Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 05, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
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 Current Reporting Status | Yes | |
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 | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 145,453,442 | |
Amendment Flag | false | |
Entity Central Index Key | 0001750155 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 14,817 | $ 19,494 |
Accounts receivable, net | 2,455 | 4,882 |
Notes receivable - current | 495 | 495 |
Inventories, net | 52,631 | 52,077 |
Prepaid expenses and other current assets | 4,390 | 8,095 |
Income taxes receivable | 7,579 | 10,764 |
Total current assets | 82,367 | 95,807 |
Property and equipment, net | 32,917 | 36,085 |
Operating lease right-of-use assets, net | 19,358 | 20,679 |
Intangible assets, net | 2,337 | 2,843 |
Stanley Brothers USA Holdings purchase option | 13,100 | 13,000 |
Notes receivable - noncurrent | 1,037 | 1,037 |
Other long-term assets | 1,898 | 2,062 |
Total assets | 153,014 | 171,513 |
Current liabilities: | ||
Accounts payable | 5,122 | 5,049 |
Accrued and other current liabilities | 7,304 | 9,570 |
Cultivation liabilities – current | 2,957 | 3,448 |
Lease obligations – current | 2,408 | 2,103 |
Total current liabilities | 17,791 | 20,170 |
Cultivation liabilities – noncurrent | 0 | 385 |
Lease obligations – noncurrent | 19,299 | 20,500 |
Other long-term liabilities | 12 | 12 |
Total liabilities | 37,102 | 41,067 |
Commitments and contingencies (note 6) | ||
Shareholders’ equity: | ||
Common shares, nil par value; unlimited shares authorized as of June 30, 2022 and December 31, 2021, respectively; 145,278,165 and 144,659,964 shares issued and outstanding as of June 30, 2022 and December 31, 2021 | 1 | 1 |
Proportionate voting shares, nil par value; nil shares authorized as of June 30, 2022 and December 31, 2021, respectively; nil shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 0 | 0 |
Additional paid-in capital | 321,021 | 319,059 |
Accumulated deficit | (205,110) | (188,614) |
Total shareholders’ equity | 115,912 | 130,446 |
Total liabilities and shareholders’ equity | $ 153,014 | $ 171,513 |
Common shares, outstanding (in shares) | 145,278,165 | 144,659,964 |
Common shares, issued (in shares) | 145,278,165 | 144,659,964 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Jun. 30, 2022 | Dec. 31, 2021 | Nov. 03, 2021 |
Statement of Financial Position [Abstract] | |||
Common shares, issued (in shares) | 145,278,165 | 144,659,964 | 142,335,464 |
Common shares, outstanding (in shares) | 145,278,165 | 144,659,964 | 142,335,464 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenue | $ 18,877 | $ 24,152 | $ 38,234 | $ 47,559 |
Cost of goods sold | 9,556 | 8,325 | 17,199 | 18,095 |
Gross profit | 9,321 | 15,827 | 21,035 | 29,464 |
Selling, general and administrative expenses | 17,259 | 25,178 | 37,614 | 48,964 |
Operating loss | (7,938) | (9,351) | (16,579) | (19,500) |
Other (expense) income, net | 68 | 105 | (17) | 210 |
Change in fair value of financial instruments and other | 0 | 3,319 | 100 | 623 |
Loss before provision for income taxes | (7,870) | (5,927) | (16,496) | (18,667) |
Income tax (expense) benefit | 0 | 4 | 0 | (30) |
Net loss | $ (7,870) | $ (5,923) | $ (16,496) | $ (18,697) |
Net loss per common share, basic (in usd per share) | $ (0.05) | $ (0.04) | $ (0.11) | $ (0.13) |
Net loss per common share, diluted (in usd per share) | $ (0.05) | $ (0.04) | $ (0.11) | $ (0.13) |
Weighted-average shares used in computing net loss per share, basic (in shares) | 145,168,510 | 139,936,443 | 145,079,859 | 139,817,622 |
Weighted-average shares used in computing net loss per share, diluted (in shares) | 145,168,510 | 139,936,443 | 145,079,859 | 139,817,622 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Restricted share units | Proportionate Voting Shares | Common Shares | Common Shares Restricted share units | Additional Paid-in Capital | Additional Paid-in Capital Restricted share units | Accumulated Deficit |
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 stock options (in shares) | 8,261 | |||||||
Exercise of stock options | 30 | 30 | ||||||
Conversion to common shares (in shares) | (3,961) | 1,584,410 | ||||||
Withholding of common shares upon vesting of restricted share units/awards (in shares) | 61,548 | |||||||
Common shares issued upon vesting of restricted share units, net of withholding | (112) | (112) | ||||||
Harmony Hemp contingent equity compensation (in shares) | 169,046 | |||||||
Harmony Hemp contingent equity compensation | 360 | 360 | ||||||
Exercise of common stock warrants (in shares) | 98,788 | |||||||
Exercise of common stock warrants | 441 | 441 | ||||||
Share-based compensation | 832 | 832 | ||||||
Net loss | (12,774) | (12,774) | ||||||
Balance (in shares) at Mar. 31, 2021 | 77,216 | 108,982,290 | ||||||
Balance at Mar. 31, 2021 | 243,019 | $ 1 | 306,684 | (63,666) | ||||
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] | ||||||||
Net loss | (18,697) | |||||||
Balance (in shares) at Jun. 30, 2021 | 75,889 | 109,807,949 | ||||||
Balance at Jun. 30, 2021 | 239,266 | $ 1 | 308,854 | (69,589) | ||||
Balance (in shares) at Mar. 31, 2021 | 77,216 | 108,982,290 | ||||||
Balance at Mar. 31, 2021 | 243,019 | $ 1 | 306,684 | (63,666) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Conversion to common shares (in shares) | (1,327) | 530,900 | ||||||
Withholding of common shares upon vesting of restricted share units/awards (in shares) | 16,559 | |||||||
Common shares issued upon vesting of restricted share units, net of withholding | (26) | (26) | ||||||
