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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 June 30, 2022
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 1250
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 August 5, 2022, there were 41,973,680 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 Financial Statements (Unaudited)
For the Quarter Ended June 30, 2022
Condensed Consolidated 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)
June 30, 2022
December 31, 2021
Assets
Current Assets
Cash and cash equivalents$27,621 $28,296 
Accounts receivable (net of allowances of $1,383 and $1,285, respectively)
72,112 69,590 
Inventories228,074 212,930 
Prepaid expenses and other current assets10,356 7,585 
Total current assets338,163 318,401 
Property, Plant and Equipment, net57,087 58,503 
Other Assets
Operating lease right-of-use assets23,365 26,444 
Goodwill237,238 242,661 
Other intangible assets, net253,484 266,939 
Deferred tax assets, net2,006 1,993 
Other assets9,335 7,638 
Total Assets$920,678 $922,579 
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable$57,624 $55,182 
Accrued expenses and other current liabilities24,498 30,733 
Contingent consideration payable 54,113 
Current portion of operating lease liabilities8,308 7,950 
Current portion of long-term debt3,750 3,750 
Total current liabilities94,180 151,728 
Non-Current Liabilities
Long-term debt432,314 383,484 
Warrant liabilities394 2,053 
Deferred tax liabilities, net32,190 35,090 
Operating lease liabilities, less current portion18,652 22,575 
Other liabilities13,604 13,778 
Total Liabilities591,334 608,708 
Commitments and Contingencies (Note 8)
  
Stockholders’ Equity
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at June 30, 2022 and December 31, 2021
  
Common stock, $0.0001 par value; 220,000,000 shares authorized; 41,973,680 and 38,871,646 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
4 4 
Additional paid-in capital359,095 330,616 
Accumulated deficit(22,384)(26,436)
Accumulated other comprehensive income (loss)(7,371)9,687 
Total stockholders’ equity329,344 313,871 
Total Liabilities and Stockholders’ Equity$920,678 $922,579 
See Notes to Unaudited Condensed Consolidated Financial Statements

5

TABLE OF CONTENTS
Whole Earth Brands, Inc.
Condensed Consolidated Statements of Operations
(In thousands of dollars, except for share and per share data)
(Unaudited)
Three Months EndedSix Months Ended
June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Product revenues, net$133,503 $126,493 $264,095 $232,318 
Cost of goods sold96,189 85,138 187,223 155,312 
Gross profit37,314 41,355 76,872 77,006 
Selling, general and administrative expenses24,960 27,828 52,748 60,735 
Amortization of intangible assets4,664 4,706 9,369 8,857 
Restructuring and other expenses 2,846  4,503 
Operating income7,690 5,975 14,755 2,911 
Change in fair value of warrant liabilities193 (241)1,054 (2,603)
Interest expense, net(6,428)(6,396)(12,460)(11,474)
Loss on extinguishment and debt transaction costs   (5,513)
Other income, net697 190 2,653 500 
Income (loss) before income taxes2,152 (472)6,002 (16,179)
Provision (benefit) for income taxes826 (4,167)1,950 (7,849)
Net income (loss)$1,326 $3,695 $4,052 $(8,330)
Net earnings (loss) per share:
Basic$0.03 $0.10 $0.10 $(0.22)
Diluted$0.03 $0.09 $0.10 $(0.22)

See Notes to Unaudited Condensed Consolidated Financial Statements

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Whole Earth Brands, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands of dollars)
(Unaudited)
Three Months EndedSix Months Ended
June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Net income (loss)$1,326 $3,695 $4,052 $(8,330)
Other comprehensive income (loss), net of tax:
Net change in pension benefit obligations recognized, net of taxes of $6, $(13), $(66) and $(13), respectively
17 (46)(207)(37)
Foreign currency translation adjustments(14,848)5,322 (16,851)3,275 
Total other comprehensive income (loss), net of tax(14,831)5,276 (17,058)3,238 
Comprehensive income (loss)$(13,505)$8,971 $(13,006)$(5,092)
See Notes to Unaudited Condensed Consolidated Financial Statements

