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Acquisition of Eagle Alcohol | 9 Months Ended
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Sep. 30, 2022
Acquisition of Eagle Alcohol [Abstract] |
ACQUISITION OF EAGLE ALCOHOL | 2. ACQUISITION OF EAGLE ALCOHOL. On January 14, 2022, the Company purchased 100% of the membership interests of Eagle Alcohol. The purchase price was $14.0 million in cash plus an estimated net working capital adjustment of $1.3 million in cash. The selling members of Eagle Alcohol are eligible to receive up to an additional $14.0 million of contingent consideration, payable through a combination of $9.0 million in cash over the next three years and an aggregate of $5.0 million in the Company’s common stock on the fourth and fifth year anniversaries of the closing date, subject to the satisfaction of certain conditions, including continued employment with the Company. With respect to these payments, the Company has recognized an estimated $0.9 million and $2.6 million for the three and nine months ended September 30, 2022, respectively, in selling, general and administrative expenses in the accompanying consolidated statements of operations. Eagle Alcohol specializes in break bulk distribution of specialty alcohols. Eagle Alcohol purchases bulk alcohol from suppliers and then stores, denatures, packages, and resells alcohol products in smaller sizes, including tank trucks, totes, and drums, that garner a premium to bulk alcohols. Eagle Alcohol delivers products to customers in the beverage, food, and related-process industries via its own dedicated trucking fleet and common carrier. The acquisition has provided the Company further vertical integration and access to new markets in the specialty alcohol industry. Eagle Alcohol’s unaudited results for the three months ended September 30, 2022 and 2021 generated $4.2 million and $9.9 million in net sales and $0.0 million and $1.0 million in net income, respectively. Eagle Alcohol’s unaudited results for the nine months ended September 30, 2022 and 2021 generated $12.1 million and $27.5 million in net sales and $0.1 million and $3.0 million in net income, respectively. The following table presents unaudited pro forma combined financial information assuming the acquisition occurred on January 1, 2021 (dollars in thousands except per share amounts):
|  | Three Months Ended September 30, |
|  | 2022 |  |  | 2021 |
Revenues – pro forma |  | $ | 336,877 |  |  | $ | 311,821 |
Net loss available to common stockholders – pro forma |  | $ | (28,357 | ) |  | $ | (3,424 | )
Diluted net loss per share – pro forma |  | $ | (0.38 | ) |  | $ | (0.05 | )
Diluted shares |  |  | 73,960 |  |  |  | 72,332 |
|  | Nine Months Ended September 30, |
|  | 2022 |  |  | 2021 |
Revenues – pro forma |  | $ | 1,007,711 |  |  | $ | 840,947 |
Net income (loss) available to common stockholders – pro forma |  | $ | (9,538 | ) |  | $ | 8,474 |
Diluted net income (loss) per share – pro forma |  | $ | (0.13 | ) |  | $ | 0.12 |
Diluted shares |  |  | 72,764 |  |  |  | 73,209 |
The following preliminary allocation of the estimated purchase price assumes, with the exception of property and equipment and intangibles, carrying values approximate fair value. Estimates of uncollectible accounts receivable are not considered material due to the short-term nature and customer collection history. The preliminary estimate of working capital is under review by management and is subject to change. Based upon these assumptions, the preliminary purchase price allocation is as follows (in thousands):
Cash and equivalents |  | $ | 705 |
Accounts receivable |  |  | 5,517 |
Inventories |  |  | 1,388 |
Other assets |  |  | 29 |
Total current assets |  |  | 7,639 |
Property and equipment |  |  | 1,067 |
Right of use assets |  |  | 2,749 |
Total tangible assets |  | $ | 11,455 |
Current liabilities |  | $ | 6,262 |
Right of use liability |  |  | 2,749 |
Total liabilities |  | $ | 9,011 |
Net tangible assets acquired |  | $ | 2,444 |
Customer relationships |  |  | 6,556 |
Tradename |  |  | 420 |
Goodwill |  |  | 5,970 |
Total Purchase Price |  | $ | 15,390 |
Goodwill represents the value of the downstream integration that the operations of Eagle Alcohol will add to the Company. The Company expects the amortization of goodwill to be deductible for tax purposes. For the identifiable intangible assets, the Company has estimated 12 years for useful lives for customer relationships and 10 years for tradename. For the three months ended September 30, 2022, the Company recorded amortization expense of $137,000 and $10,000 for customer relationships and tradename, respectively. For the nine months ended September 30, 2022, the Company recorded amortization expense of $390,000 and $30,000 for customer relationships and tradename, respectively. Any changes to the initial estimates of the fair value of the acquired assets and assumed liabilities will be recorded as adjustments to those assets and liabilities and residual amounts will be allocated to goodwill if net assets acquired are less than the purchase price. The Company did not incur any material acquisition costs.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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