Harmony Hemp contingent equity compensation | 363 | 363 | ||||||
ATM program issuance costs (in shares) | 278,200 | |||||||
ATM program issuance costs | 839 | 839 | ||||||
Share-based compensation | 994 | 994 | ||||||
Net loss | (5,923) | (5,923) | ||||||
Balance (in shares) at Jun. 30, 2021 | 75,889 | 109,807,949 | ||||||
Balance at Jun. 30, 2021 | 239,266 | $ 1 | 308,854 | (69,589) | ||||
Balance (in shares) at Dec. 31, 2021 | 0 | 144,659,964 | ||||||
Balance at Dec. 31, 2021 | 130,446 | $ 1 | 319,059 | (188,614) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Withholding of common shares upon vesting of restricted share units/awards (in shares) | 77,193 | |||||||
Common shares issued upon vesting of restricted share units, net of withholding | $ (45) | $ (45) | ||||||
Harmony Hemp contingent equity compensation (in shares) | 169,045 | |||||||
Harmony Hemp contingent equity compensation | 165 | 165 | ||||||
ATM program issuance costs (in shares) | 239,500 | |||||||
ATM program issuance costs | (2) | (2) | ||||||
Share-based compensation | 1,214 | 1,214 | ||||||
Net loss | (8,626) | (8,626) | ||||||
Balance (in shares) at Mar. 31, 2022 | 0 | 145,145,702 | ||||||
Balance at Mar. 31, 2022 | 123,152 | $ 1 | 320,391 | (197,240) | ||||
Balance (in shares) at Dec. 31, 2021 | 0 | 144,659,964 | ||||||
Balance at Dec. 31, 2021 | $ 130,446 | $ 1 | 319,059 | (188,614) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Exercise of stock options (in shares) | 0 | |||||||
Net loss | $ (16,496) | |||||||
Balance (in shares) at Jun. 30, 2022 | 0 | 145,278,165 | ||||||
Balance at Jun. 30, 2022 | 115,912 | $ 1 | 321,021 | (205,110) | ||||
Balance (in shares) at Mar. 31, 2022 | 0 | 145,145,702 | ||||||
Balance at Mar. 31, 2022 | 123,152 | $ 1 | 320,391 | (197,240) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Withholding of common shares upon vesting of restricted share units/awards (in shares) | 132,463 | |||||||
Common shares issued upon vesting of restricted share units, net of withholding | $ (13) | $ (13) | ||||||
Share-based compensation | 643 | 643 | ||||||
Net loss | (7,870) | (7,870) | ||||||
Balance (in shares) at Jun. 30, 2022 | 0 | 145,278,165 | ||||||
Balance at Jun. 30, 2022 | $ 115,912 | $ 1 | $ 321,021 | $ (205,110) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (16,496) | $ (18,697) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 3,940 | 5,466 |
Change in fair value of financial instruments | (100) | (613) |
Allowance for credit losses | (2) | 515 |
Inventory provision | 1,857 | 178 |
Share-based compensation | 2,022 | 2,549 |
Loss on disposal of assets | 150 | 93 |
Cultivation settlement reduction | (582) | 0 |
Changes in right-of-use assets | 1,236 | 1,309 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 2,430 | 601 |
Inventories, net | (2,411) | (315) |
Prepaid expenses and other current assets | 3,706 | 589 |
Operating lease obligations | (896) | (1,288) |
Accounts payable, accrued and other liabilities | (2,194) | (1,825) |
Income taxes receivable | 3,185 | 540 |
Cultivation liabilities | (323) | (5,243) |
Other operating assets and liabilities, net | 194 | (26) |
Net cash used in operating activities | (4,284) | (16,167) |
Cash flows from investing activities: | ||
Purchases of property and equipment and intangible assets | (333) | (3,268) |
Proceeds from sale of assets | 0 | 9 |
Issuance of notes receivable, net of collections | 0 | 363 |
Investment in Stanley Brothers USA Holdings purchase option | 0 | (8,000) |
Other investing activities | 0 | 507 |
Net cash used in investing activities | (333) | (10,389) |
Cash flows from financing activities: | ||
Proceeds from sale of public offering, net of issuance costs | 0 | 978 |
Proceeds from stock option exercises | 0 | 30 |
Other financing activities | (60) | (159) |
Net cash (used) provided in financing activities | (60) | 849 |
Net decrease in cash and cash equivalents | (4,677) | (25,707) |
Cash and cash equivalents —beginning of period | 19,494 | 52,803 |
Cash and cash equivalents —end of period | 14,817 | 27,096 |
Non-cash activities: | ||
Non-cash purchases of property and equipment | $ 0 | $ (2,364) |
DESCRIPTION OF BUSINESS AND PRE
DESCRIPTION OF BUSINESS AND PRESENTATION OF FINANCIAL STATEMENTS | 6 Months Ended |
Jun. 30, 2022 | |
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 the plant Cannabis sativa L. (“Cannabis”), and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol ("THC") concentration of not more than 0.3% on a dry weight basis ("Hemp"). 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-delta-9 ("THC") cannabis plants. On March 2, 2021, Charlotte’s Web executed an Option Purchase Agreement (the "SBH Purchase Option") pursuant to which the Company has the option to acquire Stanley Brothers USA Holdings, Inc. (“Stanley Brothers USA”), a cannabis wellness incubator. Until the 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 does not currently have any plans to expand into high-THC products in the near future. 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, Oregon and Canada. In furtherance of the Company’s research and development ("R&D") efforts, the Company established CW Labs, an internal division for R&D, to expand the Company’s efforts around the science of Hemp derived compounds. CW Labs is currently engaged in clinical trials addressing Hemp-based solutions for several need states. CW Labs is located in Louisville, Colorado at the Company’s current good manufacturing practice ("cGMP") production and distribution facility. 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. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES | 6 Months Ended |