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Whole Earth Brands, Inc.
Condensed Consolidated Statements of Equity
(In thousands of dollars)
(Unaudited)
Common StockAdditional
Paid-in
AccumulatedAccumulated
Other
Comprehensive
Total
Stockholders’
SharesAmountCapitalDeficitIncomeEquity
Balance at December 31, 202038,426,669 $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— — 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, 202138,426,669 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, 202138,455,759 $4 $325,150 $(34,849)$11,843 $302,148 
Common StockAdditional
Paid-in
AccumulatedAccumulated
Other
Comprehensive
Total
Stockholders’
SharesAmountCapitalDeficitIncomeEquity
Balance at December 31, 202138,871,646 $4 $330,616 $(26,436)$9,687 $313,871 
Transfer of Private Warrants to Public Warrants— — 605 — — 605 
Net income— — — 2,726 — 2,726 
Other comprehensive loss, net of tax— — — — (2,227)(2,227)
Stock-based compensation— — 1,354 — — 1,354 
Net share settlements of stock-based awards146,444 — (291)— — (291)
Shares issued for payment of contingent consideration2,659,574 — 23,936 — — 23,936 
Balance at March 31, 202241,677,664 4 356,220 (23,710)7,460 339,974 
Transfer of Private Warrants to Public Warrants— — — — — — 
Net income— — — 1,326 — 1,326 
Other comprehensive loss, net of tax— — — — (14,831)(14,831)
Stock-based compensation— — 1,564 — — 1,564 
Net share settlements of stock-based awards92,253 — (91)— — (91)
Net share settlements under management bonus plan203,763 — 1,402 — — 1,402 
Balance at June 30, 202241,973,680 $4 $359,095 $(22,384)$(7,371)$329,344 


See Notes to Unaudited Condensed Consolidated Financial Statements

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Whole Earth Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands of dollars)
(Unaudited)
Six Months Ended
June 30, 2022June 30, 2021
Operating activities
Net income (loss) $4,052 $(8,330)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation3,214 4,464 
Depreciation2,916 2,120 
Amortization of intangible assets9,369 8,857 
Deferred income taxes(1,857)808 
Amortization of inventory fair value adjustments(2,537)1,727 
Non-cash loss on extinguishment of debt 4,435 
Change in fair value of warrant liabilities(1,054)2,603 
Changes in current assets and liabilities:
Accounts receivable(4,785)(4,891)
Inventories(16,800)(8,142)
Prepaid expenses and other current assets(1,017)762 
Accounts payable, accrued liabilities and income taxes(1,741)(14,895)
Other, net(1,783)1,028 
Net cash used in operating activities(12,023)(9,454)
Investing activities
Capital expenditures(4,440)(4,624)
Acquisitions, net of cash acquired (186,601)
Proceeds from the sale of fixed assets50 4,257 
Net cash used in investing activities(4,390)(186,968)
Financing activities
Proceeds from revolving credit facility50,000 25,000 
Repayments of revolving credit facility (47,855)
Long-term borrowings 375,000 
Repayments of long-term borrowings(1,875)(137,438)
Debt issuance costs(672)(11,589)
Payment of contingent consideration(29,108) 
Tax withholdings related to net share settlements of stock awards(862) 
Net cash provided by financing activities17,483 203,118 
Effect of exchange rate changes on cash and cash equivalents(1,745)460 
Net change in cash and cash equivalents(675)7,156 
Cash and cash equivalents, beginning of period28,296 16,898 
Cash and cash equivalents, end of period$27,621 $24,054 
Supplemental disclosure of cash flow information
Interest paid$11,511 $10,037 
Taxes paid, net of refunds$5,757 $4,364 
Supplemental disclosure of non-cash investing
Non-cash capital expenditures$ $3,554 

See Notes to Unaudited Condensed Consolidated Financial Statements

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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 “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.
Basis of Presentation—The accompanying unaudited condensed consolidated 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, 2021 was derived from the audited consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated and combined financial statements for the year ended December 31, 2021 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 June 30, 2022 and the results of operations and cash flows for all periods presented. All adjustments in the accompanying unaudited condensed 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.
Principles of Consolidation—The condensed 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 condensed 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 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 December 2019, the FASB issued ASU 2019-12, “Income Taxes (Accounting Standards Codification “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 adopted this standard on January 1, 2022. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU 2020-04, “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 2020-04 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 adopted this standard during the second quarter of 2022. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements.
Accounting Standards Not Yet Adopted—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.
In connection with the restructuring plans, the Company recognized restructuring and other expenses of $2.8 million and $4.5 million for the three and six months ended June 30, 2021, primarily consisting of facility exit and other related costs. During the six months ended June 30, 2022, the Company paid employee termination benefits of $0.2 million. The Company had accrued severance expense related to the restructuring plans of $0.6 million and $0.8 million at June 30, 2022 and December 31, 2021, respectively, which is recorded in accrued expenses and other current liabilities in its unaudited condensed consolidated balance sheets.
Warrant Liabilities—The Company accounts for the Private Warrants in accordance with 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.

