Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 12, 2019 | |
Entity Registrant Name | Greenlane Holdings, Inc. | |
Entity Central Index Key | 0001743745 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Ex Transition Period | true | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity File Number | 001-38875 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
Class A common stock | ||
Entity Common Stock, Shares Outstanding | 9,997,776 | |
Class B common stock | ||
Entity Common Stock, Shares Outstanding | 5,988,485 | |
Class C common stock | ||
Entity Common Stock, Shares Outstanding | 77,791,218 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash | $ 69,335 | $ 7,341 |
Accounts receivable, net of allowance of $637 and $658 at June 30, 2019 and December 31, 2018, respectively | 11,913 | 8,218 |
Inventories, net | 48,105 | 29,502 |
Vendor deposits | 7,207 | 7,917 |
Other current assets | 3,424 | 4,127 |
Total current assets | 139,984 | 57,105 |
Property and equipment, net | 12,670 | 11,641 |
Intangible assets, net | 5,653 | 3,662 |
Goodwill | 8,996 | 5,446 |
Operating lease right-of-use assets | 2,063 | |
Deferred tax asset | 11,002 | |
Other assets | 581 | 167 |
Total assets | 180,949 | 78,021 |
Current liabilities | ||
Accounts payable | 26,473 | 20,226 |
Accrued expenses and other current liabilities | 7,017 | 9,945 |
Current portion of notes payable | 173 | 168 |
Current portion of operating leases | 643 | |
Current portion of finance leases | 114 | 95 |
Total current liabilities | 34,420 | 30,434 |
Convertible notes | 40,200 | |
Note payable, less current portion and debt issuance costs, net | 8,098 | 8,176 |
Tax Receivable Agreement liability | 5,721 | |
Operating leases, less current portion | 1,612 | |
Finance leases, less current portion | 253 | 237 |
Other liabilities | 506 | |
Total long-term liabilities | 16,190 | 48,613 |
Total liabilities | 50,610 | 79,047 |
Commitments and contingencies (Note 10) | ||
REDEEMABLE CLASS B UNITS | 10,033 | |
STOCKHOLDERS' EQUITY/MEMBERS' DEFICIT | ||
Members' deficit | (10,773) | |
Preferred stock, $0.0001 par value, 10,000 shares authorized, none issued and outstanding as of June 30, 2019 | ||
Class A common stock, $0.01 par value per share, 125,000 shares authorized; 9,998 shares issued and outstanding as of June 30, 2019 | 100 | |
Class B common stock, $0.0001 par value per share, 10,000 shares authorized; 5,988 shares issued and outstanding as of June 30, 2019 | 1 | |
Class C Common stock, $0.0001 par value per share, 100,000 shares authorized; 77,791 shares issued and outstanding as of June 30, 2019 | 8 | |
Additional paid-in capital | 31,472 | |
Accumulated deficit | (343) | |
Accumulated other comprehensive loss | (56) | (286) |
Total stockholders' equity attributable to Greenlane Holdings, Inc./members' deficit | 31,182 | (11,059) |
Non-controlling interest | 99,157 | |
Total stockholders' equity/members' deficit | 130,339 | (11,059) |
Total liabilities, redeemable Class B units and stockholders' equity/members' deficit | $ 180,949 | $ 78,021 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Accounts receivable, net of allowance | $ 637 | $ 657 |
Preferred stock, par value | $ 0.0001 | |
Preferred stock, authorized | 10,000 | |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Class A common stock | ||
Common stock, par value | $ 0.01 | |
Common stock, authorized | 125,000 | |
Common stock, issued | 9,998 | |
Common stock, outstanding | 9,998 | |
Class B common stock | ||
Common stock, par value | $ 0.0001 | |
Common stock, authorized | 10,000 | |
Common stock, issued | 5,988 | |
Common stock, outstanding | 5,988 | |
Class C common stock | ||
Common stock, par value | $ 0.0001 | |
Common stock, authorized | 100,000 | |
Common stock, issued | 77,791 | |
Common stock, outstanding | 77,791 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | ||
Income Statement [Abstract] | |||||
Net sales | $ 52,986 | $ 40,561 | $ 102,884 | $ 83,818 | |
Cost of sales | 43,835 | 32,149 | 84,746 | 66,353 | |
Gross profit | 9,151 | 8,412 | 18,138 | 17,465 | |
Operating expenses: | |||||
Salaries, benefits and payroll taxes | 7,029 | 3,610 | 15,111 | 6,557 | |
General and administrative | 5,413 | 4,086 | 10,797 | 7,620 | |
Depreciation and amortization | 645 | 369 | 1,330 | 611 | |
Total operating expenses | 13,087 | 8,065 | 27,238 | 14,788 | |
(Loss) income from operations | (3,936) | 347 | (9,100) | 2,677 | |
Other (expense) income, net: | |||||
Change in fair value of convertible notes | (12,063) | ||||
Interest expense | (140) | (117) | (742) | (160) | |
Other income, net | 748 | 67 | 924 | 160 | |
Total other (expense) income, net | 608 | (50) | (11,881) | ||
(Loss) income before income taxes | (3,328) | 297 | (20,981) | 2,677 | |
(Benefit from) provision for income taxes | (108) | 67 | (97) | 149 | |
Net (loss) income | (3,220) | 230 | (20,884) | 2,528 | |
Less: Net loss attributable to non-controlling interest | (1,453) | (1,453) | |||
Net (loss) income attributable to Greenlane Holdings, Inc. | $ (1,767) | 230 | $ (19,431) | 2,528 | |
Net loss attributable to Class A common stock per share - basic and diluted | [1] | $ (0.03) | $ (0.03) | ||
Weighted-average shares of Class A common stock outstanding - basic and diluted | [1] | 9,998 | 9,998 | ||
Other comprehensive income (loss): | |||||
Foreign currency translation adjustments | $ 23 | (13) | $ 51 | (32) | |
Comprehensive income (loss) | (3,197) | 217 | (20,833) | 2,496 | |
Less: comprehensive income (loss) attributable to non-controlling interest | (1,429) | (1,429) | |||
Comprehensive income (loss) attributable to Greenlane Holdings, Inc. | $ (1,768) | $ 217 | $ (19,404) | $ 2,496 | |
[1] | Basic and diluted net loss per Class A common stock is presented only for the period after the Company's organizational transactions. See Note 1 for a description of the organizational transactions. See Note 3 for the calculation of net loss per share. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Redeemable Class B Units and Stockholders' Equity / Members' Deficit - USD ($) shares in Thousands, $ in Thousands | Redeemable Class B Units | Members' Deficit | 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 |
Balance at Dec. 31, 2017 | $ 9,605 | $ (209) | $ 9,396 | |||||||
Balance, Shares at Dec. 31, 2017 | ||||||||||
Issuance of redeemable Class B units, net of issuance costs | $ 8,890 | |||||||||
Net loss | 77 | 2,222 | 2,222 | |||||||
Member distributions | (1,007) | (1,007) | ||||||||
Effects of foreign currency exchange | (20) | (20) | ||||||||
Balance at Mar. 31, 2018 | $ 8,967 | $ 10,820 | (229) | 10,591 | ||||||
Balance, Shares at Mar. 31, 2018 | ||||||||||
Balance at Dec. 31, 2017 | $ 9,605 | (209) | 9,396 | |||||||
Balance, Shares at Dec. 31, 2017 | ||||||||||
Equity-based compensation | ||||||||||
Balance at Jun. 30, 2018 | $ 8,970 | $ 11,027 | (242) | 10,785 | ||||||
Balance, Shares at Jun. 30, 2018 | ||||||||||
Balance at Mar. 31, 2018 | $ 8,967 | $ 10,820 | (229) | 10,591 | ||||||
Balance, Shares at Mar. 31, 2018 | ||||||||||
Net loss | $ 23 | $ 207 | 207 | |||||||
Effects of foreign currency exchange | (13) | |||||||||
Balance at Jun. 30, 2018 | $ 8,970 | $ 11,027 | (242) | 10,785 | ||||||
Balance, Shares at Jun. 30, 2018 | ||||||||||
Balance at Dec. 31, 2018 | $ 10,033 | $ (10,773) | (286) | (11,059) | ||||||
Balance, Shares at Dec. 31, 2018 | ||||||||||
Issuance of redeemable Class B units, net of issuance costs | 6,514 | |||||||||
Redemption of Class A and Class B membership units | (416) | (2,602) | (2,602) | |||||||
Equity-based compensation | 2,304 | 191 | 191 | |||||||
Net loss | (3,045) | (14,619) | (14,619) | |||||||
Member distributions | (21) | (21) | ||||||||
Effects of foreign currency exchange | 28 | 28 | ||||||||
Balance at Mar. 31, 2019 | $ 15,390 | $ (27,824) | $ (258) | (28,082) | ||||||
Balance, Shares at Mar. 31, 2019 | ||||||||||
Balance at Dec. 31, 2018 | $ 10,033 | $ (10,773) | $ (286) | (11,059) | ||||||
Balance, Shares at Dec. 31, 2018 | ||||||||||
Equity-based compensation | 4,575 | |||||||||
Balance at Jun. 30, 2019 | $ 100 | $ 1 | $ 7 | $ 31,472 | $ (343) | (56) | 99,157 | 130,339 | ||
Balance, Shares at Jun. 30, 2019 | 9,998 | 5,988 | 77,791 | |||||||
Balance at Mar. 31, 2019 | $ 15,390 | $ (27,824) | $ (258) | (28,082) | ||||||
Balance, Shares at Mar. 31, 2019 | ||||||||||
Net loss prior to the organizational transactions | $ (246) | $ (1,179) | (1,179) | |||||||
Equity-based compensation recognized prior to the organizational transactions | 113 | 137 | 137 | |||||||
Equity-based compensation | 709 | 1,122 | 1,831 | |||||||
Net loss | (343) | (1,453) | (1,796) | |||||||
Member distributions | (76) | (801) | (801) | |||||||
Effects of foreign currency exchange | (8) | (8) | ||||||||
Effects of the organizational transactions | (15,181) | 29,667 | (114,094) | 203 | 99,404 | 15,180 | ||||
Issuance of Class A common stock in the IPO, net of underwriting discount | $ 53 | 82,950 | 83,003 | |||||||
Issuance of Class A common stock in the IPO, net of underwriting discount, Shares | 5,250 | |||||||||
Issuance of Class A common stock to convertible notes holders | $ 35 | 60,277 | 60,312 | |||||||
Issuance of Class A common stock to convertible notes holders, Shares | 3,548 | |||||||||
Issuance of Class A common to stock selling stockholders | $ 8 | $ 0 | $ 0 | (7) | (1) | |||||
Issuance of Class A common to stock selling stockholders, Shares | 750 | (106) | (1,935) | |||||||
Issuance of Class A common units to underwriter upon exercise of overallotment option | $ 5 | $ 0 | $ 0 | (4) | ||||||
Issuance of Class A common units to underwriter upon exercise of overallotment option, Shares | 450 | (63) | (1,161) | |||||||
Issuance of Class B common stock | $ (1) | (1) | ||||||||
Issuance of Class B common stock, Shares | 6,157 | |||||||||
Issuance of Class C common stock | $ 8 | (8) | ||||||||
Issuance of Class C common stock, Shares | 80,887 | |||||||||
Capitalization of initial public offering costs | (3,523) | (3,523) | ||||||||
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis | 5,173 | 5,173 | ||||||||
Joint venture consolidation | 60 | 60 | ||||||||
Foreign currency translation adjustments | 7 | 24 | 31 | |||||||
Balance at Jun. 30, 2019 | $ 100 | $ 1 | $ 7 | $ 31,472 | $ (343) | $ (56) | $ 99,157 | $ 130,339 | ||
Balance, Shares at Jun. 30, 2019 | 9,998 | 5,988 | 77,791 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net (loss) income (including amounts attributable to non-controlling interests) | $ (20,884) | $ 2,528 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 1,330 | 611 |
Benefit from deferred income taxes | (123) | |
Amortization of deferred financing costs | 37 | 7 |
Debt issuance costs on convertible notes | 422 | |
Equity-based compensation expense | 4,575 | |
Change in fair value of convertible notes | 12,063 | |
Provision for doubtful accounts | 637 | 200 |
Provision for slow moving or obsolete inventory | (137) | 27 |
Loss (Income) from equity method investments in associated entities | (81) | |
Other | (12) | (6) |
Changes in operating assets and liabilities, net of the effects of acquisitions: | ||
Accounts receivable, net | (3,786) | (2,709) |
Vendor deposits | 2,410 | (1,763) |
Inventories | (18,466) | (5,007) |
Deferred offering costs | 2,284 | |
Other current assets | (1,490) | (1,305) |
Accounts payable | 5,218 | (2,105) |
Accrued expenses | (2,486) | 3,182 |
Payments of operating leases | (363) | |
Net cash used in operating activities | (18,771) | (6,421) |
Cash flows from investing activities: | ||
Acquisition of a subsidiary, net of cash acquired | 91 | 785 |
Purchase of property and equipment, net | (754) | (250) |
Purchase of intangible assets, net | (65) | (18) |
Investments | (500) | |
Net cash (used in) provided by investing activities | (1,228) | 517 |
Cash flows from financing activities: | ||
Proceeds from issuance of convertible notes | 8,050 | |
Proceeds from issuance of Class A common stock sold in initial public offering, net of underwriting costs | 83,003 | |
Payment of debt issuance costs -convertible notes | (1,734) | |
Payments on long-term debt | (594) | |
Proceeds from notes payable | 149 | |
Payments on notes payable | (83) | |
Proceeds from related parties - line of credit, net | 6,740 | |
Payments of finance lease obligations | (41) | (33) |
Deferred offering costs paid | (3,456) | |
Redemption of Class A and Class B units of Greenlane Holdings, LLC | (3,019) | |
Member distributions | (898) | (1,007) |
Net cash provided by financing activities | 81,822 | 5,255 |
Effects of exchange rate changes on cash | 171 | (32) |
Net increase (decrease) in cash | 61,994 | (681) |
Cash, as of beginning of the period | 7,341 | 2,080 |
Cash, as of end of period | 69,335 | 1,399 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Cash paid during the period for interest | 285 | 153 |
Cash paid during the period for income taxes | 81 | 136 |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows for operating leases | 363 | 282 |
Operating cash flows for finance leases | 12 | 7 |
Financing cash flows for finance leases | 41 | 33 |
Non-cash investing activities and financing activities: | ||
Conversion of convertible debt to Class A Units | 60,313 | |
Redeemable Class B Units issued for acquisition of a subsidiary | 6,664 | 8,890 |
Deferred offering costs included in accounts payable and accrued expenses | 67 | |
Leased assets obtained in exchange for new finance lease liabilities | 88 | |
Leased assets obtained in exchange for new operating lease liabilities | $ 2,562 |
Business Operations and Organiz
Business Operations and Organization | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS OPERATIONS AND ORGANIZATION | 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") was formed as a Delaware corporation on May 2, 2018. Greenlane is a holding company that was formed for the purpose of completing an underwritten initial public offering ("IPO") of shares of its Class A common stock (as defined below) and other related Transactions (as defined below) in order to carry on the business of Greenlane Holdings, LLC (the "Operating Company"), the predecessor of Greenlane for financial reporting purposes. The Operating Company was organized under the laws of the state of Delaware on October 28, 2015, and is based in Boca Raton, Florida. As the sole manager of the Operating Company, Greenlane operates and controls all the business and affairs of the Operating Company, and through the Operating Company and its consolidated subsidiaries, conducts its business. Unless the context otherwise requires, references to the "Company" refer to Greenlane Holdings, Inc., and its consolidated subsidiaries, including the Operating Company. The authorized shares of Greenlane consist of (i) Class A common stock, par value $0.01 per share (the "Class A common stock"); (ii) shares of Class B common stock, par value $0.0001 per share (the "Class B common stock); (iii) shares of Class C common stock, par value $0.0001 per share (the "Class C common stock," and together with the Class A common stock and the Class B common stock, the "Common Stock"); and (iv) shares of preferred stock, par value $0.0001 per share. See "Initial Public Offering and Organizational Transactions," below for the description of the IPO and the Transactions (as defined below) completed in April 2019. The Operating Company has been determined to be the predecessor for accounting purposes and, accordingly, the condensed consolidated financial statements for periods prior to the IPO and the related Transactions have been adjusted to combine the previously separate entities for presentation purposes. Amounts for the period from January 1, 2018 through June 30, 2018 and from January 1, 2019 through April 23, 2019 presented in the condensed consolidated financial statements and condensed notes to the financial statements herein represent the historical operations of the Operating Company. The amounts as of June 30, 2019 and for the period from April 23, 2019 reflect the consolidated operations of the Company. The Company, through its ownership of the Operating Company, holds investments in several companies that merchandise vaporizers and other products in the United States and Canada. Through its operating subsidiaries, the Company distributes to retailers through its wholesale operations and to consumers through its e-commerce activities. The Company operates four distribution centers in the United States and two distribution centers in Canada. Initial Public Offering and Organizational Transactions On April 23, 2019, Greenlane completed its IPO of 6,000,000 shares of Class A common stock, which was comprised of 5,250,000 shares of Class A common stock sold by Greenlane and 750,000 shares sold by certain selling stockholders (comprised of Aaron LoCascio, Greenlane's Chief Executive Officer, Adam Schoenfeld, Greenlane's Chief Strategy Officer, and an affiliated entity of Messrs. LoCascio and Schoenfeld), in each case at a public offering price of $17.00 per share. In addition, Greenlane issued 3,547,776 shares of Class A common stock to the holders of convertible notes upon conversion of such convertible notes at a settlement price equal to 80% of the IPO price. On April 29, 2019, the underwriters purchased an additional 450,000 shares of Class A common stock from selling stockholders pursuant to the exercise of their option to purchase additional shares in the IPO. Greenlane did not receive any proceeds from the sale of Class A common stock by the selling stockholders. The sale of shares of Class A common stock by Greenlane generated aggregate net proceeds to Greenlane, after deducting the underwriting discounts and commissions and offering expenses payable by Greenlane, of approximately $80.4 million. Greenlane contributed all of the net proceeds to the Operating Company in exchange for a number of common units of the Operating Company ("Common Units") equal to the number of shares