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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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 class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

FREE

The NASDAQ Stock Market LLC

Warrants to purchase one-half of one share of common stock

FREEW

The 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 filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

						Page
PART I - FINANCIAL INFORMATION
Item 1.			Financial Statements			4
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			35
Item 4.			Controls and Procedures			35
PART II - OTHER INFORMATION
Item 1.			Legal Proceedings			35
Item 1A.			Risk Factors			35
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			35
Item 3.			Defaults Upon Senior Securities			35
Item 4.			Mine Safety Disclosures			36
Item 5.			Other Information			36
Item 6.			Exhibits			36
Signatures						37

Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets			5
Condensed Consolidated Statements of Operations			6
Condensed Consolidated Statements of Comprehensive Income (Loss)			7
Condensed Consolidated Statements of Equity			8
Condensed Consolidated Statements of Cash Flows			10
Notes to Condensed Consolidated Financial Statements			11
Note 1: Basis of Presentation and Significant Accounting Policies			11
Note 2: Business Combinations			13
Note 3: Inventories			15
Note 4: Goodwill and Other Intangible Assets			16
Note 5: Debt			17
Note 6: Warrants			18
Note 7: Fair Value of Financial Instruments			18
Note 8: Commitments and Contingencies			19
Note 9: Income Taxes			19
Note 10: Pension Benefits			20
Note 11: Stock-Based Compensation			21
Note 12: Earnings Per Share			23
Note 13: Accumulated Other Comprehensive Income (Loss)			24
Note 14: Related Party Transactions			24
Note 15: Business Segments			25

Whole Earth Brands, Inc.
Condensed Consolidated Balance Sheets
(In thousands of dollars, except for share and per share data)
(Unaudited)
			September 30, 2022						December 31, 2021
Assets
Current Assets
Cash and cash equivalents			$	20,846					$	28,296
Accounts receivable (net of allowances of $1,815 and $1,285, respectively)			69,420						69,590
Inventories			228,830						212,930
Prepaid expenses and other current assets			11,849						7,585
Total current assets			330,945						318,401
Property, Plant and Equipment, net			55,900						58,503
Other Assets
Operating lease right-of-use assets			20,781						26,444
Goodwill			233,578						242,661
Other intangible assets, net			245,809						266,939
Deferred tax assets, net			3,964						1,993
Other assets			9,346						7,638
Total Assets			$	900,323					$	922,579
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable			$	50,872					$	55,182
Accrued expenses and other current liabilities			26,978						30,733
Contingent consideration payable			—						54,113
Current portion of operating lease liabilities			8,338						7,950
Current portion of long-term debt			3,750						3,750
Total current liabilities			89,938						151,728
Non-Current Liabilities
Long-term debt			435,741						383,484
Warrant liabilities			208						2,053
Deferred tax liabilities, net			30,351						35,090
Operating lease liabilities, less current portion			15,841						22,575
Other liabilities			13,191						13,778
Total Liabilities			585,270						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 September 30, 2022 and December 31, 2021			—						—
Common stock, $0.0001 par value; 220,000,000 shares authorized; 41,977,814 and 38,871,646 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively			4						4
Additional paid-in capital			360,826						330,616
Accumulated deficit			(24,905)						(26,436)
Accumulated other comprehensive income (loss)			(20,872)						9,687
Total stockholders’ equity			315,053						313,871
Total Liabilities and Stockholders’ Equity			$	900,323					$	922,579

Whole Earth Brands, Inc.
Condensed Consolidated Statements of Operations
(In thousands of dollars, except for share and per share data)
(Unaudited)
			Three Months Ended												Nine Months Ended
			September 30, 2022						September 30, 2021						September 30, 2022						September 30, 2021
Product revenues, net			$	135,280					$	128,941					$	399,375					$	361,259
Cost of goods sold			100,263						85,912						287,486						241,224
Gross profit			35,017						43,029						111,889						120,035
Selling, general and administrative expenses			23,566						24,838						76,314						85,573
Amortization of intangible assets			4,629						4,675						13,998						13,532
Restructuring and other expenses			—						—						—						4,503
Operating income			6,822						13,516						21,577						16,427
Change in fair value of warrant liabilities			186						2,178						1,240						(425)
Interest expense, net			(8,214)						(6,553)						(20,674)						(18,027)
Loss on extinguishment and debt transaction costs			—						—						—						(5,513)
Other income (expense), net			92						(780)						2,745						(280)
(Loss) income before income taxes			(1,114)						8,361						4,888						(7,818)
Provision (benefit) for income taxes			1,407						(445)						3,357						(8,294)
Net (loss) income			$	(2,521)					$	8,806					$	1,531					$	476
Net (loss) earnings per share:
Basic			$	(0.06)					$	0.23					$	0.04					$	0.01
Diluted			$	(0.06)					$	0.17					$	0.04					$	0.01