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


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
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, was 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 (the “Earn-Out Period”). A portion of the Earn-Out Amount (up to $27.5 million) could be paid, at the Company’s election, in freely tradeable, registered shares of Company common stock calculated using the 20-day volume weighted average trading price per share as of the date of determination. Calculation of the achievement of the Earn-Out Amount was subject to certain adjustments more thoroughly described in the Wholesome Purchase Agreement. In connection with the acquisition of Wholesome, the Company incurred transaction-related costs of $0.2 million in the three months ended June 30, 2021 and $0.2 million and $4.6 million in the six months ended June 30, 2022 and 2021, respectively.
Following the completion of the Earn-Out Period, the Company determined, in accordance with the terms of the Purchase Agreement, that the sellers were entitled to receive the Earn-Out Amount in full. The Company elected to satisfy part of the Earn-Out Amount in common stock and on February 23, 2022, issued 2,659,574 shares of the Company’s common stock. The remaining $30 million portion of the $55 million Earn-Out Amount was paid in cash which was funded from available capacity under the Company’s revolving credit facility. The settlement of the earn-out resulted in a non-cash gain of $1.1 million that was recorded in the first quarter of 2022 which represents the difference in the value of the common stock issued using the 20-day volume weighted average trading price per share as compared to the trading price on the date of issuance.
The following summarizes the 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 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$2,664 
Accounts receivable15,868 
Inventories76,879 
Prepaid expenses and other current assets1,322 
Property, plant and equipment, net3,134 
Operating lease right-of-use assets7,585 
Intangible assets104,500 
Other assets1,189 
Total assets acquired213,141 
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, net24,234 
Total liabilities assumed47,646 
Net assets acquired165,495 
Goodwill80,763 
Total Purchase Price$246,258 
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$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 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 first quarter of 2022.
In 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 $1.8 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 $2.8 million; and (ix) an increase to goodwill of $1.0 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 Financial Statements
(Unaudited)    


The results of the Company’s operations for the three and six months ended June 30, 2021 include 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 June 30, 2021 was $44.6 million and $3.4 million, respectively, and for the six months ended June 30, 2021 was $72.2 million and $5.1 million, respectively.
Pro Forma Financial InformationThe following unaudited pro forma financial information summarizes the results of operations of the Company for the three and six months ended June 30, 2021 as though the Wholesome acquisition had occurred on January 1, 2020 (in thousands):
Pro Forma Statement of Operations
Three Months Ended
June 30, 2021
Six Months Ended
June 30, 2021
Revenue$126,493 $252,698 
Net income$4,967 $1,105 
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 Wholesome acquisition been consummated on January 1, 2020.
The pro forma financial information for the three and six months ended June 30, 2021 includes adjustments to reflect intangible asset amortization based on the economic values derived from definite-lived intangible assets, interest expense on the new debt financing, and the release of the inventory fair value adjustments into cost of goods sold. These adjustments are net of taxes. The results of the Company’s operations for the three and six months ended June 30, 2022 include Wholesome for the entire period and therefore pro forma financial information is not required.
NOTE 3: INVENTORIES
Inventories consisted of the following (in thousands):
June 30, 2022December 31, 2021
Raw materials and supplies$134,536 $129,712 
Work in process2,974 1,480 
Finished goods90,564 81,738 
Total inventories$228,074 $212,930 
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)    