of Class A common stock sold by Greenlane in the IPO at a price per Common Unit equal to the IPO price per share of Class A common stock. After giving effect to the IPO and the related Transactions and the use of the net proceeds from the IPO Greenlane owns approximately 23.9% of the Operating Company's outstanding Common Units. As a result of the IPO, Mr. Schoenfeld, Greenlane's Chief Strategy Officer, and Jacoby & Co. Inc, an affiliated entity of Mr. Schoenfeld and Aaron LoCascio, Greenlane's Chief Executive Officer, collectively control approximately 83.0% of the combined voting power of Greenlane's common stock as a result of their ownership of Greenlane's Class C common stock, which are issued on a three-to-one basis with the number of Common Units owned and each share of common stock is entitled to one vote all matters submitted to a vote of Greenlane's stockholders. As a result of the IPO and the Transactions, Greenlane became the sole manager of the Operating Company and its principal asset is Common Units of the Operating Company. As the sole manager of the Operating Company, Greenlane operates and controls all of the business and affairs of the Operating Company, and through the Operating Company and its subsidiaries, conducts its business. Although Greenlane has a minority economic interest in the Operating Company, Greenlane has the sole voting interest in, and controls the management of, the Operating Company, and has the obligation to absorb losses of, and receive benefits from, the Operating Company, that could be significant. Greenlane has determined that, as a result of the Transactions, the Operating Company is a variable interest entity ("VIE") and that Greenlane is the primary beneficiary of the Operating Company. Accordingly, pursuant to the VIE accounting model, beginning in the fiscal quarter ended June 30, 2019, Greenlane consolidated the Operating Company in its consolidated financial statements and reports a non-controlling interest related to the Common Units held by the members of the Operating Company (other than the Common Units held by Greenlane) on its consolidated financial statements. Greenlane has a board of directors and executive officers but has no employees. All of the Company's assets are held by, and all of its operations are conducted through, the Operating Company. All of the Company's employees are employed by the Operating Company. In connection with the closing of the IPO, Greenlane and the Operating Company consummated the following organizational transactions (collectively, the "Transactions"): ● The Operating Company adopted and approved the Third Amended and Restated Operating Agreement of the Operating Company (the "Operating Agreement"), which converted each member's existing membership interests in the Operating Company into Common Units, including unvested membership interests and profits interests into unvested Common Units, and appointed Greenlane as the sole manager of the Operating Company; ● Greenlane amended and restated its certificate of incorporation to, among other things, provide for Class A common stock, Class B common stock and Class C common stock; ● Greenlane issued, for nominal consideration, one share of Class B common stock to its non-founder members for each Common Unit they owned and issued, for nominal consideration, three shares of Class C common stock to its founder members for each Common Unit they owned; ● Greenlane issued and sold 3,547,776 shares of Class A common stock upon conversion of the convertible notes at a settlement price equal to 80% of the IPO price; ● Greenlane issued and sold 1,200,000 shares of its Class A common stock to its members upon exchange of an equal number of Common Units, which shares were sold by the members as selling stockholders in the IPO, including 450,000 shares issued pursuant to the partial exercise of the underwriters' option to purchase additional shares; ● Greenlane issued and sold 5,250,000 shares of its Class A common stock to the purchasers in the IPO, and used all of the net proceeds received from the IPO to acquire Common Units from the Operating Company at a purchase price per Common Unit equal to the IPO price per share of Class A common stock, less underwriting discounts and commissions, which Common Units, when added to the Common Units received from the selling stockholders, collectively represented approximately 15.4% of the Operating Company's outstanding Common Units after the IPO; ● The members of the Operating Company continue to own their Common Units not exchanged for the shares of Class A common stock sold by them as selling stockholders in the IPO; ● Greenlane entered into (i) a Tax Receivable Agreement (the "TRA") with the Operating Company and the Operating Company's members and (ii) a Registration Rights (the "Registration Rights Agreement") with the Operating Company's members who, assuming that all of the Common Units of such members are redeemed or exchanged for newly-issued shares of Class A common stock on a one-to-one basis, will own an aggregate of 31,918,891 shares of Class A common stock, representing approximately 89.4% of the combined voting power of all of Greenlane's Common Stock. Although the actual timing and amount of any payments that Greenlane will make to the Operating Company's members under the TRA will vary, Greenlane expects those payments to be significant. Common Units are redeemable, subject to contractual restrictions, at the election of such members for newly-issued shares of Greenlane's corporate structure following the IPO, as described above, is commonly referred to as an "Up-C" structure, which is often used by partnerships and limited liability companies when they undertake an initial public offering of their business. 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, for income tax purposes following the IPO. 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 cash or, at Greenlane's option, for shares of Greenlane's Class A common stock on a one-for-one basis, the Up-C structure also provides the members with potential liquidity that holders of non-publicly traded limited liability companies are not typically afforded. Greenlane will receive the same benefits as its members because of its ownership of Common Units in an entity treated as a partnership, or "pass-through" entity, for income tax purposes. As Greenlane redeems additional Common Units from the Operating Company's members under the mechanism described above, Greenlane will obtain a step-up in tax basis in Greenlane's share of the Operating Company's assets. This step-up in tax basis will provide Greenlane with certain tax benefits, such as future depreciation and amortization deductions that can reduce the taxable income allocable to Greenlane. Greenlane entered into the TRA with the Operating Company and each of the Operating Company's members, which provides for the payment by Greenlane to the Operating Company's members of 85% of the amount of tax benefits, if any, that Greenlane actually realizes (or in some cases, is deemed to realize) as a result of (i) increases in tax basis resulting from the redemption of Common Units and (ii) certain other tax benefits attributable to payments made under the TRA. As a result of the completion of the Transactions, including the IPO: ● Greenlane is a holding company and its principal asset is the Common Units it holds in the Operating Company; ● Greenlane is the sole manager of the Operating Company and controls the business and affairs of the Operating Company and its subsidiaries; ● Greenlane's amended and restated certificate of incorporation and the Operating Agreement require that (i) Greenlane at all times maintains a ratio of one Common Unit owned by Greenlane for each share of Class A common stock issued by Greenlane (subject to certain exceptions for treasury shares and shares underlying certain convertible or exchangeable securities), and (ii) the Operating Company at all times maintains (x) a one-to-one ratio between the number of shares of Class A common stock issued by Greenlane and the number of Common Units owned by Greenlane, (y) a one-to-one ratio between the number of shares of 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, and (z) a three-to-one ratio between the number of shares of Class C common stock owned by the founder members of the Operating Company and their affiliates and the number of Common Units owned by the founder members of the Operating Company and their affiliates; ● Greenlane owns 9,997,776 Common Units, representing approximately 23.9% of the economic interests in the Operating Company; ● The purchasers in the IPO (i) own 6,450,000 shares of Class A common stock, representing approximately 6.9% of the combined voting power of all of Greenlane's Common Stock, (ii) own approximately 64.5% of the economic interest in Greenlane, and (iii) through Greenlane's ownership of Common Units, indirectly hold approximately 15.4% of the economic interests in the Operating Company; ● The non-founder members of the Operating Company own (i) 5,988,485 Common Units, of which 435,968 Common Units are subject to certain vesting conditions (the "Non-Vested Common Units"), representing 14.3% of the economic interests in the Operating Company, and (ii) through their ownership of Class B common stock, approximately 6.4% of the voting power in Greenlane; ● The founder members of the Operating Company own (i) 25,930,406 Common Units, representing 61.9% of the economic interests in the Operating Company, and (ii) through their ownership of Class C common stock, approximately 83.0% of the voting power in Greenlane; ● The members of the Operating Company collectively (i) own Class B common stock and Class C common stock representing approximately 89.4% of the combined voting power of all of Greenlane's common stock, and (ii) own 76.2% of the economic interests in the Operating Company, representing a direct interest through the members' ownership of Common Units. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying 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 with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair financial statement presentation have been made. Certain reclassifications have been made to prior year amounts or balances to conform to the presentation adopted in the current year. The consolidated results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019, or any other future annual or interim period. These condensed consolidated financial statements should be read in conjunction with the Operating Company's audited consolidated financial statements and related notes for the year ended December 31, 2018, which are included in Greenlane's final prospectus, dated April 17, 2019, filed with the SEC on April 22, 2019 pursuant to Rule 424(b) of the Securities Act of 1933, as amended. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates that affect certain reported amounts and disclosures. These estimates are based on management's knowledge and experience. Significant items subject to such estimates include the accounts receivable allowance for doubtful accounts, the allowance for slow-moving or obsolete inventory, assumptions used in the calculation of equity-based compensation, and the convertible notes valuation. Accordingly, actual results could differ from those estimates. Segment Reporting The Company's chief operating decision maker ("CODM") is Aaron LoCascio, Greenlane's Chief Executive Officer. The CODM reviews operating results and operating plans and makes resource allocation decisions on an entity-wide or aggregate basis. The Company has two distinct operating segments, which include the United States operations and Canadian operations. The Canadian operating segment consists of the Company's wholly-owned, Canada-based, subsidiary. The United States operating segment is comprised of all other operating subsidiaries. Beginning with the quarter ended March 31, 2019, the Company had a change in reportable segments as the Canadian operating segment no longer met the quantitative criteria to be aggregated with the United States operating segment as one reportable segment. The United States and Canada reportable segments have been identified based on how the CODM manages the business, makes operating decisions and evaluates operating performance. See "Note 15—Segment Reporting." Business Combinations Business combinations are accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations Equity-Based Compensation The Company accounts for equity-based compensation grants of equity awards to employees in accordance with ASC Topic 718, Compensation - Stock Compensation Fair Value Measurements The Company applies the provisions of ASC Topic 820, Fair Value Measurements Level 1 Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and short-term debt, are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The fair value of long-term debt is the estimated amount the Company would have to pay to repurchase the debt, including any premium or discount attributable to the difference between the stated interest rate and market rate of interest at each balance sheet date. As of June 30, 2019, and 2018, the carrying amount of the Company's long-term debt approximated its fair value. Cash For purposes of reporting cash flows, the Company considers cash on hand, checking accounts, and savings accounts to be cash. The Company considers all highly-liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. The Company places its cash with high credit quality financial institutions, which provide insurance through the Federal Deposit Insurance Company. At times, the balance in these accounts may exceed federal insured limits. The Company performs periodic evaluations of the relative credit standing of these institutions and does not expect any losses related to such concentrations. As of June 30, 2019, and December 31, 2018, approximately $0.4 million and $0.2 million, respectively, of the Company's cash balances were in foreign bank accounts and uninsured. As of June 30, 2019, and December 31, 2018, the Company had no cash equivalents. Accounts Receivable, net Accounts receivable represent amounts due from customers for merchandise sales and are recorded when product has shipped. An account is considered past due when payment has not been rendered by its due date based upon the terms of the sale. Generally, accounts receivable are due 30 days after the billing date. The Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on a history of collections as well as current credit conditions. Accounts are written off as uncollectible on a case-by-case basis. Accounts receivable were reported net of the allowance for doubtful accounts of $0.6 million and $0.7 million at June 30, 2019 and December 31, 2018, respectively. Accounts receivable are pledged as collateral for the line of credit. See "Note 7—Long Term Debt." Inventories, net Inventories consist principally of finished goods that are valued at the lower of cost or net realizable value on a weighted average cost basis. The Company has established an allowance for slow-moving or obsolete inventory based upon assumptions about future demands and market conditions. At June 30, 2019 and December 31, 2018, the reserve for obsolescence was approximately $0.1 million and $0.2 million, respectively. Inventory is pledged as collateral for the line of credit. See "Note 7—Long Term Debt." Deferred Financing Costs Costs incurred in obtaining certain debt financing are deferred and amortized over the respective terms of the related debt instruments using the interest method for term debt and the straight-line method for revolving debt. The debt issuance costs related to the revolving line of credit are presented as an asset on the condensed consolidated balance sheets while the debt issuance costs related to the real estate note are presented net against the long-term debt in the condensed consolidated balance sheets. As of June 30, 2019, and December 31, 2018, the Company had deferred debt issuance costs totaling approximately $0.1 million and $0.1 million, respectively, in connection with the issuance of long-term debt, which are included in other assets on the condensed consolidated balance sheet. The amortization of deferred debt issuance costs is included in interest expense and was not a significant amount for the three and six months ended June 30, 2019 and 2018. The Company accounts for the cost of issuing equity instruments to effect business combinations as a reduction of the otherwise determined fair value of the equity instruments issued. The Company expenses any fees not associated with arranging equity or debt financing as incurred. Property and Equipment, net Property and equipment are stated at cost or, if acquired through a business acquisition, fair value at the date of acquisition. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the asset, except for leasehold improvements, which are depreciated over the shorter of the estimated useful lives of the assets or the lease term. Upon the sale or retirement of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is credited or charged to income. Expenditures for repairs and maintenance are expensed when incurred. In April 2019, the Company changed its capitalization policy for property and equipment, and intangible assets, increasing the threshold for capitalizing all purchases from $1,000 to $5,000. The primary reason for the change is that by eliminating the requirement to record and track relatively low valued items, more attention and effort can be given to safeguarding and properly measuring the remaining, higher valued assets of the Company For the three and six months ended June 30, 2019, the Company expensed approximately $0.04 million that would have been capitalized under the prior capitalization policy. Impairment of Long-Lived Assets The Company assesses the recoverability of the carrying amount of its long lived-assets, including property and equipment and finite-lived intangibles, whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be assessed when estimated undiscounted future cash flows from the operation and disposition of the asset group are less than the carrying amount of the asset group. Asset groups have identifiable cash flows and are largely independent of other asset groups. Measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair value. There was no impairment loss for long-lived assets for the six months ended June 30, 2019 and 2018. See "Note 4—Property and Equipment." Intangible Assets, net Intangible assets consist of domain names, intellectual property, distribution agreements, proprietary technology, trademarks and tradenames, and other rights. Intangible assets with finite lives are amortized over their estimated useful lives on a straight-line basis. The straight-line method of amortization represents the Company's best estimate of the distribution of the economic value of the identifiable intangible assets. Intangible assets are carried at cost less accumulated amortization. The Company assesses the recoverability of finite-lived intangible assets in the same manner as for property and equipment, as described above. There were no impairment charges for the six months ended June 30, 2019 and 2018. See "Note 5—Goodwill and Intangible Assets." Goodwill In accordance with ASC Topic 350, Intangibles — Investments Equity method investments Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Under the equity method of accounting, an investee company's accounts are not reflected within the Company's condensed consolidated balance sheets and statements of operations and comprehensive (loss) income; however, the Company's share of the earnings or losses of the investee company is reflected in the caption "Other income, net'' in the condensed consolidated statements of operations and comprehensive (loss) income. The Company's carrying value in an equity method investee company is reflected in the caption "Investments" in the Company's condensed consolidated balance sheets. When the Company's carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company's consolidated financial statements unless the Company has guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. The Company's investment that is accounted for on the equity method of accounting consists of a 50% interest in a joint venture entity. The investment in this joint venture entity was not significant at June 30, 2019 and December 31, 2018. In the second quarter of 2019, the Company consolidated a former joint venture, which was previously accounted for as an equity investment. During the three and six months ended June 30, 2019, the operating activity related to this joint venture was not material. These investments were not established until the first quarter of 2019. Our equity method investments as of June 30, 2018 also consisted of a 33.3% non-controlling interest in NWT Holdings, LLC ("NWT"), a manufacturer of aromatic devices. The income from the equity method investment was approximately $0.1 million for the three and six months ended June 30, 2018. On December 11, 2018, the Operating Company spun off 100% of its interest in the subsidiary which held its investment in NWT through a distribution to its members. The Company had no income from its equity method investment for the three and six months ended June 30, 2019, respectively. Equity securities The Company's equity securities consist of an investment in Airgraft Inc. (ownership 1.71%). The Company has determined that its ownership does not provide it with significant influence over the operations of this investee. Accordingly, the Company accounts for its investment in this entity as equity securities. Airgraft Inc. is a private entity and its equity securities do not have a readily determinable fair value. The Company has elected to measure this security at cost minus impairment, if any; The security is adjusted to fair value when an observable price change can be identified. The balance of this investment was $0.5 million at June 30, 2019. Vendor Deposits Vendor deposits represent prepayments made to vendors for inventory purchases. A significant number of vendors require prepayment for inventory purchases made by the Company. Deferred Offering Costs The Company capitalized certain legal, accounting, and other third-party fees that were directly attributable to Greenlane's IPO. Following the successful consummation of the IPO in April 2019, deferred offering costs of approximately $3.5 million were recorded in the Company's stockholders' equity as a reduction of additional paid in capital. Deferred offering costs were approximately $2.3 million as of December 31, 2018. The Company had no deferred offering costs at June 30, 2019. Foreign Currency Translation The accompanying condensed consolidated financial statements are presented in United States (U.S.) dollars. The functional currency of one of the Company's wholly-owned, Canada-based, subsidiaries is the Canadian dollar. The assets and liabilities of this subsidiary are translated into U.S. dollars at current exchange rates and revenue and expenses are translated at average exchange rates for the year. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The foreign currency translation adjustments are included in accumulated other comprehensive loss, a separate component of members' deficit in the condensed consolidated balance sheets. Other exchange gains and losses are reported in the condensed consolidated statements of operations and comprehensive (loss) income. Comprehensive (Loss) Income Comprehensive (loss) income includes net (loss) income as currently reported by the Company, adjusted for other comprehensive items. Other comprehensive items for the Company consist of foreign currency translation gains and losses. Advertising Advertising costs are expensed as incurred and are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive (loss) income. Advertising costs totaled approximately $1.0 million for the three months ended June 30, 2019 and 2018, respectively and $2.3 million and $1.8 million for the six months ended June 30, 2019 and 2018, respectively. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes positions taken or expected to be taken in a tax return in accordance with existing accounting guidance on income taxes which prescribes a recognition threshold and measurement process. Under U.S. GAAP, a tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Interest and penalties on tax liabilities, if any, would be recorded in interest expense and other non-interest expense, respectively. In assessing the realizability of deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers The Company generates revenue primarily from the sale of finished products to customers, whereby each product unit represents a single performance obligation. The performance obligation is satisfied when the customer obtains control of the product, which typically occurs at the time of shipping. Upon shipping, the customer has legal title of the product and bears the significant risks and rewards of ownership, including the right to sell or redirect the product. As such, customer orders are recorded as revenue once the order is shipped from one of the Company's distribution centers. The Company's performance obligations for services are satisfied when the services are rendered within the arranged service period. Total service revenue is not material and accounted for less than 5% of revenues for the three months ended June 30, 2019 and 2018, and less than 5% of revenues for the six months ended June 30, 2019 and 2018. The Company provides no warranty on products sold. Product warranty is provided by the manufacturers. The Company 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 the Company's performance obligations. Revenue is presented net of sales taxes, discounts and expected refunds. Product revenues are recorded net of estimated rebates or sales incentives as well as estimated product returns as elements of variable consideration. The actual amounts of consideration ultimately received may differ from the Company's estimates. If actual results in the future vary from the Company's estimates, the Company will adjust these estimates, which would affect net revenue from products in the period such variances become known. The Company estimates product returns based on historical experience and records them on a gross basis as a refund liability that reduces the net sales for the period. The Company analyzes actual historical returns, current economic trends and changes in order volume when evaluating the adequacy of the sales returns allowance in any accounting period. The liability for returns is included in accrued expenses on the Company's condensed consolidated balance sheets and was approximately $0.6 million and $0.5 million at June 30, 2019 and December 31, 2018, respectively. Included in other current assets is an asset totaling approximately $0.3 million and $0.3 million as of June 30, 2019 and December 31, 2018, respectively, relating to the recoverable cost of merchandise estimated to be returned by customers. The Company has an established a supply chain for premium, patented, child-resistant packaging, closed-system vaporization solutions and custom-branded retail products. For these product offerings, the Company generally receives a deposit from the customer (generally 50% of the total order cost, but the amount can vary by customer contract), when an order is placed by a customer. These orders are typically completed within six weeks to three months from the date of order, depending on the complexity of the customization and the size of the order. Customer deposits, which represent deferred revenue, are included in accrued expenses on the Company's condensed consolidated balance sheets and were approximately $2.7 million and $3.2 million at June 30, 2019 and December 31, 2018, respectively. See "Note 6—Composition of Certain Financial Statement Captions." The Company holds several exclusive distribution agreements with its manufacturers that are evaluated against the criteria outlined in ASC 606-10-55, Principal versus Agent Considerations The Company applies the practical expedient provided for by ASC 606 by not adjusting the transaction price for significant financing components for periods less than one year. The Company also applies the practical expedient provided for by ASC 606 based upon which the Company generally expenses sales commissions when incurred because the amortization period is one year or less. These costs are recorded within salaries, benefits and payroll tax expenses in the condensed consolidated statements of operations and comprehensive (loss) income. Furthermore, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) attributable to the Company by the weighted average number of shares outstanding during the period. Diluted net income (loss) per share is computed by giving effect to all potential weighted average dilutive shares including stock options, restricted stock units, dividend equivalent units, restricted stock awards, and Common Units exchangeable for shares of Class A common stock for the periods after the closing of the IPO. The dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share by application of the treasury stock method or if-converted method, as applicable. See "Note 3—Income (Loss) Per Share." Recently Adopted Accounting Guidance In February 2016, the Financial Accounting ("FASB") issued Accounting Standard Update ("ASU") No. 2016-02, Leases (Topic 842) In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation: Improvements to Nonemployee Share Based Payment Accounting Recently Issued Accounting Guidance Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement, Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820), In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NOTE 3. NET LOSS PER SHARE Basic net loss per share of Class A common stock is computed by dividing net loss attributable to Greenlane by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted net loss per share of Class A common stock is computed by dividing net loss attributable to Greenlane by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive elements. Diluted net loss per share for all periods for which loss per share is presented is the same as basic net loss per share as the inclusion of potentially issuable shares would be antidilutive. Prior to the amendment and restatement of the Operating Company’s LLC Agreement on April 17, 2019 in connection with the IPO, the Operating Company’s membership interests were defined solely as percentage interests as the LLC Agreement did not define a number of membership units outstanding or authorized. As a result, a calculation of basic and diluted earnings per unit for the three and six months ended June 30, 2018 was not presented in the accompanying condensed consolidated financial statements, as a denominator to the calculation could not be determined. The basic and diluted net loss per share for the three and six months ended June 30, 2019 represents only the period from the IPO on April 23 through June 30, 2019. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share of Class A common stock is as follows: Three months ended 6/30/2019 Six months ended 6/30/2019 (in thousands, except per share amounts) Numerator: Net loss $ (1,796 ) $ (1,796 ) Less: Net loss attributable to non-controlling interests (1,453 ) (1,453 ) Net loss attributable to Class A common stockholders $ (343 ) $ (343 ) Denominator: Weighted average shares of Class A common stock outstanding 9,998 9,998 Net loss per share of Class A common stock - basic and diluted $ (0.03 ) $ (0.03 ) For the three and six months ended June 30, 2019, shares of 5,988,485 Class B common stock, 77,791,218 shares of Class C common stock and 166,827 stock options were excluded from the weighted-average in the computation of diluted net loss per share of Class A common stock because the effect would have been anti-dilutive. Shares of Class B common stock and Class C common stock do not share in the earnings or losses of Greenlane and are therefore not participating securities. As such, separate calculations of basic and diluted net loss per share for each of Class B common stock and Class C common stock under the two-class method have not been presented. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 4. PROPERTY AND EQUIPMENT The following is a summary of property and equipment, at costs less accumulated depreciation and amortization: June 30, December 31, 2018 Estimated useful life (in thousands) Furniture, equipment and software $ 2,820 $ 2,095 3 - 7 years Personal property 1,095 1,090 5 years Leasehold improvements 1,020 342 Lesser of lease term or 5 years Land improvements 601 601 15 years Building 8,033 7,773 39 years Land 691 691 14,260 12,592 Less: accumulated depreciation 1,590 951 Property and equipment, net $ 12,670 $ 11,641 Property and equipment include assets recorded under finance leases, see “Note 8—Leases.” Property and equipment are pledged as collateral for the Company line of credit. See “Note 7—Long Term Debt.” Depreciation expense for property and equipment (excluding assets recorded under finance leases) for the three months ended June 30, 2019 and 2018 was approximately $0.3 million and $0.1 million, respectively, and for approximately $0.7 million and $0.1 million, for the six months ended June 30, 2019 and 2018, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | NOTE 5. GOODWILL AND INTANGIBLE ASSETS Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired in business combinations. Goodwill is not amortized but is tested for impairment at least annually. When evaluating whether goodwill is impaired, the Company performs a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company would then recognize an impairment charge for the amount by which carrying amount exceeds the reporting unit’s estimated fair value; however, goodwill would not be reduced below zero. The Company tests for impairment of goodwill annually in the fourth quarter or when management of the Company deems that a triggering event has occurred. There were no impairments to goodwill during the three and six months ended June 30, 2019 and 2018. For the six months ended June 30, 2019, the Company recognized approximately $3.5 million in goodwill related to a business acquisition. The goodwill generated from the business acquisition is primarily related to the value placed on the expected business synergies. See “Note 11—Business Acquisition.” Identified intangible assets consisted of the following at the dates indicated below: June 30, 2019 Gross carrying amount Accumulated amortization Carrying value Estimated useful life (in thousands) Domain names $ 141 $ (71 ) $ 70 15 years Design libraries 1,677 (47 ) 1,630 15 years Distribution agreements 650 (506 ) 144 5 years Proprietary technology 1,040 (763 ) 277 5 years Trademarks and tradenames 3,231 (688 ) 2,543 5-10 years Customer relationships 1,196 (319 ) 877 5 years Non-competition agreements 218 (145 ) 73 2 years Other intangibles 50 (11 ) 39 5 years $ 8,203 $ (2,550 ) $ 5,653 December 31, 2018 Gross carrying amount Accumulated amortization Carrying value Estimated useful life (in thousands) Domain names $ 131 $ (60 ) $ 71 15 years Distribution agreements 650 (397 ) 253 5 years Proprietary technology 1,040 (659 ) 381 5 years Trademarks and tradenames 2,285 (459 ) 1,826 5-10 years Customer relationships 1,196 (199 ) 997 5 years Non-competition agreements 218 (91 ) 127 2 years Other intangibles 22 (15 ) 7 5 years $ 5,542 $ (1,880 ) $ 3,662 Amortization expense for intangible assets amounted to $0.3 million and $0.7 million during the three and six months ended June 30, 2019, respectively, and approximately $0.2 million and $0.5 million during the three and six months ended June 30, 2018, respectively. |
