v3.22.1
Supplemental Financial Statement Information
12 Months Ended
Dec. 31, 2021
Property, Plant and Equipment [Abstract]  
Supplemental Financial Statement Information SUPPLEMENTAL FINANCIAL STATEMENT INFORMATION
Other Current Assets
The following table summarizes the composition of other current assets as of the dates indicated:
(in thousands) December 31, 2021 December 31, 2020
Other current assets:
VAT refund receivable $ 143  $ 4,391 
Prepaid expenses 2,726  1,542 
Indemnification receivable, net 122  921 
Customs bonds 4,550  300 
Other 4,118  3,738 
$ 11,658  $ 10,892 
Property and Equipment, Net
The following is a summary of our property and equipment, at costs less accumulated depreciation and amortization:
As of December 31, Estimated useful life
(in thousands) 2021 2020
Furniture, equipment and software (includes $0.4 million and $0.6 million under finance leases as of December 31, 2021 and 2020, respectively)
$ 8,478  $ 2,978 
3 - 7 years
Personal property 1,130  1,130  5 years
Leasehold improvements 1,562  844 
Lesser of lease term or 5 years
Building 8,128  8,088  39 years
Land 691  691 
Land improvements 601  601  15 years
Work in process 4,871  633 
25,461  14,965 
Less: accumulated depreciation (includes $0.1 million under finance leases as of December 31, 2021 and 2020)
4,610  2,764 
Property and equipment, net $ 20,851  $ 12,201 
Depreciation expense for property and equipment (excluding assets recorded under finance leases) for the years ended December 31, 2021 and 2020 was approximately $2.1 million and $1.1 million, respectively.
Intangible Assets, Net
Identified intangible assets consisted of the following at the dates indicated below:
December 31, 2021
(in thousands) Gross carrying
amount
Accumulated
amortization
Carrying value Estimated useful life
Design libraries $ 8,710  $ (573) $ 8,137  15 years
Trademarks and tradenames 7,055  (2,144) 4,911 
5-15 years
Customer relationships 43,628  (2,359) 41,269 
5-15 years
Other intangibles 1,086  (193) 893 
5-15 years
Total finite-lived intangibles 60,479  (5,269) 55,210 
Trademarks 29,500  —  29,500  Indefinite
Total indefinite-lived intangibles 29,500  —  29,500 
Total intangible assets, net $ 89,979  $ (5,269) $ 84,710 

December 31, 2020
(in thousands) Gross carrying
amount
Accumulated
amortization
Carrying value Estimated useful life
Design libraries $ 1,677  $ (214) $ 1,463  15 years
Trademarks and tradenames 3,617  (1,572) 2,045 
1-15 years
Customer relationships 2,565  (796) 1,769 
5-15 years
Other intangibles 2,045  (1,377) 668 
2-15 years
Total intangible assets, net $ 9,904  $ (3,959) $ 5,945 
The change in the gross carrying amounts of our trademarks and tradenames, customer relationships, and other intangibles is primarily driven by our business acquisitions during the year ended December 31, 2021. The weighted-average amortization period for intangible assets we acquired during the year ended December 31, 2021 was approximately 11.6 years. The weighted-average amortization period for intangible assets we acquired during the year ended December 31, 2020 was approximately 12.3 years.
Amortization expense for intangible assets was approximately $2.6 million and $1.3 million for the years ended December 31, 2021 and 2020, respectively. Total estimated amortization expense for our intangible assets for the years 2021 through 2026 is as follows:
Amortization Expense (in thousands)
2022 $ 5,831 
2023 5,337 
2024 5,179 
2025 5,156 
2026 4,883 

Goodwill
Following the completion of the KushCo merger in late August 2021, we reassessed our operating segments based on our new organizational structure. Based on this assessment, we determined we had two operating segments as of December 31, 2021, which are the same as our reportable segments and reporting units: (1) Consumer Goods, which largely comprises Greenlane's legacy operations across the United States, Canada, and Europe, and (2) Industrial Goods, which largely comprises KushCo's legacy operations. These changes in operating segments align with how we manage our business as of the fourth quarter of 2021.
Goodwill allocated to our Industrial Goods reporting unit is comprised of goodwill generated from our merger with KushCo, which was completed on August 31, 2021. Goodwill allocated to our Consumer Goods reporting unit is comprised of goodwill generated from (1) our Eyce business acquisition, which was completed in March 2021, (2) our DaVinci business acquisition, which was completed in November 2021, and (3) our acquisition of Conscious Wholesale, our wholly owned subsidiary based in the Netherlands, in September 2019, which was previously included in our former European reporting unit, prior to our change in reporting units during the fourth quarter of 2021.
As a result of the change in reporting units, we performed a quantitative assessment of potential goodwill impairment for the former European reporting unit immediately prior to the change, and determined that goodwill was not impaired. We also performed a separate qualitative assessment of potential goodwill impairment for our Consumer Goods and Industrial Goods reporting units, we determined that goodwill was not impaired as of December 31, 2021.
During the first quarter of 2020, due to market conditions and the adverse impacts from the COVID-19 pandemic, management had concluded that a triggering event had occurred, requiring a quantitative impairment test of our goodwill for our former United States and Europe reporting units. Based on this assessment, the estimated fair value of the United States reporting unit was determined to be below its carrying value, which resulted in a $9.0 million goodwill impairment charge. The 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's Enforcement Priorities for Electronic Nicotine Delivery Systems and Other Deemed products on the Market Without Premarket Authorization, which resulted in changes to our estimates and assumptions of the expected future cash flows of the United States reporting unit.
During the fourth quarter of 2020, we performed a quantitative assessment for our former European reporting unit. Based on this assessment, we concluded that the fair value of our Europe reporting unit exceeded its carrying value and no impairment charge was required. The estimated fair value of our reporting units is highly sensitive to changes in the underlying projections and assumptions; therefore, in some instances, changes in these assumptions could potentially lead to impairment. Specifically, conditions brought on by the COVID-19 pandemic may have material impacts on the assumptions used in determining the fair value of our reporting unit. Should the business environment worsen from impacts of the COVID-19 pandemic, the fair value of our reporting unit may decrease below its carrying value and result in an impairment charge to goodwill in future periods.
Changes in the carrying amount of goodwill by reportable segment for the year ended December 31, 2021 were as follows:
(in thousands) Industrial Goods Consumer Goods Total
Balance at December 31, 2020 $ —  $ 3,280  $ 3,280 
Eyce acquisition (Note 3) 5,450  5,450 
KushCo merger (Note 3) 24,332  —  24,332 
DaVinci acquisition (Note 3) 9,052  9,052 
Foreign currency translation adjustment —  (254) (254)
Balance at December 31, 2021 $ 24,332  $ 17,528  $ 41,860 