NOTE 4: GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets consisted of the following (in thousands):
June 30, 2022
December 31, 2021
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)
$105,265 $(20,232)$85,033 $106,013 $(14,478)$91,535 
Tradenames (useful life of 25 years)
169,727 (11,976)157,751 173,522 (8,818)164,704 
Total$274,992 $(32,208)242,784 $279,535 $(23,296)256,239 
Other intangible assets not subject to amortization
Product formulations10,700 10,700 
Total other intangible assets, net253,484 266,939 
Goodwill237,238 242,661 
Total goodwill and other intangible assets$490,722 $509,600 
At June 30, 2022 and December 31, 2021, goodwill at Branded CPG was $233.6 million and $238.9 million, respectively. Goodwill at Flavors & Ingredients was $3.7 million and $3.8 million at June 30, 2022 and December 31, 2021, respectively.
The amortization expense for intangible assets was $4.7 million and $9.4 million for the three and six months ended June 30, 2022, respectively, and $4.7 million and $8.9 million for the three and six months ended June 30, 2021, respectively.
Amortization expense relating to amortizable intangible assets as of June 30, 2022 for the next five years is expected to be as follows (in thousands):
Remainder of 2022$9,361 
202318,721 
202418,721 
202518,488 
202618,267 
202717,040 
NOTE 5: DEBT
Debt consisted of the following (in thousands):
June 30, 2022December 31, 2021
Term loan, due February 2028$370,313 $372,187 
Revolving credit facility, due February 202675,000 25,000 
Less: current portion(3,750)(3,750)
Less: unamortized discount and debt issuance costs(9,249)(9,953)
Total long-term debt$432,314 $383,484 
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)    


At December 31, 2021, the Company’s senior secured loan agreement consisted of a senior secured term loan facility (the “Term Loan Facility”) of $375 million and a revolving credit facility of up to $75 million (the “Revolving Facility,” and together with the Term Loan Facility, the “Credit Facilities”). At December 31, 2021, there were $2.1 million of outstanding letters of credit that reduced the Company’s availability under the revolving credit facility. The Company’s unamortized discounts and debt issuance costs related to the Term Loan Facility and the Revolving Facility were $10.0 million and $1.8 million, respectively, at December 31, 2021. The unamortized debt issuance costs related to the Revolving Facility are included in other assets in the condensed consolidated balance sheet. See Note 7 to the Company’s consolidated and combined financial statements in its Annual Report on Form 10-K for the year ended December 31, 2021 for further information and significant terms and conditions associated with the Term Loan Facility and Revolving Facility.
In connection with the closing of the Wholesome Transaction, on February 5, 2021, the Company and certain of its subsidiaries entered into an amendment and restatement agreement (the “Amended and Restated Agreement”) which amended and restated its then existing senior secured loan agreement dated as of June 25, 2020. As of the date of the Amended and Restated Agreement, the aggregate unamortized debt issuance costs totaled $6.2 million, of which $4.4 million was expensed as a loss on extinguishment of debt in the first quarter of 2021. Additionally, in connection with the Amended and Restated Credit Agreement, the Company paid fees to certain lenders of $3.8 million, which was considered a debt discount, all of which was deferred, and incurred transaction costs of $8.9 million, of which $7.8 million was deferred and $1.1 million was expensed as part of loss on extinguishment and debt transaction costs in the first quarter of 2021.
As further described in Note 2, following the completion of the Wholesome Earn-Out Period, the Company determined, in accordance with the terms of the Purchase Agreement, that the sellers were entitled to receive the Earn-Out Amount in full. The Company elected to satisfy part of the Earn-Out Amount in common stock and on February 23, 2022, issued 2,659,574 shares of the Company’s common stock. The remaining $30 million portion of the $55 million Earn-Out Amount was paid in cash which was funded from available capacity under the Company’s revolving credit facility.
On June 15, 2022, the Company and certain of its subsidiaries entered into a first amendment (the “Amendment”) to the Amended and Restated Agreement dated as of February 5, 2021. The Amendment increased the aggregate principal amount of the Revolving Credit Facility from $75 million to $125 million (the “Amended Revolving Credit Facility”) and transitioned from LIBOR to Secured Overnight Financing Rate (“SOFR”) as the benchmark for purposes of calculating interest for all loans outstanding under the Amended and Restated Credit Agreement. At the election of the Company, loans outstanding under the Amended and Restated Credit Agreement will accrue interest at a rate per annum equal to (i) term SOFR plus 0.10%, 0.15%, or 0.25% in case of, respectively, a one-month, three-month, or six-month interest period (“Adjusted Term SOFR”), or (ii) the greater of the prime rate, the federal funds effective rate plus 0.50%, and one-month Adjusted Term SOFR plus 1.00%, in each case plus the applicable margin which is equal to (i) with respect to Amended Revolving Credit Facility and letters of credit, (A) 2.75%, in the case of base rate advances, and (B) 3.75% in the case of SOFR advances, and (ii) with respect to the Term Loan Facility, (A) 3.50%, in the case of base rate advances, and (B) 4.50% in the case of SOFR advances. In connection with the Amendment, the Company paid fees and incurred transaction costs of $0.7 million, all of which was deferred.
The transition to SOFR did not materially impact the interest rates applied to the Company’s borrowings. No other material changes were made to the terms of the Company’s Amended and Restated Agreement as a result of the Amendment.
At June 30, 2022, the Company’s senior secured loan agreement consisted of the Term Loan Facility and the Amended Revolving Credit Facility. At June 30, 2022, there were $2.1 million of outstanding letters of credit that reduced the Company’s availability under the Amended Revolving Credit Facility. The Company’s unamortized discounts and debt issuance costs related to the Term Loan Facility and the Amended Revolving Credit Facility were $9.2 million and $2.2 million, respectively, at June 30, 2022. The unamortized debt issuance costs related to the Amended Revolving Credit Facility are included in other assets in the Company’s condensed consolidated balance sheets.
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)    


