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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to         
001-38875
(Commission file number)
Greenlane Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware83-0806637
State or other jurisdiction of
incorporation or organization
(I.R.S. Employer
Identification No.)
1095 Broken Sound Parkway,Suite 300
Boca Raton, FL33487
(Address of principal executive offices)(Zip Code)
(877) 292-7660
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 par value per shareGNLNNasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports 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 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, 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
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No  ☒
As of November 11, 2021, Greenlane Holdings, Inc. had 80,467,462 shares of Class A common stock outstanding and 21,800,270 shares of Class B common stock outstanding.





TABLE OF CONTENTS




PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value per share amounts)
September 30,
2021
December 31,
2020
ASSETS(Unaudited)
Current assets
Cash$13,215 $30,435 
Accounts receivable, net of allowance of $982 and $1,084 at September 30, 2021 and December 31, 2020, respectively
15,213 6,330 
Inventories, net61,545 36,064 
Vendor deposits18,962 11,289 
Assets held for sale75 1,073 
Other current assets (Note 8)11,011 10,892 
Total current assets120,021 96,083 
Property and equipment, net19,627 12,201 
Intangible assets, net80,216 5,945 
Goodwill32,862 3,280 
Operating lease right-of-use assets9,668 3,104 
Other assets4,404 2,037 
Total assets$266,798 $122,650 
LIABILITIES
Current liabilities
Accounts payable$16,607 $18,405 
Accrued expenses and other current liabilities (Note 8)22,902 19,572 
Customer deposits6,517 2,729 
Current portion of operating leases2,977 966 
Current portion of finance leases180 184 
Total current liabilities49,183 41,856 
Notes payable, less current portion and debt issuance costs, net8,698 7,844 
Operating leases, less current portion7,047 2,524 
Finance leases, less current portion191 205 
Other liabilities1,487 964 
Total long-term liabilities17,423 11,537 
Total liabilities66,606 53,393 
Commitments and contingencies (Note 7)
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, 10,000 shares authorized, none issued and outstanding
  
Class A common stock, $0.01 par value per share, 600,000 shares authorized as of September 30, 2021 and 125,000 shares authorized as of December 31, 2020; 79,807 shares issued and outstanding as of September 30, 2021; 13,322 shares issued and outstanding as of December 31, 2020
798 133 
Class B common stock, $0.0001 par value per share, 30,000 shares authorized as of September 30, 2021 and 10,000 shares authorized as of December 31, 2020; 21,850 and 3,491 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
2 1 
Class C common stock, $0.0001 par value per share, 0 shares authorized as of September 30, 2021 and 100,000 shares authorized as of December 31, 2021; 0 and 76,039 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
 8 
Additional paid-in capital222,107 39,742 
Accumulated deficit(48,628)(24,848)
Accumulated other comprehensive income92 29 
Total stockholders’ equity attributable to Greenlane Holdings, Inc.
174,371 15,065 
Non-controlling interest25,821 54,192 
Total stockholders’ equity200,192 69,257 
Total liabilities and stockholders’ equity$266,798 $122,650 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1



GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Net sales$41,314 $35,764 $110,038 $102,032 
Cost of sales41,192 33,297 94,832 85,419 
Gross profit122 2,467 15,206 16,613 
Operating expenses:
Salaries, benefits and payroll taxes11,192 5,010 23,158 17,745 
General and administrative15,430 10,673 30,885 25,758 
Goodwill impairment charge   8,996 
Depreciation and amortization1,199 599 2,385 1,959 
Total operating expenses27,821 16,282 56,428 54,458 
Loss from operations(27,699)(13,815)(41,222)(37,845)
Other (expense) income, net:
Interest expense(119)(115)(368)(335)
Other (expense) income, net(894)357 (690)1,483 
Total other (expense) income, net(1,013)242 (1,058)1,148 
Loss before income taxes(28,712)(13,573)(42,280)(36,697)
Provision for (benefit from) income taxes3 220 (11)147 
Net loss(28,715)(13,793)(42,269)(36,844)
Less: Net loss attributable to non-controlling interest
(12,434)(9,300)(18,689)(25,839)
Net loss attributable to Greenlane Holdings, Inc.
$(16,281)$(4,493)$(23,580)$(11,005)
Net loss attributable to Class A common stock per share - basic and diluted (Note 9)
$(0.41)$(0.35)$(0.98)$(0.95)
Weighted-average shares of Class A common stock outstanding - basic and diluted (Note 9)
39,735 12,798 24,061 11,559 
Other comprehensive income (loss):
Foreign currency translation adjustments(147)285 (59)130 
Unrealized gain (loss) on derivative instrument52 35 256 (525)
Comprehensive loss
(28,810)(13,473)(42,072)(37,239)
Less: Comprehensive loss attributable to non-controlling interest
(12,479)(9,066)(18,556)(26,152)
Comprehensive loss attributable to Greenlane Holdings, Inc.
$(16,331)$(4,407)$(23,516)$(11,087)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2



GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands)