Whole Earth Brands, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands of dollars)
(Unaudited)
			Three Months Ended												Nine Months Ended
			September 30, 2022						September 30, 2021						September 30, 2022						September 30, 2021
Net (loss) income			$	(2,521)					$	8,806					$	1,531					$	476
Other comprehensive income (loss), net of tax:
Net change in pension benefit obligations recognized, net of taxes of $(63), $(5), $(129) and $(18), respectively			21						202						(186)						165
Foreign currency translation adjustments			(13,522)						(3,599)						(30,373)						(324)
Total other comprehensive loss, net of tax			(13,501)						(3,397)						(30,559)						(159)
Comprehensive (loss) income			$	(16,022)					$	5,409					$	(29,028)					$	317

Whole Earth Brands, Inc.
Condensed Consolidated Statements of Equity
(In thousands of dollars)
(Unaudited)
			Common Stock												Additional Paid-in						Accumulated						Accumulated Other Comprehensive						Total Stockholders’
			Shares						Amount						Capital						Deficit						Income						Equity
Balance at December 31, 2020			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			—						—						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			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 awards			29,090						—						—						—						—						—
Balance at June 30, 2021			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 exercises			50						—						1						—						—						1
Stock-based compensation			—						—						2,534						—						—						2,534
Net share settlements of stock-based awards			21,914						—						(115)						—						—						(115)
Balance at September 30, 2021			38,477,723						$	4					$	331,125					$	(26,043)					$	8,446					$	313,532

Whole Earth Brands, Inc.
Condensed Consolidated Statements of Equity (Continued)
(In thousands of dollars)
(Unaudited)
			Common Stock												Additional Paid-in						Accumulated						Accumulated Other Comprehensive						Total Stockholders’
			Shares						Amount						Capital						Deficit						Income (loss)						Equity
Balance at December 31, 2021			38,871,646						$	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 awards			146,444						—						(291)						—						—						(291)
Shares issued for payment of contingent consideration			2,659,574						—						23,936						—						—						23,936
Balance at March 31, 2022			41,677,664						4						356,220						(23,710)						7,460						339,974
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 awards			92,253						—						(91)						—						—						(91)
Net share settlements under management bonus plan			203,763						—						1,402						—						—						1,402
Balance at June 30, 2022			41,973,680						4						359,095						(22,384)						(7,371)						329,344
Net loss			—						—						—						(2,521)						—						(2,521)
Other comprehensive loss, net of tax			—						—						—						—						(13,501)						(13,501)
Stock-based compensation			—						—						1,743						—						—						1,743
Net share settlements of stock-based awards			4,134						—						(12)						—						—						(12)
Balance at September 30, 2022			41,977,814						$	4					$	360,826					$	(24,905)					$	(20,872)					$	315,053