Jun. 30, 2022 | |
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 unaudited interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification ("ASC") and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of June 30, 2022 and its results of operations for the three and six months ended June 30, 2022 and 2021, cash flows for the six months ended June 30, 2022 and 2021, and stockholders’ equity for the three and six months ended June 30, 2022 and 2021. Operating results for the three and six months ended June 30, 2022, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022. The unaudited interim condensed consolidated financial statements presented herein do not contain the required disclosures under GAAP for annual consolidated financial statements. Certain amounts presented in prior periods have been reclassified to conform with the current period presentation. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes as of and for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2022. Inventories Inventories are stated at the lower of cost or net realizable value. 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. The Company's inventory production process for cannabinoid products includes the cultivation of botanical raw material. Because of the duration of the cultivation process, a portion of the inventory will not be sold within one year. Consistent with the practice in other industries that cultivate botanical raw materials, all inventory is classified as a current asset. Revenue Recognition The majority of the Company’s revenue is derived from sales of branded products to consumers via the Company's direct-to-consumer e-commerce website, and distributors, retail and wholesale business-to-business customers. The following table sets forth the disaggregation of the Company’s revenue: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Direct-to-consumer $ 13,277 $ 15,683 $ 26,415 $ 31,813 Business-to-business 5,600 8,469 11,819 15,746 Total $ 18,877 $ 24,152 $ 38,234 $ 47,559 Substantially all of the Company’s revenue is earned in the United States. Recently Adopted Accounting Pronouncements Other than described below, no new accounting pronouncements adopted or issued by the FASB had or may have a material impact on the Company’s condensed 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. There was an immaterial impact upon adoption on the condensed consolidated financial statements. Recently Issued Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides optional guidance for a limited time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this standard apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The Company is currently evaluating the impact, if any, that the updated standard will have on the condensed consolidated financial statements. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT | FAIR VALUE MEASUREMENT The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021, by level within the fair value hierarchy: June 30, 2022 Level 1 Level 2 Level 3 Total Financial assets: Stanley Brothers USA Holdings Purchase Option $ — $ — $ 13,100 $ 13,100 December 31, 2021 Level 1 Level 2 Level 3 Total Financial assets: Stanley Brothers USA Holdings Purchase Option $ — $ — $ 13,000 $ 13,000 There were no transfers between levels of the hierarchy during the three and six month periods ended June 30, 2022 and the year ended December 31, 2021. Stanley Brothers USA Holdings Purchase Option The Monte Carlo valuation model considers multiple revenue and Earnings Before Interest Taxes Depreciation and Amortization ("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 of the SBH Purchase Option: June 30, December 31, 2022 2021 Expected volatility 90.0% 92.5% Expected term (years) 3.2 3.7 Risk-free interest rate 3.0% 1.1% Weighted average cost of capital 40.0% 40% Warrant Liabilities The warrants offered during 2020 (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 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. On June 18, 2022, the 2020 Share Offering Warrants expired, totaling 5,750,000 common shares, with a weighted average exercise price per warrant of $6.27. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories consist of the following: June 30, December 31, 2022 2021 Harvested hemp and seeds $ 38,042 $ 38,249 Raw materials 12,760 15,189 Finished goods 16,654 13,974 67,456 67,412 Less: inventory provision (14,825) (15,335) Total inventory $ 52,631 $ 52,077 |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Line of Credit The Company 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. 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 Company and guaranteed by other subsidiaries of the Company. The line of credit agreement requires compliance by the Company with certain debt covenants. As of June 30, 2022 and December 31, 2021, the Company was not in compliance with the |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2022 | |
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 June 30, 2022 there are no litigation 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 | 6 Months Ended |
Jun. 30, 2022 | |
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 12.67 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. Maturities of operating lease liabilities as of June 30, 2022 are as follows: Operating Leases Year Ending December 31: 2022 (6 months remaining) $ 1,433 2023 3,411 2024 3,255 2025 2,946 2026 2,222 Thereafter 15,595 Total lease obligation 28,862 Less: Imputed interest (7,155) Total lease liabilities 21,707 Less: Current lease liabilities (2,408) Total non-current lease liabilities $ 19,299 |
