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TABLE OF CONTENTS
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, 2021
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                            to                               
Commission File No. 001-38880
Whole Earth Brands, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
38-4101973
(I.R.S. Employer
Identification No.)
125 S. Wacker Drive, Suite 3150
Chicago, Illinois
60606
(Address of Principal Executive Offices)(Zip Code)
(312) 840-6000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which
registered
Common stock, par value $0.0001 per shareFREEThe NASDAQ Stock Market LLC
Warrants to purchase one-half of one share of common stockFREEWThe 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 filerAccelerated filer
Non-accelerated filerSmaller 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 5, 2021, there were 38,477,488 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.



TABLE OF CONTENTS
WHOLE EARTH BRANDS, INC.
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
Page

2

TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1.         Financial Statements.
3

TABLE OF CONTENTS
Whole Earth Brands, Inc.
Condensed Consolidated and Combined Financial Statements (Unaudited)
For the Quarter Ended September 30, 2021
Condensed Consolidated and Combined Financial Statements

4

TABLE OF CONTENTS
Whole Earth Brands, Inc.
Condensed Consolidated Balance Sheets
(In thousands of dollars, except for share and per share data)
(Unaudited)
September 30, 2021
December 31, 2020
Assets
Current Assets
Cash and cash equivalents$33,579 $16,898 
Accounts receivable (net of allowances of $940 and $955, respectively)
72,997 56,423 
Inventories193,509 111,699 
Prepaid expenses and other current assets20,068 5,045 
Total current assets320,153 190,065 
Property, Plant and Equipment, net53,860 47,285 
Other Assets
Operating lease right-of-use assets21,596 12,193 
Goodwill241,154 153,537 
Other intangible assets, net271,472 184,527 
Deferred tax assets, net2,296 2,671 
Other assets8,278 6,260 
Total Assets$918,809 $596,538 
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable$41,968 $25,200 
Accrued expenses and other current liabilities26,186 29,029 
Contingent consideration payable53,631  
Current portion of operating lease liabilities6,123 3,623 
Current portion of long-term debt3,750 7,000 
Total current liabilities131,658 64,852 
Non-Current Liabilities
Long-term debt384,070 172,662 
Warrant liabilities2,507  
Deferred tax liabilities, net52,403 23,297 
Operating lease liabilities, less current portion19,463 11,324 
Other liabilities15,176 15,557 
Total Liabilities605,277 287,692 
Commitments and Contingencies (Note 8)
  
Stockholders’ Equity
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at September 30, 2021 and December 31, 2020
  
Common stock, $0.0001 par value; 220,000,000 shares authorized; 38,477,723 and 38,426,669 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively.
4 4 
Additional paid-in capital331,125 325,679 
Accumulated deficit(26,043)(25,442)
Accumulated other comprehensive income8,446 8,605 
Total stockholders’ equity313,532 308,846 
Total Liabilities and Stockholders’ Equity$918,809 $596,538 
See Notes to Unaudited Consolidated and Combined Financial Statements

5

TABLE OF CONTENTS
Whole Earth Brands, Inc.
Condensed Consolidated and Combined Statements of Operations
(In thousands of dollars, except for share and per share data)
(Unaudited)
(Successor)(Predecessor)
Three Months Ended
September 30, 2021
Three Months Ended
September 30, 2020
Nine Months Ended
September 30, 2021
From
June 26, 2020 to September 30, 2020
From
January 1, 2020 to June 25, 2020
Product revenues, net$128,941 $67,002 $361,259 $71,480 $128,328 
Cost of goods sold85,912 48,357 241,224 51,065 77,627 
Gross profit43,029 18,645 120,035 20,415 50,701 
Selling, general and administrative expenses24,838 14,881 85,573 16,827 43,355 
Amortization of intangible assets4,675 2,700 13,532 2,841 4,927 
Asset impairment charges    40,600 
Restructuring and other expenses  4,503   
Operating income (loss)13,516 1,064 16,427 747 (38,181)
Change in fair value of warrant liabilities2,178  (425)  
Interest expense, net(6,553)(2,045)(18,027)(2,161)(238)
Loss on extinguishment and debt transaction costs  (5,513)  
Other income (expense), net(780)(170)(280)(232)801 
Income (loss) before income taxes8,361 (1,151)(7,818)(1,646)(37,618)
(Benefit) provision for income taxes(445)1,684 (8,294)1,694 (3,482)
Net income (loss)$8,806 $(2,835)$476 $(3,340)$(34,136)
Net earnings (loss) per share:
Basic$0.23 $(0.07)$0.01 $(0.09)
Diluted$0.17 $(0.07)$0.01 $(0.09)

