Quarterly report pursuant to Section 13 or 15(d)

INTANGIBLE ASSETS, NET

v3.22.1
INTANGIBLE ASSETS, NET
 3 Months Ended
Mar. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS, NET INTANGIBLE ASSETS, NETThe Company has acquired cannabis-related licenses as part of a business combination with a gross value of approximately $19,000, which have indefinite useful lives as they are expected to generate economic benefit to the Company in perpetuity. In addition, as part of the Herbal Brand acquisition in 2019, the Company acquired finite-lived intangible assets with a gross value of approximately $7,091. During the three months ended March 31, 2022 and 2021 the Company recorded approximately $191 and $390, respectively, of amortization related to its finite-lived intangible assets.
The following tables present details of the Company’s total intangible assets as of March 31, 2022 and December 31, 2021. The value of product formulation intangible asset is included in the value of Brand:
March 31, 2022
  Gross
Carrying
Amount		   Accumulated
Amortization		   Net
Carrying
Amount		   Weighted-
Average
Useful Life
(in Years)
Finite-lived intangible assets:
             
Customer contracts $ 925  $ 925  $ —  0.0
Customer relationships 1,000  532  468  3.40
Customer list 650  379  271  2.0
Brand 4,500  1,313  3,187  7.0
Total finite-lived intangible assets $ 7,075  $ 3,149  $ 3,926 
 
Indefinite-lived intangible assets:
Licenses $ 19,000  N/A $ 19,000 
Total indefinite-lived intangible assets $ 19,000  N/A $ 19,000 
Total intangible assets $ 26,075  $ 3,149  $ 22,926 
December 31, 2021
  Gross
Carrying
Amount		   Accumulated
Amortization		   Net
Carrying
Amount		   Weighted-
Average
Useful Life
(in Years)
Finite-lived intangible assets:
             
Customer contracts $ 925  $ 925  $ —  0.0
Customer relationships 1,000  487  513  3.4
Customer list 650  346  304  2.3
Brand 4,500  1,200  3,300  7.3
Total finite-lived intangible assets $ 7,075  $ 2,958  $ 4,117 
 
Indefinite-lived intangible assets:
Licenses $ 19,000  N/A $ 19,000 
Total indefinite-lived intangible assets $ 19,000  N/A $ 19,000 
Total intangible assets $ 26,075  $ 2,958  $ 23,117 

Impairment Testing - Finite-Lived Intangibles

In accordance with ASC Topic 350, “Intangibles – Goodwill and Other,” the Company performs its annual impairment test as
of December 31 of each year. As part of the review, the Company will perform a qualitative assessment to determine whether indicators of impairment existed, along with considering, among other factors, the financial performance, industry conditions, as well as microeconomic developments. The Company also reviews goodwill for impairment whenever events or changes in circumstances indicate that the carrying value of its goodwill may not be recoverable. After the close of each interim quarter,
management assesses whether any indicators of impairment exist requiring the Company to perform an interim goodwill impairment analysis.

In conjunction with the 2021 annual impairment testing, the Company reviewed finite-lived intangible assets for impairment. In performing such review, the Company makes judgments about the recoverability of purchased finite lived intangible assets whenever events or changes in circumstances indicate that an impairment may exist. The Company recognizes an impairment if
the carrying amount of the long-lived asset group exceeds the Company’s estimate of the asset group’s undiscounted future cash flows.

Significant assumptions used in the impairment analysis include financial projections of free cash flow (including assumptions about revenue projections, regulations, operating margins, capital requirements and income taxes), long-term growth rates for determining terminal value beyond the discretely forecasted periods and discount rates. For our intangible assets related to the Cannabinoid segment, our estimated revenue projections reflect that Decree 811 that was followed by the passing of the Regulation 227 in February 2022, which was further resolved in April 2022, to allow us to export cannabis flower from Colombia starting 2023. The Colombian government signed Resolution 539, which outlines the regulation and the technical guidelines for commercializing dried flower and medicinal-grade cannabis extracts.

Indefinite-lived intangible assets, consisting of certain of the Company’s licenses, were reviewed for the annual impairment assessment during the fourth quarter of 2021 similar to goodwill, in accordance with ASC 350.

For the three months ended March 31, 2022 and March 31, 2021, no impairment was recognized related to the carrying value of any of the Company’s finite or indefinite-lived intangible assets.

Amortization Expense

The following table reflects the estimated future amortization expense for each period presented for the Company’s finite-lived intangible assets as of March 31, 2022:
Estimated
Amortization
Expense
2022 $ 603 
2023 715 
2024 542 
2025 542 
2026 482 
Thereafter 1,042 
Total $ 3,926