CULTIVATION LIABILITIES
CULTIVATION LIABILITIES | 6 Months Ended |
Jun. 30, 2022 | |
Cultivation Liabilities [Abstract] | |
CULTIVATION LIABILITIES | CULTIVATION LIABILITIES Future payments due under cultivation contract obligations are as follows: Short-term Long-term Total December 31, 2021 $ 3,448 $ 385 $ 3,833 Costs incurred related to 2021 crop 97 — 97 Payments (420) — (420) Settlement reductions (582) — (582) Interest 29 — 29 Conversion to short-term borrowings 385 (385) — June 30, 2022 $ 2,957 $ — $ 2,957 |
SHAREHOLDERS_ EQUITY
SHAREHOLDERS’ EQUITY | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
SHAREHOLDERS’ EQUITY | SHAREHOLDERS’ EQUITY As of June 30, 2022 and 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 PVS 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 PVS. As of June 30, 2022 and December 31, 2021, the Company had no PVS issued and outstanding. Common Shares As of June 30, 2022 and December 31, 2021, the Company was authorized to issue an unlimited number of common shares, which have no par value. Share Offering Warrants – Liability Classified The following summarizes the number of warrants outstanding as of June 30, 2022: Number of Warrants Weighted-Average Exercise Price per Warrant Outstanding as of December 31, 2021 6,983,140 $ 7.86 Exercised — — Expired (6,983,140) $ 7.86 Outstanding as of June 30, 2022 — — As of June 30, 2022, there are no outstanding warrants. On May 8, 2022, warrants issued pursuant to the Abacus acquisition expired, totaling 1,233,140, with a weighted average exercise price per warrant of $15.29. In addition, on |
LOSS PER SHARE
LOSS PER SHARE | 6 Months Ended |
Jun. 30, 2022 | |
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 PVS is computed by dividing the allocated net loss by the weighted-average number of common shares outstanding and weighted average number of PVS outstanding during the period. Diluted loss per common share is computed by dividing the allocated net 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 PVS is computed by dividing the allocated net loss by the weighted-average number of PVS outstanding during the period. The following table sets forth the computation of basic and dilutive net loss per share attributable to common shareholders: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net loss $ (7,870) $ (5,923) $ (16,496) $ (18,697) Weighted-average number of common shares - basic 145,168,510 109,435,643 145,079,859 108,833,622 Dilutive effect of stock options and awards — — — — Weighted-average number of proportionate voting shares - basic — 76,252 — 77,460 Weighted-average number of common shares - diluted 145,168,510 109,435,643 145,079,859 108,833,622 Weighted-average number of proportionate voting shares - diluted — 76,252 — 77,460 Loss per common share – basic and diluted $ (0.05) $ (0.04) $ (0.11) $ (0.13) Loss per proportionate voting share – basic and diluted $ — $ (16.93) $ — $ (53.49) As of June 30, 2022 and 2021, potentially dilutive securities include stock options, restricted share units, broker warrants, and common share warrants. When the Company recognizes a net loss, 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: June 30, 2022 2021 Outstanding options 5,207,959 3,895,512 Outstanding restricted share units 2,508,596 974,813 Outstanding common share warrants — 9,483,140 Total 7,716,555 14,353,465 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Stock options Stock options vest over a prescribed service period and are approved by the Company's board of directors on an award-by-award basis. Options have a prescribed service period generally lasting up to four years, with certain options having a shorter vesting period or 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 six months ended June 30, 2022 and 2021: Six Months Ended June 30, 2022 2021 Expected volatility 83.4% 84.7% Expected term (years) 6.0 6.0 Risk-free interest rate 3.3% 1.5% Expected dividend yield 0% 0% Value of underlying share $0.31 $3.10 Detail of the number of stock options outstanding for the three months ended June 30, 2022 under the Company's 2015 legacy option plan and the Company's amended 2018 long term incentive plan (collectively, the "Plans") is as follows: Number of Options Weighted- per Option Weighted- (in years) Aggregate Outstanding as of December 31, 2021 3,343,883 $ 3.16 7.54 $ 1,039,229 Granted 3,555,188 1.14 Exercised — — Forfeited (and expired) (1,691,112) 4.30 Outstanding as of June 30, 2022 5,207,959 $ 1.42 8.85 $ 928,368 Exercisable/vested as of June 30, 2022 1,829,404 $ 1.49 5.83 $ 409,939 The weighted average grant-date fair value of options granted during the six months ended June 30, 2022 was $1.14. The weighted average grant-date fair value of options granted during the six months ended June 30, 2021 was $4.66. The weighted average share price at the date of exercise of options exercised during the six months ended June 30, 2022 and 2021 was $0 and $4.85, respectively. 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 up to four years. Upon vesting, one of the Company’s common shares is issued for each restricted share unit awarded. The fair value of each restricted share unit granted is equal to the market price of the Company’s shares at the date of the grant. The fair value of shares vested during the six months ended June 30, 2022 and June 30, 2021 was $625 and $628, respectively. 