Whole Earth Brands, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands of dollars)
(Unaudited)
			Nine Months Ended
			September 30, 2022						September 30, 2021
Operating activities
Net income			$	1,531					$	476
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Stock-based compensation			4,957						7,191
Depreciation			4,324						3,230
Amortization of intangible assets			13,998						13,532
Deferred income taxes			(4,586)						2,210
Amortization of inventory fair value adjustments			(2,537)						(882)
Non-cash loss on extinguishment of debt			—						4,435
Change in fair value of warrant liabilities			(1,240)						425
Changes in current assets and liabilities:
Accounts receivable			(3,746)						(2,452)
Inventories			(20,926)						(4,200)
Prepaid expenses and other current assets			(1,972)						(894)
Accounts payable, accrued liabilities and income taxes			(5,196)						(16,706)
Other, net			(1,871)						190
Net cash (used in) provided by operating activities			(17,264)						6,555
Investing activities
Capital expenditures			(6,947)						(7,076)
Acquisitions, net of cash acquired			—						(190,231)
Proceeds from the sale of fixed assets			50						4,257
Net cash used in investing activities			(6,897)						(193,050)
Financing activities
Proceeds from revolving credit facility			54,000						25,000
Repayments of revolving credit facility			—						(47,855)
Long-term borrowings			—						375,000
Repayments of long-term borrowings			(2,812)						(138,376)
Debt issuance costs			(682)						(11,589)
Payment of contingent consideration			(29,108)						—
Proceeds from sale of common stock and warrants			—						1
Tax withholdings related to net share settlements of stock awards			(874)						(115)
Net cash provided by financing activities			20,524						202,066
Effect of exchange rate changes on cash and cash equivalents			(3,813)						1,110
Net change in cash and cash equivalents			(7,450)						16,681
Cash and cash equivalents, beginning of period			28,296						16,898
Cash and cash equivalents, end of period			$	20,846					$	33,579
Supplemental disclosure of cash flow information
Interest paid			$	19,161					$	15,627
Taxes paid, net of refunds			$	7,510					$	3,999
Supplemental disclosure of non-cash investing
Non-cash capital expenditures			$	—					$	3,796

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.

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 $0.1 million in the three months ended September 30, 2021 and $0.2 million and $4.7 million in the nine months ended September 30, 2022 and 2021, respectively.

The following summarizes the purchase consideration (in thousands):

Base cash consideration			$	180,000
Closing adjustment			13,863
Fair value of Earn-Out Amount			52,395
Total Purchase Price			$	246,258

Cash and cash equivalents			$	2,664
Accounts receivable			15,868
Inventories			76,879
Prepaid expenses and other current assets			1,322
Property, plant and equipment, net			3,134
Operating lease right-of-use assets			7,585
Intangible assets			104,500
Other assets			1,189
Total assets acquired			213,141
Accounts payable			5,251
Accrued expenses and other current liabilities			10,576
Current portion of operating lease liabilities			1,435
Operating lease liabilities, less current portion			6,150
Deferred tax liabilities, net			24,234
Total liabilities assumed			47,646
Net assets acquired			165,495
Goodwill			80,763
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
Tradenames			48,800						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.

Pro Forma Financial Information—The following unaudited pro forma financial information summarizes the results of operations of the Company for the three and nine months ended September 30, 2021 as though the Wholesome acquisition had occurred on January 1, 2020 (in thousands):

									Pro Forma Statement of Operations
									Three Months Ended September 30, 2021												Nine Months Ended September 30, 2021
Revenue									$	128,941											$	381,639
Net income									$	9,551											$	10,656

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.

Inventories consisted of the following (in thousands):

			September 30, 2022									December 31, 2021
Raw materials and supplies			$	130,359								$	129,712
Work in process			2,912									1,480
Finished goods			95,559									81,738
Total inventories			$	228,830								$	212,930

Goodwill and other intangible assets consisted of the following (in thousands):

						September 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)						$	104,656					$	(23,000)					$	81,656					$	106,013					$	(14,478)					$	91,535
Tradenames (useful life of 25 years)						166,869						(13,416)						153,453						173,522						(8,818)						164,704
Total						$	271,525					$	(36,416)					235,109						$	279,535					$	(23,296)					256,239
Other intangible assets not subject to amortization
Product formulations																		10,700																		10,700
Total other intangible assets, net																		245,809																		266,939
Goodwill																		233,578																		242,661
Total goodwill and other intangible assets																		$	479,387																	$	509,600

At September 30, 2022 and December 31, 2021, goodwill at Branded CPG was $230.0 million and $238.9 million, respectively. Goodwill at Flavors & Ingredients was $3.6 million and $3.8 million at September 30, 2022 and December 31, 2021, respectively.

The amortization expense for intangible assets was $4.6 million and $14.0 million for the three and nine months ended September 30, 2022, respectively, and $4.7 million and $13.5 million for the three and nine months ended September 30, 2021, respectively.

Amortization expense relating to amortizable intangible assets as of September 30, 2022 for the next five years is expected to be as follows (in thousands):

Remainder of 2022			$	4,680
2023			18,721
2024			18,721
2025			18,488
2026			18,267
2027			17,040

Debt consisted of the following (in thousands):

			September 30, 2022						December 31, 2021
Term loan, due February 2028			$	369,375					$	372,187
Revolving credit facility, due February 2026			79,000						25,000
Less: current portion			(3,750)						(3,750)
Less: unamortized discount and debt issuance costs			(8,884)						(9,953)
Total long-term debt			$	435,741					$	383,484

•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.

