An earlier version of this report falsely stated that Impossible Meat was sold to Whole Foods. It has been corrected.
Beyond Meat has diversified its revenue streams and is no longer as dependent on Amazon.com Inc. Whole Foods, which distributes its herbal protein products, has responded to questions from the US Securities and Exchange Commission regarding changes to its reporting practices.
The SEC had previously asked why information about the company's largest traders in the interim IPOs was later removed from the documents published on the regulator's Edgar platform.
"Please explain why you no longer intend to file such agreements as exhibits and why you have removed some of the related information," the SEC had previously asked in a letter dated November 1
The SEC and Beyond Meat went back and forth six times on the company's draft, which was filed confidentially. Beyond Meat responded that it had determined that his business was no longer "substantially dependent on a single contract with a distributor."
Specifically, the company is not relying too much on Whole Foods by Amazon.com Inc. in the third quarter of 2018 when selling its herbal protein products. Revenues in the supermarket chain shrank to 2% of gross sales of about 10% for the full year 2017
In 2017, the largest distributors were United Natural Foods
UNFI, + 0.61% ,
KeHE Distributors LLC and DOT Foods Inc., accounted for 30%, 10% and 10% of gross sales, respectively, and another distributor accounted for 14% of gross sales in the nine months ended September 29, 2018.
"These contracts are short-term, non-exclusive, can be terminated at short notice and do not provide for a minimum purchase obligation for a dealer, "admitted the law firm Orrick, Herrington & Sutcliffe to the SEC on behalf of Beyond Meat.
However, the Company believes that if the relationship with the four distributors ends, it would continue to be able to sell its products to other locations, including restaurants and catering businesses. Beyond Meat has a number of restaurant chains, including Dunkin 'Brands
DNKN, -0.59% ,
Del Taco and TGIF.
The contract with Whole Foods
For Beyond Meat, this is no longer so important, "which is partly due to the company's continued and significant revenue growth," the letter said.
Whole Foods plans to sell products from the British private company The Meatless Farm from now on.
Read: The British response to Beyond Meat is due to be released in the US.
The SEC also resented one of the metrics Beyond Meat uses in its IPO documents, which it calls "earned media" impressions "or EMI. The company defines EMI as "the amount of exposure that a piece of content receives in a television program, newspaper, website, blog, or other form of media, based on the readership or audience for that particular medium."
Beyond Meat Social media and celebrities strongly supported the company as it began to grow and market its business. Stars like Leonardo DiCaprio and Jessica Chastain helped him spread his vegan message. The Company believes that EMI "reflects the interest in our products, the relevance of our products or brands to the media, the audiences they serve, and the overall positioning of our products in the market," as stated in the Prospectus.
Read now: Beyond Meat goes public with a bang: 5 Things to Know About the Plant-Based Meat Maker
But the SEC was not convinced.
Media impressions: "Please provide advanced disclosure to clarify the nature of the relationship between this metric and your operating results, or to make it clear that there are none," the letter said.
In response, the company argued that EMIs "measure brand awareness," as it is said, is an integral part of its growth strategy.
"The company believes that EMI is recognized in a number of consumer goods industries as a useful measure to measure brand awareness, consumer brand awareness and consumer environmental interest," the letter said.
Beyond Meat shares tumbled 10% on Tuesday after announcing plans to offer 2.25 million shares as it announced a second-quarter profit late Monday.
See Now: With the rise of Beyond Meat, Conagra sees a $ 30 billion chance for plant-based meat alternatives in Gardein loss of $ 9.4 million, or 24 cents a share Revenue of $ 67.3 million after a loss of $ 7.4 million on revenues of $ 17.4 million a year ago.
Earnings before interest, taxes, depreciation and amortization, adjusted for stock-based compensation and other expenses, were $ 6.9 million. According to FactSet, analysts expected sales of $ 52.5 million and a loss of 9 cents.
The stock has been in a bearish run since it went public in May and has recently traded at $ 200.44, or eight times the stock price of $ 25.
The S & P 500
has gained 2.2% in the last three months, while the Dow Jones Industrial Average
has gained 2.1%.
Additional reporting by Jeremy Owens in San Francisco
Read: Beyond endangered meat as competitors such as Impossible Burger gain a foothold