Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 22, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 000-56364 | ||
Entity Registrant Name | Charlotte's Web Holdings, Inc. | ||
Entity Incorporation, State or Country Code | A1 | ||
Entity Tax Identification Number | 98-1508633 | ||
Entity Address, Address Line One | 1801 California Street | ||
Entity Address, Address Line Two | Suite 4800 | ||
Entity Address, City or Town | Denver | ||
Entity Address, State or Province | CO | ||
Entity Address, Postal Zip Code | 80202 | ||
City Area Code | 720 | ||
Local Phone Number | 617-7303 | ||
Title of 12(g) Security | Common stock, no par value | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 499.6 | ||
Entity Common Stock, Shares Outstanding | 145,110,106 | ||
Documents Incorporated by Reference | Portions of the registrant’s definitive Proxy Statement relating to its 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2021 are incorporated herein by reference in Part III. | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001750155 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Firm ID | 42 |
Auditor Name | Ernst & Young LLP |
Auditor Location | Denver, Colorado |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 19,494,000 | $ 52,803,000 |
Accounts receivable, net | 4,882,000 | 4,793,000 |
Notes receivable - current | 495,000 | 2,757,000 |
Inventories, net | 52,077,000 | 63,157,000 |
Prepaid expenses and other current assets | 8,095,000 | 8,845,000 |
Income taxes receivable | 10,764,000 | 11,440,000 |
Total current assets | 95,807,000 | 143,795,000 |
Property and equipment, net | 36,085,000 | 39,363,000 |
Operating lease right-of-use assets, net | 20,679,000 | 21,037,000 |
Intangible assets, net | 2,843,000 | 25,376,000 |
Goodwill | 0 | 76,039,000 |
Stanley Brothers USA Holdings purchase option | 13,000,000 | 0 |
Notes receivable - noncurrent | 1,037,000 | 0 |
Other long-term assets | 2,062,000 | 5,177,000 |
Total assets | 171,513,000 | 310,787,000 |
Current liabilities: | ||
Accounts payable | 5,049,000 | 4,891,000 |
Accrued and other current liabilities | 9,570,000 | 12,763,000 |
Cultivation liabilities – current | 3,448,000 | 9,304,000 |
Lease obligations – current | 2,103,000 | 1,916,000 |
Total current liabilities | 20,170,000 | 28,874,000 |
Cultivation liabilities – noncurrent | 385,000 | 2,513,000 |
Lease obligations – noncurrent | 20,500,000 | 20,567,000 |
Warrant and other long-term liabilities | 12,000 | 4,591,000 |
Total liabilities | 41,067,000 | 56,545,000 |
Commitments and contingencies (note 9) | ||
Shareholders’ equity: | ||
Common shares, nil par value; unlimited shares authorized as of December 31, 2021 and 2020, respectively; 144,659,964 and 107,060,237 shares issued and outstanding as of December 31, 2021 and 2020 | 1,000 | 1,000 |
Proportionate voting shares, nil par value; nil shares authorized as of December 31, 2021 and unlimited shares authorized as of December 31, 2020, respectively; nil and 81,177 outstanding as of December 31, 2021 and December 31, 2020, respectively | 0 | 0 |
Additional paid-in capital | 319,059,000 | 305,133,000 |
Accumulated deficit | (188,614,000) | (50,892,000) |
Total shareholders’ equity | 130,446,000 | 254,242,000 |
Total liabilities and shareholders’ equity | $ 171,513,000 | $ 310,787,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Dec. 31, 2021 | Nov. 03, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | |||
Common shares, issued (in shares) | 144,659,964 | 142,335,464 | 107,060,237 |
Common shares, outstanding (in shares) | 144,659,964 | 142,335,464 | 107,060,237 |
Proportionate voting shares, issued (in shares) | 0 | 0 | 81,177 |
Proportionate voting shares, outstanding (in shares) | 0 | 0 | 81,177 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Revenue | $ 96,092 | $ 95,226 |
Cost of goods sold | 47,507 | 42,937 |
Gross profit | 48,585 | 52,289 |
Selling, general and administrative expenses | 97,641 | 103,631 |
Goodwill and asset impairments | 98,003 | 0 |
Operating loss | (147,059) | (51,342) |
Other income, net | 51 | 1,330 |
Change in fair value of financial instruments and other | 9,429 | 11,317 |
Loss before provision for income taxes | (137,579) | (38,695) |
Income tax (expense) benefit | (143) | 8,014 |
Net loss and comprehensive loss | $ (137,722) | $ (30,681) |
Net loss per common share, basic (in usd per share) | $ (0.98) | $ (0.25) |
Net loss per common share, diluted (in usd per share) | $ (0.98) | $ (0.25) |
Weighted-average shares used in computing net loss per share, basic (in shares) | 140,769,247 | 125,012,249 |
Weighted-average shares used in computing net loss per share, diluted (in shares) | 140,769,247 | 125,012,249 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Proportionate Voting Shares | Common Shares | Additional Paid-in Capital | Accumulated Deficit |
Balance (in shares) at Dec. 31, 2019 | 95,342 | 67,418,174 | |||
Balance at Dec. 31, 2019 | $ 123,996 | $ 1 | $ 144,206 | $ (20,211) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of common stock options (in shares) | 3,987,035 | ||||
Exercise of stock options | 2,467 | 2,467 | |||
Conversion to common shares (in shares) | (16,140) | 6,455,826 | |||
Withholding of common shares upon vesting of restricted share awards (in shares) | 32,801 | ||||
Withholding of common shares upon vesting of restricted share units | (19) | (19) | |||
Share-based compensation | 3,149 | 3,149 | |||
Harmony Hemp contingent equity compensation (in shares) | 114,696 | ||||
Harmony Hemp contingent equity compensation | 1,177 | 1,177 | |||
Share offering, net of warrants and issuance costs (in shares) | 11,500,000 | ||||
Share offering, net of warrants and issuance costs | 44,591 | 44,591 | |||
Abacus acquisition (in shares) | 1,975 | 17,551,705 | |||
Abacus acquisition | 109,562 | 109,562 | |||
Net loss and comprehensive loss | (30,681) | (30,681) | |||
Balance (in shares) at Dec. 31, 2020 | 81,177 | 107,060,237 | |||
Balance at Dec. 31, 2020 | $ 254,242 | $ 1 | 305,133 | (50,892) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Exercise of common stock options (in shares) | 8,261 | 8,261 | |||
Exercise of stock options | $ 30 | 30 | |||
Conversion to common shares (in shares) | (81,177) | 32,471,060 | |||
Exercise of warrants (in shares) | 98,788 | ||||
Exercise of warrants | 441 | 441 | |||
Withholding of common shares upon vesting of restricted share awards (in shares) | 182,727 | ||||
Withholding of common shares upon vesting of restricted share units | (146) | (146) | |||
Share-based compensation | 4,023 | 4,023 | |||
Harmony Hemp contingent equity compensation (in shares) | 338,091 | ||||
Harmony Hemp contingent equity compensation | 1,460 | 1,460 | |||
Share offering, net of warrants and issuance costs (in shares) | 4,500,800 | ||||
Share offering, net of warrants and issuance costs | 8,118 | 8,118 | |||
Net loss and comprehensive loss | (137,722) | (137,722) | |||
Balance (in shares) at Dec. 31, 2021 | 0 | 144,659,964 | |||
Balance at Dec. 31, 2021 | $ 130,446 | $ 1 | $ 319,059 | $ (188,614) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||
Net loss and comprehensive loss | $ (137,722) | $ (30,681) |
Adjustments to reconcile net loss and comprehensive loss to net cash used in operating activities: | ||
Depreciation and amortization | 11,025 | 6,847 |
Goodwill and asset impairments | 98,003 | 0 |
Change in fair value of financial instruments | (9,305) | (11,167) |
Allowance for credit losses | 1,509 | 834 |
Inventory provision | 9,729 | 8,025 |
Share-based compensation | 5,483 | 4,326 |
Loss (gain) on disposal of assets | 390 | (5) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (948) | 1,470 |
Inventories | 1,023 | (1,782) |
Prepaid expenses and other current assets | 694 | (2,867) |
Operating lease right-of-use assets and lease obligations | 138 | 569 |
Accounts payable, accrued and other liabilities | (2,911) | (8,075) |
Income taxes | 676 | (8,133) |
Cultivation liabilities | (7,166) | (11,289) |
Other operating assets and liabilities, net | (177) | (101) |
Net cash used in operating activities | (29,559) | (52,029) |
Cash flows from investing activities: | ||
Acquisition of business, net of cash acquired | 0 | 11,181 |
Purchases of property and equipment and intangible assets | (4,918) | (28,257) |
Proceeds from sale of assets | 13 | 91 |
Issuance of notes receivable, net of collections | 510 | (1,275) |
Investment in Stanley Brothers USA Holdings purchase option | (8,000) | 0 |
Other investing activities | 606 | (897) |
Net cash used in investing activities | (11,789) | (19,157) |
Cash flows from financing activities: | ||
Proceeds from public offerings, net of issuance costs | 8,257 | 53,797 |
Proceeds from stock option exercises | 30 | 2,467 |
Other financing activities | (248) | (828) |
Net cash provided by financing activities | 8,039 | 55,436 |
Net decrease in cash and cash equivalents | (33,309) | (15,750) |
Cash and cash equivalents —beginning of year | 52,803 | 68,553 |
Cash and cash equivalents —end of year | 19,494 | 52,803 |
Non-cash activities: | ||
Equity instruments issued in business combinations | 0 | 109,562 |
Non-cash purchases of property and equipment | (2,500) | (1,291) |
Reduction to cultivation liabilities for inventory provision | $ (543) | $ (2,073) |
DESCRIPTION OF BUSINESS AND PRE
DESCRIPTION OF BUSINESS AND PRESENTATION OF FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS AND PRESENTATION OF FINANCIAL STATEMENTS | DESCRIPTION OF BUSINESS AND PRESENTATION OF FINANCIAL STATEMENTS Description of the Business Charlotte’s Web Holdings, Inc. together with its subsidiaries, (collectively "Charlotte's Web" or the “Company”) is a public company incorporated pursuant to the laws of the Province of British Columbia. The Company’s common shares are publicly listed on the Toronto Stock Exchange (“TSX”) under the symbol “CWEB” and quoted on the OTCQX under the symbol "CWBHF." The Company’s head office is located in Denver, Colorado in the United States of America. The Company’s primary products are made from proprietary strains of whole-plant hemp extracts containing a full spectrum of phytocannabinoids, terpenes, flavonoids and other hemp compounds. Hemp extracts are produced from Hemp, which is defined as the plant Cannabis sativa L . The Company is engaged in research involving the effectiveness of a broad variety of compounds derived from Hemp. The Company’s current product categories include human ingestible products: tinctures (liquid product), capsules, gummies, and sprays, topicals, and pet products. The Company’s products are distributed through its e-commerce website, third-party e-commerce websites, select distributors, health practitioners, and a variety of brick-and-mortar specialty retailers. The Company does not currently produce or sell medicinal or recreational marijuana or products derived from high-THC Cannabis plants. On March 2, 2021, Charlotte’s Web executed an Option Purchase Agreement pursuant to which the Company has the option to acquire Stanley Brothers USA Holdings, Inc. (“Stanley Brothers USA”), a Cannabis wellness incubator. Until the Stanley Brothers USA Holdings Purchase Option ("SBH Purchase Option") is exercised, both Charlotte’s Web and Stanley Brothers USA will continue to operate as standalone entities in the US. Internationally, the companies are able to explore opportunities where Cannabis is federally permissible. The Company holds the number one market share position across major retail channels including total US food/drug/mass retail, total US natural specialty retail, and e-commerce, based on market share data from leading third-party analysts such as Nielsen, SPINS, and Brightfield Group, respectively. The Company grows its proprietary hemp domestically in the United States on farms leased in northeastern Colorado and sources high quality hemp through contract farming operations in Kentucky and Oregon. In furtherance of the Company’s R&D efforts, the Company established CW Labs, an internal division for R&D, to substantially expand the Company’s efforts around the science of hemp derived compounds. CW Labs is currently engaged in double-blind, placebo-controlled human clinical trials addressing hemp-based solutions for several need states. CW Labs is located in Louisville, Colorado at the Company’s LOFT production and distribution facility and the Hauptmann Woodward Research Institute on the campus of the University at Buffalo’s Jacobs School of Medicine and The Center for Integrated Global Biomedical Sciences through which it fosters collaborations throughout the State University of New York network of 64 national and international research and medical institutions. In November 2019, the Company announced a collaboration between CW Labs and the University at Buffalo’s Center for Integrated Global Biomedical Sciences to advance hemp cannabinoid science through a research program that provides a better understanding of the therapeutic uses and safety of cannabinoids. Emerging Growth Company Status The Company is an emerging growth company ("EGC"), as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use the extended transition period for complying with new or revised accounting standards, and as a result of this election, the consolidated financial statements may not be comparable to companies that comply with public company FASB standards’ effective dates. The Company can elect to early adopt, if permitted by the accounting standard. The Company may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of an offering or such earlier time that it is no longer an EGC. Smaller Reporting Company Status The Company is a “smaller reporting company” as defined in Exchange Act of 1934, as amended ("Exchange Act") Rule 12b-2. As a result, the Company is eligible to take advantage of certain reduced disclosure and other requirements that are otherwise applicable to public companies including, but not limited to, not being subject to the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. The Company will remain a smaller reporting company until the last day of the fiscal year in which (1) the aggregate worldwide market value of its common shares held by non-affiliates equaled or exceeded $250 million as of the prior June 30th, or (2) its annual revenues equaled or exceeded $100 million during such completed fiscal year and the aggregate worldwide market value of its common shares held by non-affiliates equaled or exceeded $700 million as of the prior June 30th. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Companies acquired during each reporting period are reflected in the results of the Company effective as of their respective dates of acquisition through the end of the reporting period. All intercompany balances and transactions have been eliminated in consolidation. Unless otherwise indicated, comparisons are to comparable prior periods, and 2021 and 2020 refer to the 12 months ended December 31, 2021, and December 31, 2020, respectively. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make informed estimates, judgments and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures in the accompanying notes. On an ongoing basis, management evaluates such estimates and assumptions for continued reasonableness. In particular, management makes estimates with respect to any (i) inventory provision, (ii) underlying assumptions that affect the potential impairment of goodwill and long-lived assets, (iii) ability to realize income tax benefits associated with deferred tax assets , (iv) fair value of acquired intangible assets and goodwill, and (v) underlying assumptions that affect the fair value of the SBH Purchase Option. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Management’s estimates are based on historical information available at the date of the consolidated financial statements and various other assumptions management believes are reasonable based on the circumstances. Actual results could differ materially from those estimates. Reclassifications and prior period presentations Certain amounts presented in prior periods have been reclassified to conform with the current period presentation. Basic and Diluted Net Loss per Share Basic loss per share is calculated using the two-class method, in which net loss and comprehensive loss is allocated to both common shares and proportionate voting shares based on the number of fully converted shares in each class. Basic net loss per common share and proportionate voting share is computed by dividing the allocated net loss and comprehensive loss by the weighted-average number of common shares outstanding and weighted average number of proportionate voting shares outstanding during the period. Diluted loss per common share is computed by dividing the allocated net loss and comprehensive loss by the weighted-average number of common shares together with the number of additional common shares that would have been outstanding if all potentially dilutive common shares had been issued. Diluted loss per proportionate voting share is computed by dividing the allocated net loss and comprehensive loss by the weighted-average number of proportionate voting shares outstanding during the period. Since the Company was in a loss position for the periods presented, basic net loss per share is the same as diluted net loss per share since the effects of potentially dilutive securities are antidilutive. Segments Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. As such, the Company has one operating segment, which is the business of hemp-based CBD wellness products. Substantially all long-lived assets are located in the United States and substantially all revenue is attributed to customers and consumers based in the United States. Business Combinations Business combinations are accounted for under the acquisition method of accounting. Under the acquisition method of accounting, the total consideration transferred in connection with the acquisition is allocated to the tangible and intangible assets acquired, liabilities assumed, and any non-controlling interest in the acquired entity based on fair values. Goodwill acquired in connection with business combinations represents the excess of consideration transferred over the net tangible and identifiable intangible assets acquired. Certain assumptions and estimates are employed in evaluating the fair value of assets acquired and liabilities assumed. These estimates may be affected by factors, such as changing market conditions or changes in government regulations. The most significant assumptions requiring judgment involve identifying and estimating the fair value of intangible assets and the associated useful lives to establish amortization periods. To finalize purchase accounting for significant acquisitions, the Company utilizes the services of independent valuation specialists to assist in the determination of the fair value of acquired tangible and intangible assets. Costs related to the acquisition, other than those associated with the issuance of debt or equity securities, incurred by the Company in connection with a business combination, are expensed as incurred. Any contingent or deferred consideration payable is recognized at fair value at the acquisition date. Any amounts tied to an individual’s employment are recognized as compensation expense over the required service period. Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents in accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The cash amounts in deposit accounts held in excess of federally-insured limits were $19,244 and $52,516 as of December 31, 2021 and 2020, respectively. Management believes that the Company is not exposed to significant credit risk due to the financial strength of the depository institution in which the cash is held. The Company provides credit to its customers in the normal course of business and has established credit evaluation and monitoring processes to mitigate credit risk, but has limited risk, as the majority of its sales are transacted with cash. As of December 31, 2021 and 2020, no single customer accounted for more than 10% of the Company’s consolidated revenue. As of December 31, 2021 the Company had one customer whose accounts receivable balance individually represented 34% of the Company's accounts receivable. At December 31, 2020, no single customer accounted for more than 10% of the Company's accounts receivable. Accounts Receivable and Allowance for Credit Losses Accounts receivable is stated as the amount billed, net of an estimated allowance for credit losses (“ACL”). The Company’s ACL is adjusted periodically and is based on management’s consideration of the age and nature of the past due accounts as well as specific payment issues. The Company considers as past due any receivable balance not collected within its contractual terms. Changes in the Company’s estimate to the ACL is recorded through bad debt expense and individual accounts are charged against the allowance when all reasonable collection efforts are exhausted. Inventories Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less any applicable selling expenses. Cost includes all expenses for direct raw materials inputs, as well as costs directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Cost is determined by use of the weighted average method. The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions, including forecasted demand compared to quantities on hand, as well as other factors such as potential excess or aged inventories based on product shelf life, and other factors that affect inventory obsolescence. The Company’s raw materials inventories of harvested hemp are recorded at cost to harvest. Raw materials costs as well as production costs are included in the carrying value of the Company’s finished goods inventory. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets were comprised of the following amounts (in thousands): December 31, 2021 December 31, 2020 Prepaid expenses $ 6,224 $ 4,621 Deposits 925 2,742 Other miscellaneous receivables 946 1,482 Total prepaid expenses and other current assets $ 8,095 $ 8,845 Property and Equipment, Net Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Building 30 years Machinery and equipment 3-10 years Furniture and fixtures 2-7 years Leasehold improvements Shorter of useful life or term of lease (1-15 years) Construction-in-process assets are capitalized during construction and depreciation commences when the asset is placed into service. Significant improvements that extend the useful life of an asset are capitalized. Repairs and maintenance which do not extend the useful lives of assets are expensed as incurred. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gains or losses are recognized. Intangible Assets, Net Finite Lived Intangible Assets Finite lived intangible assets consist of customer relationships, software, patents, and trade names. These intangible assets were determined to have finite lives and are amortized over their useful lives. Acquired intangible assets from business combinations include trade names and customer relationships. Software is stated at cost less accumulated amortization. The costs of obtaining a patent are capitalized and amortized over its useful life. Acquired trade names and customer relationships are stated at fair value and are amortized over their useful lives. Amortization is calculated on the straight-line basis over the following estimated useful lives of the assets: Customer Relationships 10 years Software 3-5 years Patents 15-20 years Tradenames 10 years Capitalized Software Development Costs The Company develops software for internal use. Software development costs incurred during the application development stage, which includes payroll and payroll-related costs related to employees and third-party consultant costs are capitalized. The Company amortizes these costs over the estimated useful life of the software, which is generally three years. These costs are included in intangible assets, net on the consolidated balance sheets. Goodwill Goodwill represents the excess of acquisition costs over the fair value of tangible assets and identifiable intangible assets of the businesses acquired. Goodwill is not amortized. Goodwill is subject to impairment testing annually as of October 1, or any time changes in circumstances indicate that the carrying amount may not be fully recoverable. The Company performs its annual impairment test to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill. If events or circumstances do not indicate that the fair value of a reporting unit is below its carrying amount, then goodwill is not considered to be impaired and no further testing is required. If it is determined that there are impairment indicators, the Company will compare the fair value of its reporting units to its carrying value, including goodwill. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the amount by which the carrying value of the goodwill exceeds its implied fair value, if any, is recognized as an impairment loss. The Company also monitors the indicators for goodwill impairment testing between annual tests. See note 7, Goodwill and intangible assets, for further discussion. Impairment of Long-Lived Assets The Company reviews intangible assets with indefinite useful lives for impairment at least annually and reviews all intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. Long-lived assets, such as property and equipment and intangible assets subject to depreciation and amortization, as well as indefinite lived intangibles and goodwill are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than the Company had originally estimated. Recoverability of these assets is measured by comparison of the carrying amount of each asset or asset group to the future undiscounted cash flows the asset or asset group is expected to generate over their remaining lives. If the asset or asset group is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset or asset group. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the new shorter useful life. See note 7, Goodwill and intangible assets, and note 6, Property and equipment, net, for further discussion. Cultivation Liabilities Cultivation liabilities consist of amounts owed to third-party farming operators for the hemp harvests cultivated in 2019 and 2018. There were no cultivation liabilities incurred for the hemp harvest cultivated in 2021 or 2020 as there was minimal hemp grown with third-party farming operators due to sufficient quantities on hand of harvested hemp inventories and the resulting minimal crops did not trigger additional liabilities per the terms of the agreements. The terms of the agreements with third-party farming operators are fixed and determined based on the potency and yield of the hemp crops after harvests are completed. As stated in the agreements with the third-party farming operators, amounts are paid over four or eight quarters depending on the quantity of acres planted. The Company can reduce the settlement amount of cultivation liabilities for harvested hemp outside of quality specifications, as stated in the agreements. The cultivation liabilities are initially measured at the present value of future payments, discounted using the Company’s incremental borrowing rate. Refer to note 11 for detail of the cultivation liabilities for the years ended December 31, 2021 and 2020. The Company did not enter into any arrangements of this nature with third-party farming operators for the 2022 harvest. Leases The Company elected to early adopt ASU 2016-02, Leases (Topic 842) as of January 1, 2019, as permitted by the standard. After the adoption of this standard, the Company determined if an arrangement contains a lease at inception based on whether there is an identified asset and whether the Company controls the use of the identified asset throughout the period of use. The Company classifies leases as either finance or operating. The Company does not have any finance leases. Right-of-use (“ROU”) assets are recognized at the lease commencement date and 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. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the remaining lease term. Present value of lease payments are discounted based on the more readily determinable of (i) the rate implicit in the lease or (ii) the Company’s incremental borrowing rate. Because the Company’s operating leases generally do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at lease commencement date for collateralized borrowings with a similar term, an amount equal to the lease payments and in a similar economic environment where the leased asset is located. The collateralized borrowings were based on the Company’s credit rating corroborated with market credit metrics like debt level and interest coverage. The Company’s operating lease ROU assets are measured based on the corresponding operating lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred and (iii) lease incentives under the lease. Options to renew or terminate the lease are recognized as part of the Company’s ROU assets and lease liabilities when it is reasonably certain the options will be exercised. ROU assets are also assessed for impairments consistent with the Company’s long-lived asset policy. Operating lease expense for fixed lease payments is recognized on a straight-line basis over the lease term. Variable lease payments for real estate taxes, insurance, maintenance, and utilities, which are generally based on the Company’s pro rata share of the total property, are not included in the measurement of the ROU assets or lease liabilities and are expensed as incurred. Operating leases are presented separately as operating lease right-of-use assets, net and lease obligations, current and non-current, in the accompanying consolidated balance sheets. We have elected the short-term lease recognition exemption for all applicable classes of underlying assets. Short-term disclosures include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customer (“ASC 606”). The Company elected to early adopt ASC 606 as of January 1, 2018, as permitted by the standard. The Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model to arrangements that meet the definition of a contract under the standard, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of revenue accounting, the Company evaluates the goods or services promised within each contract related performance obligation and assesses whether each promised good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company recognizes revenue from customers when control of the goods or services are transferred to the customer, generally when products are shipped, at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services. Freight revenue is included in revenue on the consolidated statements of operations and comprehensive loss, and is generally exempt from state sales taxes. Sales tax collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenue in the consolidated statements of operations and comprehensive loss. Contracts are written to include standard discounts and allowances. Contracts are not written to include advertising allowances, tiered discounts or any other performance obligation. Since the Company’s contracts involve the delivery of various tangible products, the arrangements are considered to contain only a single performance obligation, as such there is no allocation of the transaction price. The Company also offers ecommerce discounts and promotions through its online rewards program. The Charlotte’s Web Loyalty Program offers customers rewards points for every dollar spent through the Company website to earn store credit for future purchases. The Company defers recognition of revenue for unredeemed awards until the following occurs: (1) rewards are redeemed by the consumer, (2) points or certificates expire, or (3) an estimate of the expected unused portion of points or certificates is applied, which is based on historical redemption patterns. Any product that doesn’t meet the customer’s expectations can be returned within the first 30 days of delivery in exchange for another product or for a full refund. Any product sold through a distributor or retailer must be returned to the original purchase location for any return or exchange. The Company accounts for customer returns utilizing the “expected value method.” Expected amounts are excluded from revenue and recorded as a “refund liability” that represents the Company’s obligation to return the customer’s consideration. Estimates are based on actual historical data. The Company destroys all returned products for safety and quality purposes. The majority of the Company’s revenue is derived from sales of branded products to consumers via our direct-to-consumer ecommerce website, and distributors, retail and wholesale business-to-business customers. The following table sets forth the disaggregation of the Company’s revenue: Year Ended December 31, 2021 2020 Direct-to-consumer $ 62,334 $ 63,826 Business-to-business 33,758 31,400 Total $ 96,092 $ 95,226 Substantially all of the Company’s revenue is earned in the United States. Cost of Goods Sold Cost of goods sold primarily consists of the inventory and production costs for the Company’s products sold during the period, and also includes amortization and depreciation, as well as allocated expenses. Selling, General and Administrative Selling, general and administrative expense primarily consists of compensation and other personnel-related costs, including share-based compensation, marketing and advertising expenses, professional services fees, rent and related costs, property and casualty and directors and officers insurance premiums and bank and merchant fees. Advertising expenses are expensed as incurred and primarily includes the cost of marketing activities such as online advertising, search engine optimization, promotional activities and market research. For the years ended December 31, 2021 and 2020, the Company recognized $17,523 and $14,723 of advertising expense, respectively. Selling, general and administrative expense also includes research and development expenses, which are expensed as incurred. For the years ended December 31, 2021 and 2020, the Company recognized $5,502 and $5,951, respectively, of research and development expenses. Defined Contribution Plan The Company has defined contribution plans, under which the Company contributes based on a percentage of the employees’ elected contributions. Defined contribution expense of $441 and $1,038 was recorded during the years ended December 31, 2021 and December 31, 2020, respectively. Share-based Compensation The Company accounts for compensation expense for share-based option awards to employees, non-employee directors, and other non-employees based on the estimated grant date fair value of the options on a straight-line basis over the requisite service period, which is the vesting period for stock options. The fair value of stock options are estimated using the Black-Scholes-Merton (“Black-Scholes”) valuation model, which requires assumptions and judgments regarding stock price, volatility, risk-free interest rates, dividend yields and expected option terms. The Company uses the historical volatility and grant date closing price of its publicly traded shares to estimate the grant-date fair value of its stock options. Due to the lack of historical exercise history, the expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Share-based compensation is recognized net of actual forfeitures when they occur. All share-based compensation costs are recorded in the consolidated statements of operations and comprehensive loss in selling, general and administrative expense. The Company measures nonemployee awards at their fair value consistent with the accounting for employee share-based compensation as described above. For the years ended December 31, 2021 and 2020, the Company did not have any material expense for nonemployee awards. Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets or liabilities are computed based on the temporary difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal income tax rate in effect for the year in which the differences are expected to reverse. Deferred income tax expense or benefit is based on the changes in the deferred income tax assets or liabilities from period to period. A valuation allowance is established if it is more-likely-than-not that all or a portion of the deferred tax asset will not be realized. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against net deferred tax assets. We assess the likelihood that deferred tax assets will be recovered as deductions from future taxable income. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis and includes a review of all available positive and negative evidence. Factors reviewed include projections of pre-tax book income for the foreseeable future, determination of cumulative pre-tax book income or loss, earnings history, and reliability of forecasting. It is the Company's policy to offset indefinite lived deferred tax assets with indefinite lived deferred tax liabilities. The Company provided a full valuation allowance on deferred tax assets because it is more likely than not that deferred tax assets will not be realized. The Company accounts for uncertainties in income taxes under Topic 740, which prescribes a recognition threshold and measurement methodology to recognize and measure an income tax position taken, or expected to be taken, in a tax return. With respect to any tax positions that do not meet the recognition threshold, a corresponding liability, including interest and penalties, is recorded in the consolidated financial statements. The Company may be subject to examination by tax authorities where the Company conducts operations. The earliest income tax year that may be subject to examination is 2018. The Company has recorded an uncertain tax position of $179 and $134 as of December 31, 2021 and December 31, 2020, respectively. The Company’s policy is to recognize interest and penalties on taxes, if any, as income tax expense. Recently Issued Accounting Pronouncements Other than described below, no new accounting pronouncements adopted or issued by the Financial Accounting Standards Board (“FASB”) had or may have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) . The guidance on the accounting for implementation, setup and other upfront costs (collectively referred to as implementation costs) applies to entities that are a customer in a hosting arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The new standard is effective for public companies with fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. For all other entities, the amendments are effective for all fiscal years beginning after December 15, 2020 and all interim periods beginning after December 15, 2021. As an EGC, the Company has elected to use the extended transition period for complying with new or revised standards and can and has elected to follow the private company adoption timeline. The Company adopted this standard prospectively as of January 1, 2021, and is currently evaluating the impact on the Company’s consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which aims to reduce complexity in accounting standards by improving certain areas of U.S. GAAP without compromising information provided to users of financial statements. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the impact, if any, that the updated standard will have on the consolidated financial statements. Recently Adopted Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) . The guidance on the accounting for implementation, setup and other upfront costs (collectively referred to as implementation costs) applies to entities that are a customer in a hosting arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The new standard is effective for public companies with fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. For all other entities, the amendments are effective for all fiscal years beginning after December 15, 2020 and all interim periods beginning after December 15, 2021. As an EGC, the Company has elected to use the extended transition period for complying with new or revised standards and can and has elected to follow the private company adoption timeline. The Company adopted this standard prospectively as of January 1, 2021, and the adoption of the standard did not have a material impact on the Company's consolidated financial statemen |
ACQUISITION OF ABACUS HEALTH