Class A
Common Stock
Class B
Common Stock
Class C
Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Non-
Controlling
Interest
Total
Stockholders’
Equity
SharesAmountSharesAmountSharesAmount
Balance, December 31, 202013,322 $133 3,491 $1 76,039 $8 $39,742 $(24,848)$29 $54,192 $69,257 
Net loss— — — — — — — (4,256)— (3,458)(7,714)
Equity-based compensation226 2 — — — — 180 — — 324 506 
Other comprehensive income— — — — — — — — 18 31 49 
Issuance of Class A common stock for Eyce acquisition426 4 — — — — 2,001 — — — 2,005 
Exchanges of noncontrolling interest for Class A common stock2,368 24 (1,043)— (3,975)(1)5,774 — — (5,797) 
Cancellation of Class B common stock due to forfeitures— — (5)— — — 8 — — (8) 
Balance, March 31, 202116,342 163 2,443 1 72,064 7 47,705 (29,104)47 45,284 64,103 
Net loss— — — — — — — (3,043)— (2,797)(5,840)
Equity-based compensation(26)— — — — — 161 — — 246 407 
Exchanges of noncontrolling interest for Class A common stock595 6 (7)— (1,763)— 977 — — (983) 
Exercise of Class A common stock options32 — — — — — 112 — — — 112 
Member distributions— — — — — — — (200)— — (200)
Other comprehensive income— — — — — — — — 96 147 243 
Balance, June 30, 202116,943 169 2,436 1 70,301 7 48,955 (32,347)143 41,897 58,825 
Net loss— — — — — — — (16,281)— (12,434)(28,715)
Equity-based compensation(10)— — — — — 2,036 — — 1,772 3,808 
Exchanges of noncontrolling interest for Class A common stock4,019 40 (4,020)(1)— — 5,331 — — (5,370) 
Exercise of Class A common stock options and warrants5,974 60 — — — — 96 — — — 156 
Conversion of Class C common stock— — 23,434 2 (70,301)(7)5 — — —  
Issuance of Class A common stock, net of costs52,871 529 — — — — 165,684 — — — 166,213 
Other comprehensive loss— — — — — — — — (51)(44)(95)
Balance, September 30, 202179,797 $798 21,850 $2  $ $222,107 $(48,628)$92 $25,821 $200,192 













The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3




GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands)

Class A
Common Stock
Class B
Common Stock
Class C
Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Non-
Controlling
Interest
Total
Stockholders’
Equity
SharesAmountSharesAmountSharesAmount
Balance, December 31, 20199,812 $98 5,975 $1 77,791 $8 $32,108 $(9,727)$(72)$91,848 $114,264 
Net loss— — — — — — — (4,461)— (12,278)(16,739)
Equity-based compensation— — — — — — 64 — — 206 270 
Other comprehensive loss— — — — — — — — (267)(853)(1,120)
Issuance of Class A common stock480 5 — — — — 1,496 — — — 1,501 
Cancellation of Class B common stock due to forfeitures— — (105)— — — 223 — — (223) 
Joint venture consolidation— — — — — — — — — 189 189 
Balance, March 31, 202010,292 103 5,870 1 77,791 8 33,891 (14,188)(339)78,889 98,365 
Net loss— — — — — — — (2,051)— (4,261)(6,312)
Equity-based compensation— — — — — — 220 — — 672 892 
Issuance of Class A common stock for the acquisition of Conscious Wholesale171 2 — — — — 485 — — — 487 
Cancellation of Class B common stock due to equity-based compensation award forfeitures— — (6)— — — 9 — — (9) 
Exchange of noncontrolling interest for Class A common stock2,140 21 (2,140)— — — 3,896 — — (3,917) 
Other comprehensive income— — — — — — — — 99 306 405 
Balance, June 30, 202012,603 126 3,724 1 77,791 8 38,501 (16,239)(240)71,680 93,837 
Net loss— — — — — — — (4,493)— (9,300)(13,793)
Equity-based compensation— — — — — — (298)— — (682)(980)
Issuance of Class A common stock35 1 — — — — 75 — — — 76 
Cancellation of Class B Common Stock related to equity-based compensation award forfeitures— — (133)— — — 221 — — (221) 
Redemption of Common Units for Class A common stock434 4 — — (1,302)— 695 — — (699) 
Other comprehensive income— — — — — — — — 86 234 320 
Balance, September 30, 202013,072 $131 3,591 $1 76,489 $8 $39,194 $(20,732)$(154)$61,012 $79,460 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4



GREENLANE HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
20212020
Cash flows from operating activities:
Net loss (including amounts attributable to non-controlling interest)(42,269)$(36,844)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization2,385 1,959 
Equity-based compensation expense4,762 182 
Goodwill impairment charge 8,996 
Change in fair value of contingent consideration755 (719)
Change in provision for doubtful accounts318 766 
Gain (loss) related to indemnification asset(1,692)2,200 
Loss on disposal of assets206 569 
Other327 242 
Changes in operating assets and liabilities, net of the effect of acquisitions:
(Increase) decrease in accounts receivable(2,092)886 
Decrease in inventories9,723 6,140 
(Increase) decrease in vendor deposits(661)2,543 
Decrease (increase) in other current assets9,985 (6,217)
(Decrease) increase in accounts payable(7,673)6,653 
(Decrease) increase in accrued expenses(5,957)9,558 
(Decrease) in customer deposits(145)(670)
Net cash used in operating activities(32,028)(3,756)
Cash flows from investing activities:
Purchase consideration paid for acquisitions, net of cash acquired(12,284)(1,841)
Purchase of property and equipment, net(2,327)(1,438)
Proceeds from sale of assets held for sale675  
Purchase of intangible assets(320)(300)
Net cash used in investing activities(14,256)(3,579)
Cash flows from financing activities:
Member distributions(200) 
Proceeds from issuance of Class A common stock, net of costs29,539  
Proceeds from exercise of stock options and warrants268  
Repayments of notes payable(414)(145)
Other(322)(165)
Net cash provided by (used in) financing activities28,871 (310)
Effects of exchange rate changes on cash193 (135)
Net decrease in cash(17,220)(7,780)
Cash, as of beginning of the period30,435 47,773 
Cash, as of end of the period$13,215 $39,993 
Supplemental disclosures of cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$1,093 $1,193 
Lease liabilities arising from obtaining finance lease assets$119 $272 
Lease liabilities arising from obtaining operating lease right-of-use assets, net of the effect of acquisitions$ $331 
Non-cash investing and financing activities:
Non-cash purchases of property and equipment$381 $ 
Issuance of Class A common stock for acquisitions$125,496 $1,988 
Issuance of warrants and stock options for acquisition$13,182 $ 
Issuance of promissory note for acquisition$2,503 $ 
Issuance of contingent consideration for acquisition$1,828 $ 
Decrease in non-controlling interest as a result of exchanges for Class A common stock$(12,150)$(4,616)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5