Input						September 30, 2022						December 31, 2021
Asset price						$	3.84					$	10.74
Exercise price						$	11.50					$	11.50
Risk-free interest rate						4.24%						1.04%
Expected volatility						62.0%						41.0%
Expected term (years)						2.74						3.49
Dividend yield						0.0%						0.0%

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, 2022						587
Change in fair value of warrant liabilities in Q2 2022						(193)
Fair value of warrant liabilities as of June 30, 2022						394
Change in fair value of warrant liabilities in Q3 2022						(186)
Fair value of warrant liabilities as of September 30, 2022						$	208

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.

The Company’s income tax benefit was $8.3 million for the nine months ended September 30, 2021, which includes discrete income tax benefits of $4.8 million. The Company recorded a discrete tax benefit of $4.0 million related to the receipt of a beneficial tax ruling in Switzerland which allows for future amortization deductions, $1.0 million related to the reversal of uncertain tax position liabilities as a result of the lapse of applicable statute of limitations, and $0.2 million related to the finalization of the Company’s 2020 U.S. federal and state tax returns during the quarter ended September 30, 2021, partially offset with a deferred tax provision of $0.5 million related to a tax law change in the United Kingdom which was enacted in June 2021. The effective tax rate for the nine months ended September 30, 2021 was an income tax benefit of 106.1% on a pre-tax loss of $7.8 million. The effective tax rate differs from the federal rate of 21% primarily due to non-deductible permanent differences, state and local income taxes and the discrete tax benefits described above.

			Three Months Ended												Nine Months Ended
			September 30, 2022						September 30, 2021						September 30, 2022						September 30, 2021
Service cost			$	10					$	15					$	30					$	47
Interest cost			66						259						260						778
Expected return on plan assets			85						(398)						144						(1,197)
Recognized actuarial loss			—						9						—						27
Settlement gain			(130)						(97)						(1,273)						(97)
Net periodic benefit cost (credit)			$	31					$	(212)					$	(839)					$	(442)

Net periodic benefit cost (credit) is reflected in the Company’s condensed consolidated financial statements as follows (in thousands):

			Three Months Ended												Nine Months Ended
			September 30, 2022						September 30, 2021						September 30, 2022						September 30, 2021
Selling, general and administrative expense			$	10					$	15					$	30					$	47
Other income, net			21						(227)						(869)						(489)
Net periodic benefit cost (credit)			$	31					$	(212)					$	(839)					$	(442)

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.

			Nine Months Ended September 30, 2022
			Shares						Weighted Average Grant Date Fair Value (per share)
Outstanding at December 31, 2021			484,744						$	13.46
Granted			1,725,023						6.07
Vested			(195,570)						13.54
Forfeited			(77,098)						10.24
Outstanding and nonvested at September 30, 2022			1,937,099						$	7.00

A summary of activity and weighted average fair values related to the RSAs is as follows:

			Nine Months Ended September 30, 2022
			Shares						Weighted Average Grant Date Fair Value (per share)
Outstanding at December 31, 2021			117,801						$	9.76
Granted			82,615						6.96
Vested			(68,946)						8.34
Outstanding and nonvested at September 30, 2022			131,470						$	8.75

A summary of activity and weighted average fair values related to the PSUs is as follows:

			Nine Months Ended September 30, 2022
			Shares						Weighted Average Grant Date Fair Value (per share)
Outstanding at December 31, 2021			282,141						$	13.65
Granted			572,845						6.70
Forfeited			(70,164)						9.91
Outstanding and nonvested at September 30, 2022			784,822						$	9.24

As of September 30, 2022, the Company had not yet recognized compensation costs on nonvested awards as follows (in thousands):    

			Unrecognized Compensation Cost						Weighted Avg. Remaining Recognition Period (in years)
Nonvested awards			$	15,192					1.34