NOTE 6: WARRANTS
As of the date of the Business Combination, the Company had approximately 20,263,500 warrants outstanding, consisting of (i) 15,000,000 public warrants originally sold as part of the units issued in Act II’s initial public offering (the “Public Warrants”) and (ii) 5,263,500 Private Warrants that were sold by Act II to the PIPE Investors in conjunction with the Business Combination (collectively with the Public Warrants, the “Warrants”). Each warrant is exercisable for one-half of one share of the Company’s common stock at a price of $11.50 per whole share, subject to adjustment. Warrants may only be exercised for a whole number of shares as no fractional shares will be issued. As of June 30, 2022 and December 31, 2021, the Company had 19,491,320 and 18,929,880 Public Warrants outstanding, respectively, and 771,980 and 1,333,420 Private Warrants outstanding, respectively.
There were no Warrants exercised for shares of the Company’s common stock in the six months ended June 30, 2022 and 2021.
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.
Contingent Consideration Payable—The Company measured the contingent consideration payable at fair value. The fair value of the contingent consideration utilized Level 3 inputs as it is based on significant inputs not observable in the market as of December 31, 2021, such as projected financial information and discount rate.
Debt—The Company measures its term loan and revolving facilities at original carrying value, net of unamortized deferred financing costs and fees. At June 30, 2022, the estimated fair value of the term loan was $349.9 million as compared to a carrying value of $361.1 million. At December 31, 2021, the estimated fair value of the term loan approximated the carrying value of $362.2 million. The estimated fair value of the outstanding principal balance of the term loan utilized Level 2 inputs as it is based on quoted market prices for identical or similar instruments. The fair value of the revolving facility at both June 30, 2022 and December 31, 2021 approximated carrying value.
Warrant Liabilities—The Company classifies its Private Warrants as liabilities in accordance with ASC Topic 815. The Company estimates the fair value of the Private Warrants using a Black-Scholes options pricing model. The fair value of the Private Warrants utilized Level 3 inputs as it is based on significant inputs not observable in the market as of June 30, 2022 and December 31, 2021.
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)    