ACQUISITION OF ABACUS HEALTH | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITION OF ABACUS HEALTH | ACQUISITION OF ABACUS HEALTH On June 11, 2020, the Company acquired all the issued and outstanding subordinate voting shares of Abacus Products, Inc. (“Abacus”). Abacus develops, markets and sells over-the-counter (“OTC”) topical products combining active pharmaceutical ingredients with hemp extract. This acquisition provided the Company with growth opportunities in both topical and ingestible products in the CBD wellness category. Abacus primarily sells its products under three brand names: CBDMedic™, CBD Clinic™, and Harmony Hemp. CBD Clinic™ is marketed to the professional practitioner market and sold exclusively to registered health practitioners such as chiropractors, acupuncturists, massage therapists, physical therapists, naturopaths, and osteopaths. CBDMedic™ is targeted to the consumer market. CBDMedic™ products are sold directly to consumers through retail outlets, health, and fitness locations, as well as through an e-commerce platform. Harmony Hemp is targeted to the consumer market. These products are sold through retail outlets as well as through an e-commerce platform. The acquisition of these brands substantially expanded the Company's topical offerings and presence in the key food and mass markets. The acquisition closed on June 11, 2020 and, accordingly, the consolidated statements of operations and comprehensive loss include Abacus Health results of operations for the period from June 11, 2020 through December 31, 2020 and for the year ended December 31, 2021. Due to integration of Abacus Health into the Company’s systems as of July 1, 2020, at December 31, 2021 and 2020 it is not feasible for the Company to disaggregate the acquiree revenue, on an after discount and promotions basis, or the results of operations related thereto consolidated in the financial statements. If the acquisition had taken place as of January 1, 2020, revenue from continuing operations for the year ended December 31, 2020 would have been $99,341. Loss from continuing operations for the year ended December 31, 2020 would have been $(47,810). The aforementioned pro-forma amounts are unaudited. As a result of the business combination, one-time acquisition costs of $3,897 were expensed as incurred during the year ended December 31, 2020. Fair Value of Consideration Pursuant to the terms of the arrangement agreement, for each Abacus subordinate voting share and other equity instruments, including outstanding stock options, warrants, SARs, and contingent consideration, each holder received a 0.85 equivalent replacement award of the Company’s respective security at the time of closing. To determine the portion of fair value of the replacement award that is part of purchase consideration, the Company measured both the fair value of the replacement award as the acquiree, Abacus, and the acquirer, the Company, as of the acquisition date. The Company attributed the portion of the fair value related to pre-combination service as purchase consideration and attributed the remaining fair value to remuneration for post-combination services based on any remaining service period. The Company’s fair values of the replacement awards were valued using the Black-Scholes option pricing model, with the following assumptions used in the model: expected volatility; expected term; risk-free interest rate and value of the underlying share. The resulting purchase consideration for replacement stock options, warrants, SARs, and contingent consideration is $7,251. A portion of the other equity instruments, SARs of $293 and certain warrants of $2,857, were determined to be liabilities based on the nature of the instruments. These liabilities are presented at their respective fair value as of December 31, 2021 and 2020 in the consolidated balance sheets. The Company transferred 18,456,302 Common shares and 3,884,986 other equity instruments. The following table outlines the total consideration transferred: Common shares $ 105,461 Other equity instruments 7,251 Total consideration transferred $ 112,712 The following table summarizes the assets acquired and liabilities assumed as of the acquisition date: Cash $ 11,181 Accounts receivable and other receivables 2,264 Inventories 4,845 Intangible assets 23,400 Other current and long-term assets 3,653 Goodwill 76,039 $ 121,382 Accounts payable 4,687 Accrued liabilities 2,041 Current note payable 1,258 Other current and long-term liabilities 684 Total liabilities $ 8,670 Net assets acquired $ 112,712 The fair value of acquired inventories and intangible assets were determined using a forecasted cash flow approach with the assistance of a third-party valuation firm. Acquired inventories consist of substantially all finished goods. Acquired intangible assets consist of a trade name and customer relationships. Fair value of the acquired customer relationships and trade name are $22,700 and $700, respectively. The Company assigned a ten-year useful life to both classes of acquired intangible assets. The Company determined that Abacus Health’s carrying costs approximated fair value for all other acquired assets and assumed liabilities. On February 10, 2020, one of the wholly-owned subsidiaries of Abacus US, Abacus Wellness, Inc., acquired the principal assets of two companies owning the Harmony Hemp brand. Pursuant to the terms of the asset purchase agreement, Abacus US, and therefore the Company, is obligated to pay the remaining purchase price payable for Harmony Hemp and deliver contingent equity compensation. The remaining purchase price payable as of December 31, 2021 and 2020 for Harmony Hemp acquired with the Abacus acquisition was $144 and $770, respectively, which is included in accrued and other current liabilities on the consolidated balance sheets. Goodwill The goodwill acquired from the Abacus acquisition was primarily attributable to expected synergies from future growth and potential monetization opportunities. See note 7, Goodwill and intangible assets, for further discussion. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT | FAIR VALUE MEASUREMENT Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The guidance describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. Level 1 —Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date Level 2 —Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities; unadjusted quoted prices for identical or similar assets or liabilities 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 related assets or liabilities Level 3 —Unobservable inputs that are supported by little or no market data for the related assets or liabilities The categorization of a financial instrument within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s financial instruments include cash and cash equivalents, accounts receivable and other receivables, notes receivable and payable, accounts payable and accrued liabilities, cultivation liabilities, warrant liabilities and other current assets and liabilities. At December 31, 2021 and 2020, the carrying amounts of accounts receivable and other receivables, accounts payable and other current assets and liabilities approximated at their fair values because of their short-term nature. The carrying value of the notes receivable and cultivation liability approximates the fair value as the stated interest rate approximates market rates currently available to the Company. The Company’s warrant liabilities are accounted for at fair value and are considered Level 2 instruments. The Company's Stanley Brothers USA Holdings Purchase Option is accounted for at fair value and is considered a Level 3 instrument. The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis at December 31, 2021 and 2020, by level within the fair value hierarchy: December 31, 2021 Level 1 Level 2 Level 3 Total Financial assets: Stanley Brothers USA Holdings Purchase Option $ — $ — $ 13,000 $ 13,000 Financial liabilities: Warrant liabilities $ — $ — $ — $ — December 31, 2020 Level 1 Level 2 Level 3 Total Financial assets: $ — $ — $ — $ — Financial liabilities: Warrant liabilities $ — $ 4,304 $ — $ 4,304 There were no transfers between levels of the hierarchy during the year ended December 31, 2021 and December 31, 2020. Stanley Brothers USA Holdings Purchase Option On March 2, 2021, the Company entered into an option purchase agreement with Stanley Brothers USA, a privately held Delaware company, and the shareholders of Stanley Brothers USA. The SBH Purchase Option was purchased for total consideration of $8,000 and has a five-year term (extendable for an additional two years upon payment of additional consideration). The SBH Purchase Option provides the Company the option to acquire all or substantially all the shares of Stanley Brothers USA on the earlier of February 26, 2025 and federal legalization of cannabis in the United States, or such earlier time as Stanley Brothers USA and the Company agree, at a purchase price to be determined at the time of exercise of the SBH Purchase Option. Upon exercise of the SBH Purchase Option, the purchase price will be determined based on application of predetermined multiples of Stanley Brothers USA revenue and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) measures. The Company is not obligated to exercise the SBH Purchase Option. As part of the SBH Purchase Option agreement, Stanley Brothers USA issued the Company a warrant exercisable to purchase 10% of the outstanding Stanley Brothers USA shares and convertible securities that are considered in-the-money, subject to certain conditions and exclusions. The warrant is exercisable at the Company's election for a nominal exercise price in the event the Company elects not to acquire all or substantially all shares of Stanley Brothers USA and expires 60 days after the expiration of the option. The Company has elected the fair value option in accordance with ASC 825-10 guidance to record its SBH Purchase Option. Under ASC 825-10, a business entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. The SBH Purchase Option is classified as a financial asset and is remeasured at fair value at each reporting date, with changes to fair value recognized in the consolidated statements of operations and comprehensive loss for the period. The use of assumptions for the fair value determination includes a high degree of subjectivity and judgment using unobservable inputs (level 3 on the fair value hierarchy), which results in estimation uncertainty. Changes in assumptions that reasonably could have been different at the reporting date may result in a higher or lower determination of fair value (Stanley Brothers USA financial results or projections of future financial results). Changes in fair value measurements, if significant, may affect performance of cash flows. For the year ended December 31, 2021, a $5,000 gain related to the SBH Purchase Option was recognized as change in fair value of financial instruments and other in the statements of operations and comprehensive loss. As of December 31, 2021, the SBH Purchase Option represents a financial asset of $13,000 in the consolidated balance sheets. The Monte Carlo valuation model considers multiple revenue and EBITDA outcomes for Stanley Brothers USA and other probabilities in assigning a fair value. Primary assumptions utilized include financial projections of Stanley Brothers USA and the probability and timing of exercise. The following additional assumptions are used in the model: Year Ended December 31, 2021 Expected volatility 92.5% Expected term (years) 3.7 Risk-free interest rate 1.1% Weighted average cost of capital 40.0% Warrant Liabilities The 2019 Share Offering Warrants and the 2020 Share Offering Warrants do not meet all of the criteria for equity classification as the warrants are denominated in Canadian dollars, which differs from the Company's functional currency. As a result, the 2019 Share Offering Warrants and the 2020 Share Offering Warrants are initially measured at fair value and are revalued at each reporting period using the Black-Scholes option pricing model based on Level 2 observable inputs. The assumptions used by the Company are the quoted price of the Company’s common shares in an active market, risk-free interest rate, volatility and expected life, and assumes no dividends. Volatility is based on the actual historical market activity of the Company’s shares. The expected life is based on the remaining contractual term of the warrants and the risk-free interest rate is based on the implied yield available on U.S. Treasury Securities with a maturity equivalent to the expected life of the warrants. For the years ended December 31, 2021 and 2020, a $4,304 and $11,167 gain related the warrant liabilities was recognized as change in fair value of financial instruments and other in the consolidated statements of operations and comprehensive loss. As of December 31, 2021 the Company's warrant liabilities fair value is zero due to some warrants expiring in December 2021, a shorter expected term for the remaining outstanding warrants, and a significant decline in the Company's stock price. The following table provides quantitative information regarding Level 2 fair value measurements inputs at their measurement dates: Year Ended December 31, 2021 2020 Expected volatility 83.8% 86.1% Expected term (years) 0.4 – 0.5 0.1-0.5 Risk-free interest rate 0.4% 0.1% Expected dividend yield —% —% Value of underlying share $1.34 $3.29 |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories consist of the following: December 31, 2021 2020 Harvested hemp and seeds $ 38,249 $ 41,090 Raw materials 15,189 14,644 Finished goods 13,974 24,615 67,412 80,349 Less: inventory provision (15,335) (17,192) Total $ 52,077 $ 63,157 Inventory Provision |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following: December 31, 2021 2020 Building $ 3,409 $ 3,409 Machinery and equipment 15,552 17,211 Furniture and fixtures 1,202 881 Leasehold improvements 27,158 22,310 $ 47,321 $ 43,811 Accumulated depreciation (13,829) (10,551) Construction-in-process 2,593 6,103 Total property and equipment, net $ 36,085 $ 39,363 Depreciation expense for the years ended December 31, 2021 and December 31, 2020, was $7,481 and $4,839, respectively, of which $4,503 and $3,661, respectively, was recorded in Selling, general, and administrative expense in the consolidated statements of operations and comprehensive loss. For the years ended December 31, 2021 and December 31, 2020, depreciation expense of $2,978 and $1,178, respectively, was recorded in Cost of goods sold in the consolidated statements of operations and comprehensive loss. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND I NTANGIBLE ASSETS Goodwill The following table summarizes the changes in the carrying amount of goodwill: December 31, 2021 2020 Beginning balance $ 76,039 $ — Goodwill arising from business combination — 76,039 Goodwill impairment $ (76,039) — Ending balance $ — $ 76,039 The Company determined the sustained decrease in our share price in the fourth quarter of 2021, along with a significant decline to the equity value of the Company's peers, represented a goodwill impairment triggering event. The Company performed a quantitative analysis as of December 31, 2021 to determine if impairment to our goodwill existed for the one reporting unit. We used a blended approach in calculating fair value of our one reporting unit including the income approach and market approach. This analysis resulted in full impairment of our goodwill balance totaling $76,039 included in goodwill and asset impairments charges on the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021. The goodwill impairment was measured as the amount by which the carrying value of the reporting unit, including goodwill, exceeded its fair value. Intangible Assets Details of the Company’s intangible assets subject to amortization and indefinite-lived intangible assets and their respective carrying amounts are as follows: As of December 31, 2021 Weighted-Average Remaining Useful Life (in years) Gross Accumulated Amortization Net Definite-lived intangibles assets ( 1) : Software 1.67 $ 3,993 $ (2,342) $ 1,651 Patents 18.37 352 (24) 328 Internal use software in process — 714 — 714 Indefinite lived intangible assets: Internet domain name 150 — 150 Total $ 5,209 $ (2,366) $ 2,843 (1) The factors listed above representing a goodwill triggering event also indicated a triggering event for the Company's customer relationships and trade name intangible assets acquired with the acquisition of Abacus. The Company performed a quantitative analysis as of December 31, 2021 to determine if impairment existed by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over their remaining lives. This analysis resulted in full impairment of the customer relationships and trade name intangible assets acquired and total an impairment loss of $19,750 was recorded in goodwill and asset impairments charges on the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021. As of December 31, 2020 Weighted-Average Remaining Useful Life (in years) Gross Accumulated Amortization Net Definite-lived intangibles assets: Software 2.49 $ 3,789 $ (1,156) $ 2,633 Customer relationships 9.44 22,700 (1,269) 21,431 Trade names 9.44 700 (39) 661 Patents 18.66 201 (8) 193 Internal use software in process — 308 — 308 Indefinite lived intangible assets: Internet domain name — 150 — 150 Total $ 27,848 $ (2,472) $ 25,376 For the years ended December 31, 2021 and December 31, 2020, amortization expense of $3,544 and $2,008, respectively, was recorded in Selling, general, and administrative expense in the consolidated statements of operations and comprehensive loss. As of December 31, 2021 , expected amortization of intangible assets is as follows: Year Ending December 31: 2022 $ 1,065 2023 606 2024 35 2025 18 2026 18 Thereafter 237 Total future amortization $ 1,979 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Line of Credit The Company entered has an asset backed line of credit ("ABL") with J.P. Morgan for $10,000 with an option under certain circumstances to increase the line of credit to $20,000. Borrowings under the ABL bear interest at a variable rate based on (A) CB Floating Rate defined as Prime Rate plus 1.0% or (B) monthly LIBOR rate plus 2.50%. The current maturity date is March 23, 2023. Borrowings under the ABL are secured by all of the assets of the Borrowers and guaranteed by other subsidiaries of the Borrowers. The line of credit agreement requires compliance by the Company with certain debt covenants. Financial Covenants The Company is subject to a number of customary covenants under the credit facility, including limitation on additional borrowings, acquisitions, dividend payments and requirements to maintain certain financial ratios including a consolidated fixed charge coverage ratio, minimum earnings before interest, depreciation, and amortization ("EBITDA") and minimum liquidity, as defined by the line of credit agreement as measured on the last day of each quarter. As of December 31, 2021 , the Company was not in compliance with certain debt covenants and as of March 9, 2022 the line of credit was on hold. As of December 31, 2021 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal ContingenciesFrom time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. Although the ultimate aggregate amount of monetary liability or financial impact with respect to these matters is subject to many uncertainties and is therefore not predictable with assurance, management believes that as of December 31, 2021 there are no other litigations pending that could have, individually and in the aggregate, a material adverse effect on the Company’s financial position, results of operations or cash flows. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
LEASES | LEASES The Company has lease arrangements related to office space, warehouse and production space, and land to facilitate agricultural operations. The leases have remaining lease terms of less than 8 years to 13.17 years, some of which include options to extend the leases for up to 5 years. Generally, the lease agreements do not include options to terminate the lease. The weighted average remaining lease term was 10.37 years for operating leases as of December 31, 2021. The weighted average discount rate was 5.43% for operating leases as of December 31, 2021. The components of lease cost, including variable lease costs primarily consisting of common area maintenance charges and real estate taxes, for the years ended December 31, 2021 and 2020 are as follows: Year Ended December 31, 2021 2020 Operating Lease Cost: Fixed lease cost $ 2,969 $ 4,014 Variable lease cost 1,512 1,707 Total lease cost $ 4,481 $ 5,721 Sublease income 724 478 Other information related to leases was as follows: Year Ended December 31, 2021 2020 Supplemental Cash Flow Information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 3,528 $ 3,153 Right-of-use assets obtained in exchange of lease obligations: Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,350 $ 515 Maturities of operating lease liabilities as of December 31, 2021 are as follows: Operating Leases Year Ending December 31: 2022 $ 3,331 2023 3,410 2024 3,255 2025 2,946 2026 2,222 Thereafter 15,595 Total lease obligation $ 30,759 Less: Imputed interest (8,156) Total lease liabilities $ 22,603 Less: Current lease liabilities 2,103 Total non-current lease liabilities $ 20,500 |