Composition of Certain Financia
Composition of Certain Financial Statement Captions | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS | NOTE 6. COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS The following table summarizes the composition of accrued expenses and other current liabilities as of June 30, 2019 and December 31, 2018: June 30, December 31, 2018 ($ in thousands) Accrued expenses and other current liabilities: Customer deposits $ 2,735 $ 3,226 Accrued offering costs - 1,500 Refund liability 640 459 Payroll related including bonus 1,496 1,314 Accrued taxes, state and income 324 665 Accrued marketing fees and royalties 441 804 Other 1,381 1,977 Total $ 7,017 $ 9,945 |
Long Term Debt
Long Term Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
LONG TERM DEBT | NOTE 7. LONG TERM DEBT The Company’s long-term debt, excluding operating lease liabilities and finance lease liabilities, consisted of the following amounts at the dates indicated: June 30, December 31, (in thousands) 3.0% note payable to a lender in relation to a four-year vehicle loan for the purchase of a truck used in operations. $ 15 $ 24 Revolving credit note with a lender for a $15 million credit loan with a maturity date of August 23, 2020. Interest on the principal balance outstanding on the Note is due monthly at a rate of LIBOR plus 3.50% per annum. - - Credit note with a lender for the purchase of the Company’s Corporate headquarters building with a maturity date of October 1, 2025. Interest on the principal balance outstanding on the note is due monthly at a rate of LIBOR plus 2.39% per annum. 8,386 8,460 Convertible notes issued in December 2018 and in January 2019. - 40,200 8,401 48,684 Less unamortized debt issuance costs (130 ) (140 ) Less current portion of long-term debt (173 ) (168 ) Long-term debt, net, excluding operating leases and finance leases $ 8,098 $ 48,376 Line of Credit On October 1, 2018, the Operating Company, as the borrower, entered into an amended and restated revolving credit note (the “line of credit”) with Fifth Third Bank, for a $15 million revolving credit loan with a maturity date of August 23, 2020. Interest on the principal balance outstanding on the line of credit is due monthly at a rate of LIBOR plus 3.50% per annum provided that no default has occurred. The Operating Company’s obligations under the line of credit are guaranteed by Jacoby & Co. Inc., all of the Company’s operating subsidiaries, and, until the agreement was amended in connection with the IPO as described below, personally by each of Greenlane’s Chief Executive Officer and Chief Strategy Officer, and are collateralized by the Company’s accounts receivable, inventory, property and equipment, deposit accounts, intangibles and other assets, and an assignment of member life insurance policies. The line of credit borrowing base is 80% of eligible accounts receivable plus 50% of eligible inventory. The line of credit covenants requires a fixed charge coverage ratio of no less than 1.25, to be calculated on a quarterly basis on the last day of each calendar quarter. The Company was in compliance with its covenants as of June 30, 2019. On April 5, 2019, Greenlane entered into a second amendment (“Amendment No. 2 to Amended and Restated Credit Agreement,” or “Second Amendment”) to its first amended and restated credit agreement, dated October 1, 2018. This second amendment amends and restates the definition of the guarantor under the terms of the agreement, wherein both the Chief Executive Officer and the Chief Strategy Office were released from all obligations under the Amended and Restated Guaranty to the Credit Agreement dated October 1, 2018. All other terms of the agreement remain unchanged. There were no borrowings outstanding on the line of credit at June 30, 2019 and December 31, 2018. Real Estate Note On October 1, 2018, one of the Company’s wholly-owned subsidiaries closed on the purchase of a building for $10 million, which serves as the Company’s corporate headquarters. The purchase was financed through a real estate term note (the “Real Estate Note”) in the principal amount of $8.5 million, with one of the Company’s wholly-owned subsidiaries as the borrower and Fifth Third Bank as the lender. Principal amounts plus any accrued interest at a rate of LIBOR plus 2.39% are due monthly. The Company’s obligations under the Real Estate Note are secured by a mortgage on the property. LIBOR is expected to be discontinued and replaced after 2021 and the credit facility has a maturity date beyond that time. There can be no assurances as to what the alternative base rate will be in the event that LIBOR is discontinued, and the Company can provide no assurances whether that base rate will be more or less favorable than LIBOR. The Company intends to monitor the developments with respect to the phasing out of LIBOR after 2021 and work with its lenders to ensure that any transition away from LIBOR will have minimal impact on its financial condition but can provide no assurances regarding the impact of LIBOR discontinuation. Convertible Notes On December 21, 2018, the Operating Company issued an aggregate of $40.2 million in convertible promissory notes (the “convertible notes”) and received net cash proceeds of $38.9 million. Approximately $15.1 million of the net cash proceeds received from the issuance of the convertible notes were used to redeem equity interests of existing members of the Operating Company. On January 4, 2019, the Operating Company issued an additional $8.1 million in convertible notes and received net cash proceeds of $6.5 million after approximately $0.4 million of debt issuance costs related to the January 2019 note issuance, and approximately $1.2 million of costs paid in January 2019 related to the issuance of the December 2018 convertible notes. Approximately $3.0 million of the net cash proceeds received from the issuance of the convertible notes were used to redeem equity interests of existing members of the Operating Company. The balance of the net proceeds has been or will be used for general corporate purposes. Total debt issuance costs of approximately $0.4 million, incurred in connection with the issuance of the convertible notes in January 2019 and approximately $1.2 million incurred in January 2019 associated with the issuance of convertible notes in December 2018, were expensed and recognized as interest expense in the condensed consolidated statements of operations and comprehensive (loss) income for the three and six months ended June 30, 2019. The convertible notes did not accrue interest. On April 23, 2019, in connection with the closing of the IPO, Greenlane issued 3,547,776 shares of its Class A common stock to the holders of the convertible notes upon conversion of the convertible notes of the Operating Company at a settlement price equal to 80% of the IPO price per share; see “Note 1—Business Operations and Organization.” The convertible notes also contained other settlement provisions if an IPO did not occur within one year of their issuance date. There were no convertible notes outstanding at June 30, 2019. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
LEASES | NOTE 8. LEASES Lessee The Company leases warehouses, retail stores, regional offices, and machinery and equipment. Lease terms are generally three years to seven years for warehouses, office space and retail store locations, and up to seven years for other leased equipment and property. The Company adopted ASC Topic 842, Leases ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, the Company does have leases that do not provide a readily determinable implicit rate. For such leases, the Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The Company uses instruments with similar characteristics when calculating its incremental borrowing rates. The Company lease agreements do not contain any residual value guarantees. The Company has elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components. As of June 30, 2019, the Company had 10 facilities financed under operating leases (consisting of warehouses, regional offices, and retail stores), with lease term expirations between 2019 and 2026. Rent expense consists of monthly lease rents for warehouses, regional offices, and retail stores under the terms of the Company’s lease agreements recognized on a straight-line basis. The following table provides details of the Company’s future minimum lease payments under finance lease liabilities and operating lease liabilities recorded on the Company’s condensed consolidated balance sheet as of June 30, 2019. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown. Finance Operating Leases Total Finance and Operating Lease Obligations ($ in thousands) Remainder of 2019 $ 68 $ 365 $ 433 2020 133 709 842 2021 121 421 542 2022 58 422 480 2023 18 372 390 Thereafter 11 221 232 Total minimum lease payments $ 409 $ 2,510 $ 2,919 Less: amount representing interest 42 255 297 Present value of minimum lease payments $ 367 $ 2,254 $ 2,622 Less: current portion 114 643 757 Long-term portion $ 253 $ 1,612 $ 1,865 The majority of the Company’s finance lease obligations relate to leased warehouse equipment. Payments under the Company’s finance lease agreements are fixed for terms ranging from three to five years. Accounting for finance leases is substantially unchanged under Topic 842. Finance lease assets are recorded within property and equipment and the related liabilities are recorded as current portion of finance leases and in finance leases, less current portion, in the Company’s condensed consolidated balance sheets. The table below presents information related to the Company’s finance and operating leases: Six Months Ended ($ in thousands) Finance lease cost Amortization of leased assets $ 62 Interest of lease liabilities 12 Operating lease costs Operating lease cost (a) 245 Variable lease cost (a) 101 Total lease cost $ 420 (a) Expenses are classified within general and administrative expenses within the Company’s condensed consolidated statement of operations. The table below presents lease-related terms and discount rates as of June 30, 2019: June 30, Weighted average remaining lease terms Operating leases 3.3 years Finance leases 3.2 years Weighted average discount rate Operating leases 4.9 % Finance leases 6.7 % Lessor The Company has five operating leases for office space leased to third-party tenants in its corporate headquarters building in Boca Raton, Florida (acquired in October 2018). For the three and six months ended June 30, 2019, the Company had approximately $0.2 million and $0.3 million, respectively, in rental income related to these operating leases, which is included in “Other income, net” line item in the condensed consolidated statement of operations. The Company did not have any rental income for the three and six months ended June 30, 2018. The following table represents the maturity analysis of undiscounted cash flows related to lease payments which the Company expects to receive from its existing operating lease agreements with tenants: Rental Income ($ in thousands) Remainder of 2019 $ 314 2020 619 2021 585 2022 76 Thereafter - Total $ 1,594 |
Supplier Concentration
Supplier Concentration | 6 Months Ended |
Jun. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
SUPPLIER CONCENTRATION | NOTE 9. SUPPLIER CONCENTRATION During the six months ended June 30, 2019 and 2018, the Company's purchases of inventory for resale from two major vendors amounted to approximately 51.0% and 64.0%, respectively, of the Company's total inventory purchases. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10. COMMITMENTS AND CONTINGENCIES In the ordinary course of its business, the Company is involved in various legal proceedings involving a variety of matters. The Company does not believe there are any pending legal proceedings that will have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. However, the outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. On August 2, 2019, a purported stockholder of the Company filed a purported class action lawsuit against the Company, officers and directors of the Company, and the underwriters related to the Company's initial public offering. The complaint alleges, among other things, that the Company's registration statement related to its initial public offering contained untrue statements of material fact and omitted to state material facts necessary to make the statements in the registration statement not misleading, in violation of Sections 11, 12 and 15 of the Securities Act of 1933, as amended. At this time, the class is not certified, and the Company cannot estimate the amount of damages (if any) being sought by the plaintiffs. The Company can provide no assurances as to the outcome of this litigation. However, the Company believes the claim is without merit and intends to vigorously defend itself. See "Note 8 — |
Business Acquisition
Business Acquisition | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
BUSINESS ACQUISITION | NOTE 11. BUSINESS ACQUISITION Effective January 14, 2019, the Company acquired a 100% interest in Pollen Gear LLC (“Pollen Gear”) in exchange for an aggregate four percent (4.0%) equity interest in the Company. As consideration for the transaction, the Company issued its Class B units, which, as described below in “Note 17—Stockholders’ Equity / Members’ Deficit,” were contingently redeemable by the holder. Pollen Gear has been consolidated in the Company’s consolidated financial statements commencing on January 14, 2019, the date of acquisition. The Pollen Gear acquisition was accounted for as a business combination under the acquisition method under ASC Topic 805, Business Combinations Pollen Gear LLC (in thousands) Cash $ 91 Accounts receivable 546 Vendor deposits 1,700 Other deposits 18 Property and equipment, net 342 Trade name 918 Design libraries 1,677 Goodwill 3,550 Net liabilities (2,178 ) Total purchase price $ 6,664 At January 14, 2019, the Operating Company had accounts payable to Pollen Gear of approximately $0.6 million and Pollen Gear had accounts receivable for the corresponding amount from the Operating Company. Furthermore, at the date of acquisition, the Company had vendor deposits with Pollen Gear of approximately $1.7 million, and Pollen Gear had customer deposits for the corresponding amount due to the Operating Company. Both the vendor deposits and accounts payable recorded by the Company and the corresponding customer deposits and accounts receivable recorded by Pollen Gear approximated fair value. As a result of the business acquisition, the preexisting relationship between the Operating Company and Pollen Gear was effectively settled. No gain or loss was recognized on this settlement. The following unaudited pro forma financial information represents the combined results for the Company and Pollen Gear for the three and six months ended June 30, 2019 and 2018 as if Pollen Gear had been acquired on January 1, 2018 and its results had been included in the consolidated results of the Company beginning on that date: Three months ended Six months ended 2019 2018 2019 2018 (in thousands) Net Sales $ 52,986 $ 40,561 $ 102,884 $ 83,818 Net (Loss) Income $ (3,220 ) $ 323 $ (20,884 ) $ 2,729 The pro forma amounts have been calculated after applying the Company’s accounting policies to the financial statements of Pollen Gear and adjusting the combined results of the Company and Pollen Gear (a) to remove Pollen Gear product sales to the Company and to remove the cost incurred by the Company related to products purchased from Pollen Gear, (b) to reflect the increased amortization expense that would have been charged assuming intangible assets identified in the acquisition of Pollen Gear had been recorded on January 1, 2018. The impact of the Pollen Gear acquisition on the actual results reported by the combined entity in periods following the acquisition may differ significantly from that reflected in this pro forma information for a number of reasons. As a result, the pro forma information is not necessarily indicative of what the combined entity’s financial condition or results of operations would have been had the acquisition been completed on the applicable dates of this pro forma financial information. In addition, the pro forma financial information does not purport to project the future financial condition and results of operations of the combined entity. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 12. INCOME TAXES As a result of the IPO and the Transactions, Greenlane, owns a portion of the Common Units of the Operating Company, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, the Operating Company, is generally not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by the Operating Company is passed through to and included in the taxable income or loss of its members in accordance with the terms of the Operating Agreement. The Operating Company is subject to taxes in foreign jurisdictions. Greenlane is subject to U.S. federal, state and local income taxes based on its share of the Operating Company's pass-through taxable income. The effective tax rate differs from the statutory tax rate primarily due to the Operating Company's pass-through structure for U.S. income tax purposes. For the six months ended June 30, 2019, the Company did not have any unrecognized tax benefits as a result of tax positions taken during a prior period or during the current period. No interest or penalties have been recorded as a result of tax uncertainties. Tax Receivable Agreement (TRA) The Company entered into the TRA, with the Operating Company and each of the Members that provides for the payment by the Operating Company to the Members of 85% of the amount of tax benefits, if any, that the Company may actually realize (or in some circumstances are deemed to realize) as a result of (i) increases in tax basis resulting from any future redemptions that are funded by the Company or exchanges of Common Units described above in "Note 1—Business Operations and Organization" and (ii) certain other tax benefits attributable to payments made under the TRA. The annual tax benefits are computed by calculating the income taxes due, including such tax benefits, and the income taxes due without such benefits. The Operating Company expects to benefit from the remaining 15% of any tax benefits that it may actually realize. The TRA payments are not conditioned upon any continued ownership interest in the Operating Company. The rights of each noncontrolling interest holder under the TRA are assignable to transferees of its interest in the Operating Company. The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the amount and timing of the taxable income the Operating Company generates each year and the applicable tax rate. As of June 30, 2019, the Company had a liability of $5.7 million related to its projected obligations under the TRA, which is captioned as Tax Receivable Agreement liability in the Company's Condensed Consolidated Balance Sheets. During the six months ended June 30, 2019, the Company did not make any payments, inclusive of interest, to members of the Operating Company pursuant to the TRA. |