See Notes to Unaudited Consolidated and Combined Financial Statements

6

TABLE OF CONTENTS
Whole Earth Brands, Inc.
Condensed Consolidated and Combined Statements of Comprehensive Income (Loss)
(In thousands of dollars)
(Unaudited)
(Successor)(Predecessor)
Three Months Ended
September 30, 2021
Three Months Ended
September 30, 2020
Nine Months Ended
September 30, 2021
From
June 26, 2020 to September 30, 2020
From
January 1, 2020 to June 25, 2020
Net income (loss)$8,806 $(2,835)$476 $(3,340)$(34,136)
Other comprehensive income (loss), net of tax:
Net change in pension benefit obligations recognized, net of taxes of $(5), $, $(18), $ and $65
202  165  318 
Foreign currency translation adjustments(3,599)3,130 (324)3,145 (2,286)
Total other comprehensive income (loss), net of tax(3,397)3,130 (159)3,145 (1,968)
Comprehensive income (loss)$5,409 $295 $317 $(195)$(36,104)
See Notes to Unaudited Consolidated and Combined Financial Statements

7

TABLE OF CONTENTS
Whole Earth Brands, Inc.
Condensed Consolidated and Combined Statements of Equity
(In thousands of dollars)
(Unaudited)
(Predecessor)
Total Equity
Balance at December 31, 2019$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, net338 
Net loss(5,481)
Other comprehensive loss, net of tax(132)
Balance at June 25, 2020$439,722 
Common StockPreferred StockAdditional
Paid-in
AccumulatedAccumulated
Other
Comprehensive
Total
Stockholders’
SharesAmountSharesAmountCapitalDeficitIncomeEquity
Balance at June 26, 2020 (Successor)
30,926,669 $3  $ $250,366 $(16,703)$ $233,666 
Issuance of warrants— — — — 7,895  — 7,895 
Issuance of common stock7,500,000 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 and Combined Financial Statements

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TABLE OF CONTENTS
Whole Earth Brands, Inc.
Condensed Consolidated and Combined Statements of Equity (Continued)
(In thousands of dollars)
(Unaudited)
Common StockPreferred StockAdditional
Paid-in
AccumulatedAccumulated
Other
Comprehensive
Total
Stockholders’
SharesAmountSharesAmountCapitalDeficitIncomeEquity
Balance at December 31, 2020 (Successor)38,426,669 $4  $ $325,679 $(25,442)$8,605 $308,846 
Reclassification of Private Warrants (Note 1)— — — — (7,062)(1,077)— (8,139)
Transfer of Private Warrants to Public Warrants (Note 6)— — — — 2,502 — — 2,502 
Net loss— — — — — (12,025)— (12,025)
Other comprehensive loss, net of tax— — — — — — (2,038)(2,038)
Stock-based compensation— — — — 1,639 — — 1,639 
Balance at March 31, 2021 (Successor)38,426,669 $4  $ $322,758 $(38,544)$6,567 $290,785 
Net income— — — — — 3,695 — 3,695 
Other comprehensive income, net of tax— — — — — — 5,276 5,276 
Stock-based compensation— — — — 2,392 — — 2,392 
Net share settlements of stock-based awards29,090 — — — — — — — 
Balance at June 30, 2021 (Successor)38,455,759 $4  $ $325,150 $(34,849)$11,843 $302,148 
Transfer of Private Warrants to Public Warrants (Note 6)— — — — 3,555 — — 3,555 
Net income— — — — — 8,806 — 8,806 
Other comprehensive loss, net of tax— — — — — — (3,397)(3,397)
Warrant exercises50 — — — 1 — — 1 
Stock-based compensation— — — — 2,534 — — 2,534 
Net share settlements of stock-based awards21,914 — — — (115)— — (115)
Balance at September 30, 2021 (Successor)38,477,723 $4  $ $331,125 $(26,043)$8,446 $313,532 
See Notes to Unaudited Consolidated and Combined Financial Statements