NOTE 12: EARNINGS PER SHARE

			Three Months Ended												Nine Months Ended
			September 30, 2022						September 30, 2021						September 30, 2022						September 30, 2021
EPS numerator:
Net (loss) income attributable to common shareholders			$	(2,521)					$	8,806					$	1,531					$	476
Less: Change in fair value of warrant liabilities			—						(2,178)						—						—
Numerator - diluted			$	(2,521)					$	6,628					$	1,531					$	476
EPS denominator:
Weighted average shares outstanding - basic			41,976,865						38,492,878						41,311,366						38,453,611
Effect of dilutive securities			—						1,372,872						17,719						1,493,119
Weighted average shares outstanding - diluted			41,976,865						39,865,750						41,329,085						39,946,730
Net (loss) earnings per share:
Basic			$	(0.06)					$	0.23					$	0.04					$	0.01
Diluted			$	(0.06)					$	0.17					$	0.04					$	0.01

			Net Currency Translation Gains (Losses)						Funded Status of Benefit Plans						Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2020			$	7,774					$	831					$	8,605
Other comprehensive loss before reclassifications			(2,047)						—						(2,047)
Amounts reclassified from AOCI			—						9						9
Balance at March 31, 2021			5,727						840						6,567
Other comprehensive income (loss) before reclassifications			5,322						(55)						5,267
Amounts reclassified from AOCI			—						9						9
Balance at June 30, 2021			11,049						794						11,843
Other comprehensive (loss) income before reclassifications			(3,599)						290						(3,309)
Amounts reclassified from AOCI			—						(88)						(88)
Balance at September 30, 2021			$	7,450					$	996					$	8,446
Balance at December 31, 2021			$	8,758					$	929					$	9,687
Other comprehensive loss before reclassifications			(2,003)						—						(2,003)
Amounts reclassified from AOCI			—						(224)						(224)
Balance at March 31, 2022			6,755						705						7,460
Other comprehensive loss before reclassifications			(14,848)						—						(14,848)
Amounts reclassified from AOCI			—						17						17
Balance at June 30, 2022			(8,093)						722						(7,371)
Other comprehensive loss before reclassifications			(13,522)						—						(13,522)
Amounts reclassified from AOCI			—						21						21
Balance at September 30, 2022			$	(21,615)					$	743					$	(20,872)

			Three Months Ended												Nine Months Ended
			September 30, 2022						September 30, 2021						September 30, 2022						September 30, 2021
Product revenues, net
Branded CPG			$	105,373					$	102,693					$	313,207					$	283,585
Flavors & Ingredients			29,907						26,248						86,168						77,674
Total product revenues, net			$	135,280					$	128,941					$	399,375					$	361,259
Operating income
Branded CPG			$	5,518					$	10,090					$	17,555					$	30,507
Flavors & Ingredients			7,287						9,520						24,137						14,230
			12,805						19,610						41,692						44,737
Corporate			(5,983)						(6,094)						(20,115)						(28,310)
Total operating income			$	6,822					$	13,516					$	21,577					$	16,427

The following table presents disaggregated revenue information for the Company (in thousands):

			Three Months Ended												Nine Months Ended
			September 30, 2022						September 30, 2021						September 30, 2022						September 30, 2021
Branded CPG:
North America			$	75,823					$	72,285					$	220,071					$	190,699
Europe			15,223						18,197						51,479						58,135
India, Middle East and Africa			4,526						3,267						13,007						9,522
Asia-Pacific			5,607						5,732						17,650						16,552
Latin America			4,194						3,212						11,000						8,677
Flavors & Ingredients			29,907						26,248						86,168						77,674
Total product revenues, net			$	135,280					$	128,941					$	399,375					$	361,259

•Flavors & Ingredients, comprised of our Mafco Worldwide division of operating companies, is a global, business-to-business focused operation with a long history as a trusted supplier of essential, functional ingredients to some of the CPG industry’s largest and most demanding customers. Our products provide a variety of solutions for our customers including flavor enhancement, flavor / aftertaste masking, moisturizing, product mouthfeel modification and skin soothing characteristics. Our Flavors & Ingredients segment operates our licorice-derived products business.

In connection with the closing of the Wholesome Transaction, on February 5, 2021, we and certain of our subsidiaries entered into an amendment and restatement agreement (the “Amendment Agreement”) with Toronto Dominion (Texas) LLC, as administrative agent, and certain lenders signatory thereto, which amended and restated our existing senior secured loan agreement dated as of June 25, 2020 (as amended on September 4, 2020, the “Existing Credit Agreement,” and as further amended by the Amendment Agreement, the “Amended and Restated Credit Agreement”), by and among Toronto Dominion (Texas) LLC, as administrative agent, certain lenders signatory thereto and certain other parties. See Note 7 to our consolidated and combined financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021 for a further description of the Amended and Restated Credit Agreement.