GREENLANE HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BUSINESS OPERATIONS AND ORGANIZATION
Organization
Greenlane Holdings, Inc. (“Greenlane” and, collectively with the Operating Company (as defined below) and its consolidated subsidiaries, the “Company”, "we", "us", and "our") was formed as a Delaware corporation on May 2, 2018. We are a holding company that was formed for the purpose of completing an underwritten initial public offering (“IPO”) of shares of our Class A common stock , $0.01 par value per share (the “Class A common stock”), in order to carry on the business of Greenlane Holdings, LLC (the “Operating Company”). The Operating Company was organized under the laws of the state of Delaware on September 1, 2015, and is based in Boca Raton, Florida. Unless the context otherwise requires, references to the “Company” refer to us, and our consolidated subsidiaries, including the Operating Company.
We are the sole manager of the Operating Company and our principal asset is Common Units of the Operating Company (“Common Units”). As the sole manager of the Operating Company, we operate and control all of the business and affairs of the Operating Company, and we conduct our business through the Operating Company and its subsidiaries. We have a board of directors and executive officers, but no employees. All of our assets are held and all of the employees are employed by the Operating Company.
We have the sole voting interest in, and control the management of, the Operating Company, and we have the obligation to absorb losses of, and receive benefits from, the Operating Company, that could be significant. We determined that the Operating Company is a variable interest entity (“VIE”) and that we are the primary beneficiary of the Operating Company. Accordingly, pursuant to the VIE accounting model, beginning in the fiscal quarter ended June 30, 2019, we consolidated the Operating Company in our consolidated financial statements and reported a non-controlling interest related to the Common Units held by the members of the Operating Company (other than the Common Units held by us) on our consolidated financial statements.

On August 31, 2021, we completed our previously announced merger with KushCo Holdings, Inc. ("KushCo") and have included the results of operations of KushCo in our condensed consolidated statements of operations and comprehensive loss from that date forward. As such, the KushCo financial information included in our condensed consolidated financial statements for the three and nine months ended September 30, 2021 is for the period commencing on August 31, 2021 (the date of the closing of the merger) through September 30, 2021. Immediately following the merger with KushCo, stockholders that held Class A common stock prior to the completion of the merger owned 51.9% and former KushCo stockholders owned 48.1% of the equity of the combined company on a fully diluted basis. In connection with the merger with KushCo, the Greenlane Certificate of Incorporation was amended and restated (the “A&R Charter”) in order to (i) increase the number of authorized shares of Greenlane Class B common stock, $0.0001 par value per share (the “Class B Common stock”), from 10,000,000 shares to 30,000,000 shares in order to effect the conversion of each outstanding share of Class C common stock, $0.0001 par value per share (the “Class C common stock”), into one-third of one share of Class B common stock, (ii) increase the number of authorized shares of Class A common stock from 125,000,000 shares to 600,000,000 shares, and (iii) eliminate references to the Class C common stock. Pursuant to the terms of an Agreement and Plan of Merger, dated as of March 31, 2021 (the "Merger Agreement") with KushCo, immediately prior to the consummation of the business combination, holders of Class C common stock received one-third of one share of Class B common stock for each share of Class C common stock held immediately prior to the closing of the merger. For further information about the merger with KushCo, see "Note 3 - Business Acquisitions."
We merchandise premium cannabis accessories, child-resistant packaging, specialty vaporization solutions and lifestyle products in the United States, Canada and Europe, serving a diverse and expansive customer base with more than 8,000 retail locations, including licensed cannabis dispensaries, smoke shops, and specialty retailers. We distribute to multi-state operators ("MSOs"), licensed producers ("LPs"), other retailers and brands through wholesale operations under our Industrial Goods division, and to consumers through both wholesale operations as well as e-commerce activities and our retail stores under our Consumer Goods division.
Our corporate structure is commonly referred to as an “Up-C” structure. The Up-C structure allows the members of the Operating Company to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass-through” entity. One of these benefits is that future taxable income of the Operating Company that is allocated to its members will be taxed on a flow-through basis and therefore will not be subject to corporate taxes at the Operating Company entity level. Additionally, because the members may redeem their Common Units for shares of Class A common stock on a one-for-one basis or, at our option, for cash, the Up-C structure also provides the members with potential liquidity that holders of non-publicly traded limited liability companies are not typically afforded.