9

TABLE OF CONTENTS
Whole Earth Brands, Inc.
Condensed Consolidated and Combined Statements of Cash Flows
(In thousands of dollars)
(Unaudited)
(Successor)(Predecessor)
Nine Months Ended September 30, 2021From
June 26, 2020 to September 30, 2020
From
January 1, 2020 to June 25, 2020
Operating activities
Net income (loss) $476 $(3,340)$(34,136)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation7,191   
Depreciation3,230 797 1,334 
Amortization of intangible assets13,532 2,841 4,927 
Deferred income taxes2,210 (3,490)(5,578)
Asset impairment charges  40,600 
Amortization of inventory fair value adjustments(882)8,701  
Non-cash loss on extinguishment of debt4,435   
Change in fair value of warrant liabilities425   
Changes in current assets and liabilities:
Accounts receivable(2,452)(6,535)7,726 
Inventories(4,200)(3,679)3,576 
Prepaid expenses and other current assets(894)(2,516)3,330 
Accounts payable, accrued liabilities and income taxes(16,706)(5,618)507 
Other, net190 124 (2,378)
Net cash provided by (used in) operating activities6,555 (12,715)19,908 
Investing activities
Capital expenditures(7,076)(2,139)(3,532)
Acquisitions, net of cash acquired(190,231)(376,674) 
Proceeds from the sale of fixed assets4,257   
Transfer from trust account 178,875  
Net cash used in investing activities(193,050)(199,938)(3,532)
Financing activities
Proceeds from revolving credit facility25,000  3,500 
Repayments of revolving credit facility(47,855) (8,500)
Long-term borrowings375,000 140,000  
Repayments of long-term borrowings(138,376)(1,750) 
Debt issuance costs(11,589)(7,139) 
Proceeds from sale of common stock and warrants1 75,000  
Tax withholdings related to net share settlements of stock-based awards(115)  
Funding to Parent, net  (11,924)
Net cash provided by (used in) financing activities202,066 206,111 (16,924)
See Notes to Unaudited Consolidated and Combined Financial Statements

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Whole Earth Brands, Inc.
Condensed Consolidated and Combined Statements of Cash Flows (Continued)
(In thousands of dollars)
(Unaudited)
(Successor)(Predecessor)
Nine Months Ended
September 30, 2021
From
June 26, 2020 to September 30, 2020
From
January 1, 2020 to June 25, 2020
Effect of exchange rate changes on cash and cash equivalents1,110 88 215 
Net change in cash and cash equivalents 16,681 (6,454)(333)
Cash and cash equivalents, beginning of period16,898 55,535 10,395 
Cash and cash equivalents, end of period$33,579 $49,081 $10,062 
Supplemental disclosure of cash flow information
Interest paid$15,627 $1,667 $798 
Taxes paid, net of refunds$3,999 $1,722 $2,244 
Supplemental disclosure of non-cash investing
Non-cash capital expenditures$3,796 $ $ 
See Notes to Unaudited Consolidated and Combined Financial Statements

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Whole Earth Brands, Inc.
Notes to Condensed Consolidated and Combined 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 “Business Combination”) 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. In conjunction with the Business Combination, the Company issued an aggregate of 7,500,000 shares of Whole Earth Brands common stock and 5,263,500 private placement warrants (the “Private 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 Business Combination, 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 Business Combination and includes Whole Earth Brands, Inc. and its subsidiaries for periods after the Closing (referred to as the “Successor”).
Basis of Presentation—The accompanying unaudited consolidated and combined 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, 2020 was derived from the audited consolidated financial statements. These unaudited condensed consolidated and combined interim financial statements should be read in conjunction with the Company’s audited consolidated and combined financial statements for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K.
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, 2021 and the results of operations and cash flows for all periods presented. All adjustments reflected in the accompanying unaudited consolidated and combined 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 and combined 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.
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated and Combined Financial Statements
(Unaudited)    