CULTIVATION LIABILITIES
CULTIVATION LIABILITIES | 12 Months Ended |
Dec. 31, 2021 | |
Cultivation Liabilities [Abstract] | |
CULTIVATION LIABILITIES | CULTIVATION LIABILITIES In conjunction with the contract terms, the company can reduce the settlement amount for harvested hemp outside of quality specifications. For the years ended December 31, 2021 and 2020, the Company recognized $855 and $2,073, respectively, of settlement reductions. Future payments due under contract obligations are as follows: Short-term Long-term Total December 31, 2019 $ 10,803 $ 14,289 $ 25,092 Payments (11,289) — (11,289) Settlement reductions (2,073) — (2,073) Interest 87 — 87 Conversion to short-term borrowings 11,776 (11,776) — December 31, 2020 $ 9,304 $ 2,513 $ 11,817 Short-term Long-term Total December 31, 2020 $ 9,304 $ 2,513 $ 11,817 Payments (7,166) — (7,166) Settlement reductions (855) — (855) Interest 37 — 37 Conversion to short-term borrowings 2,128 (2,128) — December 31, 2021 $ 3,448 $ 385 $ 3,833 Scheduled maturities of amounts owed as of December 31, 2021 are as follows: Year Ending December 31: 2022 $ 3,461 2023 385 Total payments $ 3,846 Less: Imputed interest (13) Total cultivation liabilities $ 3,833 Less: Current portion of cultivation liabilities (3,448) Total non-current cultivation liabilities $ 385 |
SHAREHOLDERS_ EQUITY
SHAREHOLDERS’ EQUITY | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
SHAREHOLDERS’ EQUITY | SHAREHOLDERS’ EQUITY As of December 31, 2021, the Company’s share capital consists of one class of issued and outstanding shares: Common Shares. The Company is also authorized to issue preferred shares issuable in series. To date, no shares of preferred shares have been issued or are outstanding. On November 3, 2021, all outstanding proportionate voting shares ("PVS") of the Company were converted by way of mandatory conversion in accordance with the Company’s Articles and at the discretion of the Company, into common shares. Following this conversion, and as of the close of business on November 3, 2021, 142,335,464 common shares were issued and outstanding, nil proportionate voting shares were issued and outstanding and nil preferred shares were issued and outstanding. Pursuant to the Company’s Articles, the Company is no longer authorized to issue additional proportionate voting shares. Common Shares As of December 31, 2021, the Company was authorized to issue an unlimited number of common shares, which have no par value. Dividend Rights – Holders of common shares are entitled to receive dividends out of the assets available for the payment of dividends at such times and in such amount and form as the Board of Directors may determine from time to time, subject to any preferential rights of the holders of any outstanding preferred shares, on the following basis, and otherwise without preference or distinction between the common shares and the PVSs; each PVS was entitled to 400 times the amount distributed per common share. The Company is permitted to pay dividends unless there are reasonable grounds for believing that the Company is insolvent or the payment of the dividend would render the Company insolvent. Voting Rights – Holders of common shares shall be entitled to receive notice of and to attend and vote at all meetings of shareholders of the Company except a meeting at which only the holders of another class or series of shares is entitled to vote. Each common share shall entitle the holder thereof to one vote at each such meeting. Liquidation Rights – Holders of common shares will be entitled to receive all of the Company's assets remaining after payment of all debts and other liabilities, subject to any preferential rights of the holders of any outstanding preferred shares. Proportionate Voting Shares Pursuant to the above, the Company is no longer authorized to issue additional proportionate voting shares. As a result as of December 31, 2021, the Company had no PVS issued and outstanding. As of December 31, 2020, the Company had issued and outstanding 81,177 PVS shares. Dividend Rights – Holders of PVSs were entitled to receive dividends out of the assets available for the payment of dividends at such times and in such amount and form as the Board of Directors may determine from time to time, subject to any preferential rights of the holders of any outstanding preferred shares, on the following basis, and otherwise without preference or distinction among or between the common shares and the PVSs; each PVS was entitled to 400 times the amount distributed per common share. The Company was permitted to pay dividends unless there were reasonable grounds for believing that the Company was insolvent or the payment of the dividend would render the Company insolvent. Voting Rights – Holders of PVSs were entitled to receive notice of and to attend and vote at all meetings of shareholders of the Company except a meeting at which only the holders of another class or series of shares is entitled to vote. Each PVS entitled the holder thereof to 400 votes at each such meeting. Conversion Rights – PVSs could at any time, subject to certain conditions as outlined in the Articles, at the option of the holder or the discretion of the Company, be converted into common shares at a ratio of 400 common shares per PVS. Liquidation Rights – Holders of Shares were entitled to receive all of the Company's assets remaining after payment of all debts and other liabilities, subject to any preferential rights of the holders of any outstanding preferred shares, on the basis that each PVS were entitled to 400 times the amount distributed per common share, and otherwise without preference or distinction between the common shares and PVSs. Share Offering Warrants – Liability Classified The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments and meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s common shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Any change in fair value of the warrants is recognized in the Company’s statements of operations and comprehensive loss. On June 4, 2021, the Company filed a prospectus supplement to establish an at-the-market equity program (the “ATM Program”). The Company may distribute up to C$60,000,000 of Common Shares of the Company (the “Offered Shares”) under the ATM Program. Distributions of the Offered Shares through the ATM Program are made pursuant to the terms of an equity distribution agreement with Canaccord Genuity Corp. and BMO Nesbitt Burns Inc. (together, the “Agents”). The Offered Shares may be issued by the Company to the public from time to time, through the Agents, at the Company’s discretion. The Offered Shares sold under the ATM Program are sold at the prevailing market price at the time of sale under the ATM Program, and for the year ended December 31, 2021, the Company issued 4,740,300 Offered Shares at an average price of $1.85 per share for gross proceeds of $8,714. For the year ended December 31, 2021, share issuance costs were $596 for net proceeds to the Company of $8,118. The Company became an SEC reporting entity beginning on January 4, 2022. As of that date, the ATM Program ceased to be available to the Company. Thereafter, the manner in which the Company raises capital will likely require that the Company file registration statements with the SEC related to such activities, which will likely increase the time and expense associated with such activities. On June 18, 2020, the Company closed its underwritten public share offering (“2020 Share Offering”) of 10,000,000 units ("Offered Units") with an over-allotment option exercised in full for an additional 1,500,000 units of the Company at a price of C$6.75 (US$4.97) per Offered Unit, for total aggregate gross proceeds of C$77,625 (US$57,165). Each Offered Unit consisted of one common share of the Company and one-half of one common share purchase warrant of the Company (each whole common share purchase warrant, a "2020 Share Offering Warrant"). Each 2020 Share Offering Warrant entitles the holder to purchase one common share of the Company at a price of C$8.50 through expiration two years after the closing of the 2020 Share Offering. At initial measurement, the 5,750,000 2020 Share Offering Warrants issued resulted in a $9,206 financial liability reported in the consolidated statements of financial position. For the year ended December 31, 2020, share issuance costs of $3,368 were recognized in the consolidated statements of changes in shareholders’ equity. The 2020 Share Offering Warrants do not meet all of the criteria for equity classification as the warrants are denominated in Canadian dollars, which differs from the Company’s functional currency. As a result, the 2020 Share Offering Warrants are initially measured at fair value and are revalued at each reporting period using the Black-Scholes option pricing model (note 4). Total common share warrants issued in the 2020 Share Offering were 5,750 at an initial fair market value of $1.601 per share, totaling $9,206, as reported as a warrant liability. Pursuant to the terms of the Abacus acquisition, each holder of an Abacus common share warrant received a 0.85 equivalent replacement warrant. Refer to note 3 for determination of fair value of warrants acquired and the related classification as of acquisition June 11, 2020. The following summarizes the number of warrants outstanding as of December 31, 2021 and December 31, 2020: Number of Warrants Weighted-Average Exercise Price per Warrant Outstanding as of December 31, 2020 10,142,872 $ 8.80 Exercised 98,788 4.42 Expired 3,060,944 10.94 Outstanding as of December 31, 2021 6,983,140 $ 7.86 For the balance of outstanding warrants at December 31, 2021, the weighted average remaining contractual life is 0.54 years. |
LOSS PER SHARE
LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | LOSS PER SHARE The Company computes loss per share of common shares and PVS under the two-class method required for multiple classes of common shares and participating securities. The rights, including the liquidation and dividend rights, of the two classes of shares are similar except for the 400:1 conversion ratio between the common shares and PVS shares. Accordingly, the loss per share attributable to common shareholders will be the same for common shares and PVS, on either an individual or combined basis. Basic net loss per common share and proportionate voting share is computed by dividing the allocated net loss and comprehensive loss by the weighted-average number of common shares outstanding and weighted average number of proportionate voting shares outstanding during the period. Diluted loss per common share is computed by dividing the allocated net loss and comprehensive loss by the weighted-average number of common shares together with the number of additional common shares that would have been outstanding if all potentially dilutive common shares had been issued, unless anti-dilutive. Diluted loss per proportionate voting share is computed by dividing the allocated net loss and comprehensive loss by the weighted-average number of proportionate voting shares outstanding during the period. The following table sets forth the computation of basic and dilutive net loss per share attributable to common shareholders: Year Ended December 31, 2021 2020 Net loss and comprehensive loss $ (137,722) $ (30,681) Weighted-average number of common shares - basic 140,769,247 88,996,249 Dilutive effect of stock options and awards — — Weighted-average number of proportionate voting shares - basic — 90,040 Weighted-average number of common shares - diluted 140,769,247 88,996,249 Weighted-average number of proportionate voting shares - diluted — 90,040 Loss per common share – basic and diluted $ (0.98) $ (0.25) Loss per proportionate voting share – basic and diluted $ — $ (98.17) As of December 31, 2021 and 2020, potentially dilutive securities include stock options, restricted share units, broker warrants, and common share warrants. When the Company recognizes a net loss and comprehensive loss from continuing operations, all potentially dilutive shares are anti-dilutive and are consequently excluded from the calculation of diluted net loss per share. The potentially dilutive awards outstanding for each year are presented in the table below: Year Ended December 31, 2021 2020 Outstanding options 3,343,883 3,330,206 Outstanding restricted share units 1,816,851 456,675 Outstanding common share warrants 6,983,140 10,142,872 Total 12,143,874 13,929,753 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Share Incentive Plans 2015 Plan On December 31, 2015, the Company adopted the Stanley Brothers, Inc. 2015 Stock Option Plan (the “2015 Plan”), which provides for grants of incentive stock options and nonqualified stock options to employees (including officers), consultants and directors. The 2015 Plan, and grants made under the 2015 Plan, are designed to align shareholder and participant interests. The Company’s board of directors establishes the terms and conditions of any grants under the 2015 Plan. Incentive stock options may be granted only to employees. 2018 Plan On August 31, 2018, the Company adopted the Charlotte’s Web Holdings, Inc. 2018 Long-Term Incentive Plan (the “2018 Plan”), which provides for grants of stock options, stock appreciation rights, share awards, share units, performance shares, performance units, and other share-based awards (collectively the “Awards”) to eligible individuals on the terms and subject to conditions set forth in the 2018 Plan. The 2018 Plan is designed to attract and retain key personnel and service providers. The Company’s board of directors, or appointed administrators, establish the terms and conditions of any grants under the 2018 Plan. The aggregate number of common shares of the Company as to which share incentive awards may be granted from time to time under both the 2015 Plan and 2018 Plan shall not exceed 13,500,000 shares. The maximum exercise period of any option grant shall not exceed ten years from the date of grant. The share incentive awards vest over a time-based service period, generally a period of one Stock options Stock options vest over a prescribed service period and are approved by the board of directors on an award-by-award basis. Options have a prescribed service period generally lasting up to four years, with certain options vesting immediately upon issuance. Upon the exercise of any stock options, the Company issues shares to the award holder from the pool of authorized but unissued common shares. The fair values of options granted during the period were determined using a Black-Scholes model. The following principal inputs were used in the valuation of awards issued for the years ended December 31, 2021 and 2020: Year Ended December 31, 2021 2020 Expected volatility 82.0% - 86.5% 84.1% - 87.4% Expected term (years) 5.0 – 7.0 0.3 – 7.0 Risk-free interest rate 1.3% - 1.7% 0.5% - 1.4% Expected dividend yield 0% 0% Value of underlying share $1.02 - $4.70 $2.40 - $7.13 Detail of the number of stock options outstanding for the years ended December 31, 2021 and 2020 under the 2015 and 2018 plans is as follows: Number of Options Weighted- per Option Weighted- (in years) Aggregate Outstanding as of December 31, 2020 3,330,206 $ 3.93 7.83 $ 4,955,658 Granted 1,290,662 3.56 Exercised (8,261) 3.64 Forfeited (and expired) (1,268,724) 5.57 Outstanding as of December 31, 2021 3,343,883 $ 3.16 7.54 $ 1,039,229 Exercisable/vested as of December 31, 2021 2,003,375 $ 2.56 5.54 $ 941,729 For the options outstanding at December 31, 2021, the weighted average remaining contractual life is 7.54 years. The weighted average grant-date fair value of options granted during the year ended December 31, 2021 was $3.56. For the options outstanding at December 31, 2020, weighted average remaining contractual life is 7.83 years. The weighted average grant-date fair value of options granted during the year ended December 31, 2020 was $4.92. The weighted average share price at the date of exercise of options exercised during the years ending December 31, 2021 and 2020 was $4.85 and $5.20, respectively. Vesting of awards under these plans were generally time based over a period of one Of the 3,343,883 options outstanding at December 31, 2021, 1,300,012 options have an exercise price of $0.56, and the remaining 2,043,871 options have an exercise price ranging between $1.02 and $21.10. Restricted share units The Company has issued time-based restricted share units to certain employees as permitted under the 2018 Plan. The restricted share units granted vest in accordance with the board-approved agreement, typically over equal installments over one Details of the number of restricted share units outstanding under the 2018 Plan is as follows: Number of Shares Weighted- Outstanding as of December 31, 2020 456,675 $ 6.47 Granted 2,160,313 2.50 Forfeited (584,290) 5.07 Vested (182,727) 5.40 Outstanding as of December 31, 2021 1,816,851 $ 2.28 Share-based Compensation Expense Share-based compensation expense for all equity arrangements for the years ended December 31, 2021 and 2020 was $5,483 and $4,326, respectively, included in selling, general and administrative expense in the consolidated statements of operations and comprehensive loss. As of December 31, 2021, and 2020, there was approximately $4,638 and $6,769 of total unrecognized share-based compensation expense, related to unvested options granted to employees under the Company’s share option plan that is expected to be recognized over a weighted average period of 2.27 years as of each year ended. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Loss before provision for income taxes for the years ended December 31, 2021 and December 31, 2020 consists of the following: Year Ended December 31, 2021 2020 U.S. loss $ (137,589) $ (38,793) Foreign income 10 98 Total current $ (137,579) $ (38,695) The major components of income tax (expense) benefit attributable to loss from operations consists of: Year Ended December 31, 2021 2020 Current: Federal $ 50 $ 8,217 State (33) (176) Foreign (160) (7) Total current $ (143) $ 8,034 Deferred: Federal — — State — — Foreign — (20) Total deferred — (20) Total income tax (expense) benefit $ (143) $ 8,014 Income tax (expense) benefit attributable to loss from continuing operations for the years ended December 31, 2021 and 2020 differed from the amounts computed by applying the U.S. federal income tax rates of 21.0%, as a result of the following: Year Ended December 31, 2021 2020 U.S. federal statutory tax rate 21.0% 21.0% State income taxes, net of federal tax benefit 1.8% 4.7% Share-based compensation (0.3)% 7.2% Change in fair value of financial instruments and other 1.4% 6.1% Non-deductible transaction costs —% (2.1)% Goodwill impairment (1) (11.4)% —% Changed in valuation allowance (2) (12.5)% (18.5)% Research and development tax credit 0.4% 2.9% Other, net (0.5)% (0.6)% Effective tax rate (0.1)% 20.7% (1) During the year ended December 31, 2021, the Company impaired its goodwill associated with the acquisition of Abacus. A portion of this impairment charge is permanently disallowed for tax purposes. (2) During the year ended December 31, 2021, the Company maintained a full valuation allowance on its deferred tax assets. In March 2020, the President of the United States signed into law the Coronavirus Aid, Relief and Economic Security ("CARES") Act, a substantial tax-and-spending package intended to provide additional economic stimulus to address the impact of the COVID-19 pandemic. The CARES Act, among other things, allows for the Company to carryback certain net operating losses ("NOLs") generated in 2019. The impact of the carryback of our 2019 net operating losses resulted in an additional refund of $8,056, and is reflected in income taxes receivable as of December 31, 2021 and 2020 . The carryback also resulted in an income tax benefit of $8,056, consisting of $6,218 due to the ability to recognize the net operating loss deferred tax asset and $1,838 from the rate differential between the tax effective in the carryback period and the 21% federal tax rate in 2019. The difference in the income tax receivable and the income tax benefit relates to incremental R&D credits claimed in the years the carryback was applied. These incremental tax credits recorded are also subject to the valuation established against net deferred tax assets. The Company previously recognized $3,273 of income taxes receivable related to overpayments made in 2019. The CARES Act, 2019 overpayments, and miscellaneous other income taxes receivable result in total income taxes receivable as of December 31, 2020 of $11,440. During the year ended December 31, 2021, the Company received $676 of the outstanding incomes taxes receivable related to state refunds. The components of deferred tax assets and liabilities are as follows: December 31, 2021 2020 Deferred tax assets: Net operating loss and other carryforwards $ 45,557 $ 33,961 Share-based compensation 1,853 1,717 Inventory provision and UNICAP 263A 4,191 4,653 Lease liability 5,586 5,455 Other 385 1,186 Property and equipment 121 — Intangible assets 514 — Total deferred tax assets $ 58,207 $ 46,972 Valuation allowance (52,888) (35,685) Total deferred tax assets, net $ 5,319 $ 11,287 Deferred tax liabilities: Property and equipment $ — $ (851) Intangibles — (5,127) Right of use assets (5,110) (5,103) Warrants (209) (206) Total deferred tax liabilities $ (5,319) $ (11,287) Net deferred taxes (liabilities) $ — $ — The realization of deferred income tax assets may be dependent on the Company’s ability to generate sufficient income in future years in the associated jurisdiction to which the deferred tax assets relate. The Company considers all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based on the review of all positive and negative evidence, including a three-year cumulative pre-tax loss, the Company continues to believe its deferred tax assets are not more-likely-than-not to be realized and, as such, a full valuation allowance is recorded against net deferred taxes. For the years ended December 31, 2021 and 2020, the Company’s valuation allowance increased by $17,203 and $11,251, respectively, primarily related to the incremental net operating losses. As of December 31, 2021, the Company has federal and state net operating losses of approximately $170,443 and $144,225, respectively. The entire federal NOLs are post-2017 NOL and therefore can be carried forward indefinitely and the state NOLs will begin to expire on December 31, 2029. The Company also has a research and development credit carryforward of $1,788 as of December 31, 2021. Tax laws impose restrictions on the utilization of net operating loss carryforwards and research and development credit carryforwards in the event of a change in ownership of the Company as defined by Internal Revenue Code Section 382 and 383. The Company may have experienced ownership changes in the past that impact the availability of its net operating losses and tax credits. Should there be additional ownership changes in the future, the Company's ability to utilize existing carryforwards could be substantially restricted. Uncertain tax position A reconciliation of the beginning and ending amount of uncertain tax positions as of December 31, 2021 and 2020 is as follows: Balance at December 31, 2020 $ 134 Additions for current year tax positions 52 Additions for prior year tax positions — Reductions for prior year tax positions (7) Reductions as a result of settlement with tax authority — Balance at December 31, 2021 $ 179 Balance at December 31, 2019 $ — Additions for current year tax positions 55 Additions for prior year tax positions 79 Reductions for prior year tax positions — Reductions as a result of settlement with tax authority — Balance at December 31, 2020 $ 134 The Company recognizes the tax benefit from an uncertain tax position only if it is probable that the tax position will be sustained based on its technical merits. The Company measures and records the tax benefits from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company’s estimated liabilities related to these matters are adjusted in the period in which the uncertain tax position is effectively settled, the statute of limitations for examination expires or when additional information becomes available. The Company’s liability for unrecognized tax benefits requires the use of assumptions and significant judgement to estimate the exposures associated with our various filing positions. Although the Company believes that the judgments and estimates made are reasonable, actual results could differ and resulting adjustments could materially affect the Company's effective income tax rate and income tax provision. The Company’s policy is to recognize interest and penalties on taxes, if any, as income tax expense. If recognized, none of the uncertain tax positions would affect the effective tax rate. The Company does not anticipate any significant changes to the uncertain tax positions in the next twelve months. The Company files income tax returns in the U.S. federal and various state jurisdictions and Israel. In the normal course of business, it is subject to examination by taxing authorities throughout the world. The Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities in years before 2018. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Aidance Scientific, Inc. (“Aidance”) is the manufacturer of nearly all Abacus Health products. The former Chief Executive Officer of Abacus Health, and a current Officer of the Company, also serves on Aidance’s Board of Directors. For the years ended December 31, 2021 and 2020, the Company made purchases of $3,570 and $2,758, respectively from Aidance. Payment terms on purchases are due 30 days after receipt. As of December 31, 2021, the Company had a liability of $119 due to Aidance presented in accounts payable in the consolidated balance sheets. Effective November 2020, the Company entered into a note receivable with certain founders of the Company to negotiate a future binding transaction in good faith. This agreement included a secured promissory note, where $1,000 was loaned to one of the founders. The note receivable is secured by equity instruments with certain founders of the Company, is carried at amortized cost, bears interest at 3.25% per annum, and required the unpaid principal and unpaid interest balances to be paid on or before the maturity date of November 13, 2021. Interest income is recognized based upon the contractual interest rate and unpaid principal balance of the promissory note. As of December 31, 2021, the founders owed the Company $1,037 consisting of principal and interest. The founders requested an extension of the maturity date, as allowed under the terms of the promissory note, resulting in an extension of the maturity date to November 13, 2023. The founders' equity instruments securing the promissory note remained in place and interest will continue to accrue on the note. On March 22, 2022, the Company and the founders amended the agreement to increase the equity instruments securing the promissory note. As a result of this amendment and the liquid and quantifiable value of the shares pledged, the Company does not believe there is an estimated credit loss on the note receivable as of December 31, 2021. The Company will continue to evaluate the note receivable for changes to credit loss estimates through the extended maturity date. On March 2, 2021, the Company entered into the SBH Purchase Option with Stanley Brothers USA as discussed above (note 4). The SBH Purchase Option was purchased for total consideration of $8,000. Certain founders of the Company, who are or were employees at the time, are the majority shareholders of Stanley Brothers USA. On April 16, 2021, pursuant to an amendment to the agreement, the name and likeness and license agreement between the Company and Leeland & Sig LLC d/b/a Stanley Brothers Brand Company was extended for a period of one year, expiring July 31, 2022. In addition, the Company executed a consulting agreement which extended the service arrangements of the seven Stanley Brothers for a period of one year, expiring July 31, 2022. Upon execution of the consulting agreement, the Company paid $2,081 to Leeland & Sig LLC d/b/a Stanley Brothers Brand Company, on behalf of the Stanley Brothers, as consideration for the consulting services to be provided to the Company over the term of the agreement and certain restrictive covenants. For the year ended December 31, 2021, the Company recognized $1,056 of sales and marketing expenses in the condensed consolidated statements of operations and comprehensive loss related to this agreement. The remaining $1,025 is presented in prepaid expenses in the condensed consolidated balance sheets. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Companies acquired during each reporting period are reflected in the results of the Company effective as of their respective dates of acquisition through the end of the reporting period. All intercompany balances and transactions have been eliminated in consolidation. Unless otherwise indicated, comparisons are to comparable prior periods, and 2021 and 2020 refer to the 12 months ended December 31, 2021, and December 31, 2020, respectively. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make informed estimates, judgments and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures in the accompanying notes. On an ongoing basis, management evaluates such estimates and assumptions for continued reasonableness. In particular, management makes estimates with respect to any (i) inventory provision, (ii) underlying assumptions that affect the potential impairment of goodwill and long-lived assets, (iii) ability to realize income tax benefits associated with deferred tax assets , (iv) fair value of acquired intangible assets and goodwill, and (v) underlying assumptions that affect the fair value of the SBH Purchase Option. Appropriate adjustments, if any, to the estimates used are made prospectively based upon such periodic evaluation. Management’s estimates are based on historical information available at the date of the consolidated financial statements and various other assumptions management believes are reasonable based on the circumstances. Actual results could differ materially from those estimates. |
Reclassifications and prior period presentations | Reclassifications and prior period presentations Certain amounts presented in prior periods have been reclassified to conform with the current period presentation. |
Basic and Diluted Net Loss per Share | Basic and Diluted Net Loss per Share Basic loss per share is calculated using the two-class method, in which net loss and comprehensive loss is allocated to both common shares and proportionate voting shares based on the number of fully converted shares in each class. Basic net loss per common share and proportionate voting share is computed by dividing the allocated net loss and comprehensive loss by the weighted-average number of common shares outstanding and weighted average number of proportionate voting shares outstanding during the period. Diluted loss per common share is computed by dividing the allocated net loss and comprehensive loss by the weighted-average number of common shares together with the number of additional common shares that would have been outstanding if all potentially dilutive common shares had been issued. Diluted loss per proportionate voting share is computed by dividing the allocated net loss and comprehensive loss by the weighted-average number of proportionate voting shares outstanding during the period. Since the Company was in a loss position for the periods presented, basic net loss per share is the same as diluted net loss per share since the effects of potentially dilutive securities are antidilutive. |
Segments | Segments Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. As such, the Company has one operating segment, which is the business of hemp-based CBD wellness products. Substantially all long-lived assets are located in the United States and substantially all revenue is attributed to customers and consumers based in the United States. |
Business Combinations | Business Combinations Business combinations are accounted for under the acquisition method of accounting. Under the acquisition method of accounting, the total consideration transferred in connection with the acquisition is allocated to the tangible and intangible assets acquired, liabilities assumed, and any non-controlling interest in the acquired entity based on fair values. Goodwill acquired in connection with business combinations represents the excess of consideration transferred over the net tangible and identifiable intangible assets acquired. Certain assumptions and estimates are employed in evaluating the fair value of assets acquired and liabilities assumed. These estimates may be affected by factors, such as changing market conditions or changes in government regulations. The most significant assumptions requiring judgment involve identifying and estimating the fair value of intangible assets and the associated useful lives to establish amortization periods. To finalize purchase accounting for significant acquisitions, the Company utilizes the services of independent valuation specialists to assist in the determination of the fair value of acquired tangible and intangible assets. Costs related to the acquisition, other than those associated with the issuance of debt or equity securities, incurred by the Company in connection with a business combination, are expensed as incurred. Any contingent or deferred consideration payable is recognized at fair value at the acquisition date. Any amounts tied to an individual’s employment are recognized as compensation expense over the required service period. |
Cash and Cash Equivalents | Cash and Cash EquivalentsThe Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents in accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The cash amounts in deposit accounts held in excess of federally-insured limits were $19,244 and $52,516 as of December 31, 2021 and 2020, respectively. Management believes that the Company is not exposed to significant credit risk due to the financial strength of the depository institution in which the cash is held. The Company provides credit to its customers in the normal course of business and has established credit evaluation and monitoring processes to mitigate credit risk, but has limited risk, as the majority of its sales are transacted with cash. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Accounts receivable is stated as the amount billed, net of an estimated allowance for credit losses (“ACL”). The Company’s ACL is adjusted periodically and is based on management’s consideration of the age and nature of the past due accounts as well as specific payment issues. The Company considers as past due any receivable balance not collected within its contractual terms. Changes in the Company’s estimate to the ACL is recorded through bad debt expense and individual accounts are charged against the allowance when all reasonable collection efforts are exhausted. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less any applicable selling expenses. Cost includes all expenses for direct raw materials inputs, as well as costs directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Cost is determined by use of the weighted average method. The Company periodically reviews the value of items in inventory and provides write-downs or write-offs of inventory based on its assessment of market conditions, including forecasted demand compared to quantities on hand, as well as other factors such as potential excess or aged inventories based on product shelf life, and other factors that affect inventory obsolescence. The Company’s raw materials inventories of harvested hemp are recorded at cost to harvest. Raw materials costs as well as production costs are included in the carrying value of the Company’s finished goods inventory. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Building 30 years Machinery and equipment 3-10 years Furniture and fixtures 2-7 years Leasehold improvements Shorter of useful life or term of lease (1-15 years) Construction-in-process assets are capitalized during construction and depreciation commences when the asset is placed into service. Significant improvements that extend the useful life of an asset are capitalized. Repairs and maintenance which do not extend the useful lives of assets are expensed as incurred. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gains or losses are recognized. |
Intangible Assets, Net | Intangible Assets, Net Finite Lived Intangible Assets Finite lived intangible assets consist of customer relationships, software, patents, and trade names. These intangible assets were determined to have finite lives and are amortized over their useful lives. Acquired intangible assets from business combinations include trade names and customer relationships. Software is stated at cost less accumulated amortization. The costs of obtaining a patent are capitalized and amortized over its useful life. Acquired trade names and customer relationships are stated at fair value and are amortized over their useful lives. Amortization is calculated on the straight-line basis over the following estimated useful lives of the assets: Customer Relationships 10 years Software 3-5 years Patents 15-20 years Tradenames 10 years |
Capitalized Software Development Costs | Capitalized Software Development CostsThe Company develops software for internal use. Software development costs incurred during the application development stage, which includes payroll and payroll-related costs related to employees and third-party consultant costs are capitalized. The Company amortizes these costs over the estimated useful life of the software, which is generally three years. These costs are included in intangible assets, net on the consolidated balance sheets. |
Goodwill | Goodwill Goodwill represents the excess of acquisition costs over the fair value of tangible assets and identifiable intangible assets of the businesses acquired. Goodwill is not amortized. Goodwill is subject to impairment testing annually as of October 1, or any time changes in circumstances indicate that the carrying amount may not be fully recoverable. The Company performs its annual impairment test to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill. |
Impairment of Long-Lived Assets | Impairment of Long-Lived AssetsThe Company reviews intangible assets with indefinite useful lives for impairment at least annually and reviews all intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. Long-lived assets, such as property and equipment and intangible assets subject to depreciation and amortization, as well as indefinite lived intangibles and goodwill are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than the Company had originally estimated. Recoverability of these assets is measured by comparison of the carrying amount of each asset or asset group to the future undiscounted cash flows the asset or asset group is expected to generate over their remaining lives. If the asset or asset group is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset or asset group. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the new shorter useful life. |
Cultivation Liabilities | Cultivation Liabilities Cultivation liabilities consist of amounts owed to third-party farming operators for the hemp harvests cultivated in 2019 and 2018. There were no cultivation liabilities incurred for the hemp harvest cultivated in 2021 or 2020 as there was minimal hemp grown with third-party farming operators due to sufficient quantities on hand of harvested hemp inventories and the resulting minimal crops did not trigger additional liabilities per the terms of the agreements. The terms of the agreements with third-party farming operators are fixed and determined based on the potency and yield of the hemp crops after harvests are completed. As stated in the agreements with the third-party farming operators, amounts are paid over four or eight quarters depending on the quantity of acres planted. The Company can reduce the settlement amount of cultivation liabilities for harvested hemp outside of quality specifications, as stated in the agreements. The cultivation liabilities are initially measured at the present value of future payments, discounted using the Company’s incremental borrowing rate. Refer to note 11 for detail of the cultivation liabilities for the years ended December 31, 2021 and 2020. The Company did not enter into any arrangements of this nature with third-party farming operators for the 2022 harvest. |