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, 2021 1,816,851 $ 2.28 Granted 2,197,676 $ 0.98 Forfeited (1,230,658) $ 2.10 Vested (209,656) $ 2.98 Shares withheld upon vesting (65,617) $ 2.29 Outstanding as of June 30, 2022 2,508,596 $ 1.22 Share-based Compensation Expense Share-based compensation expense for all equity arrangements for the three and six months ended June 30, 2022 and June 30, 2021 was $643 and $1,357 and $2,022 and $2,549, respectively, included in selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive loss. As of June 30, 2022, $5,219 of total unrecognized share-based compensation expense related to unvested options and restricted stock units granted to employees is expected to be recognized over a weighted-average period of 2.19 years. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESThe Company’s effective tax rate in the six months ended June 30, 2022 and 2021 was 0% and 0.16%, respectively. The Company’s effective tax rates differ from the U.S. federal statutory rate of 21% for the six months end June 30, 2022 and 2021, respectively, primarily due to the valuation allowance. The effective tax rate for the six months of 2022 was lower than the same periods in 2021 primarily due to state income taxes. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2022 | |
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 Products, Inc. ("Abacus"), and a former officer of the Company, also serves on Aidance’s Board of Directors. For the three and six months ended June 30, 2022 and 2021, the Company made purchases of $1,016 and $649 and $1,688 and $2,186, respectively from Aidance. Payment terms on purchases are due 30 days after receipt. As of June 30, 2022, the Company had a liability of $182 due to Aidance presented in accounts payable in the condensed consolidated balance sheets. As of December 31, 2021, the Company had a liability of $119 due to Aidance presented in accounts payable in the condensed consolidated balance sheets. Effective November 2020, the Company entered into a note receivable with certain founders of the Company ("founders") 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 year, and required the unpaid principal and unpaid interest balances to be paid on or before the maturity date of November 13, 2021. 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. According to the terms of the agreement, no additional interest will accrue through the payment date. The founders' equity instruments securing the promissory note remained in place. Interest income is recognized based upon the contractual interest rate and unpaid principal balance of the promissory note. As of June 30, 2022 and December 31, 2021, the founders owed the Company $1,037 consisting of principal and interest. On March 22, 2022, the Company and the founders amended the agreement to increase the equity instruments securing the promissory note and to extend the maturity date to November 13, 2023. As a result of this amendment, the Company does not believe there is an estimated credit loss on the note receivable as of June 30, 2022 and 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 3). 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 Name and Likeness and License Agreement between the Company and Leeland & Sig LLC d/b/a Stanley Brothers Brand Company, agreement was extended for a period of one year, originally expiring July 31, 2022 and was subsequently extended to August 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 seven 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 three and six months ended June 30, 2022, the Company recognized $454 and $875, respectively in sales and marketing expenses in the condensed consolidated statements of operations and net loss related to this agreement. For the three and six months ended June 30, 2021, the Company recognized $167 selling, general and administrative expenses in the condensed consolidated statements of operations and net loss related to this agreement. The remaining $150 is presented in prepaid expenses in the condensed consolidated balance sheets. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS During July 2022, the Company received approximately $7,600 from the Internal Revenue Service ("IRS") which was the remaining amount of the income taxes receivable. On July 27, 2022, the Company entered into a payoff letter with J.P. Morgan to voluntarily terminate all commitments and obligations under the ABL. In connection with the execution of the payoff letter, the Company paid J.P. Morgan approximately $20 in fees and expenses. There were no outstanding borrowings under the ABL at the time of termination. On July 28, 2022, 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 month, expiring August 31, 2022. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification ("ASC") and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of June 30, 2022 and its results of operations for the three and six months ended June 30, 2022 and 2021, cash flows for the six months ended June 30, 2022 and 2021, and stockholders’ equity for the three and six months ended June 30, 2022 and 2021. Operating results for the three and six months ended June 30, 2022, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022. The unaudited interim condensed consolidated financial statements presented herein do not contain the required disclosures under GAAP for annual consolidated financial statements. Certain amounts presented in prior periods have been reclassified to conform with the current period presentation. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes as of and for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2022. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. 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. The Company's inventory production process for cannabinoid products includes the cultivation of botanical raw material. Because of the duration of the cultivation process, a portion of the inventory will not be sold within one year. Consistent with the practice in other industries that cultivate botanical raw materials, all inventory is classified as a current asset. |