Recently Adopted Accounting PronouncementsThe 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 March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 six months ended June 25, 2020.
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 upon adoption can be applied prospectively to applicable contract modifications made on or before 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.
Restructuring and Employee Termination Benefits—During 2020, the Company adopted restructuring plans to streamline processes and realize cost savings by consolidating facilities and eliminating various positions in operations and general and administrative areas.
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated and Combined Financial Statements
(Unaudited)    


In connection with the restructuring plans, the Company recognized restructuring and other expenses of $4.5 million for the nine months ended September 30, 2021. This included facility exit and other related costs of $3.9 million and employee termination benefits of $0.6 million. During the nine months ended September 30, 2021, the Company paid employee termination benefits of $0.5 million. The Company has accrued severance expense related to the restructuring plans of $1.1 million and $1.0 million at September 30, 2021 and December 31, 2020, respectively, which is recorded in accrued expenses and other current liabilities in the unaudited condensed consolidated balance sheets.
Warrant Liabilities—The Company accounts for the Private Warrants in accordance with Accounting Standards Codification “ASC” Topic 815, “Derivatives and Hedging.” Under the guidance contained in ASC Topic 815-40, the Private Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Private Warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period. The liability is subject to re-measurement at each balance sheet date, and any change in fair value is recognized in the Company’s statement of operations. The Private Warrants are valued using a Black-Scholes option pricing model.
Based on the views expressed in the SEC’s Staff Statement of April 12, 2021 in which the SEC staff clarified its interpretations of certain generally accepted accounting principles related to certain terms common in warrants issued by Special Purpose Acquisition Companies (“SPACs”), the Company determined that the Private Warrants should be treated as derivative liabilities rather than as components of equity, as previously presented as of December 31, 2020. Accordingly, the Company recorded out of period adjustments to the unaudited Condensed Consolidated Balance Sheet at January 1, 2021 to reclassify warrant liabilities of $8.1 million and transaction costs incurred by Act II of $1.1 million related to the issuance of the Private Warrants. Additionally, during the first quarter of 2021, the Company recognized the cumulative effect of the error on prior periods by recording a $1.2 million gain in the Statement of Operations to reflect the cumulative decrease in the fair value of the Private Warrants from the date of issuance through December 31, 2020. The Company concluded that this misstatement was not material to the current period or the previously filed financial statements.
NOTE 2: BUSINESS COMBINATIONS
On June 25, 2020, pursuant to the Business Combination, 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 purchase consideration (in thousands):
Base cash consideration$387,500 
Closing adjustment(764)
Total Purchase Price$386,736 
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated and Combined Financial Statements
(Unaudited)    


The Company 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 receivable45,769 
Inventories106,436 
Prepaid expenses and other current assets2,461 
Property, plant and equipment, net43,554 
Operating lease right-of-use assets12,541 
Intangible assets148,750 
Deferred tax assets, net1,065 
Other assets1,398 
Total assets acquired372,036 
Accounts payable18,590 
Accrued expenses and other current liabilities35,063 
Current portion of operating lease liabilities3,007 
Operating lease liabilities, less current portion12,208 
Deferred tax liabilities, net24,630 
Other liabilities16,227 
Total liabilities assumed109,725 
Net assets acquired262,311 
Goodwill124,425 
Total Purchase Price$386,736 
The values allocated to identifiable intangible assets and their estimated useful lives are as follows:
Identifiable intangible assetsFair Value
(in thousands)
Useful Life
(in years)
Customer relationships$47,359 
0.5 to 10
Tradenames90,691 25
Product formulations10,700 Indefinite
$148,750 
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. Of the purchase price allocated to goodwill, a total of $2.5 million will be deductible for income tax purposes pursuant to Internal Revenue Code (“IRC”) Section 197 over a 15-year period.
The Company’s allocation of purchase price was based upon valuations performed to determine the fair value of the net assets as of the acquisition date and was subject to adjustments for up to one year after the closing date of the acquisition to reflect final valuations. The allocation of purchase price was finalized in the second quarter of 2021.
In the first half of 2021, the Company recorded measurement period adjustments to its allocation of purchase price resulting in an increase in deferred tax liabilities, net of $1.5 million, other liabilities of $0.7 million and goodwill of $2.2 million.