In connection with our initial public offering, we entered into a Tax Receivable Agreement (the “TRA”) with the Operating Company and the Operating Company’s members and a Registration Rights (the “Registration Rights Agreement”) with the Operating Company’s members.The TRA provides for the payment by us to the Operating Company’s members of 85.0% of the amount of tax benefits, if any, that we may actually realize (or in some cases, are deemed to realize) as a result of (i) the
6



step-up in tax basis in our share of the Operating Company's assets resulting from the redemption of Common Units under the mechanism described above and (ii) certain other tax benefits attributable to payments made under the TRA. Pursuant to the Registration Rights Agreement, we have agreed to register the resale of shares of Class A common stock that are issuable to the Operating Company’s members upon redemption or exchange of their Common Units.

The A&R Charter and the Third Amended and Restated Operating Agreement of the Operating Company (the “Operating Agreement”) require that (a) we at all times maintain a ratio of one Common Unit owned by us for each share of our Class A common stock issued by us (subject to certain exceptions), and (b) the Operating Company at all times maintains (i) a one-to-one ratio between the number of shares of our Class A common stock issued by us and the number of Common Units owned by us, and (ii) a one-to-one ratio between the number of shares of our Class B common stock owned by the non-founder members of the Operating Company and the number of Common Units owned by the non-founder members of the Operating Company.
The following table sets forth the economic and voting interests of our common stock holders as of September 30, 2021:
Class of Common Stock (ownership)
Total Shares (1)
Class A Shares (as converted) (2)
Economic Ownership in the Operating Company (3)
Voting Interest in Greenlane (4)
Economic Interest in Greenlane (5)
Class A79,806,834 79,806,834 78.5 %78.5 %100.0 %
Class B21,850,270 21,850,270 21.5 %21.5 % %
Total101,657,104 101,657,104 100.0 %100.0 %100.0 %
(1) Represents the total number of outstanding shares for each class of common stock as of September 30, 2021.
(2) Represents the number of shares of Class A common stock that would be outstanding assuming the exchange of all outstanding shares of Class B common stock upon redemption of all related Common Units. Shares of Class B common stock would be canceled, without consideration, on a one-to-one basis pursuant to the terms and subject to the conditions of the Operating Agreement.
(3) Represents the indirect economic interest in the Operating Company through the holders' ownership of common stock.
(4) Represents the aggregate voting interest in us through the holders' ownership of common stock. Each share of Class A common stock and Class B common stock entitles its holder to one vote per share on all matters submitted to a vote of our stockholders.
(5) Represents the aggregate economic interest in us through the holders' ownership of Class A common stock.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting.

Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2020.

The condensed consolidated balance sheet as of December 31, 2020 included herein was derived from the audited financial statements as of that date.

The condensed consolidated results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021, or any other future annual or interim period. Certain reclassifications have been made to prior year amounts or balances to conform to the presentation adopted in the current year.

Use of Estimates

Conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. U.S. GAAP requires us to make estimates and judgments in several areas. Such areas include, but are not limited to: the collectability of accounts receivable; the allowance for slow-moving or obsolete inventory; the realizability of deferred tax assets; the fair value of goodwill; the fair value of contingent consideration arrangements; the useful lives of intangibles assets
7


and property and equipment; the calculation of our VAT receivable and VAT payable, including fines and penalties payable; our loss contingencies, including our TRA liability; and the valuation and assumptions underlying equity-based compensation. These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.

Update on COVID-19

On March 11, 2020, the World Health Organization recognized the novel coronavirus ("COVID-19") as a global pandemic, prompting many national, regional, and local governments, including those in the markets that the Company operates in, to implement preventative or protective measures, such as travel and business restrictions, temporary store closures, and wide-sweeping quarantines and stay-at-home orders. As a result, COVID-19 significantly curtailed global economic activity, including in the industries in which we operate.

While the U.S. has recently seen a decline in new cases and states are loosening their shutdown and social distancing protocols, resulting in a wide reopening of adult recreational use and medical stores as well as other retail stores that the Company sells to, our sources of revenue continue to be affected by COVID-19, especially with the rise of new variants.

We continue to be impacted by business and supply chain disruptions resulting from the COVID-19 pandemic. In particular, the pandemic has resulted in increased air freight costs incurred by us, as well as general difficulties in securing space on incoming freight from international vendors in order to make room for essential items. We continue to experience unexpected and uncontrollable delays with our international supply shipments due to a significant increase in shipments to U.S. ports, less cargo being shipped by air, and a general shortage of containers. We, along with many other importers of goods across all industries, continue to experience severe congestion and extensive wait times for carriers at ports across the United States. While we have been working diligently with our network of freight partners and suppliers to expedite delivery dates and provide solutions to reduce further impact and delays, we are unable to determine the full impact of these delays as they are outside our control. Additionally, the Occupational Safety and Health Administration introduced a rule requiring certain employers to mandate vaccinations or conduct weekly COVID-19 test on unvaccinated employees. These requirements could result in employee attrition if employees choose not to provide proof of vaccination or submit to COVID-19 testing.

Overall, while we are continuing to navigate the financial, operational, and personnel challenges presented by the COVID-19 pandemic, the full extent of its impact on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic, the potential uncertainty related to and proliferation of new strains, and related actions taken by the U.S., international and state and local governments to prevent the spread of disease, all of which are uncertain, outside our control, and cannot be predicted at this time.

We expect uncertainties around our key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Our estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in our condensed consolidated financial statements.