Revenue Recognition | Revenue RecognitionThe majority of the Company’s revenue is derived from sales of branded products to consumers via the Company's direct-to-consumer e-commerce website, and distributors, retail and wholesale business-to-business customers. |
Recently Adopted and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements Other than described below, no new accounting pronouncements adopted or issued by the FASB had or may have a material impact on the Company’s condensed 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. There was an immaterial impact upon adoption on the condensed consolidated financial statements. Recently Issued Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This standard provides optional guidance for a limited time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this standard apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The Company is currently evaluating the impact, if any, that the updated standard will have on the condensed consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Accounting Policies [Abstract] | |
Disaggregation of revenue | The following table sets forth the disaggregation of the Company’s revenue: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Direct-to-consumer $ 13,277 $ 15,683 $ 26,415 $ 31,813 Business-to-business 5,600 8,469 11,819 15,746 Total $ 18,877 $ 24,152 $ 38,234 $ 47,559 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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 June 30, 2022 and December 31, 2021, by level within the fair value hierarchy: June 30, 2022 Level 1 Level 2 Level 3 Total Financial assets: Stanley Brothers USA Holdings Purchase Option $ — $ — $ 13,100 $ 13,100 December 31, 2021 Level 1 Level 2 Level 3 Total Financial assets: Stanley Brothers USA Holdings Purchase Option $ — $ — $ 13,000 $ 13,000 |
Measurement inputs | The following additional assumptions are used in the model of the SBH Purchase Option: June 30, December 31, 2022 2021 Expected volatility 90.0% 92.5% Expected term (years) 3.2 3.7 Risk-free interest rate 3.0% 1.1% Weighted average cost of capital 40.0% 40% |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consist of the following: June 30, December 31, 2022 2021 Harvested hemp and seeds $ 38,042 $ 38,249 Raw materials 12,760 15,189 Finished goods 16,654 13,974 67,456 67,412 Less: inventory provision (14,825) (15,335) Total inventory $ 52,631 $ 52,077 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Leases [Abstract] | |
Maturities of operating lease liabilities | Maturities of operating lease liabilities as of June 30, 2022 are as follows: Operating Leases Year Ending December 31: 2022 (6 months remaining) $ 1,433 2023 3,411 2024 3,255 2025 2,946 2026 2,222 Thereafter 15,595 Total lease obligation 28,862 Less: Imputed interest (7,155) Total lease liabilities 21,707 Less: Current lease liabilities (2,408) Total non-current lease liabilities $ 19,299 |
CULTIVATION LIABILITIES (Tables
CULTIVATION LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Cultivation Liabilities [Abstract] | |
Future payments due under contract obligations and scheduled maturities | Future payments due under cultivation contract obligations are as follows: Short-term Long-term Total December 31, 2021 $ 3,448 $ 385 $ 3,833 Costs incurred related to 2021 crop 97 — 97 Payments (420) — (420) Settlement reductions (582) — (582) Interest 29 — 29 Conversion to short-term borrowings 385 (385) — June 30, 2022 $ 2,957 $ — $ 2,957 |
SHAREHOLDERS_ EQUITY (Tables)
SHAREHOLDERS’ EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Equity [Abstract] | |
Summary of number of warrants outstanding | The following summarizes the number of warrants outstanding as of June 30, 2022: Number of Warrants Weighted-Average Exercise Price per Warrant Outstanding as of December 31, 2021 6,983,140 $ 7.86 Exercised — — Expired (6,983,140) $ 7.86 Outstanding as of June 30, 2022 — — |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net loss $ (7,870) $ (5,923) $ (16,496) $ (18,697) Weighted-average number of common shares - basic 145,168,510 109,435,643 145,079,859 108,833,622 Dilutive effect of stock options and awards — — — — Weighted-average number of proportionate voting shares - basic — 76,252 — 77,460 Weighted-average number of common shares - diluted 145,168,510 109,435,643 145,079,859 108,833,622 Weighted-average number of proportionate voting shares - diluted — 76,252 — 77,460 Loss per common share – basic and diluted $ (0.05) $ (0.04) $ (0.11) $ (0.13) Loss per proportionate voting share – basic and diluted $ — $ (16.93) $ — $ (53.49) |
Potentially dilutive awards | The potentially dilutive awards outstanding for each year are presented in the table below: June 30, 2022 2021 Outstanding options 5,207,959 3,895,512 Outstanding restricted share units 2,508,596 974,813 Outstanding common share warrants — 9,483,140 Total 7,716,555 14,353,465 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
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 six months ended June 30, 2022 and 2021: Six Months Ended June 30, 2022 2021 Expected volatility 83.4% 84.7% Expected term (years) 6.0 6.0 Risk-free interest rate 3.3% 1.5% Expected dividend yield 0% 0% Value of underlying share $0.31 $3.10 |