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Whole Earth Brands, Inc.
Notes to Condensed Consolidated and Combined Financial Statements
(Unaudited)    


Direct transaction-related costs consist of costs incurred in connection with the Business Combination. Act II incurred transaction costs of $18.1 million prior to the Business Combination which are reflected within the accumulated deficit within the Consolidated Statement of Equity. During the three months ended March 31, 2021, the Company reclassified $1.1 million of Act II transaction costs related to the issuance of the Private Warrants that had been previously recorded in additional paid-in capital in connection with the Business Combination to accumulated deficit (See Note 1).
Swerve Acquisition—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. In connection with the acquisition of Swerve, the Company incurred transaction-related costs of $0.3 million in the nine months ended September 30, 2021. Swerve is included within the Company’s Branded CPG reportable segment. Swerve’s results are included in the Company’s consolidated statement of operations from the date of acquisition.
The following summarizes the purchase consideration (in thousands):
Base cash consideration$80,000 
Closing adjustment(968)
Total Purchase Price$79,032 
The Company recorded the fair value of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed as follows (in thousands):
Accounts receivable$3,223 
Inventories6,824 
Prepaid expenses and other current assets223 
Property, plant and equipment, net143 
Operating lease right-of-use assets76 
Intangible assets36,300 
Other assets3 
Total assets acquired46,792 
Accounts payable3,477 
Accrued expenses and other current liabilities288 
Current portion of operating lease liabilities48 
Operating lease liabilities, less current portion28 
Total liabilities assumed3,841 
Net assets acquired42,951 
Goodwill36,081 
Total Purchase Price$79,032 
The 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$3,200 10
Tradenames33,100 25
$36,300 
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated and Combined Financial Statements
(Unaudited)    