Goodwill

Goodwill represents the excess of the price we paid over the fair value of the net identifiable assets we acquired in business combinations. In accordance with ASC Topic 350, Intangibles—Goodwill and Other, we review goodwill for impairment at the reporting unit level annually or, when events or circumstances dictate, more frequently. The impairment review for goodwill consists of a qualitative assessment of whether it is more-likely-than-not that a reporting unit's fair value is less than its carrying amount, and if necessary, a quantitative goodwill impairment test. Factors to consider when performing the qualitative assessment include general economic conditions, limitations on accessing capital, changes in forecasted operating results and fluctuations in foreign exchange rates. If the qualitative assessment demonstrates that it is more-likely-than-not that the estimated fair value of the reporting unit exceeds its carrying value, it is not necessary to measure and record impairment loss. We may elect to bypass the qualitative assessment and proceed directly to the quantitative assessment, for any reporting unit, in any period. We can resume the qualitative assessment for any reporting unit in any subsequent period.

When we perform a quantitative impairment test, we use a combination of an income approach, a discounted cash flow valuation approach, and a market approach, using the guideline public company method, to determine the fair value of each reporting unit, and then compare the fair value to its carrying amount to determine the amount of impairment, if any. If a reporting unit's fair value is less than its carrying amount, we record an impairment charge based on that difference, up to the amount of goodwill allocated to that reporting unit.

The quantitative impairment test requires the application of a number of significant assumptions, including estimated projections of future revenue growth rates, EBITDA margins, terminal value growth rates, market multiples, discount rates, and foreign currency exchange rates. The projections of future cash flows used to assess the fair value of the reporting units are based on the internal operation plans reviewed by management. The market multiples are based on comparable public company
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multiples. The discount rates are based on the risk-free rate of interest and estimated risk premiums for the reporting units at the time the impairment analysis is prepared. The projections of future exchange rates are based on the current exchange rates at the time the projections are prepared. if the fair value of the reporting unit exceeds its carrying value, no further analysis or write-down of goodwill is required. If the fair value of the reporting unit is less than the carrying value of its net assets, the implied fair value of the reporting unit is allocated to all its underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their fair value. If necessary, goodwill is then written down to its implied fair value.

Due to market conditions and estimated adverse impacts from the COVID-19 pandemic, management concluded that a triggering event occurred in the first quarter of 2020, requiring a quantitative impairment test of our goodwill for our United States and Europe reporting units. Based on this assessment, we concluded that the estimated fair value of our United States reporting unit was determined to be below its carrying value, which resulted in a $9.0 million goodwill impairment charge for the three months ended March 31, 2020. This impairment charge resulted from the impacts of COVID-19 on our current and forecasted wholesale revenues and the restrictions on certain products we sell imposed by the Federal Drug Administration ("FDA") Enforcement Priorities for Electronic Nicotine Delivery Systems ("ENDS") and Other Deemed Products on the Market Without Premarket Authorization ("ENDS Enforcement Guidance'), which resulted in changes to our estimates and assumptions of the expected future cash flows of the United States reporting unit.

We recognized no goodwill impairment charges during the three and nine months ended September 30, 2021. See "Note 3—Business Acquisitions" for discussion of goodwill recognized during 2021 related to the Eyce LLC acquisition and KushCo merger. The assignment of goodwill recognized from the KushCo merger to reporting units has not yet been completed as of the date of these financial statements. We expect to make a determination relating to the application of the segment reporting disclosure requirements applicable to KushCo during the fourth quarter of 2021.

Revenue Recognition
Revenue is recognized when customers obtain control of goods and services promised by us. Revenue is measured based on the amount of consideration that we expect to receive in exchange for those goods or services, reduced by promotional discounts and estimates for return allowances and refunds. Taxes collected from customers for remittance to governmental authorities are excluded from net sales.

We generate revenue primarily from the sale of finished products to customers, whereby each product unit represents a single performance obligation. We recognize revenue from product sales when the customer has obtained control of the products, which is either upon shipment from one of our fulfillment centers or upon delivery to the customer, depending upon the specific terms and conditions of the arrangement, or at the point of sale for our retail store sales. We provide no warranty on products sold. Product warranty is provided by the manufacturers.

Our performance obligations for services are satisfied when the services are rendered within the arranged service period. Service revenue was de minimis for the three and nine months ended September 30, 2021 and 2020.

Beginning with the first quarter of 2020, we entered into a limited number of bill-and-hold arrangements. Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met: (i) the customer has requested delayed delivery and storage of the products by us, in exchange for a storage fee, because they want to secure a supply of the products but lack storage space, (ii) the risk of ownership has passed to the customer, (iii) the products are segregated from our other inventory items held for sale, (iv) the products are ready for shipment to the customer, and (v) the products are customized and thus we do not have the ability to use the products or direct them to another customer. Revenue under bill-and-hold arrangements was $0.2 million and $0.5 million for the three and nine months ended September 30, 2021, respectively, and $0.5 million and $1.5 million for the three and nine months ended September 30, 2020, respectively. Storage fees charged to customers for bill-and-hold arrangements are recognized as invoiced. Such fees were not significant for the three and nine months ended September 30, 2021 and 2020.