			Three Months Ended																		Nine Months Ended
(In thousands)			September 30, 2022						September 30, 2021						Change						September 30, 2022						September 30, 2021						Change
Product revenues, net			$	135,280					$	128,941					+4.9		%				$	399,375					$	361,259					+10.6		%
Cost of goods sold			100,263						85,912						+16.7		%				287,486						241,224						+19.2		%
Gross profit			35,017						43,029						-18.6		%				111,889						120,035						-6.8		%
Selling, general and administrative expenses			23,566						24,838						-5.1		%				76,314						85,573						-10.8		%
Amortization of intangible assets			4,629						4,675						-1.0		%				13,998						13,532						+3.4		%
Restructuring and other expenses			—						—						*						—						4,503						*
Operating income			6,822						13,516						-49.5		%				21,577						16,427						+31.4		%
Change in fair value of warrant liabilities			186						2,178						-91.5		%				1,240						(425)						*
Interest expense, net			(8,214)						(6,553)						+25.3		%				(20,674)						(18,027)						+14.7		%
Loss on extinguishment and debt transaction costs			—						—						*						—						(5,513)						*
Other income (expense), net			92						(780)						*						2,745						(280)						*
(Loss) income before income taxes			(1,114)						8,361						*						4,888						(7,818)						*
Provision (benefit) for income taxes			1,407						(445)						*						3,357						(8,294)						*
Net (loss) income			$	(2,521)					$	8,806					*						$	1,531					$	476					*

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Product revenues, net. Product revenues, net for the three months ended September 30, 2022 were $135.3 million, an increase of $6.3 million, or 4.9%, from $128.9 million for the three months ended September 30, 2021 due to a $2.7 million increase in product revenues in the Branded CPG segment and a $3.7 million increase in product revenues at Flavors & Ingredients. The increase in Branded CPG revenues was driven primarily by price increases, partially offset by declines in volume and unfavorable impacts from foreign exchange, as further discussed below. The increase in Flavors & Ingredients revenues was primarily driven by volume growth and price increases, partially offset by unfavorable impacts from foreign exchange, as further discussed below.

Cost of goods sold. Cost of goods sold for the three months ended September 30, 2022 was $100.3 million, an increase of $14.4 million, or 16.7%, from $85.9 million for the three months ended September 30, 2021. The increase was primarily due to increased logistics and raw materials costs due to inflationary pressures and costs associated with the Company’s new production operations at Branded CPG. Additionally, the prior year period included $2.6 million of favorable purchase accounting adjustments related to inventory revaluations that did not re-occur in the current quarter as all inventory revaluation purchase accounting adjustments were fully amortized as of June 30, 2022.

Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended September 30, 2022 were $23.6 million, a decrease of $1.3 million, or 5.1%, from $24.8 million for the three months ended September 30, 2021 primarily due to a $1.0 million decline in public company readiness and acquisition related transaction expenses and a $0.3 million reduction in stock-based compensation expense.

Amortization of intangible assets. Amortization of intangible assets for the three months ended September 30, 2022 was flat compared to the three months ended September 30, 2021.

Change in fair value of warrant liabilities. Change in fair value of warrant liabilities for the three months ended September 30, 2022 was a non-operating gain of $0.2 million, a decrease of $2.0 million, from a non-operating gain of $2.2 million for the three months ended September 30, 2021.

Interest expense, net. Interest expense, net for the three months ended September 30, 2022 was $8.2 million, an increase of $1.7 million, or 25.3%, from $6.6 million for the three months ended September 30, 2021. The increase was primarily due to higher debt levels under our new credit facilities as well as higher interest rates for the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

Other income (expense), net. Other income, net for the three months ended September 30, 2022 was $0.1 million compared to expense of $0.8 million for the three months ended September 30, 2021. The increase was primarily due to realized foreign exchange gains in the third quarter of 2022 compared to losses in the third quarter of 2021, partially offset by a decrease in pension income as a result of the termination of our qualified defined benefit pension plan at Flavors & Ingredients.