Equity-Based Compensation
Equity-Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Compensation Related Costs [Abstract] | |
EQUITY-BASED COMPENSATION | NOTE 13. EQUITY-BASED COMPENSATION On April 17, 2019, Greenlane adopted the 2019 Equity Incentive Plan (the "2019 Plan"). The 2019 Plan provides eligible participants with compensation opportunities in the form of cash and equity incentive awards. The 2019 Plan is designed to enhance the Company's ability to attract, retain and motivate its executive officers and other key management and incentivizes executives to increase the Company's long-term growth and equity value in alignment with the interests of Greenlane's stockholders. Under the 2019 Plan, Greenlane may grant up to 5,000,000 stock options and other equity-based awards to employees, directors and officers. Equity-based compensation cost is measured at the grant date for all equity-based awards made to employees based on the fair value of the awards and is attributed on a straight-line basis for awards with service conditions and on an accelerated attribution basis for awards with performance conditions over the requisite service period, which is generally the vesting period. The Company accounts for grants of equity awards to employees in accordance with ASC 718, Compensation-Stock Compensation In connection with the closing of the IPO, Greenlane and the Operating Company consummated certain organizational transactions, as described in further detail in Note 1, among which, the Operating Company reclassified unvested Class B membership interests and profits interests which had been granted as equity-based compensation into Common Units of the Operating Company. During the three and six months ended June 30, 2019, the Company recorded compensation expense of approximately $1.7 million and $4.6 million, respectively, related to equity-based compensation awards, which is included in salaries, benefits and payroll taxes in the condensed consolidated statement of operations and comprehensive (loss) income. The Company did not incur any equity-based compensation expense during the three and six months ended June 30, 2018. As of June 30, 2019, total unrecognized compensation expense related to unvested Common Units granted as equity-based compensation was approximately $7.7 million, which is expected to be recognized over a weighted-average period of 2.5 years. As of June 30, 2019, total unrecognized compensation expense related to unvested stock options granted as equity-based compensation was approximately $1.2 million, which is expected to be recognized over a weighted-average period of 2.0 years. In connection with the IPO, the Company granted 176,784 options to its directors and certain employees, less forfeitures. The stock options were granted with an exercise price of $17.00 per share and vest ratably over a zero to four-year period. The fair value of the stock option awards during the six months ended June 30, 2019 was determined on the grant date using the Black-Scholes valuation model based on the following weighted-average assumptions: June 30, Expected volatility (1) 85 % Expected dividend yield (2) - % Expected term (3) 3.75 years Risk-free interest rate (4) 2.37 % ( 1 Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term. (2) The Company has assumed a dividend yield of zero as management has no plans to declare dividends in the foreseeable future. (3) Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method. (4) The risk-free rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. A summary of stock option activity for the six months ended June 30, 2019 is as follows: Stock Options Outstanding at beginning of period - Granted 176,784 Exercised - Forfeited (9,957 ) Outstanding at end of period 166,827 |
Employee Benefit Plan
Employee Benefit Plan | 6 Months Ended |
Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLAN | NOTE 14. EMPLOYEE BENEFIT PLAN The Company has a 401(k) retirement savings plan. Eligible employees must be at least 18 years of age and have completed six months of service. Participants are eligible to receive a matching contribution from the Company of up to the first 3% of compensation plus 50% of participant contributions between 3% and 5% of compensation. Matching contributions, other than safe harbor contributions, vest 33% per year and are 100% vested after three years of service. Safe harbor matching contributions are 100% vested as of the date of the contribution. The Company's safe harbor matching contributions to the plan totaled approximately $0.1 million and $0.1 million for the three months ended June 30, 2019 and 2018 respectively and $0.1 million and $0.1 million for the six months ended June 30, 2019 and 2018, respectively. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 15. SEGMENT REPORTING Segment information is prepared on the same basis that management reviews financial information for operational decision-making purposes. Beginning with the quarter ended March 31, 2019, the Company had a change in reportable segments due to Canadian operations becoming a significant part of the business. As of June 30, 2019, the Company had two reportable segments: (1) U.S. and (2) Canada. The U.S. operating segment is comprised of the Company’s U.S. operations while the Canadian operating segment is comprised of the Company’s Canadian operations. “Corporate and other” is comprised of unallocated corporate overhead expenses. The reportable segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by the Company’s chief operating decision maker to allocate resources and assess performance. At June 30, 2019, the Company’s chief operating decision maker was Greenlane’s Chief Executive Officer. Upon completion of the IPO and as a result of Greenlane’s control of the Operating Company’s business and operations as the sole manager of the Operating Company, the Company’s chief operating decision maker is Greenlane’s Chief Executive Officer. Concurrent with the change in reportable operating segments, the Company revised its prior period financial information to reflect comparable financial information for the new segment structure. Historical financial information presented herein reflects this change. The table below provides information on revenues from external customers, intersegment revenues, and segment income for the reportable segments for the three and six months ended June 30, 2019 and 2018. Intersegment revenues are eliminated in consolidation. Three Months Ended Three Months Ended June 30, 2019 June 30, 2018 United States Canada United States Canada ($ in thousands) Revenues from External Customers $ 47,288 $ 5,698 $ 38,657 $ 1,904 Intercompany Revenues 909 42 108 (5 ) Segment (Loss) Income (1) (1,068 ) (371 ) 902 (10 ) (1) Segment (loss) income represents segment operating (loss) income. Six Months Ended Six Months Ended June 30, 2019 June 30, 2018 United States Canada United States Canada ($ in thousands) Revenues from External Customers $ 90,420 $ 12,464 $ 80,088 $ 3,730 Intercompany Revenues 1,518 82 1,844 87 Segment (Loss) Income (1) (2,250 ) (237 ) 3,293 100 (1) Segment (loss) income represents segment operating (loss) income. The following is a reconciliation of total loss for the reportable segments to consolidated (loss) income from continuing operations before income taxes. Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 ($ in thousands) Total segment (loss) income for reportable segments $ (1,439 ) $ 892 $ (2,487 ) $ 3,394 Corporate and other income (loss) (2,497 ) (544 ) (6,613 ) (717 ) Interest expense (140 ) (117 ) (742 ) (160 ) Change in fair value of convertible notes payable - - (12,063 ) - Other income, net 748 66 924 160 (Loss) income from continuing operations before income taxes $ (3,328 ) $ 296 $ (20,981 ) $ 2,677 No single customer represented more than 10% of the Company’s total consolidated revenue for the three and six months ended June 30, 2019 and 2018 respectively. As of June 30, 2019, one customer represented approximately 14.3% of the Company’s accounts receivable balances. No other single customers represented more than 10% for the period. At December 31, 2018, no single customer represented more than 10% of the Company’s accounts receivable balance. |
Non-Controlling Interest
Non-Controlling Interest | 6 Months Ended |
Jun. 30, 2019 | |
Noncontrolling Interest [Abstract] | |
NON-CONTROLLING INTEREST | NOTE 16. NON-CONTROLLING INTEREST As discussed in "Note 1—Business Operations and Organization," Greenlane consolidates the financial results of the Operating Company and reports a non-controlling interest related to the Common Units held by non-controlling interest holders on its consolidated financial statements. As of June 30, 2019, Greenlane owned 23.9% of the economic interests in the Operating Company, with the remaining 76.1% of the economic interests owned by non-controlling interest holders. The non-controlling interests on the accompanying condensed consolidated statements of operations and comprehensive (loss) income represents the portion of the loss attributable to the economic interest in the Operating Company held by the non-controlling holders of Common Units calculated based on the weighted average non-controlling interests' ownership during the periods presented. |
Stockholders' Equity _ Members'
Stockholders' Equity / Members' Deficit | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY / MEMBERS' DEFICIT | NOTE 17. STOCKHOLDERS' EQUITY / MEMBERS' DEFICIT On April 17, 2019, in connection with the IPO and the Transactions, Greenlane amended and restated its certificate of incorporation. After giving effect to the amendment and restatement of Greenlane's certificate of incorporation, the total number of shares of all classes of stock that Greenlane is authorized to issue is two hundred forty-five million (245,000,000), consisting of (i) one hundred twenty-five million (125,000,000) shares of Class A common stock; (ii) ten million (10,000,000) shares of Class B common stock; and (iii) one hundred million (100,000,000) shares of Class C common stock; and (iv) ten million (10,000,000) shares of preferred stock, par value $0.0001 per share. Pursuant to the amended and restated certificate of incorporation, the two hundred (200) shares of common stock, par value $0.01 per share, of Greenlane issued and outstanding prior to the effective time were cancelled without further action by, or consideration to, the holders thereof. Shares of Class A common stock have both voting interests and economic interests (i.e., the right to receive distributions or dividends, whether cash or stock, and proceeds upon dissolution, winding up or liquidation), while shares of Class B common stock and Class C common stock have voting interests but no economic interests. Each share of Class A common stock, Class B common stock and Class C common stock entitles the record holder thereof to one vote on all matters on which stockholders generally are entitled to vote, and except as otherwise required in the amended and restated certificate of incorporation, the holders of Common Stock will vote together as a single class on all matters (or, if any holders of preferred stock of Greenlane are entitled to vote together with the holders of Common Stock, as a single class with such holders of preferred stock). Redeemable Class B Units The Operating Company issued Class B units as consideration for its recent business acquisitions, as well as in form of equity-based compensation to certain of the Operating Company's executive employees. The Operating Company's Class B units are non-voting and contained a put right whereby, at any time after the third anniversary of February 20, 2018 (in each case prior to an effective IPO or capital event), each of the holders of Class B units had the right to require that the Operating Company purchase all, but not less than all, of its Class B units at an aggregate price equal to the fair market value of the Class B units as of the date of the put notice (as defined), in the form of a cash payment. The Class B units did not contain any mandatory redemption provisions. The Operating Company classified the Class B units outside of members' deficit as of December 31, 2018 as the units contained contingent redemption features that were not solely within the Operating Company's control. The initial carrying value of the amount classified in temporary equity for the Class B units issued as consideration for business acquisitions was based on the issuance date fair value of the redeemable Class B units, net of issuance costs. As discussed in "Note 1—Business Operations and Organization," Greenlane completed its IPO of 6,000,000 shares of Class A common stock (which was comprised of 5,250,000 shares of Class A common stock sold by Greenlane and 750,000 shares of Class A common stock sold by certain selling stockholders, comprised of Messrs. LoCascio and Schoenfeld and an affiliated entity of Messrs. LoCascio and Schoenfeld) at a public offering price of $17.00 per share on April 23, 2019 and became the sole manager of the Operating Company. As part of the Transactions, the Class B units were converted to Common Units of the Operating Company and the put right was eliminated. There were no redeemable Class B units outstanding at June 30, 2019. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 18. SUBSEQUENT EVENTS On July 11, 2019, Greenlane entered into a fixed-for-floating interest rate swap agreement with a notional amount of $8.4 million to swap variable rate interest payments under its Real Estate Note for fixed interest payments bearing an interest rate of 2.0775%. Subsequent events have been evaluated through August 12, 2019, which is the date the financial statements were available to be issued. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying 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 with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair financial statement presentation have been made. Certain reclassifications have been made to prior year amounts or balances to conform to the presentation adopted in the current year. The consolidated results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019, or any other future annual or interim period. These condensed consolidated financial statements should be read in conjunction with the Operating Company's audited consolidated financial statements and related notes for the year ended December 31, 2018, which are included in Greenlane's final prospectus, dated April 17, 2019, filed with the SEC on April 22, 2019 pursuant to Rule 424(b) of the Securities Act of 1933, as amended. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates that affect certain reported amounts and disclosures. These estimates are based on management's knowledge and experience. Significant items subject to such estimates include the accounts receivable allowance for doubtful accounts, the allowance for slow-moving or obsolete inventory, assumptions used in the calculation of equity-based compensation, and the convertible notes valuation. Accordingly, actual results could differ from those estimates. |
Segment Reporting | Segment Reporting The Company's chief operating decision maker ("CODM") is Aaron LoCascio, Greenlane's Chief Executive Officer. The CODM reviews operating results and operating plans and makes resource allocation decisions on an entity-wide or aggregate basis. The Company has two distinct operating segments, which include the United States operations and Canadian operations. The Canadian operating segment consists of the Company's wholly-owned, Canada-based, subsidiary. The United States operating segment is comprised of all other operating subsidiaries. Beginning with the quarter ended March 31, 2019, the Company had a change in reportable segments as the Canadian operating segment no longer met the quantitative criteria to be aggregated with the United States operating segment as one reportable segment. The United States and Canada reportable segments have been identified based on how the CODM manages the business, makes operating decisions and evaluates operating performance. See "Note 15—Segment Reporting." |
Business Combinations | Business Combinations Business combinations are accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations |
Equity-Based Compensation | Equity-Based Compensation The Company accounts for equity-based compensation grants of equity awards to employees in accordance with ASC Topic 718, Compensation - Stock Compensation |