Leases | Leases The Company elected to early adopt ASU 2016-02, Leases (Topic 842) as of January 1, 2019, as permitted by the standard. After the adoption of this standard, the Company determined if an arrangement contains a lease at inception based on whether there is an identified asset and whether the Company controls the use of the identified asset throughout the period of use. The Company classifies leases as either finance or operating. The Company does not have any finance leases. Right-of-use (“ROU”) assets are recognized at the lease commencement date and 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. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the remaining lease term. Present value of lease payments are discounted based on the more readily determinable of (i) the rate implicit in the lease or (ii) the Company’s incremental borrowing rate. Because the Company’s operating leases generally do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at lease commencement date for collateralized borrowings with a similar term, an amount equal to the lease payments and in a similar economic environment where the leased asset is located. The collateralized borrowings were based on the Company’s credit rating corroborated with market credit metrics like debt level and interest coverage. The Company’s operating lease ROU assets are measured based on the corresponding operating lease liability adjusted for (i) payments made to the lessor at or before the commencement date, (ii) initial direct costs incurred and (iii) lease incentives under the lease. Options to renew or terminate the lease are recognized as part of the Company’s ROU assets and lease liabilities when it is reasonably certain the options will be exercised. ROU assets are also assessed for impairments consistent with the Company’s long-lived asset policy. Operating lease expense for fixed lease payments is recognized on a straight-line basis over the lease term. Variable lease payments for real estate taxes, insurance, maintenance, and utilities, which are generally based on the Company’s pro rata share of the total property, are not included in the measurement of the ROU assets or lease liabilities and are expensed as incurred. Operating leases are presented separately as operating lease right-of-use assets, net and lease obligations, current and non-current, in the accompanying consolidated balance sheets. We have elected the short-term lease recognition exemption for all applicable classes of underlying assets. Short-term disclosures include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet. |
Revenue Recognition and Cost of Goods Sold | Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customer (“ASC 606”). The Company elected to early adopt ASC 606 as of January 1, 2018, as permitted by the standard. The Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model to arrangements that meet the definition of a contract under the standard, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of revenue accounting, the Company evaluates the goods or services promised within each contract related performance obligation and assesses whether each promised good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company recognizes revenue from customers when control of the goods or services are transferred to the customer, generally when products are shipped, at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods and services. Freight revenue is included in revenue on the consolidated statements of operations and comprehensive loss, and is generally exempt from state sales taxes. Sales tax collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenue in the consolidated statements of operations and comprehensive loss. Contracts are written to include standard discounts and allowances. Contracts are not written to include advertising allowances, tiered discounts or any other performance obligation. Since the Company’s contracts involve the delivery of various tangible products, the arrangements are considered to contain only a single performance obligation, as such there is no allocation of the transaction price. The Company also offers ecommerce discounts and promotions through its online rewards program. The Charlotte’s Web Loyalty Program offers customers rewards points for every dollar spent through the Company website to earn store credit for future purchases. The Company defers recognition of revenue for unredeemed awards until the following occurs: (1) rewards are redeemed by the consumer, (2) points or certificates expire, or (3) an estimate of the expected unused portion of points or certificates is applied, which is based on historical redemption patterns. Any product that doesn’t meet the customer’s expectations can be returned within the first 30 days of delivery in exchange for another product or for a full refund. Any product sold through a distributor or retailer must be returned to the original purchase location for any return or exchange. The Company accounts for customer returns utilizing the “expected value method.” Expected amounts are excluded from revenue and recorded as a “refund liability” that represents the Company’s obligation to return the customer’s consideration. Estimates are based on actual historical data. The Company destroys all returned products for safety and quality purposes. The majority of the Company’s revenue is derived from sales of branded products to consumers via our direct-to-consumer ecommerce website, and distributors, retail and wholesale business-to-business customers. The following table sets forth the disaggregation of the Company’s revenue: Year Ended December 31, 2021 2020 Direct-to-consumer $ 62,334 $ 63,826 Business-to-business 33,758 31,400 Total $ 96,092 $ 95,226 Substantially all of the Company’s revenue is earned in the United States. Cost of Goods Sold Cost of goods sold primarily consists of the inventory and production costs for the Company’s products sold during the period, and also includes amortization and depreciation, as well as allocated expenses. |
Selling, General and Administrative | Selling, General and AdministrativeSelling, general and administrative expense primarily consists of compensation and other personnel-related costs, including share-based compensation, marketing and advertising expenses, professional services fees, rent and related costs, property and casualty and directors and officers insurance premiums and bank and merchant fees. Advertising expenses are expensed as incurred and primarily includes the cost of marketing activities such as online advertising, search engine optimization, promotional activities and market research. For the years ended December 31, 2021 and 2020, the Company recognized $17,523 and $14,723 of advertising expense, respectively. Selling, general and administrative expense also includes research and development expenses, which are expensed as incurred. For the years ended December 31, 2021 and 2020, the Company recognized $5,502 and $5,951, respectively, of research and development expenses. |
Defined Contribution Plan | Defined Contribution PlanThe Company has defined contribution plans, under which the Company contributes based on a percentage of the employees’ elected contributions. |
Stock-Based Compensation | Share-based Compensation The Company accounts for compensation expense for share-based option awards to employees, non-employee directors, and other non-employees based on the estimated grant date fair value of the options on a straight-line basis over the requisite service period, which is the vesting period for stock options. The fair value of stock options are estimated using the Black-Scholes-Merton (“Black-Scholes”) valuation model, which requires assumptions and judgments regarding stock price, volatility, risk-free interest rates, dividend yields and expected option terms. The Company uses the historical volatility and grant date closing price of its publicly traded shares to estimate the grant-date fair value of its stock options. Due to the lack of historical exercise history, the expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Share-based compensation is recognized net of actual forfeitures when they occur. All share-based compensation costs are recorded in the consolidated statements of operations and comprehensive loss in selling, general and administrative expense. |
Income Taxes | Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets or liabilities are computed based on the temporary difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal income tax rate in effect for the year in which the differences are expected to reverse. Deferred income tax expense or benefit is based on the changes in the deferred income tax assets or liabilities from period to period. A valuation allowance is established if it is more-likely-than-not that all or a portion of the deferred tax asset will not be realized. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against net deferred tax assets. We assess the likelihood that deferred tax assets will be recovered as deductions from future taxable income. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis and includes a review of all available positive and negative evidence. Factors reviewed include projections of pre-tax book income for the foreseeable future, determination of cumulative pre-tax book income or loss, earnings history, and reliability of forecasting. It is the Company's policy to offset indefinite lived deferred tax assets with indefinite lived deferred tax liabilities. The Company provided a full valuation allowance on deferred tax assets because it is more likely than not that deferred tax assets will not be realized. The Company accounts for uncertainties in income taxes under Topic 740, which prescribes a recognition threshold and measurement methodology to recognize and measure an income tax position taken, or expected to be taken, in a tax return. With respect to any tax positions that do not meet the recognition threshold, a corresponding liability, including interest and penalties, is recorded in the consolidated financial statements. The Company may be subject to examination by tax authorities where the Company conducts operations. The earliest income tax year that may be subject to examination is 2018. The Company has recorded an uncertain tax position of $179 and $134 as of December 31, 2021 and December 31, 2020, respectively. The Company’s policy is to recognize interest and penalties on taxes, if any, as income tax expense. |
Recently Issued and Recently Adopted Accounting Pronouncements | Recently Issued Accounting Pronouncements Other than described below, no new accounting pronouncements adopted or issued by the Financial Accounting Standards Board (“FASB”) had or may have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) . The guidance on the accounting for implementation, setup and other upfront costs (collectively referred to as implementation costs) applies to entities that are a customer in a hosting arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The new standard is effective for public companies with fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. For all other entities, the amendments are effective for all fiscal years beginning after December 15, 2020 and all interim periods beginning after December 15, 2021. As an EGC, the Company has elected to use the extended transition period for complying with new or revised standards and can and has elected to follow the private company adoption timeline. The Company adopted this standard prospectively as of January 1, 2021, and is currently evaluating the impact on the Company’s consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which aims to reduce complexity in accounting standards by improving certain areas of U.S. GAAP without compromising information provided to users of financial statements. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the impact, if any, that the updated standard will have on the consolidated financial statements. Recently Adopted Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) . The guidance on the accounting for implementation, setup and other upfront costs (collectively referred to as implementation costs) applies to entities that are a customer in a hosting arrangement that is a service contract. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The new standard is effective for public companies with fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. For all other entities, the amendments are effective for all fiscal years beginning after December 15, 2020 and all interim periods beginning after December 15, 2021. As an EGC, the Company has elected to use the extended transition period for complying with new or revised standards and can and has elected to follow the private company adoption timeline. The Company adopted this standard prospectively as of January 1, 2021, and the adoption of the standard did not have a material impact on the Company's consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Prepaid expenses and other current assets | Prepaid expenses and other current assets were comprised of the following amounts (in thousands): December 31, 2021 December 31, 2020 Prepaid expenses $ 6,224 $ 4,621 Deposits 925 2,742 Other miscellaneous receivables 946 1,482 Total prepaid expenses and other current assets $ 8,095 $ 8,845 |
Property and equipment | Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Building 30 years Machinery and equipment 3-10 years Furniture and fixtures 2-7 years Leasehold improvements Shorter of useful life or term of lease (1-15 years) Property and equipment consist of the following: December 31, 2021 2020 Building $ 3,409 $ 3,409 Machinery and equipment 15,552 17,211 Furniture and fixtures 1,202 881 Leasehold improvements 27,158 22,310 $ 47,321 $ 43,811 Accumulated depreciation (13,829) (10,551) Construction-in-process 2,593 6,103 Total property and equipment, net $ 36,085 $ 39,363 |
Intangible assets | Amortization is calculated on the straight-line basis over the following estimated useful lives of the assets: Customer Relationships 10 years Software 3-5 years Patents 15-20 years Tradenames 10 years Details of the Company’s intangible assets subject to amortization and indefinite-lived intangible assets and their respective carrying amounts are as follows: As of December 31, 2021 Weighted-Average Remaining Useful Life (in years) Gross Accumulated Amortization Net Definite-lived intangibles assets ( 1) : Software 1.67 $ 3,993 $ (2,342) $ 1,651 Patents 18.37 352 (24) 328 Internal use software in process — 714 — 714 Indefinite lived intangible assets: Internet domain name 150 — 150 Total $ 5,209 $ (2,366) $ 2,843 (1) The factors listed above representing a goodwill triggering event also indicated a triggering event for the Company's customer relationships and trade name intangible assets acquired with the acquisition of Abacus. The Company performed a quantitative analysis as of December 31, 2021 to determine if impairment existed by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over their remaining lives. This analysis resulted in full impairment of the customer relationships and trade name intangible assets acquired and total an impairment loss of $19,750 was recorded in goodwill and asset impairments charges on the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021. As of December 31, 2020 Weighted-Average Remaining Useful Life (in years) Gross Accumulated Amortization Net Definite-lived intangibles assets: Software 2.49 $ 3,789 $ (1,156) $ 2,633 Customer relationships 9.44 22,700 (1,269) 21,431 Trade names 9.44 700 (39) 661 Patents 18.66 201 (8) 193 Internal use software in process — 308 — 308 Indefinite lived intangible assets: Internet domain name — 150 — 150 Total $ 27,848 $ (2,472) $ 25,376 |
Disaggregation of revenue | The following table sets forth the disaggregation of the Company’s revenue: Year Ended December 31, 2021 2020 Direct-to-consumer $ 62,334 $ 63,826 Business-to-business 33,758 31,400 Total $ 96,092 $ 95,226 |
ACQUISITION OF ABACUS HEALTH (T
ACQUISITION OF ABACUS HEALTH (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Fair value of consideration | The following table outlines the total consideration transferred: Common shares $ 105,461 Other equity instruments 7,251 Total consideration transferred $ 112,712 The following table summarizes the assets acquired and liabilities assumed as of the acquisition date: Cash $ 11,181 Accounts receivable and other receivables 2,264 Inventories 4,845 Intangible assets 23,400 Other current and long-term assets 3,653 Goodwill 76,039 $ 121,382 Accounts payable 4,687 Accrued liabilities 2,041 Current note payable 1,258 Other current and long-term liabilities 684 Total liabilities $ 8,670 Net assets acquired $ 112,712 |
Fair value allocation to identifiable net assets acquired and liabilities assumed, and goodwill acquired | The following table outlines the total consideration transferred: Common shares $ 105,461 Other equity instruments 7,251 Total consideration transferred $ 112,712 The following table summarizes the assets acquired and liabilities assumed as of the acquisition date: Cash $ 11,181 Accounts receivable and other receivables 2,264 Inventories 4,845 Intangible assets 23,400 Other current and long-term assets 3,653 Goodwill 76,039 $ 121,382 Accounts payable 4,687 Accrued liabilities 2,041 Current note payable 1,258 Other current and long-term liabilities 684 Total liabilities $ 8,670 Net assets acquired $ 112,712 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Financial instruments measured at fair value on a recurring basis | The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis at December 31, 2021 and 2020, by level within the fair value hierarchy: December 31, 2021 Level 1 Level 2 Level 3 Total Financial assets: Stanley Brothers USA Holdings Purchase Option $ — $ — $ 13,000 $ 13,000 Financial liabilities: Warrant liabilities $ — $ — $ — $ — December 31, 2020 Level 1 Level 2 Level 3 Total Financial assets: $ — $ — $ — $ — Financial liabilities: Warrant liabilities $ — $ 4,304 $ — $ 4,304 |
Measurement inputs | The following additional assumptions are used in the model: Year Ended December 31, 2021 Expected volatility 92.5% Expected term (years) 3.7 Risk-free interest rate 1.1% Weighted average cost of capital 40.0% The following table provides quantitative information regarding Level 2 fair value measurements inputs at their measurement dates: Year Ended December 31, 2021 2020 Expected volatility 83.8% 86.1% Expected term (years) 0.4 – 0.5 0.1-0.5 Risk-free interest rate 0.4% 0.1% Expected dividend yield —% —% Value of underlying share $1.34 $3.29 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consist of the following: December 31, 2021 2020 Harvested hemp and seeds $ 38,249 $ 41,090 Raw materials 15,189 14,644 Finished goods 13,974 24,615 67,412 80,349 Less: inventory provision (15,335) (17,192) Total $ 52,077 $ 63,157 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Building 30 years Machinery and equipment 3-10 years Furniture and fixtures 2-7 years Leasehold improvements Shorter of useful life or term of lease (1-15 years) Property and equipment consist of the following: December 31, 2021 2020 Building $ 3,409 $ 3,409 Machinery and equipment 15,552 17,211 Furniture and fixtures 1,202 881 Leasehold improvements 27,158 22,310 $ 47,321 $ 43,811 Accumulated depreciation (13,829) (10,551) Construction-in-process 2,593 6,103 Total property and equipment, net $ 36,085 $ 39,363 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the carrying amount of goodwill | The following table summarizes the changes in the carrying amount of goodwill: December 31, 2021 2020 Beginning balance $ 76,039 $ — Goodwill arising from business combination — 76,039 Goodwill impairment $ (76,039) — Ending balance $ — $ 76,039 |
