NOTE 3  BUSINESS COMBINATIONS BWR Business Combination The Company completed a business combination with Brands Within Reach, LLC (BWR) in July 2019 that was accounted for using the acquisition method of accounting under ASC 805, Business Combinations , and using the fair value concepts set forth in ASC 820, Fair Value Measurement . As a result of the business combination with BWR, the Company acquired certain key licensing and distribution rights in the United States for some of the worlds leading beverage brands. The purchase consideration consisted of cash payments of $ 1.5 million and the issuance of 107,602 shares of Common Stock with an estimated fair value of approximately $ 453 ,000. For the three and six months ended June 30, 2020, the accompanying condensed consolidated statements of operations include net revenue related to the post-acquisition results of operations of BWR of $ 2.8 million and $ 4.9 million, respectively. For the three and six months ended June 30, 2020, the accompanying condensed consolidated statements of operations include net losses related to the post-acquisition results of operations of BWR of $ 0.3 million and $ 2.6 million, respectively. Unaudited Pro Forma Disclosures The following table summarizes on an unaudited pro forma basis, the Companys results of operations for the three and six months ended June 30, 2019 giving effect to the BWR business combination as if it had occurred on January 1, 2019 (in thousands, except loss per share amount): SCHEDULE OF UNAUDITED PRO FORMA DISCLOSURES Three Six Months Months Net revenue $ 70,054 $ 132,818 Net loss $ (12,918) $ (14,603) Net loss per share- basic and diluted $ (0.17) $ (0.19) Weighted average number of shares of common stock outstanding- basic and diluted 76,439 75,888 The pro forma financial results shown above reflect the historical operating results of the Company, including the unaudited pro forma results of BWR as if this business combination and the related equity issuances had occurred at the beginning of the first full calendar year preceding the acquisition date. The calculations of pro forma net revenue and pro forma net loss give effect to the pre-acquisition operating results of BWR based on (i) the historical net revenue and net income (loss), and (ii) incremental depreciation and amortization based on the fair value of property, equipment and identifiable intangible assets acquired and the related estimated useful lives. The pro forma information presented above does not purport to represent what the actual results of operations would have been for the periods indicated, nor does it purport to represent the Companys future results of operations. NewAge, Inc. Notes to Unaudited Condensed Consolidated Financial Statements Business Combination Liabilities On December 21, 2018, the Company entered into a business combination with Morinda Holdings, Inc. (Morinda). The purchase consideration included the issuance of 43,804 shares of Series D Preferred Stock (the Preferred Stock) providing for the potential payment of up to $ 15.0 million (the Milestone Dividend) if the Adjusted EBITDA of Morinda was at least $ 20.0 million for the year ended December 31, 2019. If the Adjusted EBITDA of Morinda was less than $20.0 million, the Milestone Dividend was reduced whereby no Milestone Dividend was payable if actual Adjusted EBITDA was $17.0 million or lower. Adjusted EBITDA of Morinda for the year ended December 31, 2019 was less than $17.0 million and, accordingly, no Milestone Dividend was payable to the holders of the Preferred Stock. The Preferred Stock also provided for dividends at a rate of 1.5% per annum of the Milestone Dividend amount. The Preferred Stock terminated on April 15, 2020 , and the Company paid accumulated cash dividends of approximately $ 0.3 million in May 2020. As of June 30, 2020 and December 31, 2019, the following is a summary of purchase consideration payable to the former stockholders of Morinda, and outstanding earnout obligations related to business combinations with Morinda in December 2018 (in thousands): SUMMARY OF EARNOUT OBLIGATIONS 2020 2019 Payables to former Morinda stockholders: Excess Working Capital (EWC) payable in July 2020, net of discount $ 5,437 $ 5,283 Earnout under Series D preferred stock - 225 Total $ 5,437 $ 5,508