Transactions with California Custom Beverage, LLC, former related party

12 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

Transactions with California Custom Beverage, LLC, former related party

13. Transactions with California Custom Beverage, LLC, former related party

In December 2018, the Company signed a co-packing agreement with California Custom Beverage, LLC’s (“CCB”), an entity owned by Christopher J. Reed, a former related party, pursuant to which CCB agreed to produce certain products for the Company for agreed fees. The co-packing agreement, as amended, includes certain provisions for product inputs, shrinkage, and quality assurance. Also beginning in 2019, CCB agreed to pay the Company a 5% royalty through 2021 on certain private label sales made by CCB.

During the years ended December 31, 2023 and 2022, the Company incurred co-packing fees due to CCB of $1,957 and $3,718, respectively, of which $259 and $2,205, were payable to CCB as of December 31, 2023 and 2022. At December 31, 2023 and 2022, the Company had also recorded receivables from CCB of $1,382 and $1,315, respectively, including royalty receivable of $297, and the balance for charge backs of certain costs management determined were permittable under the co-packing agreement.

At December 31, 2022, CCB disputed that it owes $1,043 of the $1,315 recorded as receivable by the Company. The Company believes that it will prevail in this dispute, however, as of December 31, 2023 and 2022, due to the uncertainty about the ultimate amount that will be settled, the Company has provided a reserve for $1,123 and $538, respectively, based on management’s estimate.

At December 31, 2023 and 2022, accounts receivable due from and accounts payable due to CCB were as follows:

	December 31, 2023			December 31, 2022
Accounts receivable, net of provision of $1,123 and $538 at December 31, 2023 and 2022, respectively		259			777
Accounts payable		(259	)		(2,025	)
Net (payable) receivable		-			(1,248	)

In addition, on April 19, 2023, the Company received a letter from CCB demanding payment of various amounts, including the $452 and $2,025 outstanding at December 31, 2023 and 2022, respectively. The Company has determined that the probability of realizing any loss on the demand from CCB is remote and therefore has not recorded any additional accruals related to the demand.