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 entire amount of the purchase price allocated to goodwill will be deductible for income tax purposes pursuant to IRC Section 197 over a 15-year period.
The Company’s allocation of purchase price was based upon 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.
Wholesome Acquisition—On December 17, 2020, the Company entered into a stock purchase agreement (the “Wholesome Purchase Agreement”) with WSO Investments, Inc. (“WSO Investments” and together with its subsidiaries “Wholesome” and affiliates). WSO Investments is the direct parent of its wholly-owned subsidiary Wholesome Sweeteners, Incorporated, which was formed to import, market, distribute, and sell organic sugars, unrefined specialty sugars, and related products. Wholesome is included within the Company’s Branded CPG reportable segment. Wholesome’s results are included in the Company’s consolidated statement of operations from the date of acquisition.
On February 5, 2021, pursuant to the terms of the Wholesome Purchase Agreement, the Company purchased and acquired all of the issued and outstanding shares of capital stock for an initial cash purchase price of $180 million plus up to an additional $55 million (the “Earn-Out Amount”) upon the satisfaction of certain post-closing financial metrics. Subject to the terms and conditions of the Wholesome Purchase Agreement payment of the Earn-Out Amount, in whole or in part, is subject to Wholesome achieving certain EBITDA thresholds at or above approximately $30 million during the period beginning August 29, 2020, and ending December 31, 2021 and is expected to be paid by March 31, 2022. A portion of the Earn-Out Amount (up to $27.5 million) may be paid, at the Company’s election, in freely tradeable, registered shares of Company common stock. The fair value of the Earn-Out Amount assumes a full payout. In connection with the acquisition of Wholesome, the Company incurred transaction-related costs of $0.1 million and $4.7 million in the three and nine months ended September 30, 2021, respectively.
The following summarizes the preliminary purchase consideration (in thousands):
Base cash consideration$180,000 
Closing adjustment13,863 
Fair value of Earn-Out Amount52,395 
Total Purchase Price$246,258 
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated and Combined 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$2,664 
Accounts receivable15,868 
Inventories78,522 
Prepaid expenses and other current assets1,271 
Property, plant and equipment, net3,134 
Operating lease right-of-use assets7,585 
Intangible assets104,500 
Other assets1,189 
Total assets acquired214,733 
Accounts payable5,251 
Accrued expenses and other current liabilities10,576 
Current portion of operating lease liabilities1,435 
Operating lease liabilities, less current portion6,150 
Deferred tax liabilities, net26,685 
Total liabilities assumed50,097 
Net assets acquired164,636 
Goodwill81,622 
Total Purchase Price$246,258 
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$55,700 10
Tradenames48,800 25
$104,500 
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. Of the purchase price allocated to goodwill, a total of $4.7 million will be deductible for income tax purposes pursuant to IRC Section 197 over a 9-year period.
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. The accounting for the Wholesome acquisition is not complete as the valuation for certain acquired assets and liabilities have not been finalized. These final valuations of the assets and liabilities could have a material impact on the preliminary purchase price allocation disclosed above.
In the second and third quarter of 2021, the Company recorded measurement period adjustments to its initial allocation of purchase price as a result of ongoing valuation procedures on assets and liabilities assumed, including (i) an increase in purchase price of $3.6 million due to the finalization of the closing adjustment; (ii) a decrease to inventory of $0.2 million; (iii) an increase in prepaid expenses and other current assets of $0.5 million; (iv) an increase in property, plant and equipment of $0.4 million; (v) a decrease to intangible assets of $1.9 million; (vi) a decrease to other assets of $0.1 million; (vii) a decrease to accrued expenses and other current liabilities of $2.7 million; (viii) a decrease to deferred tax liabilities, net of $0.3 million; and (ix) an increase to goodwill of $1.9 million due to the incremental measurement period adjustments discussed in items (i) through (viii). The impact of measurement period adjustments to the results of operations was immaterial.
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated and Combined Financial Statements
(Unaudited)    


The results of the Company’s operations for the three and nine months ended September 30, 2021 includes the results of Wholesome since February 5, 2021. Product revenues, net and operating income of Wholesome included in the Company’s condensed consolidated statement of operations for the three months ended September 30, 2021 was $53.1 million and $7.5 million, respectively, and for the nine months ended September 30, 2021 was $125.3 million and $12.6 million, respectively.
Pro Forma Financial InformationThe following unaudited pro forma financial information summarizes the results of operations for the Company as though the Business Combination and Swerve acquisition had occurred on January 1, 2019 and the Wholesome acquisition had occurred on January 1, 2020 (in thousands):
Pro Forma
Statements of Operations
Three Months EndedNine Months Ended
September 30, 2021September 30, 2020September 30, 2021September 30, 2020
Revenue$128,941 $120,968 $381,639 $367,150 
Net income (loss)$9,613 $5,272 $13,928 $(38,626)
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 acquisitions. 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 Business Combination and Swerve acquisitions been consummated on January 1, 2019 and the Wholesome acquisition been consummated on January 1, 2020.
The Successor and Predecessor periods have been combined in the pro forma for the three and nine months ended September 30, 2021 and 2020 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 property, plant and equipment that have been adjusted to fair value, and the release of the inventory fair value adjustments into cost of goods sold. These adjustments are net of taxes.
NOTE 3: INVENTORIES
Inventories consisted of the following (in thousands):
September 30, 2021December 31, 2020
Raw materials and supplies$117,445 $66,487 
Work in process1,408 562 
Finished goods74,656 44,650 
Total inventories$193,509 $111,699 
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated and Combined Financial Statements
(Unaudited)    


NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets consisted of the following (in thousands):
September 30, 2021
December 31, 2020
Gross
Amount
Accumulated
Amortization
Net
Amount
Gross
Amount
Accumulated
Amortization
Net
Amount
Other intangible assets subject to amortization
Customer relationships (useful life of 5 to 10 years)
$105,868 $(11,313)