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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2021

Schedule of estimated useful life of property and equipment

The estimated useful life of property and equipment are as follows:


			Machinery and equipment			5 years to 10 years
			Leasehold improvements			Lower of useful life or lease term
			Vehicles			3 years to 5 years
			Furniture and fixtures			7 years
			Building			28 years to 40 years
			Property held under capital leases			3 years to 5 years
			Computer hardware and software			3 years

Schedule of goodwill

The following table displays a roll-forward of the carrying amount of goodwill from December 31, 2020 to September 30, 2021:


Gross carrying amount
Balance at December 31, 2020	$	3,113,000
Acquired through business combination	397,000
Balance at September 30, 2021	3,510,000

Accumulated impairment
Balance at December 31, 2020	—
Impairment loss recognized	—
Balance at September 30, 2021	—
Carrying amount at September 30, 2021	$	3,510,000

Schedule of variable interest entity financial information

The following financial information includes assets and liabilities of Global Wells and are included in the accompanying condensed consolidated balance sheets, except for those that eliminate upon consolidation:


	September 30, 2021		December 31, 2020
Cash	$	689,000	$	81,000
Accounts receivable	396,000		343,000
Prepaid expenses and other current assets	87,000		98,000
Property and equipment, net	46,916,000		47,826,000
Other assets	4,882,000		5,260,000
Total assets	$	52,970,000	$	53,608,000

Accounts payable	$	29,000	$	564,000
Accrued expenses	447,000		128,000
Customer deposits	82,000		—
Due to Lollicup USA Inc.	2,620,000		2,990,000
Long-term debt, current portion	1,166,000		694,000
Long-term debt, net of current portion	35,629,000		36,697,000
Other liabilities	2,851,000		3,906,000
Total liabilities	$	42,824,000	$	44,979,000

Summary of net sales disaggregated by customer type

For the three months and nine months ended September 30, 2021 and 2020, net sales disaggregated by customer type consists of the amounts shown below.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
National	$	22,894,000	$	18,426,000	$	63,493,000	$	50,092,000
Distributors	57,317,000		39,862,000		148,294,000		118,322,000
Online	14,644,000		8,928,000		39,790,000		26,472,000
Retail	7,856,000		9,101,000		21,333,000		30,251,000
Total Revenue	$	102,711,000	$	76,317,000	$	272,910,000	$	225,137,000

Schedule of concentration of credit risk

For the three and nine months ended September 30, 2021 and 2020, respectively, purchases from the following vendor makes up greater than 10 percent of total purchases:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Keary Global Ltd. ("Keary Global") and its affiliate, Keary International, Ltd.- related parties	13.7	%	13.3	%	14.3	%	11	%

Amounts due to the following vendors at September 30, 2021 and December 31, 2020 that exceed 10 percent of total accounts payable are as follows:


	September 30, 2021		December 31, 2020
Keary Global and its affiliate, Keary International - related parties	*		18	%
Taizhou Fuling Plastics Co., Ltd	*		11	%
Fuling Technology Co., Ltd.	24	%	*
Wen Ho Industrial Co.	12	%	*

*Amounts payable represented less than 10% of total accounts payable

Summary of fair value measurements by level for the assets and liabilities measured at fair value on a recurring basis

The following table summarizes the Company’s fair value measurements by level at September 30, 2021 for the assets and liabilities measured at fair value on a recurring basis:


	Level 1		Level 2			Level 3
Cash equivalents	$	699,000	$	—		$	—
Interest rate swaps	—		(1,549,000)		*	—
Fair value, September 30, 2021	$	699,000	$	(1,549,000)		$	—

*See Note 9 for further discussion on interest rate swaps.

The following table summarizes the Company’s fair value measurements by level at December 31, 2020 for the assets and liabilities measured at fair value on a recurring basis:


	Level 1		Level 2		Level 3
Cash equivalents	$	448,000	$	—	$	—
Interest rate swaps	—		(2,847,000)		—
Fair value, December 31, 2020	$	448,000	$	(2,847,000)	$	—

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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