Detail of the number of stock options outstanding | Detail of the number of stock options outstanding for the three months ended June 30, 2022 under the Company's 2015 legacy option plan and the Company's amended 2018 long term incentive plan (collectively, the "Plans") is as follows: Number of Options Weighted- per Option Weighted- (in years) Aggregate Outstanding as of December 31, 2021 3,343,883 $ 3.16 7.54 $ 1,039,229 Granted 3,555,188 1.14 Exercised — — Forfeited (and expired) (1,691,112) 4.30 Outstanding as of June 30, 2022 5,207,959 $ 1.42 8.85 $ 928,368 Exercisable/vested as of June 30, 2022 1,829,404 $ 1.49 5.83 $ 409,939 |
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, 2021 1,816,851 $ 2.28 Granted 2,197,676 $ 0.98 Forfeited (1,230,658) $ 2.10 Vested (209,656) $ 2.98 Shares withheld upon vesting (65,617) $ 2.29 Outstanding as of June 30, 2022 2,508,596 $ 1.22 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 18,877 | $ 24,152 | $ 38,234 | $ 47,559 |
Direct-to-consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 13,277 | 15,683 | 26,415 | 31,813 |
Business-to-business | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 5,600 | $ 8,469 | $ 11,819 | $ 15,746 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES - Share-Based Compensation (Details) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Accounting Policies [Abstract] | ||
Expected dividend yield | 0% | 0% |
FAIR VALUE MEASUREMENT - Financ
FAIR VALUE MEASUREMENT - Financial Instruments Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Financial assets: | ||
Stanley Brothers USA Holdings purchase option | $ 13,100 | $ 13,000 |
Level 1 | ||
Financial assets: | ||
Stanley Brothers USA Holdings purchase option | 0 | 0 |
Level 2 | ||
Financial assets: | ||
Stanley Brothers USA Holdings purchase option | 0 | 0 |
Level 3 | ||
Financial assets: | ||
Stanley Brothers USA Holdings purchase option | $ 13,100 | $ 13,000 |
FAIR VALUE MEASUREMENT - Narrat
FAIR VALUE MEASUREMENT - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 18, 2022 | May 08, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | ||||||
Warrants expired (in shares) | 5,750,000 | 1,233,140 | 6,983,140 | |||
Warrants exercise price (in cad per share) | $ 6.27 | |||||
Gain related to warrant liabilities | $ 0 | $ 4,099 | $ 0 | $ 1,443 |
FAIR VALUE MEASUREMENT - Fair V
FAIR VALUE MEASUREMENT - Fair Value Measurement Inputs - Purchase Option (Details) (Details) | Jun. 30, 2022 year | Dec. 31, 2021 year |
Expected volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Purchase option, measurement input | 0.900 | 0.925 |
Expected term | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Purchase option, measurement input | 3.2 | 3.7 |
Risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Purchase option, measurement input | 0.030 | 0.011 |
Weighted average cost of capital | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Purchase option, measurement input | 0.400 | 0.40 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Harvested hemp and seeds | $ 38,042 | $ 38,249 |
Raw materials | 12,760 | 15,189 |
Finished goods | 16,654 | 13,974 |
Inventory, gross | 67,456 | 67,412 |
Less: inventory provision | (14,825) | (15,335) |
Inventories, net | $ 52,631 | $ 52,077 |
DEBT (Details)
DEBT (Details) | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity | $ 10,000,000 |
Prime rate | |
Line of Credit Facility [Line Items] | |
Basis spread on variable interest rate | 1% |
LIBOR | |
Line of Credit Facility [Line Items] | |
Basis spread on variable interest rate | 2.50% |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Jun. 30, 2022 |
Lessee, Lease, Description [Line Items] | |
Renewal term | 5 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 8 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 12 years 8 months 1 day |
LEASES - Maturities of Operatin
LEASES - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Year Ending December 31: | ||
2022 (6 months remaining) | $ 1,433 | |
2023 | 3,411 | |
2024 | 3,255 | |
2025 | 2,946 | |
2026 | 2,222 | |
Thereafter | 15,595 | |
Total lease obligation | 28,862 | |
Less: Imputed interest | (7,155) | |
Total lease liabilities | 21,707 | |
Less: Current lease liabilities | (2,408) | $ (2,103) |
Total non-current lease liabilities | $ 19,299 | $ 20,500 |
CULTIVATION LIABILITIES - Contr
CULTIVATION LIABILITIES - Contract Obligations (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Cultivation Liabilities [Abstract] | |
Short-term, beginning | $ 3,448 |
Short-term, costs incurred related to 2021 crop | 97 |
Short-term, payments | (420) |
Short-term, settlement reductions | (582) |
Short-term, interest | 29 |
Short-term, conversion to short-term borrowings | 385 |
Short-term, ending | 2,957 |
Long-term, beginning | 385 |
Long-term, costs incurred related to 2021 crop | 0 |
Long-term, payments | 0 |
Long-term, settlement reductions | 0 |
Long-term, interest | 0 |
Long-term, conversion to short-term borrowings | (385) |
Long-term, ending | 0 |
Total, beginning | 3,833 |
Total, costs incurred related to 2021 crop | 97 |
Total, payments | (420) |
Total, settlement reductions | (582) |
Total, interest | 29 |
Total, conversion to short-term borrowings | 0 |
Total, ending | $ 2,957 |
SHAREHOLDERS_ EQUITY - Narrativ
SHAREHOLDERS’ EQUITY - Narrative (Details) - $ / shares | 6 Months Ended | ||||
Jun. 18, 2022 | May 08, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Nov. 03, 2021 | |
Equity [Abstract] | |||||
Common shares, issued (in shares) | 145,278,165 | 144,659,964 | 142,335,464 | ||
Common shares, outstanding (in shares) | 145,278,165 | 144,659,964 | 142,335,464 | ||
PVS, issued (in shares) | 0 | 0 | 0 | ||
PVS, outstanding (in shares) | 0 | 0 | 0 | ||
Preferred shares, issued (in shares) | 0 | ||||