Provision (benefit) for income taxes. The provision for income taxes for the three months ended September 30, 2022 was $1.4 million, which includes a discrete tax provision of $0.4 million related primarily to the finalization of the Company’s 2021 U.S. federal and state tax returns during the quarter ended September 30, 2022. The benefit for income taxes for the three months ended September 30, 2021 was $0.4 million, which includes a discrete tax benefit of $0.3 million related to the finalization of a Switzerland tax ruling and $0.2 million in connection with the filing of the Company’s 2020 U.S. federal and state tax returns during the quarter. The effective tax rate for the three months ended September 30, 2022 was an income tax provision of 126.3%, compared to an income tax benefit of 5.3% for the three months ended September 30, 2021. The effective tax rate for the three months ended September 30, 2022 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, and the discrete tax provision. The effective tax rate for the three months ended September 30, 2021 differs from the statutory federal rate of 21% primarily due to non-deductible permanent differences, state and local income taxes, benefit from losses in certain jurisdictions, foreign income at different rates, and discrete tax benefits.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Product revenues, net. Product revenues, net for the nine months ended September 30, 2022 were $399.4 million, an increase of $38.1 million, or 10.6%, from $361.3 million for the nine months ended September 30, 2021. The increase was primarily due to a $29.6 million increase in product revenues in the Branded CPG segment and an $8.5 million increase in product revenues at Flavors & Ingredients. The increase in Branded CPG revenues was primarily due to Wholesome, which was acquired on February 5, 2021, as well as price increases, partially offset by declines in volume and unfavorable impacts from foreign exchange, as further discussed below. The increase in Flavors & Ingredients revenues was primarily driven by volume growth and price increases, partially offset by unfavorable impacts from foreign exchange, as further discussed below.

Cost of goods sold. Cost of goods sold for the nine months ended September 30, 2022 was $287.5 million, an increase of $46.3 million, or 19.2%, from $241.2 million for the nine months ended September 30, 2021. The increase was primarily due to a $29.5 million increase in costs as a result of a full nine months of Wholesome (acquired on February 5, 2021), as well as costs associated with the new production operations at Branded CPG, and increased logistics and raw materials costs due to inflationary pressures, partially offset by a $1.7 million favorable change in purchase accounting adjustments related to inventory revaluations (benefit of $2.5 million for the nine months ended September 30, 2022 compared to a benefit of $0.9 million for the nine months ended September 30, 2021).

Selling, general and administrative expenses. Selling, general and administrative expenses for the nine months ended September 30, 2022 were $76.3 million, a decrease of $9.3 million, or 10.8%, from $85.6 million for the nine months ended September 30, 2021. The decrease was primarily due to a $12.1 million decline in public company readiness and acquisition related transaction expenses and a $1.1 million decrease in stock-based compensation expense, partially offset by higher salaries from increased headcount in the second half of 2021.

Amortization of intangible assets. Amortization of intangible assets for the nine months ended September 30, 2022 was $14.0 million, an increase of $0.5 million, or 3.4%, from $13.5 million for the nine months ended September 30, 2021 primarily due to amortization expense related to the intangible assets acquired as part of the Wholesome acquisition on February 5, 2021.

Restructuring and other expenses. Restructuring and other expenses for the nine months ended September 30, 2021 were $4.5 million and related primarily to certain disposal costs at our Camden, New Jersey facility, which was sold in the second quarter of 2021.

Change in fair value of warrant liabilities. Change in fair value of warrant liabilities for the nine months ended September 30, 2022 was a non-operating gain of $1.2 million, an increase of $1.7 million, from a non-operating loss of $0.4 million for the nine months ended September 30, 2021.

Interest expense, net. Interest expense, net for the nine months ended September 30, 2022 was $20.7 million, an increase of $2.6 million, or 14.7%, from $18.0 million for the nine months ended September 30, 2021. The increase was primarily due to higher debt levels under our new credit facilities and rising interest rates during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

Other income (expense), net. Other income, net for the nine months ended September 30, 2022 was $2.7 million compared to expense of $0.3 million for the nine months ended September 30, 2021. The increase was primarily due to a $0.4 million increase in pension income related to the termination of our qualified defined benefit pension plan at Flavors & Ingredients, a $1.1 million non-cash gain related to the settlement of the Wholesome acquisition earn-out as further described above and realized foreign exchange gains in the nine months ended September 30, 2022 compared to losses in the nine months ended September 30, 2021.