Fair Value Measurements | Fair Value Measurements The Company applies the provisions of ASC Topic 820, Fair Value Measurements Level 1 Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and short-term debt, are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The fair value of long-term debt is the estimated amount the Company would have to pay to repurchase the debt, including any premium or discount attributable to the difference between the stated interest rate and market rate of interest at each balance sheet date. As of June 30, 2019, and 2018, the carrying amount of the Company's long-term debt approximated its fair value. |
Cash | Cash For purposes of reporting cash flows, the Company considers cash on hand, checking accounts, and savings accounts to be cash. The Company considers all highly-liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. The Company places its cash with high credit quality financial institutions, which provide insurance through the Federal Deposit Insurance Company. At times, the balance in these accounts may exceed federal insured limits. The Company performs periodic evaluations of the relative credit standing of these institutions and does not expect any losses related to such concentrations. As of June 30, 2019, and December 31, 2018, approximately $0.4 million and $0.2 million, respectively, of the Company's cash balances were in foreign bank accounts and uninsured. As of June 30, 2019, and December 31, 2018, the Company had no cash equivalents. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable represent amounts due from customers for merchandise sales and are recorded when product has shipped. An account is considered past due when payment has not been rendered by its due date based upon the terms of the sale. Generally, accounts receivable are due 30 days after the billing date. The Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on a history of collections as well as current credit conditions. Accounts are written off as uncollectible on a case-by-case basis. Accounts receivable were reported net of the allowance for doubtful accounts of $0.6 million and $0.7 million at June 30, 2019 and December 31, 2018, respectively. Accounts receivable are pledged as collateral for the line of credit. See "Note 7—Long Term Debt." |
Inventories, net | Inventories, net Inventories consist principally of finished goods that are valued at the lower of cost or net realizable value on a weighted average cost basis. The Company has established an allowance for slow-moving or obsolete inventory based upon assumptions about future demands and market conditions. At June 30, 2019 and December 31, 2018, the reserve for obsolescence was approximately $0.1 million and $0.2 million, respectively. Inventory is pledged as collateral for the line of credit. See "Note 7—Long Term Debt." |
Deferred Financing Costs | Deferred Financing Costs Costs incurred in obtaining certain debt financing are deferred and amortized over the respective terms of the related debt instruments using the interest method for term debt and the straight-line method for revolving debt. The debt issuance costs related to the revolving line of credit are presented as an asset on the condensed consolidated balance sheets while the debt issuance costs related to the real estate note are presented net against the long-term debt in the condensed consolidated balance sheets. As of June 30, 2019, and December 31, 2018, the Company had deferred debt issuance costs totaling approximately $0.1 million and $0.1 million, respectively, in connection with the issuance of long-term debt, which are included in other assets on the condensed consolidated balance sheet. The amortization of deferred debt issuance costs is included in interest expense and was not a significant amount for the three and six months ended June 30, 2019 and 2018. The Company accounts for the cost of issuing equity instruments to effect business combinations as a reduction of the otherwise determined fair value of the equity instruments issued. The Company expenses any fees not associated with arranging equity or debt financing as incurred. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost or, if acquired through a business acquisition, fair value at the date of acquisition. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the asset, except for leasehold improvements, which are depreciated over the shorter of the estimated useful lives of the assets or the lease term. Upon the sale or retirement of assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is credited or charged to income. Expenditures for repairs and maintenance are expensed when incurred. In April 2019, the Company changed its capitalization policy for property and equipment, and intangible assets, increasing the threshold for capitalizing all purchases from $1,000 to $5,000. The primary reason for the change is that by eliminating the requirement to record and track relatively low valued items, more attention and effort can be given to safeguarding and properly measuring the remaining, higher valued assets of the Company For the three and six months ended June 30, 2019, the Company expensed approximately $0.04 million that would have been capitalized under the prior capitalization policy. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company assesses the recoverability of the carrying amount of its long lived-assets, including property and equipment and finite-lived intangibles, whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. An impairment loss would be assessed when estimated undiscounted future cash flows from the operation and disposition of the asset group are less than the carrying amount of the asset group. Asset groups have identifiable cash flows and are largely independent of other asset groups. Measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair value. There was no impairment loss for long-lived assets for the six months ended June 30, 2019 and 2018. See "Note 4—Property and Equipment." |
Intangible Assets, net | Intangible Assets, net Intangible assets consist of domain names, intellectual property, distribution agreements, proprietary technology, trademarks and tradenames, and other rights. Intangible assets with finite lives are amortized over their estimated useful lives on a straight-line basis. The straight-line method of amortization represents the Company's best estimate of the distribution of the economic value of the identifiable intangible assets. Intangible assets are carried at cost less accumulated amortization. The Company assesses the recoverability of finite-lived intangible assets in the same manner as for property and equipment, as described above. There were no impairment charges for the six months ended June 30, 2019 and 2018. See "Note 5—Goodwill and Intangible Assets." |
Goodwill | Goodwill In accordance with ASC Topic 350, Intangibles — |
Investments | Investments Equity method investments Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Under the equity method of accounting, an investee company's accounts are not reflected within the Company's condensed consolidated balance sheets and statements of operations and comprehensive (loss) income; however, the Company's share of the earnings or losses of the investee company is reflected in the caption "Other income, net'' in the condensed consolidated statements of operations and comprehensive (loss) income. The Company's carrying value in an equity method investee company is reflected in the caption "Investments" in the Company's condensed consolidated balance sheets. When the Company's carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company's consolidated financial statements unless the Company has guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. The Company's investment that is accounted for on the equity method of accounting consists of a 50% interest in a joint venture entity. The investment in this joint venture entity was not significant at June 30, 2019 and December 31, 2018. In the second quarter of 2019, the Company consolidated a former joint venture, which was previously accounted for as an equity investment. During the three and six months ended June 30, 2019, the operating activity related to this joint venture was not material. These investments were not established until the first quarter of 2019. Our equity method investments as of June 30, 2018 also consisted of a 33.3% non-controlling interest in NWT Holdings, LLC ("NWT"), a manufacturer of aromatic devices. The income from the equity method investment was approximately $0.1 million for the three and six months ended June 30, 2018. On December 11, 2018, the Operating Company spun off 100% of its interest in the subsidiary which held its investment in NWT through a distribution to its members. The Company had no income from its equity method investment for the three and six months ended June 30, 2019, respectively. Equity securities The Company's equity securities consist of an investment in Airgraft Inc. (ownership 1.71%). The Company has determined that its ownership does not provide it with significant influence over the operations of this investee. Accordingly, the Company accounts for its investment in this entity as equity securities. Airgraft Inc. is a private entity and its equity securities do not have a readily determinable fair value. The Company has elected to measure this security at cost minus impairment, if any; The security is adjusted to fair value when an observable price change can be identified. The balance of this investment was $0.5 million at June 30, 2019. |
Vendor Deposits | Vendor Deposits Vendor deposits represent prepayments made to vendors for inventory purchases. A significant number of vendors require prepayment for inventory purchases made by the Company. |
Deferred Offering Costs | Deferred Offering Costs The Company capitalized certain legal, accounting, and other third-party fees that were directly attributable to Greenlane's IPO. Following the successful consummation of the IPO in April 2019, deferred offering costs of approximately $3.5 million were recorded in the Company's stockholders' equity as a reduction of additional paid in capital. Deferred offering costs were approximately $2.3 million as of December 31, 2018. The Company had no deferred offering costs at June 30, 2019. |
Foreign Currency Translation | Foreign Currency Translation The accompanying condensed consolidated financial statements are presented in United States (U.S.) dollars. The functional currency of one of the Company's wholly-owned, Canada-based, subsidiaries is the Canadian dollar. The assets and liabilities of this subsidiary are translated into U.S. dollars at current exchange rates and revenue and expenses are translated at average exchange rates for the year. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The foreign currency translation adjustments are included in accumulated other comprehensive loss, a separate component of members' deficit in the condensed consolidated balance sheets. Other exchange gains and losses are reported in the condensed consolidated statements of operations and comprehensive (loss) income. |
Comprehensive (Loss) Income | Comprehensive (Loss) Income Comprehensive (loss) income includes net (loss) income as currently reported by the Company, adjusted for other comprehensive items. Other comprehensive items for the Company consist of foreign currency translation gains and losses. |
Advertising | Advertising Advertising costs are expensed as incurred and are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive (loss) income. Advertising costs totaled approximately $1.0 million for the three months ended June 30, 2019 and 2018, respectively and $2.3 million and $1.8 million for the six months ended June 30, 2019 and 2018, respectively. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes positions taken or expected to be taken in a tax return in accordance with existing accounting guidance on income taxes which prescribes a recognition threshold and measurement process. Under U.S. GAAP, a tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Interest and penalties on tax liabilities, if any, would be recorded in interest expense and other non-interest expense, respectively. In assessing the realizability of deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers The Company generates revenue primarily from the sale of finished products to customers, whereby each product unit represents a single performance obligation. The performance obligation is satisfied when the customer obtains control of the product, which typically occurs at the time of shipping. Upon shipping, the customer has legal title of the product and bears the significant risks and rewards of ownership, including the right to sell or redirect the product. As such, customer orders are recorded as revenue once the order is shipped from one of the Company's distribution centers. The Company's performance obligations for services are satisfied when the services are rendered within the arranged service period. Total service revenue is not material and accounted for less than 5% of revenues for the three months ended June 30, 2019 and 2018, and less than 5% of revenues for the six months ended June 30, 2019 and 2018. The Company provides no warranty on products sold. Product warranty is provided by the manufacturers. The Company 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 the Company's performance obligations. Revenue is presented net of sales taxes, discounts and expected refunds. Product revenues are recorded net of estimated rebates or sales incentives as well as estimated product returns as elements of variable consideration. The actual amounts of consideration ultimately received may differ from the Company's estimates. If actual results in the future vary from the Company's estimates, the Company will adjust these estimates, which would affect net revenue from products in the period such variances become known. The Company estimates product returns based on historical experience and records them on a gross basis as a refund liability that reduces the net sales for the period. The Company analyzes actual historical returns, current economic trends and changes in order volume when evaluating the adequacy of the sales returns allowance in any accounting period. The liability for returns is included in accrued expenses on the Company's condensed consolidated balance sheets and was approximately $0.6 million and $0.5 million at June 30, 2019 and December 31, 2018, respectively. Included in other current assets is an asset totaling approximately $0.3 million and $0.3 million as of June 30, 2019 and December 31, 2018, respectively, relating to the recoverable cost of merchandise estimated to be returned by customers. The Company has an established a supply chain for premium, patented, child-resistant packaging, closed-system vaporization solutions and custom-branded retail products. For these product offerings, the Company generally receives a deposit from the customer (generally 50% of the total order cost, but the amount can vary by customer contract), when an order is placed by a customer. These orders are typically completed within six weeks to three months from the date of order, depending on the complexity of the customization and the size of the order. Customer deposits, which represent deferred revenue, are included in accrued expenses on the Company's condensed consolidated balance sheets and were approximately $2.7 million and $3.2 million at June 30, 2019 and December 31, 2018, respectively. See "Note 6—Composition of Certain Financial Statement Captions." The Company holds several exclusive distribution agreements with its manufacturers that are evaluated against the criteria outlined in ASC 606-10-55, Principal versus Agent Considerations The Company applies the practical expedient provided for by ASC 606 by not adjusting the transaction price for significant financing components for periods less than one year. The Company also applies the practical expedient provided for by ASC 606 based upon which the Company generally expenses sales commissions when incurred because the amortization period is one year or less. These costs are recorded within salaries, benefits and payroll tax expenses in the condensed consolidated statements of operations and comprehensive (loss) income. Furthermore, the Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. |
Net Income (Loss) | Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) attributable to the Company by the weighted average number of shares outstanding during the period. Diluted net income (loss) per share is computed by giving effect to all potential weighted average dilutive shares including stock options, restricted stock units, dividend equivalent units, restricted stock awards, and Common Units exchangeable for shares of Class A common stock for the periods after the closing of the IPO. The dilutive effect of outstanding awards, if any, is reflected in diluted earnings per share by application of the treasury stock method or if-converted method, as applicable. See "Note 3—Income (Loss) Per Share." |
Recently Adopted Accounting Guidance | Recently Adopted Accounting Guidance In February 2016, the Financial Accounting ("FASB") issued Accounting Standard Update ("ASU") No. 2016-02, Leases (Topic 842) In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation: Improvements to Nonemployee Share Based Payment Accounting |
Recently Issued Accounting Guidance Not Yet Adopted | Recently Issued Accounting Guidance Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement, Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820), In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Net Loss Per Share | |