Finite-lived intangible assets | Amortization is calculated on the straight-line basis over the following estimated useful lives of the assets: Customer Relationships 10 years Software 3-5 years Patents 15-20 years Tradenames 10 years Details of the Company’s intangible assets subject to amortization and indefinite-lived intangible assets and their respective carrying amounts are as follows: As of December 31, 2021 Weighted-Average Remaining Useful Life (in years) Gross Accumulated Amortization Net Definite-lived intangibles assets ( 1) : Software 1.67 $ 3,993 $ (2,342) $ 1,651 Patents 18.37 352 (24) 328 Internal use software in process — 714 — 714 Indefinite lived intangible assets: Internet domain name 150 — 150 Total $ 5,209 $ (2,366) $ 2,843 (1) The factors listed above representing a goodwill triggering event also indicated a triggering event for the Company's customer relationships and trade name intangible assets acquired with the acquisition of Abacus. The Company performed a quantitative analysis as of December 31, 2021 to determine if impairment existed by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over their remaining lives. This analysis resulted in full impairment of the customer relationships and trade name intangible assets acquired and total an impairment loss of $19,750 was recorded in goodwill and asset impairments charges on the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021. As of December 31, 2020 Weighted-Average Remaining Useful Life (in years) Gross Accumulated Amortization Net Definite-lived intangibles assets: Software 2.49 $ 3,789 $ (1,156) $ 2,633 Customer relationships 9.44 22,700 (1,269) 21,431 Trade names 9.44 700 (39) 661 Patents 18.66 201 (8) 193 Internal use software in process — 308 — 308 Indefinite lived intangible assets: Internet domain name — 150 — 150 Total $ 27,848 $ (2,472) $ 25,376 |
Indefinite-lived intangible assets | Details of the Company’s intangible assets subject to amortization and indefinite-lived intangible assets and their respective carrying amounts are as follows: As of December 31, 2021 Weighted-Average Remaining Useful Life (in years) Gross Accumulated Amortization Net Definite-lived intangibles assets ( 1) : Software 1.67 $ 3,993 $ (2,342) $ 1,651 Patents 18.37 352 (24) 328 Internal use software in process — 714 — 714 Indefinite lived intangible assets: Internet domain name 150 — 150 Total $ 5,209 $ (2,366) $ 2,843 (1) The factors listed above representing a goodwill triggering event also indicated a triggering event for the Company's customer relationships and trade name intangible assets acquired with the acquisition of Abacus. The Company performed a quantitative analysis as of December 31, 2021 to determine if impairment existed by comparing the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate over their remaining lives. This analysis resulted in full impairment of the customer relationships and trade name intangible assets acquired and total an impairment loss of $19,750 was recorded in goodwill and asset impairments charges on the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021. As of December 31, 2020 Weighted-Average Remaining Useful Life (in years) Gross Accumulated Amortization Net Definite-lived intangibles assets: Software 2.49 $ 3,789 $ (1,156) $ 2,633 Customer relationships 9.44 22,700 (1,269) 21,431 Trade names 9.44 700 (39) 661 Patents 18.66 201 (8) 193 Internal use software in process — 308 — 308 Indefinite lived intangible assets: Internet domain name — 150 — 150 Total $ 27,848 $ (2,472) $ 25,376 |
Expected amortization of intangible assets | As of December 31, 2021 , expected amortization of intangible assets is as follows: Year Ending December 31: 2022 $ 1,065 2023 606 2024 35 2025 18 2026 18 Thereafter 237 Total future amortization $ 1,979 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Components of lease cost and other information related to leases | The components of lease cost, including variable lease costs primarily consisting of common area maintenance charges and real estate taxes, for the years ended December 31, 2021 and 2020 are as follows: Year Ended December 31, 2021 2020 Operating Lease Cost: Fixed lease cost $ 2,969 $ 4,014 Variable lease cost 1,512 1,707 Total lease cost $ 4,481 $ 5,721 Sublease income 724 478 Other information related to leases was as follows: Year Ended December 31, 2021 2020 Supplemental Cash Flow Information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 3,528 $ 3,153 Right-of-use assets obtained in exchange of lease obligations: Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,350 $ 515 |
Maturities of operating lease liabilities | Maturities of operating lease liabilities as of December 31, 2021 are as follows: Operating Leases Year Ending December 31: 2022 $ 3,331 2023 3,410 2024 3,255 2025 2,946 2026 2,222 Thereafter 15,595 Total lease obligation $ 30,759 Less: Imputed interest (8,156) Total lease liabilities $ 22,603 Less: Current lease liabilities 2,103 Total non-current lease liabilities $ 20,500 |
CULTIVATION LIABILITIES (Tables
CULTIVATION LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Cultivation Liabilities [Abstract] | |
Future payments due under contract obligations and scheduled maturities | Future payments due under contract obligations are as follows: Short-term Long-term Total December 31, 2019 $ 10,803 $ 14,289 $ 25,092 Payments (11,289) — (11,289) Settlement reductions (2,073) — (2,073) Interest 87 — 87 Conversion to short-term borrowings 11,776 (11,776) — December 31, 2020 $ 9,304 $ 2,513 $ 11,817 Short-term Long-term Total December 31, 2020 $ 9,304 $ 2,513 $ 11,817 Payments (7,166) — (7,166) Settlement reductions (855) — (855) Interest 37 — 37 Conversion to short-term borrowings 2,128 (2,128) — December 31, 2021 $ 3,448 $ 385 $ 3,833 Scheduled maturities of amounts owed as of December 31, 2021 are as follows: Year Ending December 31: 2022 $ 3,461 2023 385 Total payments $ 3,846 Less: Imputed interest (13) Total cultivation liabilities $ 3,833 Less: Current portion of cultivation liabilities (3,448) Total non-current cultivation liabilities $ 385 |
SHAREHOLDERS_ EQUITY (Tables)
SHAREHOLDERS’ EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Summary of number of warrants outstanding | The following summarizes the number of warrants outstanding as of December 31, 2021 and December 31, 2020: Number of Warrants Weighted-Average Exercise Price per Warrant Outstanding as of December 31, 2020 10,142,872 $ 8.80 Exercised 98,788 4.42 Expired 3,060,944 10.94 Outstanding as of December 31, 2021 6,983,140 $ 7.86 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Computation of basic and diluted net loss per share | The following table sets forth the computation of basic and dilutive net loss per share attributable to common shareholders: Year Ended December 31, 2021 2020 Net loss and comprehensive loss $ (137,722) $ (30,681) Weighted-average number of common shares - basic 140,769,247 88,996,249 Dilutive effect of stock options and awards — — Weighted-average number of proportionate voting shares - basic — 90,040 Weighted-average number of common shares - diluted 140,769,247 88,996,249 Weighted-average number of proportionate voting shares - diluted — 90,040 Loss per common share – basic and diluted $ (0.98) $ (0.25) Loss per proportionate voting share – basic and diluted $ — $ (98.17) |
Potentially dilutive awards | The potentially dilutive awards outstanding for each year are presented in the table below: Year Ended December 31, 2021 2020 Outstanding options 3,343,883 3,330,206 Outstanding restricted share units 1,816,851 456,675 Outstanding common share warrants 6,983,140 10,142,872 Total 12,143,874 13,929,753 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Inputs used in valuation of awards | The following principal inputs were used in the valuation of awards issued for the years ended December 31, 2021 and 2020: Year Ended December 31, 2021 2020 Expected volatility 82.0% - 86.5% 84.1% - 87.4% Expected term (years) 5.0 – 7.0 0.3 – 7.0 Risk-free interest rate 1.3% - 1.7% 0.5% - 1.4% Expected dividend yield 0% 0% Value of underlying share $1.02 - $4.70 $2.40 - $7.13 |
Detail of the number of stock options outstanding | Detail of the number of stock options outstanding for the years ended December 31, 2021 and 2020 under the 2015 and 2018 plans is as follows: Number of Options Weighted- per Option Weighted- (in years) Aggregate Outstanding as of December 31, 2020 3,330,206 $ 3.93 7.83 $ 4,955,658 Granted 1,290,662 3.56 Exercised (8,261) 3.64 Forfeited (and expired) (1,268,724) 5.57 Outstanding as of December 31, 2021 3,343,883 $ 3.16 7.54 $ 1,039,229 Exercisable/vested as of December 31, 2021 2,003,375 $ 2.56 5.54 $ 941,729 |
Details of the number of restricted share awards outstanding | Details of the number of restricted share units outstanding under the 2018 Plan is as follows: Number of Shares Weighted- Outstanding as of December 31, 2020 456,675 $ 6.47 Granted 2,160,313 2.50 Forfeited (584,290) 5.07 Vested (182,727) 5.40 Outstanding as of December 31, 2021 1,816,851 $ 2.28 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Loss before provision for income taxes | Loss before provision for income taxes for the years ended December 31, 2021 and December 31, 2020 consists of the following: Year Ended December 31, 2021 2020 U.S. loss $ (137,589) $ (38,793) Foreign income 10 98 Total current $ (137,579) $ (38,695) |
Major components of income tax expense (benefit) | The major components of income tax (expense) benefit attributable to loss from operations consists of: Year Ended December 31, 2021 2020 Current: Federal $ 50 $ 8,217 State (33) (176) Foreign (160) (7) Total current $ (143) $ 8,034 Deferred: Federal — — State — — Foreign — (20) Total deferred — (20) Total income tax (expense) benefit $ (143) $ 8,014 |
Effective tax rate reconciliation | Income tax (expense) benefit attributable to loss from continuing operations for the years ended December 31, 2021 and 2020 differed from the amounts computed by applying the U.S. federal income tax rates of 21.0%, as a result of the following: Year Ended December 31, 2021 2020 U.S. federal statutory tax rate 21.0% 21.0% State income taxes, net of federal tax benefit 1.8% 4.7% Share-based compensation (0.3)% 7.2% Change in fair value of financial instruments and other 1.4% 6.1% Non-deductible transaction costs —% (2.1)% Goodwill impairment (1) (11.4)% —% Changed in valuation allowance (2) (12.5)% (18.5)% Research and development tax credit 0.4% 2.9% Other, net (0.5)% (0.6)% Effective tax rate (0.1)% 20.7% (1) During the year ended December 31, 2021, the Company impaired its goodwill associated with the acquisition of Abacus. A portion of this impairment charge is permanently disallowed for tax purposes. (2) During the year ended December 31, 2021, the Company maintained a full valuation allowance on its deferred tax assets. |
Components of deferred tax assets and liabilities | The components of deferred tax assets and liabilities are as follows: December 31, 2021 2020 Deferred tax assets: Net operating loss and other carryforwards $ 45,557 $ 33,961 Share-based compensation 1,853 1,717 Inventory provision and UNICAP 263A 4,191 4,653 Lease liability 5,586 5,455 Other 385 1,186 Property and equipment 121 — Intangible assets 514 — Total deferred tax assets $ 58,207 $ 46,972 Valuation allowance (52,888) (35,685) Total deferred tax assets, net $ 5,319 $ 11,287 Deferred tax liabilities: Property and equipment $ — $ (851) Intangibles — (5,127) Right of use assets (5,110) (5,103) Warrants (209) (206) Total deferred tax liabilities $ (5,319) $ (11,287) Net deferred taxes (liabilities) $ — $ — |
Reconciliation of uncertain tax positions | A reconciliation of the beginning and ending amount of uncertain tax positions as of December 31, 2021 and 2020 is as follows: Balance at December 31, 2020 $ 134 Additions for current year tax positions 52 Additions for prior year tax positions — Reductions for prior year tax positions (7) Reductions as a result of settlement with tax authority — Balance at December 31, 2021 $ 179 Balance at December 31, 2019 $ — Additions for current year tax positions 55 Additions for prior year tax positions 79 Reductions for prior year tax positions — Reductions as a result of settlement with tax authority — Balance at December 31, 2020 $ 134 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES - Segments (Details) | 12 Months Ended |
Dec. 31, 2021segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES - Concentration of Credit Risk (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | ||
Cash in excess of federally-insured limits | $ 19,244 | $ 52,516 |
Accounts receivable | Customer concentration risk | One customer | ||
Fair Value, Concentration of Risk, Financial Statement Captions [Line Items] | ||
Concentration risk percentage | 34.00% |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Prepaid expenses | $ 6,224 | $ 4,621 |
Deposits | 925 | 2,742 |
Other miscellaneous receivables | 946 | 1,482 |
Total prepaid expenses and other current assets | $ 8,095 | $ 8,845 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Building | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 30 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Furniture and fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 2 years |
Furniture and fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 7 years |
Leasehold improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 1 year |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 15 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES - Intangible Assets and Capitalized Software Development Costs (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Customer Relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 10 years |
Software | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 3 years |
Tradenames | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 10 years |
Minimum | Software | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 3 years |
Minimum | Patents | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 15 years |
Maximum | Software | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 5 years |
Maximum | Patents | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 20 years |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 96,092 | $ 95,226 |
Direct-to-consumer | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 62,334 | 63,826 |
Business-to-business | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 33,758 | $ 31,400 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES - Selling, General and Administrative and Defined Contribution Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | ||
Advertising expense | $ 17,523 | $ 14,723 |
Research and development expenses | 5,502 | 5,951 |
Defined contribution expense | $ 441 | $ 1,038 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES - Share-Based Compensation (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | ||
Expected dividend yield | 0.00% | 0.00% |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES - Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | |||
Uncertain tax positions | $ 179 | $ 134 | $ 0 |
ACQUISITION OF ABACUS HEALTH -
ACQUISITION OF ABACUS HEALTH - Narrative (Details) $ in Thousands | Jun. 11, 2020USD ($)shares | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) |
Harmony Hemp | |||
Business Acquisition [Line Items] | |||
Asset acquisition, consideration payable | $ 144 | $ 770 | |
Customer Relationships | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 10 years | ||
Tradenames | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 10 years | ||
Abacus Health | |||
Business Acquisition [Line Items] | |||
Pro forma revenue | 99,341,000 | ||
Pro forma net loss | (47,810,000) | ||
One-time acquisition costs | $ 3,897,000 | ||
Share issuance ratio | 0.85 | ||
Liabilities incurred | $ 7,251,000 | ||
Liabilities incurred, SARs | 293,000 | ||
Liabilities incurred, warrants | $ 2,857,000 | ||
Estimated useful life | 10 years | ||
Abacus Health | Customer Relationships | |||
Business Acquisition [Line Items] | |||
Acquired intangible assets | $ 22,700,000 | ||
Abacus Health | Tradenames | |||
Business Acquisition [Line Items] | |||
Acquired intangible assets | $ 700,000 | ||
Abacus Health | Common shares | |||
Business Acquisition [Line Items] | |||
Equity issued (in shares) | shares | 18,456,302 | ||
Abacus Health | Other Equity Instruments [Member] | |||
Business Acquisition [Line Items] | |||
Equity issued (in shares) | shares | 3,884,986 |
ACQUISITION OF ABACUS HEALTH _2
ACQUISITION OF ABACUS HEALTH - Fair Value of Consideration (Details) - USD ($) $ in Thousands | Jun. 11, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Business Acquisition [Line Items] | |||
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ 0 | $ 109,562 | |
Abacus Health | |||
Business Acquisition [Line Items] | |||
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ 112,712 | ||
Abacus Health | Common Stock [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | 105,461 | ||
Abacus Health | Other Equity Instruments [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ 7,251 |
ACQUISITION OF ABACUS HEALTH _3
ACQUISITION OF ABACUS HEALTH - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 11, 2020 | Dec. 31, 2019 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets [Abstract] | ||||
Goodwill | $ 0 | $ 76,039 | $ 0 | |
Abacus Health | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets [Abstract] | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents | $ 11,181 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables | 2,264 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | 4,845 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 23,400 | |||
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Other Current And Noncurrent Assets | 3,653 | |||
Goodwill | 76,039 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Goodwill and Assets | 121,382 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities [Abstract] | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable | 4,687 | |||
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Current Liabilities, Accrued Liabilities | 2,041 | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Long-term Debt | 1,258 | |||
Business Combination, Recognized Identifiable Assets Acquired And Liabilities Assumed, Current And Noncurrent Liabilities, Other | 684 | |||
Liabilities | 8,670 | |||
Net assets acquired | $ 112,712 |
FAIR VALUE MEASUREMENT - Financ
FAIR VALUE MEASUREMENT - Financial Instruments Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 18, 2020 |
Financial assets: | |||
Stanley Brothers USA Holdings purchase option | $ 13,000 | $ 0 | |
Financial assets | 0 | ||
Financial liabilities: | |||
Warrant liabilities | 0 | 4,304 | $ 9,206 |
Level 1 | |||
Financial assets: | |||
Stanley Brothers USA Holdings purchase option | 0 | ||
Financial assets | 0 | ||
Financial liabilities: | |||
Warrant liabilities | 0 | 0 | |
Level 2 | |||
Financial assets: | |||
Stanley Brothers USA Holdings purchase option | 0 | ||
Financial assets | 0 | ||
Financial liabilities: | |||
Warrant liabilities | 0 | 4,304 | |
Level 3 | |||
Financial assets: | |||
Stanley Brothers USA Holdings purchase option | 13,000 | ||
Financial assets | 0 | ||
Financial liabilities: | |||
Warrant liabilities | $ 0 | $ 0 |
FAIR VALUE MEASUREMENT - Narrat
FAIR VALUE MEASUREMENT - Narrative (Details) - USD ($) $ in Thousands | Mar. 02, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 18, 2020 |
Fair Value Disclosures [Abstract] | ||||
Purchase option | $ 8 | $ 8,000 | $ 0 | |
Purchase option, term | 5 years | |||
Purchase option, extension term | 2 years | |||
Warrant, percentage of outstanding shares | 10.00% | |||
Warrants expiration period | 60 days | 2 years | ||
Gain on change in fair value of purchase option | 5 | |||
Purchase option | 13,000 | 0 | ||
Gain related to warrant liabilities | 4,304 | 11,167 | ||
Warrant liabilities | $ 0 | $ 4,304 | $ 9,206 |
FAIR VALUE MEASUREMENT - Fair V
FAIR VALUE MEASUREMENT - Fair Value Measurement Inputs - Purchase Option (Details) (Details) | Dec. 31, 2021 |
Expected volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Purchase option, measurement input | 0.925 |
Expected term | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Purchase option, measurement input | 3.7 |
Risk-free interest rate | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Purchase option, measurement input | 0.011 |
Weighted average cost of capital | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Purchase option, measurement input | 0.400 |
FAIR VALUE MEASUREMENT - Fair_2
FAIR VALUE MEASUREMENT - Fair Value Measurement Inputs - Warrants (Details) | Dec. 31, 2021 | Dec. 31, 2020 |
Expected volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants, measurement input | 0.838 | 0.861 |
Expected term | Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants, measurement input | 0.4 | 0.1 |
Expected term | Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants, measurement input | 0.5 | 0.5 |
Risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants, measurement input | 0.004 | 0.001 |
Expected dividend yield | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants, measurement input | 0 | 0 |
Value of underlying share | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants, measurement input | 1.34 | 3.29 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Harvested hemp and seeds | $ 38,249 | $ 41,090 |