The fair value of the Private Warrants was estimated at June 30, 2022 and December 31, 2021 using a Black-Scholes options pricing model and the following assumptions:
InputJune 30, 2022December 31, 2021
Asset price$6.20$10.74
Exercise price$11.50$11.50
Risk-free interest rate2.99%1.04%
Expected volatility48.0%41.0%
Expected term (years)2.993.49
Dividend yield0.0%0.0%
The fair value of warrant liabilities as of June 30, 2022 was $0.4 million. The changes in the warrant liabilities during the six months ended June 30, 2022 were as follows (in thousands):
Fair value of warrant liabilities as of December 31, 2021$2,053 
Transfer of Private Warrants to Public Warrants(605)
Change in fair value of warrant liabilities in Q1 2022(861)
Fair value of warrant liabilities as of March 31, 2022587 
Change in fair value of warrant liabilities in Q2 2022(193)
Fair value of warrant liabilities as of June 30, 2022$394 
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 condensed consolidated financial position or results of operations.
NOTE 9: INCOME TAXES
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.
The Company’s income tax provision was $0.8 million for the three months ended June 30, 2022. The effective tax rate for the three months ended June 30, 2022 was an income tax provision of 38.4% on pre-tax income of $2.2 million which differs from the statutory federal rate of 21% primarily due to state and local taxes, non-deductible permanent differences, limited benefit on current year interest deductions and losses in certain jurisdictions, the change in the fair value of warrant liabilities, foreign income at different rates and the U.S. tax effect of international operations including Global Intangible Low-Taxed Income (“GILTI”) recorded during the period.
The Company’s income tax provision was $2.0 million for the six months ended June 30, 2022. The effective tax rate for the six months ended June 30, 2022 was an income tax provision of 32.5% on pre-tax income of $6.0 million which differs from the statutory federal rate of 21% primarily due to state and local taxes, non-deductible permanent differences, limited benefit on current year interest deductions and losses in certain jurisdictions, the change in the fair value of warrant liabilities, foreign income at different rates and the U.S. tax effect of international operations including GILTI recorded during the period.

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


The Company’s income tax benefit was $4.2 million for the three months ended June 30, 2021, which includes a discrete income tax benefit of $4.2 million related to the receipt of a beneficial tax ruling in Switzerland which allows for future amortization deductions, the reversal of uncertain tax position liabilities as a result of the lapse of applicable statute of limitations, partially offset by a deferred tax provision related to a tax law change in the United Kingdom which was enacted during the quarter ended June 30, 2021. The effective tax rate for the three months ended June 30, 2021 was an income tax benefit of 882.8% on a pre-tax loss of $0.5 million which differs from the statutory federal rate of 21% primarily due to these discrete tax items.
The Company’s income tax benefit was $7.8 million for the six months ended June 30, 2021, which includes a discrete income tax benefit of $4.3 million including the $4.2 million benefit recorded in the three months ended June 30, 2021 described above. The effective tax rate for the six months ended June 30, 2021 was an income tax benefit of 48.5% on a pre-tax loss of $16.2 million. The effective tax rate differs from the federal rate of 21% primarily due to these discrete tax benefits.
At both June 30, 2022 and December 31, 2021, the Company had an uncertain tax position liability of $0.2 million, including interest and penalties. The unrecognized tax benefits include amounts related primarily to various state and foreign tax issues.
NOTE 10: PENSION BENEFITS
Certain current and former employees of the Company are covered under a funded qualified 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 certain of 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 froze the pension plan on December 31, 2019. In addition, the Company has unfunded non-qualified plans covering certain salaried employees with additional retirement benefits in excess of qualified plan limits imposed by federal tax law. The Company uses December 31 as a measurement date for the plans.
In February 2021, the Compensation Committee approved the termination of the Company’s qualified defined benefit retirement plan at Flavors & Ingredients. During the fourth quarter of 2021, the Company offered the option of receiving a lump sum payment to certain participants with vested benefits in lieu of receiving monthly annuity payments. Approximately 125 participants elected to receive the settlement, and lump sum payments of approximately $16.8 million were paid from plan assets to these participants in December 2021. The benefit obligation settled approximated payments to plan participants and a pre-tax settlement gain of $0.5 million was recorded in the fourth quarter of 2021.
On February 11, 2022, the Company purchased non-participating annuity contracts to settle the remaining liabilities of the plan for approximately $9.5 million which was fully funded by plan assets. The annuity contracts purchased resulted in a settlement gain of approximately $1.0 million that was recorded in the first quarter of 2022. The remaining surplus of the plan will be used, as prescribed in the applicable regulations, to fund future contributions to the defined contribution plan at Flavors & Ingredients. At June 30, 2022, the remaining surplus of the plan was approximately $2.6 million.
The components of net periodic benefit cost (credit) for the Company’s defined benefit pension plans was as follows (in thousands):
Three Months EndedSix Months Ended
June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Service cost$10 $16 $20 $32 
Interest cost67 260 194 519 
Expected return on plan assets112 (400)59 (799)
Recognized actuarial loss 9  18 
Settlement gain(126) (1,143) 
Net periodic benefit cost (credit)$63 $(115)$(870)$(230)
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)    


