- In December 2018, New Age Beverage (NASDAQ:NBEV) competed its merger with multi-level firm (MLM), Morinda, to help reverse losses NBEV has sustained since completing its reverse merger in 2016. NBEV Paid Morinda $75 million in cash and $10 million in stock to complete the transaction.
- While Morinda reported 2016 revenue from China of $68m in 2016, SAIC filings show that real revenue of Morinda was only $33m in that year!
- Financial filings from China also show that Morinda had a big net loss of $32m in 2017 from its China operations.
- National filings show that Morinda’s European operations gave up their headquarters in 2017 and was in the process of winding down the company. The winding down process was expected to be completed less than three months of the completion of the merger.
- NBEV’s CEO boosts that $46 million in cash came along with Morinda. However, we don’t believe investors clearly understand that over $50 million will have to be paid out to Morinda shareholders.
- In short, we believe NBEV got duped by buying a dying business with inflated financials.
- We believe that Morinda’s China business is in jeopardy of being totally shut down, supporting our conclusion that any growth Morinda is claiming it has experienced in China, or that NBEV is expecting to realize from China is in the rear-view mirror and irrelevant.
- Our research combined with our on-the-ground research proves that Morinda is conducting illegal MLM operations in the majority of China provinces/cities that it operates in. Specifically, it is doing business in regions where it does not have a direct selling license to operate in.
- The number of MLM companies that China regulators have forced to suspend their China operations, now stands at 5 in 2019, including $NHTC. Morinda’s Primary product (90% of sales), appears to have the similar Chinese name of the product that was the subject of a China Central Television (CCTV) scathing 2019 expose on NHTC.
- We believe NBEV’s CEO is highly promotional, but has proven to be unable to successfully build companies for extended periods of time, as evidenced by the two previous public companies he was the CEO of that ended badly for shareholders.
- A shady auditor and a lack of checks and balances set NBEV up for failure
- We believe the stock will collapse and see immediate downside of 60%
Institutional Analyst (IA) has no affiliation with Grizzly Research.