Raw materials | 15,189 | 14,644 |
Finished goods | 13,974 | 24,615 |
Inventory, gross | 67,412 | 80,349 |
Less: inventory provision | (15,335) | (17,192) |
Inventories, net | $ 52,077 | $ 63,157 |
INVENTORIES - Narrative (Detail
INVENTORIES - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | ||
Inventory provisions | $ 10,272 | |
Inventory provisions, cost of goods sold | 9,729 | $ 8,025 |
Inventory provisions, settlement reduction of cultivation liabilities | 543 | 2,073 |
Inventory write-off | $ 12,129 | $ 8,779 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 47,321 | $ 43,811 |
Accumulated depreciation | (13,829) | (10,551) |
Property and equipment, net | 36,085 | 39,363 |
Building | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 3,409 | 3,409 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 15,552 | 17,211 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,202 | 881 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 27,158 | 22,310 |
Construction-in-process | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 2,593 | $ 6,103 |
PROPERTY AND EQUIPMENT, NET - N
PROPERTY AND EQUIPMENT, NET - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 7,481 | $ 4,839 |
Impairment, property and equipment | 1,921 | |
Selling, general and administrative expense | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | 4,503 | 3,661 |
Cost of goods sold | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 2,978 | $ 1,178 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 76,039 | $ 0 |
Goodwill arising from business combination | 0 | |
Goodwill impairment | (76,039) | 0 |
Ending balance | $ 0 | $ 76,039 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021USD ($)reporting_unit | Dec. 31, 2020USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Number of reporting units | reporting_unit | 1 | |
Impairment of goodwill | $ 76,039 | $ 0 |
Impairment, intangible assets | $ 19,750 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Definite-lived intangible assets, accumulated amortization | $ (2,366) | $ (2,472) |
Indefinite lived intangible assets | 150 | 150 |
Gross | 5,209 | 27,848 |
Net | $ 2,843 | $ 25,376 |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-average remaining useful life | 1 year 8 months 1 day | 2 years 5 months 26 days |
Definite-lived intangible assets, gross | $ 3,993 | $ 3,789 |
Definite-lived intangible assets, accumulated amortization | (2,342) | (1,156) |
Definite-lived intangible assets, net | $ 1,651 | $ 2,633 |
Customer Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-average remaining useful life | 9 years 5 months 8 days | |
Definite-lived intangible assets, gross | $ 22,700 | |
Definite-lived intangible assets, accumulated amortization | (1,269) | |
Definite-lived intangible assets, net | $ 21,431 | |
Tradenames | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-average remaining useful life | 9 years 5 months 8 days | |
Definite-lived intangible assets, gross | $ 700 | |
Definite-lived intangible assets, accumulated amortization | (39) | |
Definite-lived intangible assets, net | $ 661 | |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted-average remaining useful life | 18 years 4 months 13 days | 18 years 7 months 28 days |
Definite-lived intangible assets, gross | $ 352 | $ 201 |
Definite-lived intangible assets, accumulated amortization | (24) | (8) |
Definite-lived intangible assets, net | 328 | 193 |
Internal use software in process | ||
Finite-Lived Intangible Assets [Line Items] | ||
Definite-lived intangible assets, gross | 714 | 308 |
Definite-lived intangible assets, net | $ 714 | $ 308 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS - Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 3,544 | $ 2,008 |
Finite Lived Intangible Assets, Excluding Software Development | ||
Year Ending December 31: | ||
2022 | 1,065 | |
2023 | 606 | |
2024 | 35 | |
2025 | 18 | |
2026 | 18 | |
Thereafter | 237 | |
Definite-lived intangible assets, net | $ 1,979 |
DEBT (Details)
DEBT (Details) | Mar. 01, 2021USD ($) |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity | $ 10,000,000,000 |
Increase limit | $ 20,000,000,000 |
Prime rate | |
Line of Credit Facility [Line Items] | |
Basis spread on variable interest rate | 1.00% |
LIBOR | |
Line of Credit Facility [Line Items] | |
Basis spread on variable interest rate | 2.50% |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Dec. 31, 2021 |
Lessee, Lease, Description [Line Items] | |
Renewal term | 5 years |
Weighted average remaining lease term | 10 years 4 months 13 days |
Weighted average discount rate | 5.43% |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 8 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 13 years 2 months 1 day |
LEASES - Lease Costs (Details)
LEASES - Lease Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Lease Cost: | ||
Fixed lease cost | $ 2,969 | $ 4,014 |
Variable lease cost | 1,512 | 1,707 |
Total lease cost | 4,481 | 5,721 |
Sublease income | $ 724 | $ 478 |
LEASES - Other Information (Det
LEASES - Other Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows for operating leases | $ 3,528 | $ 3,153 |
Right-of-use assets obtained in exchange of lease obligations: | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 2,350 | $ 515 |
LEASES - Maturities of Operatin
LEASES - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Year Ending December 31: | ||
2022 | $ 3,331 | |
2023 | 3,410 | |
2024 | 3,255 | |
2025 | 2,946 | |
2026 | 2,222 | |
Thereafter | 15,595 | |
Total lease obligation | 30,759 | |
Less: Imputed interest | (8,156) | |
Total lease liabilities | 22,603 | |
Less: Current lease liabilities | 2,103 | $ 1,916 |
Total non-current lease liabilities | $ 20,500 | $ 20,567 |
CULTIVATION LIABILITIES - Narra
CULTIVATION LIABILITIES - Narrative (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Other Liabilities Disclosure [Abstract] | |
Settlement reduction | $ 855 |
CULTIVATION LIABILITIES - Contr
CULTIVATION LIABILITIES - Contract Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cultivation Liabilities [Abstract] | ||
Short-term, beginning | $ 9,304 | $ 10,803 |
Short-term, payments | (7,166) | (11,289) |
Short-term, settlement reductions | (855) | (2,073) |
Short-term, interest | 37 | 87 |
Short-term, conversion to short-term borrowings | 2,128 | 11,776 |
Short-term, ending | 3,448 | 9,304 |
Long-term, beginning | 2,513 | 14,289 |
Long-term, payments | 0 | 0 |
Long-term, settlement reductions | 0 | 0 |
Long-term, interest | 0 | 0 |
Long-term, conversion to short-term borrowings | (2,128) | (11,776) |
Long-term, ending | 385 | 2,513 |
Total, beginning | 11,817 | 25,092 |
Total, payments | (7,166) | (11,289) |
Total, settlement reductions | (855) | (2,073) |
Total, interest | 37 | 87 |
Total, conversion to short-term borrowings | 0 | 0 |
Total, ending | $ 3,833 | $ 11,817 |
CULTIVATION LIABILITIES - Sched
CULTIVATION LIABILITIES - Scheduled Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Year Ending December 31: | |||
2022 | $ 3,461 | ||
2023 | 385 | ||
Total payments | 3,846 | ||
Less: Imputed interest | (13) | ||
Total cultivation liabilities | 3,833 | $ 11,817 | $ 25,092 |
Less: Current portion of cultivation liabilities | (3,448) | (9,304) | (10,803) |
Total non-current cultivation liabilities | $ 385 | $ 2,513 | $ 14,289 |
SHAREHOLDERS_ EQUITY - General,
SHAREHOLDERS’ EQUITY - General, Common Shares and Proportionate Voting Shares (Details) | 12 Months Ended | ||
Dec. 31, 2021voteshares | Nov. 03, 2021shares | Dec. 31, 2020shares | |
Equity [Abstract] | |||
Common shares, issued (in shares) | 144,659,964 | 142,335,464 | 107,060,237 |
Common shares, outstanding (in shares) | 144,659,964 | 142,335,464 | 107,060,237 |
PVS, issued (in shares) | 0 | 0 | 81,177 |
PVS, outstanding (in shares) | 0 | 0 | 81,177 |
Preferred shares, issued (in shares) | 0 | ||
Preferred shares, outstanding (in shares) | 0 | ||
Common shares, number of votes per share | vote | 1 | ||
Common shares, conversion ratio | 0.0025 | ||
PVS dividend rights, common stock dividend multiplier | 400 | ||
PVS, number of votes per share | vote | 400 | ||
PVS, conversion ratio | 400 | ||
PVS liquidation rights, common stock distribution multiplier | 400 |
SHAREHOLDERS_ EQUITY - Warrants
SHAREHOLDERS’ EQUITY - Warrants Narrative (Details) $ / shares in Units, $ / shares in Units, $ in Thousands, $ in Thousands | Jun. 04, 2021CAD ($) | Jun. 18, 2020USD ($)$ / sharesshares | Jun. 18, 2020CAD ($)shares | Jun. 11, 2020 | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($)shares | Mar. 02, 2021 | Jun. 18, 2020$ / shares | Dec. 03, 2019shares |
Class of Warrant or Right [Line Items] | |||||||||
Maximum value of shares offered | $ | $ 60,000 | ||||||||
Share offering, shares/units issued (in shares) | 10,000,000 | 10,000,000 | 4,740,300 | ||||||
Share offering, price per share (in cad or usd per share) | (per share) | $ 4.97 | $ 1.85 | $ 6.75 | ||||||
Share offering, gross proceeds | $ 57,165,000 | $ 77,625,000 | $ 8,714 | ||||||
Share issuance costs | $ | 596 | $ 3,368 | |||||||
Share offering, net proceeds | $ | $ 8,118 | ||||||||
Number of common shares in each unit (in shares) | 1 | ||||||||
Number of warrants in each unit (in shares) | 0.5 | 0.5 | |||||||
Warrants exercise price (in cad per share) | $ / shares | $ 8.50 | ||||||||
Warrants expiration period | 2 years | 60 days | |||||||
Warrants outstanding (in shares) | 5,750,000 | 6,983,140 | 10,142,872 | ||||||
Warrant liabilities | $ | $ 9,206 | $ 0 | $ 4,304 | ||||||
Warrants initial fair market value (in usd per share) | $ / shares | $ 1.601 | ||||||||
Warrants weighted average remaining contractual life | 6 months 14 days | ||||||||
Over-allotment option | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Share offering, shares/units issued (in shares) | 1,500,000 | 1,500,000 | |||||||
Abacus Health | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Share issuance ratio | 0.85 |
SHAREHOLDERS_ EQUITY - Warran_2
SHAREHOLDERS’ EQUITY - Warrants Outstanding (Details) | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Number of Warrants | |
Outstanding (in shares) | shares | 10,142,872 |
Exercised (in shares) | shares | 98,788 |
Expired (in shares) | shares | 3,060,944 |
Outstanding (in shares) | shares | 6,983,140 |
Weighted-Average Exercise Price per Warrant | |
Outstanding (in usd per share) | $ / shares | $ 8.80 |
Exercised (in usd per share) | $ / shares | 4.42 |
Expired (in usd per share) | $ / shares | 10.94 |
Outstanding (in usd per share) | $ / shares | $ 7.86 |
LOSS PER SHARE - Narrative (Det
LOSS PER SHARE - Narrative (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
PVS, conversion ratio | 400 |
LOSS PER SHARE - Basic and Dilu
LOSS PER SHARE - Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Net loss and comprehensive loss | $ (137,722) | $ (30,681) |
Weighted-average number of common shares - basic (in shares) | 140,769,247 | 125,012,249 |
Weighted-average number of common shares - basic (in shares) | 88,996,249 | |
Dilutive effect of stock options and awards (in shares) | 0 | 0 |
Weighted-average number of proportionate voting shares - basic | 0 | 90,040 |
Weighted-average number of common shares - diluted (in shares) | 140,769,247 | 125,012,249 |
Weighted-average number of common shares - diluted (in shares) | 88,996,249 | |
Weighted-average number of proportionate voting shares - diluted | 0 | 90,040 |
Loss per common share - basic (in usd per share) | $ (0.98) | $ (0.25) |
Loss per common share - diluted (in usd per share) | (0.98) | (0.25) |
Loss per proportionate voting share - basic (in usd per share) | 0 | (98.17) |
Loss per proportionate voting share - diluted (in usd per share) | $ 0 | $ (98.17) |
LOSS PER SHARE - Potentially Di
LOSS PER SHARE - Potentially Dilutive Awards (Details) - shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive awards (in shares) | 12,143,874,000 | 13,929,753,000 |
Outstanding options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive awards (in shares) | 3,343,883,000 | 3,330,206,000 |
Outstanding restricted share units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive awards (in shares) | 1,816,851,000 | 456,675,000 |
Outstanding common share warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive awards (in shares) | 6,983,140,000 | 10,142,872,000 |
SHARE-BASED COMPENSATION - Narr
SHARE-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards authorized (in shares) | 13,500,000 | |
Number of awards available (in shares) | 8,855,118 | |
Options outstanding, weighted average remaining contractual life | 7 years 6 months 14 days | 7 years 9 months 29 days |
Options outstanding, weighted average grant-date fair value (in usd per share) | $ 3.56 | $ 4.92 |
Options exercised, weighted average share price (in usd per share) | $ 4.85 | $ 5.20 |
Options vested (in shares) | 720,261 | 1,004,939 |
Options vested, weighted average grant date fair value (in usd per share) | $ 5.93 | $ 4.84 |
Options outstanding (in shares) | 3,343,883 | 3,330,206 |
Fair value of shares vested | $ 751 | |
Share-based compensation expense | 5,483 | $ 4,326 |
Unrecognized share based compensation expense | $ 4,638 | $ 6,769 |
Exercise price range one | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options outstanding, exercise price range (in shares) | 1,300,012 | |
Exercise price, maximum (in usd per share) | $ 0.56 | |
Exercise price range two | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options outstanding, exercise price range (in shares) | 2,043,871 | |
Exercise price, maximum (in usd per share) | $ 21.10 | |
Exercise price, minimum (in usd per share) | $ 1.02 | |
Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expiration period | 10 years | |
Prescribed service period | 4 years | |
Unrecognized share based compensation expense, period for recognition | 2 years 3 months 7 days | 2 years 3 months 7 days |
Options | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 1 year | |
Options | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
Restricted share units | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 1 year | |
Restricted share units | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years |
SHARE-BASED COMPENSATION - Fair
SHARE-BASED COMPENSATION - Fair Value Inputs (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility, minimum | 82.00% | 84.10% |
Expected volatility, maximum | 86.50% | 87.40% |
Risk-free interest rate, minimum | 1.30% | 0.50% |
Risk-free interest rate, maximum | 1.70% | 1.40% |
Expected dividend yield | 0.00% | 0.00% |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term | 5 years | 3 months 18 days |
Value of underlying share (in usd per share) | $ 1.02 | $ 2.40 |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term | 7 years | 7 years |
Value of underlying share (in usd per share) | $ 4.70 | $ 7.13 |
SHARE-BASED COMPENSATION - Opti
SHARE-BASED COMPENSATION - Options Outstanding (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Options | ||
Outstanding (in shares) | 3,330,206 | |
Granted (in shares) | 1,290,662 | |
Exercised (in shares) | (8,261) | |
Forfeited (and expired) (in shares) | (1,268,724) | |
Outstanding (in shares) | 3,343,883 | 3,330,206 |
Exercisable/vested (in shares) | 2,003,375 | |
Weighted-Average Exercise Price Per Option | ||
Outstanding (in usd per share) | $ 3.16 | $ 3.93 |
Granted (in usd per share) | 3.56 | |
Exercised (in usd per share) | 3.64 | |
Forfeited (and expired) (in usd per share) | 5.57 | |
Outstanding (in usd per share) | 3.16 | $ 3.93 |
Exercisable/vested (in usd per share) | $ 2.56 | |
Weighted-Average Remaining Contract Term | ||
Outstanding | 7 years 6 months 14 days | 7 years 9 months 29 days |
Exercisable/vested | 5 years 6 months 14 days | |
Aggregate Intrinsic Value | ||
Outstanding | $ 1,039,229 | $ 4,955,658 |
Exercisable/vested | $ 941,729 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Share Units Outstanding (Details) | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Number of Shares | |
Outstanding (in shares) | shares | 456,675 |
Granted (in shares) | shares | 2,160,313 |
Forfeited (in shares) | shares | (584,290) |
Vested (in shares) | shares | (182,727) |
Outstanding (in shares) | shares | 1,816,851 |
Weighted-Average Grant Date Fair Value | |
Outstanding (in usd per share) | $ / shares | $ 6.47 |
Granted (in usd per share) | $ / shares | 2.50 |
Forfeited (in usd per share) | $ / shares | 5.07 |
Vested (in usd per share) | $ / shares | 5.40 |
Outstanding (in usd per share) | $ / shares | $ 2.28 |
INCOME TAXES - Loss Before Prov
INCOME TAXES - Loss Before Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
U.S. loss | $ (137,589) | $ (38,793) |
Foreign income | 10 | 98 |
Loss before provision for income taxes | $ (137,579) | $ (38,695) |
INCOME TAXES - Major Components
INCOME TAXES - Major Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | ||
Federal | $ 50 | $ 8,217 |
State | (33) | (176) |
Foreign | (160) | (7) |
Total current | (143) | 8,034 |
Deferred: | ||
Federal | 0 | 0 |
State | 0 | 0 |
Foreign | 0 | (20) |
Total deferred | 0 | (20) |
Total income tax (expense) benefit | $ (143) | $ 8,014 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
U.S. federal statutory tax rate | 21.00% | 21.00% | |
Income tax receivable, CARES Act | $ 8,056 | $ 8,056 | $ 3,273 |
Income tax benefit, recognizing net operating loss deferred tax asset | 6,218 | ||
Income tax benefit, tax rate differential between carryback period and federal tax rate | 1,838 | ||
Income taxes receivable | 11,440 | ||
Receipt of income taxes receivable | 676 | (8,133) | |
Increase in valuation allowance | 17,203 | $ 11,251 | |
Net operating loss carryforwards not subject to expiration | 170,443 | ||
Net operating loss carryforwards subject to expiration | 144,225 | ||
Research and development credit carryforward | 1,788 | ||
Uncertain tax positions that would affect the effective tax rate | $ 0 |
INCOME TAXES - Effective Tax Ra
INCOME TAXES - Effective Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory tax rate | 21.00% | 21.00% |
State income taxes, net of federal tax benefit | 1.80% | 4.70% |
Share-based compensation | (0.30%) | 7.20% |
Change in fair value of financial instruments and other | 1.40% | 6.10% |
Non-deductible transaction costs | 0.00% | (2.10%) |
Goodwill impairment | (11.40%) | 0.00% |
Changed in valuation allowance | (12.50%) | (18.50%) |
Research and development tax credit | 0.40% | 2.90% |
Other, net | (0.50%) | (0.60%) |
Effective tax rate | (0.10%) | 20.70% |
INCOME TAXES - Deferred Tax Ass
INCOME TAXES - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | ||
Net operating loss and other carryforwards | $ 45,557 | $ 33,961 |
Share-based compensation | 1,853 | 1,717 |
Inventory provision and UNICAP 263A | 4,191 | 4,653 |
Lease liability | 5,586 | 5,455 |
Other | 385 | 1,186 |
Property and equipment | 121 | 0 |
Intangible assets | 514 | 0 |
Total deferred tax assets | 58,207 | 46,972 |
Valuation allowance | (52,888) | (35,685) |
Total deferred tax assets, net | 5,319 | 11,287 |
Deferred tax liabilities: | ||
Property and equipment | 0 | (851) |
Intangibles | 0 | (5,127) |
Right of use assets | (5,110) | (5,103) |
Warrants | (209) | (206) |
Total deferred tax liabilities | (5,319) | (11,287) |
Net deferred taxes (liabilities) | $ 0 | $ 0 |
INCOME TAXES - Uncertain Tax Po
INCOME TAXES - Uncertain Tax Positions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance | $ 134 | $ 0 |
Additions for current year tax positions | 52 | 55 |
Additions for prior year tax positions | 0 | 79 |
Reductions for prior year tax positions | (7) | 0 |
Reductions as a result of settlement with tax authority | 0 | 0 |
Balance | $ 179 | $ 134 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Apr. 16, 2021 | Mar. 02, 2021 | Nov. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Related Party Transaction [Line Items] | |||||
Note receivable from related party | $ 1,000,000 | $ 1,037 | |||
Note receivable interest rate | 3.25% | ||||
Purchase option | $ 8 | 8,000 | $ 0 | ||
Purchase option, extended term | 1 year | ||||
Prepaid expenses | 6,224 | 4,621 | |||
Related party manufacturing agreement | |||||
Related Party Transaction [Line Items] | |||||
Related party expenses | $ 3,570 | $ 2,758 | |||
Payment terms | 30 days | ||||
Related party liability | $ 119 | ||||
Related party consulting services | |||||
Related Party Transaction [Line Items] | |||||
Related party expenses | 1,056 | ||||
Consulting agreement, extended term | 1 year | ||||
Payments to related party | $ 2,081 | ||||
Prepaid expenses | $ 1,025 |