Net periodic benefit cost (credit) is reflected in the Company’s condensed consolidated financial statements as follows (in thousands):
Three Months EndedSix Months Ended
June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Selling, general and administrative expense$10 $16 $20 $32 
Other income, net53 (131)(890)(262)
Net periodic benefit cost (credit)$63 $(115)$(870)$(230)
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 (“SOs”), stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance shares, performance share units (“PSUs”) and other stock-based awards to officers, employees and non-employee directors of, and certain other service providers to, the Company and its subsidiaries. These awards are settled in shares of the Company’s stock and therefore classified as equity awards. Under the terms of the Plan an aggregate of 9,300,000 shares of common stock are authorized for issuance under the Plan.
RSUs generally vest ratably on the anniversary of the grant date over a period of one to three years, depending on the specific terms of each RSU agreement.
PSU awards generally cliff vest subsequent to the completion of a cumulative three-year performance period, depending on the period specified in each respective PSU agreement. The number of PSUs that ultimately vest depends on the Company’s performance relative to specified three-year cumulative financial targets established for each grant and are expected to be settled in stock.
Stock-based compensation expense for the three and six months ended June 30, 2022 was $1.6 million and $3.2 million, respectively. Stock-based compensation expense for the three and six months ended June 30, 2021 was $2.8 million and $4.5 million, respectively. Stock-based compensation expense for the three and six months ended June 30, 2021 includes $0.4 million of expense related to 2021 management bonuses that were settled in stock during the second quarter of 2022.
A summary of activity and weighted average fair values related to the RSUs is as follows:
Six Months Ended June 30, 2022
SharesWeighted Average Grant Date Fair Value (per share)
Outstanding at December 31, 2021
484,744 $13.46 
Granted548,521 7.32 
Vested(188,759)13.58 
Forfeited(11,094)12.79 
Outstanding and nonvested at June 30, 2022
833,412 $9.40 
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Whole Earth Brands, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)    


A summary of activity and weighted average fair values related to the RSAs is as follows:
Six Months Ended June 30, 2022
SharesWeighted Average Grant Date Fair Value (per share)
Outstanding at December 31, 2021
117,801 $9.76 
Granted82,615 6.96 
Vested(68,946)8.34 
Outstanding and nonvested at June 30, 2022
131,470 $8.75 
A summary of activity and weighted average fair values related to the PSUs is as follows:
Six Months Ended June 30, 2022
SharesWeighted Average Grant Date Fair Value (per share)
Outstanding at December 31, 2021
282,141 $13.65 
Granted569,989 6.71 
Forfeited(11,654)12.89 
Outstanding and nonvested at June 30, 2022
840,476 $8.95 
As of June 30, 2022, the Company had not yet recognized compensation costs on nonvested awards as follows (in thousands):    
Unrecognized Compensation CostWeighted Avg. Remaining Recognition Period (in years)
Nonvested awards$13,848 1.93
NOTE 12: EARNINGS PER SHARE
Basic earnings (loss) per common share (“EPS”) 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. RSUs and RSAs also are not considered outstanding until they have vested. Contingently issuable shares associated with outstanding PSUs that have cliff vesting based on achievement of a performance condition were not included in the earnings per share calculations for the periods presented as the applicable vesting conditions had not been satisfied.
Diluted EPS 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 warrants that are liability-classified, during the periods when the impact would be dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in the fair value of warrant liability and adjusts the denominator to include the dilutive shares using the treasury stock method.
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Notes to Condensed Consolidated Financial Statements
(Unaudited)    


The computation of basic and diluted earnings (loss) per common share is shown below (in thousands, except for share and per share data):
Three Months EndedSix Months Ended
June 30, 2022June 30, 2021June 30, 2022June 30, 2021
EPS numerator:
Net income (loss) attributable to common shareholders$1,326 $3,695 $4,052 $(8,330)
EPS denominator:
Weighted average shares outstanding - basic41,918,403 38,458,278 40,973,101 38,444,590 
Effect of dilutive securities1,697,47126,578
Weighted average shares outstanding - diluted41,918,403 40,155,749 40,999,679 38,444,590 
Net earnings (