Schedule of net loss per share | Three months ended 6/30/2019 Six months ended 6/30/2019 (in thousands, except per share amounts) Numerator: Net loss $ (1,796 ) $ (1,796 ) Less: Net loss attributable to non-controlling interests (1,453 ) (1,453 ) Net loss attributable to Class A common stockholders $ (343 ) $ (343 ) Denominator: Weighted average shares of Class A common stock outstanding 9,998 9,998 Net loss per share of Class A common stock - basic and diluted $ (0.03 ) $ (0.03 ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | June 30, December 31, 2018 Estimated useful life (in thousands) Furniture, equipment and software $ 2,820 $ 2,095 3 - 7 years Personal property 1,095 1,090 5 years Leasehold improvements 1,020 342 Lesser of lease term or 5 years Land improvements 601 601 15 years Building 8,033 7,773 39 years Land 691 691 14,260 12,592 Less: accumulated depreciation 1,590 951 Property and equipment, net $ 12,670 $ 11,641 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of identified intangible assets | June 30, 2019 Gross carrying amount Accumulated amortization Carrying value Estimated useful life (in thousands) Domain names $ 141 $ (71 ) $ 70 15 years Design libraries 1,677 (47 ) 1,630 15 years Distribution agreements 650 (506 ) 144 5 years Proprietary technology 1,040 (763 ) 277 5 years Trademarks and tradenames 3,231 (688 ) 2,543 5-10 years Customer relationships 1,196 (319 ) 877 5 years Non-competition agreements 218 (145 ) 73 2 years Other intangibles 50 (11 ) 39 5 years $ 8,203 $ (2,550 ) $ 5,653 December 31, 2018 Gross carrying amount Accumulated amortization Carrying value Estimated useful life (in thousands) Domain names $ 131 $ (60 ) $ 71 15 years Distribution agreements 650 (397 ) 253 5 years Proprietary technology 1,040 (659 ) 381 5 years Trademarks and tradenames 2,285 (459 ) 1,826 5-10 years Customer relationships 1,196 (199 ) 997 5 years Non-competition agreements 218 (91 ) 127 2 years Other intangibles 22 (15 ) 7 5 years $ 5,542 $ (1,880 ) $ 3,662 |
Composition of Certain Financ_2
Composition of Certain Financial Statement Captions (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | June 30, December 31, 2018 ($ in thousands) Accrued expenses and other current liabilities: Customer deposits $ 2,735 $ 3,226 Accrued offering costs - 1,500 Refund liability 640 459 Payroll related including bonus 1,496 1,314 Accrued taxes, state and income 324 665 Accrued marketing fees and royalties 441 804 Other 1,381 1,977 Total $ 7,017 $ 9,945 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | June 30, December 31, (in thousands) 3.0% note payable to a lender in relation to a four-year vehicle loan for the purchase of a truck used in operations. $ 15 $ 24 Revolving credit note with a lender for a $15 million credit loan with a maturity date of August 23, 2020. Interest on the principal balance outstanding on the Note is due monthly at a rate of LIBOR plus 3.50% per annum. - - Credit note with a lender for the purchase of the Company’s Corporate headquarters building with a maturity date of October 1, 2025. Interest on the principal balance outstanding on the note is due monthly at a rate of LIBOR plus 2.39% per annum. 8,386 8,460 Convertible notes issued in December 2018 and in January 2019. - 40,200 8,401 48,684 Less unamortized debt issuance costs (130 ) (140 ) Less current portion of long-term debt (173 ) (168 ) Long-term debt, net, excluding operating leases and finance leases $ 8,098 $ 48,376 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of maturities of lease liabilities | Finance Operating Leases Total Finance and Operating Lease Obligations ($ in thousands) Remainder of 2019 $ 68 $ 365 $ 433 2020 133 709 842 2021 121 421 542 2022 58 422 480 2023 18 372 390 Thereafter 11 221 232 Total minimum lease payments $ 409 $ 2,510 $ 2,919 Less: amount representing interest 42 255 297 Present value of minimum lease payments $ 367 $ 2,254 $ 2,622 Less: current portion 114 643 757 Long-term portion $ 253 $ 1,612 $ 1,865 |
Schedule of components of finance and operating leases | Six Months Ended ($ in thousands) Finance lease cost Amortization of leased assets $ 62 Interest of lease liabilities 12 Operating lease costs Operating lease cost (a) 245 Variable lease cost (a) 101 Total lease cost $ 420 (a) Expenses are classified within general and administrative expenses within the Company’s condensed consolidated statement of operations. |
Schedule of lease related terms and discount rates | June 30, Weighted average remaining lease terms Operating leases 3.3 years Finance leases 3.2 years Weighted average discount rate Operating leases 4.9 % Finance leases 6.7 % |
Schedule of rental income | Rental Income ($ in thousands) Remainder of 2019 $ 314 2020 619 2021 585 2022 76 Thereafter - Total $ 1,594 |
Business Acquisition (Tables)
Business Acquisition (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of fair value analysis of the acquired assets and liabilities | Pollen Gear LLC (in thousands) Cash $ 91 Accounts receivable 546 Vendor deposits 1,700 Other deposits 18 Property and equipment, net 342 Trade name 918 Design libraries 1,677 Goodwill 3,550 Net liabilities (2,178 ) Total purchase price $ 6,664 |
Schedule of unaudited pro forma financial information | Three months ended Six months ended 2019 2018 2019 2018 (in thousands) Net Sales $ 52,986 $ 40,561 $ 102,884 $ 83,818 Net (Loss) Income $ (3,220 ) $ 323 $ (20,884 ) $ 2,729 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Compensation Related Costs [Abstract] | |
Schedule of stock option awards | June 30, Expected volatility (1) 85 % Expected dividend yield (2) - % Expected term (3) 3.75 years Risk-free interest rate (4) 2.37 % (1) Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term. (2) The Company has assumed a dividend yield of zero as management has no plans to declare dividends in the foreseeable future. (3) Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method. (4) The risk-free rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. |
Schedule of stock option activity | Stock Options Outstanding at beginning of period - Granted 176,784 Exercised - Forfeited (9,957 ) Outstanding at end of period 166,827 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule revenues are eliminated in consolidation | Three Months Ended Three Months Ended June 30, 2019 June 30, 2018 United States Canada United States Canada ($ in thousands) Revenues from External Customers $ 47,288 $ 5,698 $ 38,657 $ 1,904 Intercompany Revenues 909 42 108 (5 ) Segment (Loss) Income (1) (1,068 ) (371 ) 902 (10 ) (1) Segment (loss) income represents segment operating (loss) income. Six Months Ended Six Months Ended June 30, 2019 June 30, 2018 United States Canada United States Canada ($ in thousands) Revenues from External Customers $ 90,420 $ 12,464 $ 80,088 $ 3,730 Intercompany Revenues 1,518 82 1,844 87 Segment (Loss) Income (1) (2,250 ) (237 ) 3,293 100 (1) Segment (loss) income represents segment operating (loss) income. |
Schedule of consolidated (loss) income from continuing operations before income taxes | Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 ($ in thousands) Total segment (loss) income for reportable segments $ (1,439 ) $ 892 $ (2,487 ) $ 3,394 Corporate and other income (loss) (2,497 ) (544 ) (6,613 ) (717 ) Interest expense (140 ) (117 ) (742 ) (160 ) Change in fair value of convertible notes payable - - (12,063 ) - Other income, net 748 66 924 160 (Loss) income from continuing operations before income taxes $ (3,328 ) $ 296 $ (20,981 ) $ 2,677 |
Business Operations and Organ_2
Business Operations and Organization (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 6 Months Ended | ||
Apr. 29, 2019 | Apr. 23, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | |
Business Operations and Organization (Textual) | ||||
Shares sold by certain selling stockholders | 1,200,000 | |||
Underwriters purchased an additional shares of common stock from the selling stockholders | 450,000 | |||
Aggregate net proceeds | $ 83,003 | |||
Class of common stock shares, description | The authorized shares of Greenlane consist of (i) Class A common stock, par value $0.01 per share (the “Class A common stock”); (ii) shares of Class B common stock, par value $0.0001 per share (the “Class B common stock); (iii) shares of Class C common stock, par value $0.0001 per share (the “Class C common stock”, and together with the Class A common stock and the Class B common stock, the “Common Stock”); and (iv) shares of preferred stock, par value $0.0001 per share | |||
Class A common stock [Member] | ||||
Business Operations and Organization (Textual) | ||||
Shares of common stock | 3,547,776 | |||
Settlement price percentage | 80.00% | |||
Public offering price of per share | $ 17 | |||
Underwriters purchased an additional shares of common stock from the selling stockholders | 450,000 | |||
Aggregate net proceeds | $ 80,400 | |||
Percentage of outstanding common units | 23.90% | |||
Voting power percentage | 83.00% | |||
Tax Receivable Agreement [Member] | ||||
Business Operations and Organization (Textual) | ||||
Shares of common stock | 31,918,891 | |||
Voting power percentage | 89.40% | |||
IPO [Member] | Class A common stock | ||||
Business Operations and Organization (Textual) | ||||
Shares of common stock | 6,000,000 | |||
Shares sold by certain selling stockholders | 750,000 | |||
IPO [Member] | Class A common stock [Member] | ||||
Business Operations and Organization (Textual) | ||||
Shares of common stock | 5,250,000 | |||
Greenlane Holding Company [Member] | ||||
Business Operations and Organization (Textual) | ||||
Shares of common stock | 9,997,776 | |||
Class of common stock shares, description | The non-founder members of the Operating Company own (i) 5,988,485 Common Units, of which 435,968 Common Units are subject to certain vesting conditions (the "Non-Vested Common Units"), representing 14.3% of the economic interests in the Operating Company, and (ii) through their ownership of Class B common stock, approximately 6.4% of the voting power in Greenlane; ? The founder members of the Operating Company own (i) 25,930,406 Common Units, representing 61.9% of the economic interests in the Operating Company, and (ii) through their ownership of Class C common stock, approximately 83.0% of the voting power in Greenlane; | |||
Common stock voting rights, description | (i) own Class B common stock and Class C common stock representing approximately 89.4% of the combined voting power of all of Greenlane's common stock, and (ii) own 76.2% of the economic interests in the Operating Company, representing a direct interest through the members' ownership of Common Units. | |||
Greenlane Holding Company [Member] | IPO [Member] | ||||
Business Operations and Organization (Textual) | ||||
Issuance initial public offering, description | The purchasers in the IPO (i) own 6,450,000 shares of Class A common stock, representing approximately 6.9% of the combined voting power of all of Greenlane's Common Stock, (ii) own approximately 64.5% of the economic interest in Greenlane, and (iii) through Greenlane's ownership of Common Units, indirectly hold approximately 15.4% of the economic interests in the Operating Company; |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Dec. 11, 2018 | Apr. 30, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Summary of Significant Accounting Policies (Textual) | |||||||
Percentage of acquired assets and assumed liabilities | 100.00% | 100.00% | |||||
Cash balances were in foreign bank accounts and uninsured | $ 400 | $ 400 | $ 200 | ||||
Allowance for doubtful accounts | 600 | 600 | 700 | ||||
Inventory reserve for obsolescence | 100 | 100 | 200 | ||||
Deferred debt issuance costs totaling | $ 100 | 100 | 100 | ||||
Amortization of deferred debt issuance costs | $ 37 | $ 7 | |||||
Equity method interest, percentage | 50.00% | 50.00% | |||||
Investments | $ 500 | ||||||
Income from equity method investment | $ 100 | $ 100 | 100 | $ 100 | |||
Non-controlling interest in equity method investments | 33.30% | ||||||
Spun off interest percentage | 100.00% | ||||||
Advertising costs | $ 1,000 | $ 1,000 | $ 2,300 | $ 1,800 | |||
Tax benefit amount realized upon settlement, percentage | 50.00% | ||||||
Revenue percentage | 5.00% | 5.00% | 5.00% | 5.00% | |||
Liability for returns included in accrued expenses | $ 600 | $ 600 | 500 | ||||
Other current assets | 300 | 300 | 300 | ||||
Customer deposits | 2,700 | 2,700 | 3,200 | ||||
Changed capitalization policy, description | The Company changed its capitalization policy for property and equipment, and intangible assets, increasing the threshold for capitalizing all purchases from $1,000 to $5,000. | ||||||
Expensed, capitalization policy | $ 40 | $ 36 | |||||
Significant financing components period, description | The transaction price for significant financing components for periods less than one year. | ||||||
Amortization period, description | The company generally expenses sales commissions when incurred because the amortization period is one year or less. | ||||||
Value of unsatisfied performance obligations contracts period, description | The value of unsatisfied performance obligations for contracts with an original expected length of one year or less. | ||||||
Total order cost, percentage | 50.00% | ||||||
IPO [Member] | |||||||
Summary of Significant Accounting Policies (Textual) | |||||||
Deferred offering costs | $ 31,200 | $ 2,300 | |||||
Airgraft Inc. [Member] | |||||||
Summary of Significant Accounting Policies (Textual) | |||||||
Equity method interest, percentage | 1.71% | 1.71% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Property and equipment, gross | $ 14,260 | $ 12,592 |
Less: accumulated depreciation | 1,590 | 951 |
Property and equipment, net | 12,670 | 11,641 |
Furniture, equipment and software [Member] | ||
Property and equipment, gross | $ 2,820 | 2,095 |
Estimated useful life | 3 - 7 years | |
Personal property [Member] | ||
Property and equipment, gross | $ 1,095 | 1,090 |
Estimated useful life | 5 years | |
Leasehold improvements [Member] | ||
Property and equipment, gross | $ 1,020 | 342 |
Estimated useful life | Lesser of lease term or 5 years | |
Land improvements [Member] | ||
Property and equipment, gross | $ 601 | 601 |
Estimated useful life | 15 years | |
Building [Member] | ||
Property and equipment, gross | $ 8,033 | 7,773 |
Estimated useful life | 39 years | |
Land [Member] | ||
Property and equipment, gross | $ 691 | $ 691 |
Property and Equipment (Detai_2
Property and Equipment (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Property and Equipment (Textual) | ||||
Depreciation expense | $ 300 | $ 100 | $ 700 | $ 100 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | ||
Numerator | |||||
Net (loss) income | $ (3,220) | $ 230 | $ (20,884) | $ 2,528 | |
Less: Net loss attributable to non-controlling interest | (1,453) | (1,453) | |||
Net loss attributable to Class A common stockholders | $ (343) | $ (343) | |||
Denominator | |||||
Weighted-average shares of Class A common stock outstanding - basic and diluted | [1] | 9,998 | 9,998 | ||
Net loss attributable to Class A common stock per share - basic and diluted | [1] | $ (0.03) | $ (0.03) | ||
[1] | Basic and diluted net loss per Class A common stock is presented only for the period after the Company's organizational transactions. See Note 1 for a description of the organizational transactions. See Note 3 for the calculation of net loss per share. |
Net Loss Per Share (Details Tex
Net Loss Per Share (Details Textual) | 6 Months Ended |
Jun. 30, 2019shares | |
Class B common stock [Member] | |
Net Loss Per Share (Textual) | |
Antidilutive weighted-average shares | 5,988,485 |
Class C common stock [Member] | |
Net Loss Per Share (Textual) | |
Antidilutive weighted-average shares | 77,791,218 |
Stock options [Member] | |
Net Loss Per Share (Textual) | |
Antidilutive weighted-average shares | 166,827 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Gross carrying amount | $ 8,203 | $ 5,542 |
Accumulated amortization | (2,550) | (1,880) |
Carrying value | 5,653 | 3,662 |
Domain Names [Member] | ||
Gross carrying amount | 141 | 131 |
Accumulated amortization | (71) | (60) |
Carrying value | $ 70 | $ 71 |
Estimated useful life | 15 years | 15 years |
Design Libraries [Member] | ||
Gross carrying amount | $ 1,677 | |
Accumulated amortization | (47) | |
Carrying value | $ 1,630 | |
Estimated useful life | 15 years | |
Distribution Agreements [Member] | ||
Gross carrying amount | $ 650 | $ 650 |
Accumulated amortization | (506) | (397) |
Carrying value | $ 144 | $ 253 |
Estimated useful life | 5 years | 5 years |
Proprietary Technology [Member] | ||
Gross carrying amount | $ 1,040 | $ 1,040 |
Accumulated amortization | (763) | (659) |
Carrying value | $ 277 | $ 381 |
Estimated useful life | 5 years | 5 years |
Trademarks and Tradenames [Member] | ||
Gross carrying amount | $ 3,231 | $ 2,285 |
Accumulated amortization | (688) | (459) |
Carrying value | $ 2,543 | $ 1,826 |
Trademarks and Tradenames [Member] | Minimum [Member] | ||
Estimated useful life | 5 years | 5 years |
Trademarks and Tradenames [Member] | Maximum [Member] | ||
Estimated useful life | 10 years | 10 years |
Customer Relationships [Member] | ||
Gross carrying amount | $ 1,196 | $ 1,196 |
Accumulated amortization | (319) | (199) |
Carrying value | $ 877 | $ 997 |
Estimated useful life | 5 years | 5 years |
Non-competition Agreements [Member] | ||
Gross carrying amount | $ 218 | $ 218 |
Accumulated amortization | (145) | (91) |
Carrying value | $ 73 | $ 127 |
Estimated useful life | 2 years | 2 years |
Other Intangibles [Member] | ||
Gross carrying amount | $ 50 | $ 22 |
Accumulated amortization | (11) | (15) |
Carrying value | $ 39 | $ 7 |
Other Intangibles [Member] | Minimum [Member] | ||
Estimated useful life | 5 years | 5 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Goodwill and Intangible Assets (Textual) | ||||
Amortization expense for intangible assets | $ 300 | $ 700 | $ 200 | $ 500 |
Composition of Certain Financ_3
Composition of Certain Financial Statement Captions (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Accrued expenses and other current liabilities: | ||
