New Age Beverage Corp. NBEV
NBEV paid $85m for Morinda, an MLM with inflated China financials and missing licenses in 60% of provinces — stock faces 60% immediate downside.
Thesis
NBEV's December 2018 merger with Morinda for $85 million is a disaster disguised as a bargain: Grizzly's on-the-ground research shows Morinda's China revenue was inflated 51% in 2016 and 36% in 2017 versus SAIC filings, and that Morinda operates without direct-selling licenses in 60% of the Chinese provinces it serves. The report ties Morinda's primary product to the same Noni Juice brand exposed by CCTV in its January 2019 hit on NHTC — which saw shares collapse 60% — and notes China regulators have suspended new MLM license issuance. CEO Brent Willis, whose prior ventures XFit Brands and Electronic Cigarettes International collapsed, boasted about $46m of Morinda cash while omitting $50m in hidden contractual obligations. A tiny Florida auditor, accelerating insider sales, and reliance on dilutive equity raises to stay afloat point to immediate 60% downside and potential insolvency.
SCQA
New Age Beverage is a NASDAQ-listed beverage roll-up that acquired MLM firm Morinda for $85 million in December 2018, marketing the deal as a transformational bargain at under 0.5x Morinda's 2017 sales.
Morinda's China revenues are inflated versus SAIC filings (51% in 2016, 36% in 2017), it lacks direct-selling licenses in 60% of China provinces amid a nationwide MLM crackdown, and hides over $50m in contractual obligations to Morinda shareholders.
Grizzly publishes its short thesis urging investors to sell NBEV, arguing the Morinda acquisition is fraudulent, the roll-up depends on dilutive equity raises, and a China regulatory action could wipe out Morinda's profit contribution overnight.
Immediate downside of 60% from the June 2019 price of $4.56, with scope to fall much lower — potentially insolvency — as Morinda's contribution collapses and continued equity issuance dilutes shareholders 30-88%.
The three reasons
- 1
Morinda's China revenue inflated 51% in 2016 and 36% in 2017 versus SAIC filings
- 2
Morinda lacks direct-selling licenses in 60% of Chinese provinces it operates in
- 3
CEO Brent Willis previously ran XFIT and ECIGQ — both collapsed toward zero
Primary demands
- Sell NBEV — immediate 60% downside with further insolvency risk
- Scrutinize Morinda's overstated China financials and missing MLM licenses
- Investigate CEO Brent Willis's track record and accelerating insider sales
KPIs cited
Pattern membership
Precedents cited
- NHTC CCTV expose January 2019 (shares -60%)
- Quanjian Group MLM crackdown
- Hualin Group MLM crackdown
- Infinitus (China) MLM crackdown
- Tianshi Group MLM crackdown
- Deloitte Malaysia and Brazil audit fines
Composition what's on the 22 slides
Slide gallery ·
Notes
Classic China-fraud short report built on on-the-ground fieldwork: photos of unlicensed Morinda offices, SAIC vs SEC financial reconciliation, and an analogy to the January 2019 CCTV/NHTC expose. Cover page reads 'Publication Date June 27th 2018' but filename and content (June 26 2019 price, June 2019 Marley deal, April 2019 Form 4) confirm this is a June 27, 2019 report — the cover '2018' is a typo. Document is Word-style prose with occasional photo collages and small tables; 'Not For Distribution' watermark across body pages. Author is the Grizzly Research team, no individual signatory on cover or closing.