For certain product offerings such as premium, patented, child-resistant packaging, closed-system vaporization solutions and custom-branded retail products, we may receive a deposit from the customer (generally 25% - 50% of the total order cost, but the amount can vary by customer contract) when an order is placed by a customer. We typically complete these orders within one to six months from the date of order, depending on the complexity of the customization and the size of the order, but the completion timeline can vary by product type and terms of sales with each customer. See “Note 8—Supplemental Financial Statement Information” for a summary of changes to our customer deposits liability balance during the nine months ended September 30, 2021.

We estimate product returns based on historical experience and record them as a refund liability that reduces the net sales for the period. We analyze actual historical returns, current economic trends and changes in order volume when evaluating the adequacy of our sales returns allowance in any reporting period. Our liability for returns, which is included within "Accrued
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expenses and other current liabilities" in our condensed consolidated balance sheets, was approximately $1.1 million and $0.8 million as of September 30, 2021 and December 31, 2020, respectively. The recoverable cost of merchandise estimated to be returned by customers, which is included within "Other current assets" in our condensed consolidated balance sheets, was approximately $0.2 million as of September 30, 2021 and December 31, 2020.

We elected to account for shipping and handling expenses that occur after the customer has obtained control of products as a fulfillment activity in cost of sales. Shipping and handling fees charged to customers are included in net sales upon completion of our performance obligations. We apply the practical expedient provided for by the applicable revenue recognition guidance by not adjusting the transaction price for significant financing components for periods less than one year. We also apply the practical expedient provided by the applicable revenue recognition guidance based upon which we generally expense sales commissions when incurred because the amortization period is one year or less. Sales commissions are recorded within "Salaries, benefits and payroll tax expenses" in the condensed consolidated statements of operations and comprehensive loss.

No single customer represented more than 10% of our net sales for the three and nine months ended September 30, 2021 and 2020. As of September 30, 2021, only one customer customer represented more than 10% of our accounts receivable balance, totaling 15% of the net, accounts receivable balance.
Value Added Taxes

During the third quarter of 2020, as part of a global tax strategy review, we determined that our European subsidiaries based in the Netherlands, which we acquired on September 30, 2019, had historically collected and remitted value added tax ("VAT") payments, which related to direct-to-consumer sales to other European Union ("EU") member states, directly to the Dutch tax authorities. In connection with our subsidiaries' payment of VAT to Dutch tax authorities rather than other EU member states, the German government has commenced a criminal investigation, which could result in penalties; other jurisdictions could commence such investigations as well.

We performed an analysis of the VAT overpayments to the Dutch tax authorities, which we expect will be refunded to us, and VAT payable to other EU member states, including potential fines and penalties. Based on this analysis, we recorded VAT payable of approximately $3.1 million and $9.9 million within "Accrued expenses and other current liabilities" and VAT receivable of approximately $0.1 million and $4.4 million within "Other current assets" in our condensed consolidated balance sheet as of September 30, 2021 and December 31, 2020, respectively.

We established VAT receivables in jurisdictions where VAT paid exceeds VAT collected and are recoverable through the filing of refund claims. Our VAT receivable balance as of September 30, 2021 and December 31, 2020 relates to refund claims with the Dutch tax authorities. In April 2021, we received a refund from the Dutch tax authorities of approximately $4.1 million.

Pursuant to the purchase and sale agreement by which we acquired our European subsidiaries, the sellers are required to indemnify us against certain specified matters and losses, including any and all liabilities, claims, penalties and costs incurred or sustained by us in connection with non-compliance with tax laws in relation to activities of the sellers. The indemnity (or indemnification receivable) is limited to an amount equal to the purchase price under the purchase and sale agreement. As of September 30, 2021 and December 31, 2020, we recognized an indemnification asset of approximately $0.1 million and $0.9 million within "Other current assets" using the loss recovery model. We were beneficiaries of a bank guarantee in the amount of approximately $0.9 million for claims for which we are entitled to indemnification under the purchase and sale agreement, which we collected in April 2021. In April 2021, we entered into a settlement agreement with the sellers of Conscious Wholesale requiring the transfer of approximately $0.8 million in cash from the sellers' bank accounts, which we also collected in April 2021. In May 2021, we entered into another settlement with the sellers to place 650,604 shares of our Class A common stock owned by the sellers in escrow, which requires that those securities be sold as necessary to pay additional liabilities of the seller to us under the purchase and sale agreement.

During the three and nine months ended September 30, 2020, we recognized a charge of approximately $2.2 million within "general and administrative" expenses in our consolidated statements of operations and comprehensive loss, which represented the difference between the VAT payable and the VAT receivable and indemnification asset recorded as of September 30, 2020. During the three and nine months ended September 30, 2021, we recognized a gain of approximately $0 and $1.7 million within "general and administrative expenses" in our condensed consolidated statements of operations and comprehensive loss, which represented the partial reversal of the previously recognized charge, as the indemnification asset became probable of recovery based on the settlement agreements with the sellers and the related amounts collected from the sellers, and a reduction in our previously estimated VAT liability for penalties and interest based on our voluntary disclosure to, and ongoing settlement with, the relevant tax authorities in the EU member states.

Management intends to pursue recovery of all additional losses from the sellers to the full extent of the indemnification provisions of the purchase and sale agreement, however, the collectability of such additional indemnification amounts may be subject to litigation and may be affected by the credit risk of indemnifying parties, and are therefore subject to significant uncertainties as to the amount and timing of recovery.

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As noted above, we have voluntarily disclosed VAT owed to several relevant tax authorities in the EU member states, and believe in doing so we will reduce our liability for penalties and interest. Nonetheless, we may incur expenses in future periods related to such matters, including litigation costs and other expenses to defend our position. The outcome of such matters is inherently unpredictable and subject to significant uncertainties.