Customer deposits | $ 2,735 | $ 3,226 |
Accrued offering costs | 1,500 | |
Refund liability | 640 | 459 |
Payroll related including bonus | 1,496 | 1,314 |
Accrued taxes, state and income | 324 | 665 |
Accrued marketing fees and royalties | 441 | 804 |
Other | 1,381 | 1,977 |
Total | $ 7,017 | $ 9,945 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Long-term debt, gross | $ 8,401 | $ 48,684 |
Less unamortized debt issuance costs | (130) | (140) |
Less current portion of long-term debt | (173) | (168) |
Long-term debt, net, excluding operating leases and finance leases | 8,098 | 48,376 |
Revolving credit note [Member] | ||
Long-term debt, gross | ||
Credit note [Member] | ||
Long-term debt, gross | 8,386 | 8,460 |
3.0% note payable [Member] | ||
Long-term debt, gross | 15 | 24 |
Convertible notes [Member] | ||
Long-term debt, gross | $ 40,200 |
Long Term Debt (Details Textual
Long Term Debt (Details Textual) - USD ($) $ in Thousands | Jan. 04, 2019 | Oct. 01, 2018 | Apr. 23, 2019 | Jan. 31, 2019 | Dec. 21, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Long Term Debt (Textual) | ||||||||
Interest rate, Description | 3.0% note payable to a lender in relation to a four year vehicle loan for the purchase of a truck used in operations. | |||||||
Convertible notes | $ 40,200 | |||||||
Net cash proceeds | 8,050 | |||||||
Debt issuance costs | 422 | |||||||
Convertible Debt [Member] | ||||||||
Long Term Debt (Textual) | ||||||||
Interest rate, Description | Approximately $1.2 million incurred in January 2019 associated with the issuance of convertible notes in December 2018, were expensed and recognized as interest expense in the condensed consolidated statements of operations for the three and six months ended June 30, 2019 respectively. | |||||||
Convertible notes | $ 8,100 | $ 40,200 | ||||||
Net cash proceeds | 6,500 | 38,900 | ||||||
Net cash proceeds from issuance of convertible notes | $ 15,100 | $ 3,000 | ||||||
Debt issuance costs | $ 400 | $ 400 | ||||||
Convertible Debt [Member] | Class A common stock [Member] | ||||||||
Long Term Debt (Textual) | ||||||||
Convertible notes upon conversion, Shares | 3,547,776 | |||||||
Description of convertible debt | The convertible notes of the Operating Company at a settlement price equal to 80% of the IPO price per share. | |||||||
Real Estate Note [Member] | ||||||||
Long Term Debt (Textual) | ||||||||
Maturity date | Oct. 1, 2025 | |||||||
Purchase of building amount | $ 10,000 | |||||||
Principal amount | $ 8,500 | |||||||
Interest rate, Description | LIBOR plus 2.39% are due monthly. | LIBOR plus 2.39% are due monthly. | ||||||
Line of Credit [Member] | ||||||||
Long Term Debt (Textual) | ||||||||
Revolving credit loan | $ 15,000 | $ 15,000 | ||||||
Maturity date | Aug. 23, 2020 | Aug. 23, 2020 | ||||||
Description of Line of credit | The line of credit borrowing base is 80% of eligible accounts receivable plus 50% of eligible inventory. The line of credit covenants require a fixed charge coverage ratio of no less than 1.25, to be calculated on a quarterly basis on the last day of each calendar quarter. | |||||||
Description of covenant terms | The Company was in compliance with its covenants as of June 30, 2019. | |||||||
Interest rate, Description | LIBOR plus 3.50% per annum. | LIBOR plus 3.50% per annum. |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Maturities of lease liabilities | ||
Operating Leases, The remainder of 2019 | $ 365 | |
Operating Leases, 2020 | 709 | |
Operating Leases, 2021 | 421 | |
Operating Leases, 2022 | 422 | |
Operating Leases, 2023 | 372 | |
Operating Leases, Thereafter | 221 | |
Total minimum lease payments | 2,510 | |
Less: amount representing interest | 255 | |
Operating Leases, Present value of lease liabilities | 2,254 | |
Operating leases, less current portion | 643 | |
Operating leases, less long - term portion | 1,612 | |
Finance Leases, The remainder of 2019 | 68 | |
Finance Leases, 2020 | 133 | |
Finance Leases, 2021 | 121 | |
Finance Leases, 2022 | 58 | |
Finance Leases, 2023 | 18 | |
Finance Leases, Thereafter | 11 | |
Total minimum lease payments | 409 | |
Less: amount representing interest | 42 | |
Present value of minimum lease payments | 367 | |
Finance leases, less current portion | 114 | 95 |
Finance leases, less long - term portion | 253 | $ 237 |
Finance and Operating Lease Obligations,Remainder of 2019 | 433 | |
Finance and Operating Lease Obligations, 2020 | 842 | |
Finance and Operating Lease Obligations, 2021 | 542 | |
Finance and Operating Lease Obligations, 2022 | 480 | |
Finance and Operating Lease Obligations, 2023 | 390 | |
Finance and Operating Lease Obligations, Thereafter | 232 | |
Total minimum lease payments | 2,919 | |
Less: amount representing interest | 297 | |
Present value of minimum lease payments | 2,622 | |
Less: current portion | 757 | |
Long-term portion | $ 1,865 |
Leases (Details 1)
Leases (Details 1) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019USD ($) | ||
Finance lease cost | ||
Amortization of leased assets | $ 62 | |
Interest of lease liabilities | 12 | |
Operating lease costs | ||
Operating lease cost | 245 | [1] |
Variance lease cost | 101 | [1] |
Total lease cost | $ 420 | |
[1] | Expenses are classified within general and administrative expenses within the Company's condensed consolidated statement of operations. |
Leases (Details 2)
Leases (Details 2) | Jun. 30, 2019 |
Weighted average remaining lease terms and discount rate [Abstract] | |
Weighted average remaining lease terms, Operating leases | 3 years 3 months 19 days |
Weighted average remaining lease terms, Finance leases | 3 years 2 months 12 days |
Weighted average discount rate, Operating leases | 4.90% |
Weighted average discount rate, Finance leases | 6.70% |
Leases (Details 3)
Leases (Details 3) $ in Thousands | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
Remainder of 2019 | $ 314 |
2020 | 619 |
2021 | 585 |
2022 | 76 |
Thereafter | |
Total | $ 1,594 |
Leases (Details Textual)
Leases (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Leases (Textual) | ||
Lease term, Description | Lease terms are generally three years to seven years for warehouses, office space and retail store locations, and up to seven years for other leased equipment and property. | |
Description of Operating finance lease agreements | The Company's finance lease agreements are fixed for terms ranging from three to five years. | |
Rental income | $ 200 | $ 300 |
Supplier Concentration (Details
Supplier Concentration (Details) - Supplier Concentration Risk [Member] - Vendors | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Supplier Concentration (Textual) | ||
Number of vendors | 2 | 2 |
Purchases from vendors | 51.00% | 64.00% |
Business Acquisition (Details)
Business Acquisition (Details) - Pollen Gear LLC [Member] $ in Thousands | Jan. 14, 2019USD ($) |
Cash | $ 91 |
Accounts receivable | 546 |
Vendor deposits | 1,700 |
Other deposits | 18 |
Property and equipment, net | 342 |
Trade name | 918 |
Design libraries | 1,677 |
Goodwill | 3,550 |
Net liabilities | (2,178) |
Total purchase price | $ 6,664 |
Business Acquisition (Details 1
Business Acquisition (Details 1) - Pollen Gear LLC [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net Sales | $ 52,986 | $ 40,561 | $ 102,884 | $ 83,818 |
Net Income (Loss) | $ (3,220) | $ (323) | $ (20,884) | $ 2,729 |
Business Acquisition (Details T
Business Acquisition (Details Textual) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 14, 2019 |
Business Acquisition (Textual) | ||
Aggregate equity interest percentage | 100.00% | |
Pollen Gear LLC [Member] | ||
Business Acquisition (Textual) | ||
Operating company acquired percentage | 100.00% | |
Aggregate equity interest percentage | 4.00% | |
Accounts receivable | $ 600 | |
Vendor deposits | $ 1,700 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Taxes (Textual) | ||||
Income tax expense | ||||
Tax receivable agreement, description | The Operating Company entered into a Tax Receivable Agreement (‘TRA’), with the Operating Company and each of the Members that provides for the payment by the Operating Company to the Members of 85% of the amount of tax benefits, if any, that the Company may actually realize (or in some circumstances are deemed to realize) as a result of (i) increases in tax basis resulting from any future redemptions that are funded by the Company or exchanges of Common Units described above in “Note 1—Business Operations and Organization” and (ii) certain other tax benefits attributable to payments made under the TRA. The annual tax benefits are computed by calculating the income taxes due, including such tax benefits, and the income taxes due without such benefits. The Operating Company expects to benefit from the remaining 15% of any tax benefits that it may actually realize. The TRA payments are not conditioned upon any continued ownership interest in the Operating Company. The rights of each noncontrolling interest holder under the TRA are assignable to transferees of its interest in the Operating Company. The rights of each noncontrolling interest holder under the TRA are assignable to transferees of its interest. The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the amount and timing of the taxable income the Operating Company generates each year and the tax rate then applicable. Payments are generally due under the TRA within a specified period of time following the filing of our tax return for the taxable year with respect to which the payment obligation arises, although interest on such payments will begin to accrue at a rate of LIBOR plus 100 basis points from the due date (without extensions) of such tax return. Any late payments that may be made under the TRA will continue to accrue interest at LIBOR plus 500 basis points until such payments are made, including any late payments that the Operating Company may subsequently make because the Operating Company did not have enough available cash to satisfy its payment obligations at the time at which they originally arose. | |||
Projected obligation liability | $ 5,700 | $ 5,700 |
Equity-Based Compensation (Deta
Equity-Based Compensation (Details) | 6 Months Ended | |
Jun. 30, 2019 | ||
Compensation Related Costs [Abstract] | ||
Expected volatility | 85.00% | [1] |
Expected dividend yield | 0.00% | [2] |
Expected term | 3 years 9 months | [3] |
Risk-free interest rate | 2.37% | [4] |
[1] | Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term. | |
[2] | The Company has assumed a dividend yield of zero as management has no plans to declare dividends in the foreseeable future. | |
[3] | Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method | |
[4] | The risk-free rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. |
Equity-Based Compensation (De_2
Equity-Based Compensation (Details 1) - Stock option [Member] | 6 Months Ended |
Jun. 30, 2019shares | |
Outstanding at beginning of period | |
Granted | 176,784 |
Exercised | |
Forfeited | (9,957) |
Outstanding at end of period | 166,827 |
Equity-Based Compensation (De_3
Equity-Based Compensation (Details Textual) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Apr. 17, 2019 | Jun. 30, 2019 | Jun. 30, 2019 | ||
Equity-Based Compensation (Textual) | ||||
Expected dividend yield | [1] | 0.00% | ||
Compensation expense related to equity-based compensation awards | $ 1,700 | $ 4,600 | ||
Unrecognized compensation expense related to unvested common units | $ 7,700 | |||
Unrecognized compensation expense related to unvested common units weighted-average period | 2 years 6 months | |||
Unrecognized compensation expense related to unvested stock options | $ 1,200 | |||
Unrecognized compensation expense related to unvested stock options weighted-average period | 2 years | |||
Equity Incentive Plan [Member] | ||||
Equity-Based Compensation (Textual) | ||||
Stock based compensation description | Greenlane may grant up to 5,000,000 stock options and other equity-based awards to employees, directors and officers. | The Company may grant up to 5,000,000 stock options and other equity-based awards to employees, directors and officers. | ||
Expected dividend yield | 0.00% | |||
Equity Incentive Plan [Member] | IPO [Member] | ||||
Equity-Based Compensation (Textual) | ||||
Stock based compensation description | The Company granted 176,784 options to its directors and certain employees, less forfeitures. The stock options were granted with an exercise price of $17.00 per share and vest ratably over a zero to four-year period. | |||
[1] | The Company has assumed a dividend yield of zero as management has no plans to declare dividends in the foreseeable future. |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Employee Benefit Plan (Textual) | ||||
Retirement savings plan description | The Company has a 401(k) retirement savings plan. Eligible employees must be at least 18 years of age and have completed six months of service. Participants are eligible to receive a matching contribution from the Company of up to the first 3% of compensation plus 50% of participant contributions between 3% and 5% of compensation. Matching contributions, other than safe harbor contributions, vest 33% per year and are 100% vested after three years of service. Safe harbor matching contributions are 100% vested as of the date of the contribution. | |||
Contributions plan total | $ 100 | $ 100 | $ 100 | $ 100 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | ||
United States [Member] | |||||
Revenues are eliminated in consolidation | |||||
Revenues from External Customers | $ 47,288 | $ 38,657 | $ 90,420 | $ 80,088 | |
Intercompany Revenues | 909 | 108 | 1,518 | 1,844 | |
Segment (Loss) Income | [1] | (1,068) | 902 | (2,250) | 3,293 |
Canada [Member] | |||||
Revenues are eliminated in consolidation | |||||
Revenues from External Customers | 5,698 | 1,904 | 12,464 | 3,730 | |
Intercompany Revenues | 42 | (5) | 82 | 87 | |
Segment (Loss) Income | [1] | $ (371) | $ (10) | $ (237) | $ 100 |
[1] | Segment (loss) income represents segment operating (loss) income. |
Segment Reporting (Details 1)
Segment Reporting (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Interest expense | $ (140) | $ (117) | $ (742) | $ (160) |
(Loss) income from continuing operations before income taxes | (3,328) | 297 | (20,981) | 2,677 |
Reportable Segments [Member] | ||||
Total segment (loss) income for reportable segments | (1,439) | 892 | (2,487) | 3,394 |
Corporate and other income (loss) | (2,497) | (544) | (6,613) | (717) |
Interest expense | (140) | (117) | (742) | (160) |
Change in fair value of convertible notes payable | (12,063) | |||
Other income, net | 748 | 66 | 924 | 160 |
(Loss) income from continuing operations before income taxes | $ (3,328) | $ 296 | $ (20,981) | $ 2,677 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019SegmentsCustomer | Jun. 30, 2018 | Dec. 31, 2018 | |
Segment Reporting (Textual) | |||||
Number of operating segments | Segments | 2 | ||||
Number of customer | Customer | 1 | ||||
Concentration risk percentage, description | No other single customers represented more than 10% for the period. | ||||
Consolidated Revenue [Member] | |||||
Segment Reporting (Textual) | |||||
Segment revenue percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
Accounts Receivable [Member] | |||||
Segment Reporting (Textual) | |||||
Segment revenue percentage | 14.30% | 10.00% |
Non-Controlling Interest (Detai
Non-Controlling Interest (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Non-Controlling Interest (Textual) | |
Economic interest percentage | 23.90% |
Non-controlling interest holders [Member] | |
Non-Controlling Interest (Textual) | |
Economic interest percentage | 76.10% |
Stockholders' Equity _ Member_2
Stockholders' Equity / Members' Deficit (Details) - $ / shares | Apr. 17, 2019 | Apr. 23, 2019 | Jun. 30, 2019 |
Stockholders' Equity / Members' Deficit (Textual) | |||
Certificate of incorporation related description | In connection with the IPO and the Transactions, Greenlane amended and restated its certificate of incorporation. After giving effect to the amendment and restatement of Greenlane’s certificate of incorporation, the total number of shares of all classes of stock that Greenlane is authorized to issue is two hundred forty-five million (245,000,000), consisting of (i) one hundred twenty-five million (125,000,000) shares of Class A common stock; (ii) ten million (10,000,000) shares of Class B common stock; and (iii) one hundred million (100,000,000) shares of Class C common stock; and (iv) ten million (10,000,000) shares of preferred stock, par value $0.0001 per share. Pursuant to the amended and restated certificate of incorporation, the two hundred (200) shares of common stock, par value $0.01 per share, of Greenlane issued and outstanding prior to the effective time were cancelled without further action by, or consideration to, the holders thereof. | ||
Shares sold by certain selling stockholders | 1,200,000 | ||
Class A common stock [Member] | |||
Stockholders' Equity / Members' Deficit (Textual) | |||
Shares of common stock | 3,547,776 | ||
Public offering price of per share | $ 17 | ||
Class A common stock [Member] | IPO [Member] | |||
Stockholders' Equity / Members' Deficit (Textual) | |||
Shares of common stock | 5,250,000 | ||
Class A common stock [Member] | IPO [Member] | |||
Stockholders' Equity / Members' Deficit (Textual) | |||
Shares of common stock | 6,000,000 | ||
Shares sold by certain selling stockholders | 750,000 |
Subsequent Events (Details)
Subsequent Events (Details) | Jul. 11, 2019 |
Subsequent Event [Member] | |
Subsequent Events (Textual) | |
Description of notational amount | Greenlane entered into a fixed-for-floating interest rate swap agreement with a notational amount of $8.4 million to swap variable rate interest payments under its Real Estate Note for fixed interest payments bearing an interest rate of 2.0775%. |