Series A Convertible Preferred stock (“Series A”) to Pepsi. On an as-converted basis the Series A held by Pepsi accounts for approximately 8.5% of the Company’s outstanding Common Stock, both on the date of issuance and as of December 31, 2022. Also, as discussed Note 14, the Securities Purchase Agreement entered into on August 1, 2022 (the “Purchase Agreement”) granted Pepsi the right to designate a nominee for election to the Company’s nine-member board of directors, so long as Pepsi meets certain ownership requirements with respect to the Company’s stock. During the year ended December 31, 2022, a Pepsi executive was nominated by Pepsi and elected to the Company’s board of directors.

 

Based on Pepsi’s contractual representation rights for a seat on the Company’s Board of Directors, the Company has concluded that Pepsi represents a related party to the Company. As of and for the year ended December 31, 2022, the following transactions were recognized in the Company’s financial statements:

 

●Net sales to Pepsi amounted to $142.3 million for the year ended December 31, 2022 and are included in Revenue on the accompanying consolidated statement of operations and comprehensive (loss) income.

 

●Accounts receivable due from Pepsi on December 31, 2022, were $31.6 million and are included in Accounts receivable, net on the Company’s consolidated balance sheets.

 

●Pepsi paid the Company $227.8 million in cash in 2022 under the Transition Agreement. This amount was restricted and used to pay termination fees owed by the Company to terminated distributors. The Company has recorded deferred revenues of $189.5 million, which is presented net of $4.2 million of revenue recognized at December 31, 2022, and a liability payable due to Pepsi of $34.8 million, representing refund liabilities owed to Pepsi under the Transition Agreement which are included in Accounts payable and accrued expenses on the accompanying consolidated balance sheets as of December 31, 2022. The $34.8 million represents the excess of payments received from Pepsi less amounts paid and expected to be paid to terminated distributors.

 

●The issuance of Series A to Pepsi was recorded at fair value, determined to be $832.5 million, on August 1, 2022. Cash proceeds from the issuance of Series A received from Pepsi were $550.0 million. See Note 14 for more information.

 

●The Company has recorded a $282.5 million asset as Deferred other costs, representing the excess of the $832.5 million fair value of the Series A Preferred Stock over the issuance proceeds of $550.0 million. Amounts representing the unamortized deferred other costs of $14.1 million and $262.5 million are presented in Deferred other costs-current and Deferred other costs-non-current, respectively, net of $5.9 million of accumulated amortization recognized as an offset to Revenue in the accompanying consolidated statement of operations and comprehensive (loss) income and consolidated balance sheets as of and for the year ended December 31, 2022.

 

See Notes 1. Organization and Description of Business, 2. Basis of Presentation Significant Accounting Policies, 11. Accounts Payable and Accrued Expenses, and 14. Mezzanine Equity for more information.

 

Related Party Leases

 

The Company’s office is rented from a company affiliated with CD Financial, LLC which is controlled by one of our major stockholders. The lease extends until December 2024 with a monthly rent of $37.6 thousand.