Accrued Expenses and Other Current Liabilities
The following table summarizes the composition of accrued expenses and other current liabilities as of the dates indicated:
(in thousands) December 31, 2021 December 31, 2020
Accrued expenses and other current liabilities:
VAT payable $ 4,393  $ 10,800 
Contingent consideration 5,641  — 
Accrued employee compensation 6,055  2,361 
Accrued professional fees 1,700  1,750 
Refund liability 1,481  785 
Accrued construction in progress (ERP) 1,061  — 
Sales tax payable 1,034  284 
Accrued third-party logistics fees 421  1,295 
Other 3,342  2,115 
$ 25,128  $ 19,390 
Customer Deposits
For certain product offerings such as 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 orders related to customer deposits 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 order completion timeline can vary by product type and terms of sale with each customer. Changes in our customer deposits liability balance during the year ended December 31, 2021 were as follows:
(in thousands) Customer Deposits
Balance as of December 31, 2020 $ 2,729 
Customer deposits assumed as part of the KushCo and DaVinci acquisitions (Note 3 - Business Acquisitions) 3,974 
Increases due to deposits received, net of other adjustments 20,066 
Revenue recognized (18,845)
Balance as of December 31, 2021 $ 7,924 

We typically complete orders related to customer deposits within six weeks to three months from the date of order, depending on the complexity of the customization and the size of the order.

Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive income (loss) for the periods presented were as follows:
(in thousands) Foreign Currency Translation Unrealized Gain or (Loss) on Derivative Instrument Total
Balance at December 31, 2019 $ (22) $ (50) $ (72)
Other comprehensive income (loss) 654  (459) 195 
Less: Other comprehensive (income) loss attributable to non-controlling interest (449) 355  (94)
Balance at December 31, 2020 183  (154) 29 
Other comprehensive income (loss) 115  376  491 
Less: Other comprehensive (income) loss attributable to non-controlling interest (16) (180) (196)
Balance at December 31, 2021 $ 282  $ 42  $ 324 
Supplier Concentration
Our four largest vendors accounted for an aggregate of approximately 32.5% and 49.5% of our total net sales and 51.8% and 41.6% of our total purchases for the years ended December 31, 2021 and 2020, respectively. We expect to maintain our relationships with these vendors.
Related Party Transactions
Nicholas Kovacevich, our Chief Executive Officer and Dallas Imbimbo, who serves on our Board, own capital stock of Unrivaled Brands Inc. (“Unrivaled”) and serve on the Unrivaled board of directors. Net sales to Unrivaled for the years ended December 31, 2021 and 2020 totaled $0.1 million and $0, respectively. Total accounts receivable due from Unrivaled were $0.4 million and $0 as of December 31, 2021 and 2020, respectively.
Adam Schoenfeld, our Chief Marketing Officer and Board Director, has a significant ownership interest in one of our customers, Universal Growing. Net sales to Universal Growing for the years ended December 31, 2021 and 2020 totaled $0.2 million and $0.1 million, respectively. Total accounts receivable due from Universal Growing as of December 31, 2021 and 2020 were de minimis.
In December 2021, we entered into a Secured Promissory Note with Aaron LoCascio, our co-founder, former Chief Executive Officer and President, and a current director of the Company, in which Mr. LoCascio provided us with a bridge loan in the principal amount of $8.0 million (the “Bridge Loan”). Accrued interest at a rate of 15.0% is due monthly, and principal amount is due in full in June 2022. The Bridge Loan is secured by a continuing security interest in all of our assets and properties whether then or thereafter existing or required, including our inventory and receivables (as defined under the Universal Commercial Code) and includes negative covenants restricting our ability to incur further indebtedness and engage in certain asset dispositions until the earlier of June 30, 2022 or the Bridge Loan has been fully repaid.