Refer to "Note 7—Commitments and Contingencies" for additional discussion regarding our contingencies.
Recently Adopted Accounting Guidance
In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This update was effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We adopted this standard beginning January 1, 2021. Adoption of this standard did not have a material impact on our condensed consolidated financial statements.
In January 2020, the FASB issued ASU No. 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), which clarifies the interaction of accounting for equity securities under Topic 321, the accounting for equity investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815. We adopted this guidance beginning January 1, 2021. Adoption of this standard did not have a material impact on our condensed consolidated financial statements.
In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which addresses the measurement and disclosure requirements for convertible instruments and contracts in an entity's own equity. The new standard simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity's own equity. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021. We elected to early adopt the new standard beginning January 1, 2021, on a modified retrospective basis. Adoption of this standard did not impact our condensed consolidated financial statements, as we did not hold any instruments to which this standard was applicable during the current reporting period nor in earlier reporting periods.
Recently Issued Accounting Guidance Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses. The standard requires the use of an “expected loss” model on certain types of financial instruments. The standard also amends the impairment model for available-for-sale securities and requires estimated credit losses to be recorded as allowances rather than as reductions to the amortized cost of the securities. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2022 for filers that are eligible to be smaller reporting companies under the SEC's definition. Early adoption is permitted. We do not believe the adoption of this new guidance will have a material impact on our condensed consolidated financial statements and disclosures.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued as a result of reference rate reform. These amendments are not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope, which clarified the scope and application of the original guidance. ASU No. 2020-04 and ASU No. 2021-01 are effective as of March 12, 2020 through December 31, 2022 and may be applied to contract modifications and hedging relationships from the beginning of an interim period that includes or is subsequent to March 12, 2020. We are still evaluating the impact these standards will have on our consolidated financial statements and related disclosures.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if it had originated the contracts. Prior to this ASU, an acquirer generally recognizes contract assets acquired and contract liabilities assumed that arose from contracts with customers at fair value on the acquisition date. The ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The ASU is to be applied prospectively to business combinations occurring on or after the effective date of the amendment (or if adopted early as of an interim period, as of the beginning of the fiscal year that includes the interim period of early application). We are still assessing this standard’s impact on our consolidated financial statements.

NOTE 3. BUSINESS ACQUISITIONS
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Eyce LLC

On March 2, 2021, we acquired substantially all the assets of Eyce LLC ("Eyce"), a designer and manufacturer of silicon pipes, bubblers, rigs, and other smoking and vaporization-related accessories and merchandise. We acquired Eyce to take advantage of expected synergies, which include increased margins from the direct integration of one of our top-selling product lines into our offerings of Greenlane Brands products (as defined below) and the enlistment of key talent in Eyce's founding owners.

We accounted for the Eyce acquisition as a business combination under the acquisition method under ASC Topic 805, Business Combinations. Eyce has been consolidated in our condensed consolidated financial statements commencing on March 2, 2021, the date of acquisition. The purchase price for the Eyce acquisition was allocated based on estimates of the fair value of net assets acquired at the acquisition date, with the excess allocated to goodwill. The total purchase consideration for the Eyce acquisition consisted of the following:
(in thousands)Purchase Consideration
Cash$2,403 
Class A common stock2,005 
Promissory note2,503 
Contingent consideration - payable in cash914 
Contingent consideration - payable in Class A common stock914 
Total purchase consideration$8,739 

During the three and nine months ended September 30, 2021, we recognized approximately $0 and $0.3 million in Eyce acquisition-related costs, which were included within "general and administrative" expenses in our condensed consolidated statement of operations and comprehensive loss.
The contingent consideration arrangement requires us to make contingent payments based on the achievement of certain revenue and EBITDA performance targets for the years ending December 31, 2021 and 2022, as set forth in the acquisition agreement. We estimated the fair value of the contingent consideration by using a Monte Carlo simulation that includes significant unobservable inputs such as the risk-free rate, risk-adjusted discount rate, the volatility of the underlying financial metrics and projected financial forecast of the acquired business over the earn-out period. As a result of additional information obtained about facts and circumstances that existed as of the acquisition date, we calculated an adjustment to the purchase price related to the estimated fair value of contingent consideration issued, and recorded a measurement period adjustment during the second quarter of 2021.
The following table summarizes the purchase price allocation and the estimated fair value of the net assets acquired at the date of acquisition as of September 30, 2021.
(in thousands)Estimated Fair Value
as of Acquisition Date
(as previously reported)
Measurement Period AdjustmentsEstimated Fair Value as of Acquisition Date
(as adjusted)
Inventory$92 $— $92 
Developed technology1,738 — 1,738 
Trade name1,294 — 1,294 
Customer relationships165 — 165 
Goodwill4,840 610 5,450 
Total purchase price$8,129 $610 $8,739 

Goodwill generated from the Eyce acquisition is primarily related to the value we placed on expected business synergies. The assignment of goodwill recognized from this business combination to reporting units has not yet been completed as of the date of these financial statements. We anticipate that the goodwill recognized will be deductible for income tax purposes.