Provision (benefit) for income taxes. The provision for income taxes for the nine months ended September 30, 2022 was $3.4 million, which includes a discrete tax provision of $0.5 million related primarily to the finalization of the Company’s 2021 U.S. federal and state tax returns during the quarter ended September 30, 2022. The benefit for income taxes for the nine months ended September 30, 2021 was $8.3 million, which includes a discrete tax benefit of $4.8 million. The Company recorded a discrete tax benefit of $4.0 million related to the receipt of a beneficial tax ruling in Switzerland which allows for future amortization deductions, $1.0 million related to the reversal of uncertain tax position liabilities as a result of the lapse of applicable statute of limitations, and $0.2 million related to finalization of the Company’s 2020 U.S. federal and state tax returns during the quarter ended September 30, 2021, partially offset with a deferred tax provision of $0.5 million related to a tax law change in the United Kingdom which was enacted in June 2021. The effective tax rate for the nine months ended September 30, 2022 was an income tax provision of 68.7%, compared to an income tax benefit of 106.1% for the nine months ended September 30, 2021. The effective tax rate for the nine months ended September 30, 2022 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, and the discrete tax provision. The effective tax rate for the nine months ended September 30, 2021 differs from the statutory federal rate of 21% primarily due to non-deductible permanent differences, state and local income taxes and the discrete tax benefits.

			Three Months Ended																		Nine Months Ended
(In thousands)			September 30, 2022						September 30, 2021						Change						September 30, 2022						September 30, 2021						Change
Product revenues, net			$	105,373					$	102,693					+2.6		%				$	313,207					$	283,585					+10.4		%
Operating income			$	5,518					$	10,090					-45.3		%				$	17,555					$	30,507					-42.5		%

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Segment product revenues, net. Product revenues, net for Branded CPG for the three months ended September 30, 2022 were $105.4 million, an increase of $2.7 million, or 2.6%, from $102.7 million for the three months ended September 30, 2021, driven by an $8.1 million increase in sales primarily due to higher pricing, partially offset by a $2.1 million decline due to lower volumes, which includes $1.7 million due to the planned discontinuance of certain private label contracts earlier in the year, and a $3.3 million unfavorable impact of foreign exchange.

Segment operating income. Operating income for Branded CPG for the three months ended September 30, 2022 was $5.5 million, a decrease of $4.6 million, or 45.3%, from $10.1 million for the three months ended September 30, 2021, primarily due to increases in costs associated with new production operations of $4.3 million and increased logistics and materials costs due to inflationary pressures, partially offset by increases in revenues as discussed above and a $0.5 million reduction in stock-based compensation expense.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Segment product revenues, net. Product revenues, net for Branded CPG for the nine months ended September 30, 2022 were $313.2 million, an increase of $29.6 million, or 10.4%, from $283.6 million for the nine months ended September 30, 2021, primarily driven by a $35.3 million increase in revenues at Wholesome due to a full nine months of results in 2022 (acquired on February 5, 2021) as well as both higher pricing and volume. This increase was partially offset by a $5.7 million decline in revenues for all other Branded CPG business as a $7.6 million increase in sales largely due to higher pricing was more than offset by a $5.3 million decline in sales due to the planned discontinuance of certain private label contracts and an $8.1 million unfavorable impact of foreign exchange.

Segment operating income. Operating income for Branded CPG for the nine months ended September 30, 2022 was $17.6 million, a decrease of $13.0 million, or 42.5%, from $30.5 million for the nine months ended September 30, 2021, primarily due to an increase in costs associated with new production operations of $11.6 million, increased logistics and materials costs due to inflationary pressures, partially offset by a $7.0 million increase in operating income at Wholesome driven by a full nine months of results (acquired on February 5, 2021), and a $1.1 million reduction in stock-based compensation expense in the segment.

			Three Months Ended																		Nine Months Ended
(In thousands)			September 30, 2022						September 30, 2021						Change						September 30, 2022						September 30, 2021						Change
Product revenues, net			$	29,907					$	26,248					+13.9		%				$	86,168					$	77,674					+10.9		%
Operating income			$	7,287					$	9,520					-23.5		%				$	24,137					$	14,230					+69.6		%