Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 5 – Goodwill and Intangible Assets

Prior year amounts have been restated to reflect the correction of errors discussed in Note 1 – Basis of presentation. Changes in the carrying amount of goodwill and indefinite-lived intangible assets for the years ended December 31, 2021 and 2020 are as follows:

	Goodwill			Brand Names		Total
Balance at December 31, 2020, before accumulated impairment loses (As Restated)	$	11,548		$	3,700	$	15,248
Accumulated impairment loses		(1,244	)		–		(1,244	)
Balance at December 31, 2020 (As Restated)		10,304			3,700		14,004
Acquisition (1)		1,400			–		1,400
Balance at December 31, 2021	$	11,704		$	3,700	$	15,404

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(1) Refer to Note 16 for additional information regarding acquisition-related adjustments to goodwill

Goodwill

The Company performed the annual impairment assessment of goodwill for its single reporting unit as of December 31, 2021 and 2020, noting no impairment loss. Considerable management judgment is necessary to evaluate goodwill for impairment. Lifeway estimates fair value using widely accepted valuation techniques including discounted cash flows and market multiples analysis with respect to its single reporting unit. These valuation approaches are dependent upon a number of factors, including estimates of future growth rates, its cost of capital, capital expenditures, income tax rates, and other variables. Assumptions used in the Company’s valuations were consistent with its internal projections and operating plans. Lifeway’s discounted cash flows forecast could be negatively impacted by a change in the competitive landscape, any internal decisions to pursue new or different strategies, a loss of a significant customer, or a significant change in the market place including changes in the prices paid for its products or changes in the size of the market for its products. Additionally, under the market approach analysis, the Company used significant other observable inputs including various guideline company comparisons. Lifeway bases its fair value estimates on assumptions it believes to be reasonable, but which are unpredictable and inherently uncertain. Changes in these estimates or assumptions could materially affect the determination of fair value and the conclusions of the quantitative goodwill test for the Company’s one reporting unit.

Indefinite-lived Intangible Assets

The Company performed the annual impairment assessment on the indefinite-lived intangible asset as of December 31, 2021 and 2020, resulting in no impairment losses.

During the fourth quarter of 2021, the Company completed an assessment of the useful life of its indefinite-lived brand name intangible asset and determined it should adjust the estimated useful life from indefinite to 15 years. The change in accounting estimate will be effective January 1, 2022, at which time the Company will begin amortizing the asset over 15 years. The future amortization expense is included in the five-year intangible asset amortization table in the finite-lived intangible asset section below.

Finite-lived Intangible Assets

The gross carrying amounts and accumulated amortization of finite-lived intangible assets consisted of the following:

	December 31, 2021							December 31, 2020
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount
Recipes	$	44	$	(44	)	$	–	$	44	$	(44	)	$	–
Customer lists and other customer related intangibles		4,529		(4,529	)		–		4,529		(4,529	)		–
Customer relationship		3,385		(1,052	)		2,333		985		(985	)		–
Brand names		4,248		(2,303	)		1,945		2,248		(2,248	)		–
Formula		438		(438	)		–		438		(438	)		–
Total finite lived intangible assets	$	12,644	$	(8,366	)	$	4,278	$	8,244	$	(8,244	)	$	–

Estimated amortization expense on intangible assets for the next five years is as follows: 

Year	Amortization
2022	$	540
2023	$	540
2024	$	540
2025	$	540
2026	$	540