Merger with KushCo Holdings, Inc.
On August 31, 2021, we completed our previously announced merger with KushCo Holdings, Inc. ("KushCo"), pursuant to the terms of an Agreement and Plan of Merger, dated as of March, 31, 2021 (the "Merger Agreement"). Greenlane’s merger with KushCo creates the leading ancillary cannabis products and services company. The combined company serves a premier group of customers, which includes many of the leading MSOs and LPs, the top smoke shops in the United States, and millions of consumers globally.
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Pursuant to the Merger Agreement, Merger Sub Gotham 1, LLC, our wholly owned subsidiary (“Merger Sub 1”), merged with KushCo (the “Initial Surviving Corporation”) (“Merger 1”) and then the Initial Surviving Corporation was merged with and into Merger Sub Gotham 2, LLC, our wholly owned subsidiary (“Merger Sub 2”), with Merger Sub 2 as the surviving limited liability company and a wholly owned subsidiary of Greenlane (“Merger 2,” and together with Merger 1, the “Mergers”).

At the effective time of the Mergers, each KushCo stockholder received 0.3016 shares of Class A common stock, as determined pursuant to the exchange ratio formula set forth in the Merger Agreement (the “Exchange Ratio”) for each share of KushCo’s common stock, $0.01 par value per share (“KushCo common stock”), issued and outstanding immediately prior to the effective time of the Mergers, with cash paid for any fractional shares that a KushCo stockholder would have otherwise been entitled to receive. Immediately following the Mergers, stockholders that held Greenlane common stock prior to the completion of the Mergers owned 51.9% and former KushCo stockholders owned 48.1% of the equity of the combined company on a fully diluted basis.

Pursuant to the Merger Agreement, immediately prior to the consummation of the Mergers, holders of Class C common stock received one-third of one share of Class B common stock for each share of Class C common stock held immediately prior to the closing of the mergers, and Greenlane adopted the A&R Charter, which eliminated Class C common stock as a class of Greenlane’s capital stock.

Treatment of KushCo Equity Awards

At the effective time of the Mergers, options to purchase shares of KushCo common stock (“KushCo options”) were treated as follows:

Each KushCo option that was outstanding immediately prior to the Merger 1 effective time, whether or not then vested or exercisable (but after taking into account any acceleration or vesting as provided under the KushCo equity plan covering such option), was converted into an option to purchase, on the same terms and conditions that applied to such KushCo option immediately prior to the Merger 1 effective time, (A) that number of shares of Class A common stock, rounded down to the nearest whole share, determined by multiplying (1) the total number of KushCo shares subject to such KushCo option immediately prior to the Merger 1 effective time by (2) the Exchange Ratio, (B) at a per-share exercise price, rounded up to the nearest whole cent, determined by dividing (1) the exercise price per share covered by such KushCo option immediately prior to the Merger 1 effective time by (2) the Exchange Ratio;

Greenlane assumed the sponsorship of the KushCo Holdings, Inc. 2016 Stock Incentive Plan covering such KushCo options (the “KushCo Equity Plan”), and all references to KushCo therein were deemed references to Greenlane and all references to shares of KushCo common stock therein were deemed references to Class A common stock; and

Each KushCo restricted stock unit (a “KushCo RSU”) that was then held and remained outstanding immediately prior to the Merger 1 effective time accelerated and became vested in full in accordance with the terms of the KushCo equity plan covering such KushCo RSUs and each such KushCo RSU was immediately settled and treated in the same manner as shares of KushCo common stock in the Mergers.

Effect of Merger 1 on KushCo Warrants

Additionally, each warrant to purchase one or more shares of KushCo common stock (a “KushCo Warrant”), whether exercisable or not, was converted into a warrant to purchase Class A common stock. Greenlane assumed each such KushCo Warrant in accordance with its terms (the “Assumed Warrants”). With respect to the Assumed Warrants: (i) the Assumed Warrants are exercisable solely for shares of Class A common stock; (ii) the number of shares of Class A common stock subject to such Assumed Warrants is equal to the number of shares of KushCo common stock subject to such Assumed Warrants as of immediately prior to the effective time of Merger 1 multiplied by the Exchange Ratio, rounded up to the nearest whole share; and (iii) the per share exercise price under each such Assumed Warrant was adjusted by dividing the per share exercise price under such Assumed Warrant by the Exchange Ratio and rounding up to the nearest cent.
Estimated Purchase Consideration and Preliminary Purchase Price Allocation
We accounted for the KushCo acquisition as a business combination under the acquisition method under ASC Topic 805, Business Combinations. KushCo has been consolidated in our condensed consolidated financial statements commencing on August 31, 2021, the date of acquisition.
The initial accounting for the acquisition, including the purchase price allocation, is preliminary pending completion of the fair value analyses of the replacement warrants and replaced equity compensation awards, as well as pending completion of the fair value analyses of assets acquired and liabilities assumed.
We allocated the purchase price to the net identifiable tangible and intangible assets acquired and liabilities assumed based on their preliminary estimated fair values as of the date of acquisition. The excess of the purchase price over the estimated fair value of the net assets and liabilities was allocated to goodwill. We determined the preliminary estimated fair values after
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review and consideration of relevant information as of the acquisition date, including discounted cash flows, quoted market prices and estimated made by management. The fair values assigned to tangible and intangible assets acquired and liabilities assumed are preliminary based on management's estimates and assumptions and may be subject to change as additional information is received. We expect to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.
The total estimated purchase consideration for the KushCo acquisition consisted of the following:
(in thousands)Purchase Consideration
Class A common stock (1)$123,491 
Estimated fair value of assumed warrants8,423 
Estimated fair value of replaced equity awards