Preferred shares, outstanding (in shares) | 0 | ||||
Warrants expired (in shares) | 5,750,000 | 1,233,140 | 6,983,140 | ||
Warrants expired, weighted average exercise price (in usd per share) | $ 15.29 | $ 7.86 | |||
Warrants exercise price (in cad per share) | $ 6.27 |
SHAREHOLDERS_ EQUITY - Warrants
SHAREHOLDERS’ EQUITY - Warrants Outstanding (Details) - $ / shares | 6 Months Ended | ||
Jun. 18, 2022 | May 08, 2022 | Jun. 30, 2022 | |
Number of Warrants | |||
Outstanding (in shares) | 6,983,140 | ||
Exercised (in shares) | 0 | ||
Expired (in shares) | (5,750,000) | (1,233,140) | (6,983,140) |
Outstanding (in shares) | 0 | ||
Weighted-Average Exercise Price per Warrant | |||
Outstanding (in usd per share) | $ 7.86 | ||
Exercised (in usd per share) | 0 | ||
Expired (in usd per share) | $ 15.29 | 7.86 | |
Outstanding (in usd per share) | $ 0 |
LOSS PER SHARE - Narrative (Det
LOSS PER SHARE - Narrative (Details) | 6 Months Ended |
Jun. 30, 2022 | |
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 | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Earnings Per Share [Abstract] | ||||||
Net loss | $ (7,870) | $ (8,626) | $ (5,923) | $ (12,774) | $ (16,496) | $ (18,697) |
Weighted-average number of common shares - basic (in shares) | 145,168,510 | 139,936,443 | 145,079,859 | 139,817,622 | ||
Weighted-average number of common shares - basic (in shares) | 109,435,643 | 108,833,622 | ||||
Dilutive effect of stock options and awards (in shares) | 0 | 0 | 0 | 0 | ||
Weighted-average number of proportionate voting shares - basic | 0 | 76,252 | 0 | 77,460 | ||
Weighted-average number of common shares - diluted (in shares) | 145,168,510 | 139,936,443 | 145,079,859 | 139,817,622 | ||
Weighted-average number of common shares - diluted (in shares) | 109,435,643 | 108,833,622 | ||||
Weighted-average number of proportionate voting shares - diluted | 0 | 76,252 | 0 | 77,460 | ||
Loss per common share - basic (in usd per share) | $ (0.05) | $ (0.04) | $ (0.11) | $ (0.13) | ||
Loss per common share - diluted (in usd per share) | (0.05) | (0.04) | (0.11) | (0.13) | ||
Loss per proportionate voting share - basic (in usd per share) | 0 | (16.93) | 0 | |||
Loss per proportionate voting share - diluted (in usd per share) | $ 0 | $ (16.93) | $ 0 | $ (53.49) |
LOSS PER SHARE - Potentially Di
LOSS PER SHARE - Potentially Dilutive Awards (Details) - shares | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive awards (in shares) | 7,716,555 | 14,353,465,000 |
Outstanding options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive awards (in shares) | 5,207,959 | 3,895,512,000 |
Outstanding restricted share units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive awards (in shares) | 2,508,596 | 974,813,000 |
Outstanding common share warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially dilutive awards (in shares) | 0 | 9,483,140,000 |
SHARE-BASED COMPENSATION - Narr
SHARE-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted, weighted average grant-date fair value (in usd per share) | $ 1.14 | $ 4.66 | ||
Options exercised, weighted average share price (in usd per share) | $ 0 | $ 4.85 | ||
Fair value of shares vested | $ 625 | $ 628 | ||
Share-based compensation expense | $ 643 | $ 1,357 | 2,022 | $ 2,549 |
Unrecognized share based compensation expense | $ 5,219 | $ 5,219 | ||
Unrecognized share based compensation expense, period for recognition | 2 years 2 months 8 days | |||
Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Prescribed service period | 4 years | |||
Restricted share units | ||||
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 | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Expected volatility | 83.40% | 84.70% |
Expected term | 6 years | 6 years |
Risk-free interest rate | 3.30% | 1.50% |
Expected dividend yield | 0% | 0% |
Value of underlying share (in usd per share) | $ 0.31 | $ 3.10 |
SHARE-BASED COMPENSATION - Opti
SHARE-BASED COMPENSATION - Options Outstanding (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Number of Options | |||
Outstanding (in shares) | 3,343,883 | ||
Granted (in shares) | 3,555,188 | ||
Exercised (in shares) | 0 | ||
Forfeited (and expired) (in shares) | (1,691,112) | ||
Outstanding (in shares) | 5,207,959 | 3,343,883 | |
Exercisable/vested (in shares) | 1,829,404 | ||
Weighted-Average Exercise Price Per Option | |||
Outstanding (in usd per share) | $ 1.42 | $ 3.16 | |
Granted (in usd per share) | 1.14 | $ 4.66 | |
Exercised (in usd per share) | 0 | ||
Forfeited (and expired) (in usd per share) | 4.30 | ||
Outstanding (in usd per share) | 1.42 | $ 3.16 | |
Exercisable/vested (in usd per share) | $ 1.49 | ||
Weighted-Average Remaining Contract Term | |||
Outstanding | 8 years 10 months 6 days | 7 years 6 months 14 days | |
Exercisable/vested | 5 years 9 months 29 days | ||
Aggregate Intrinsic Value | |||
Outstanding | $ 928,368 | $ 1,039,229 | |
Exercisable/vested | $ 409,939 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Share Units Outstanding (Details) | 6 Months Ended |
Jun. 30, 2022 $ / shares shares | |
Number of Shares | |
Outstanding (in shares) | shares | 1,816,851 |
Granted (in shares) | shares | 2,197,676 |
Forfeited (in shares) | shares | (1,230,658) |
Vested (in shares) | shares | (209,656) |
Shares withheld upon vesting (in shares) | shares | (65,617) |
Outstanding (in shares) | shares | 2,508,596 |
Weighted-Average Grant Date Fair Value | |
Outstanding (in usd per share) | $ / shares | $ 2.28 |
Granted (in usd per share) | $ / shares | 0.98 |
Forfeited (in usd per share) | $ / shares | 2.10 |
Vested (in usd per share) | $ / shares | 2.98 |
Shares withheld upon vesting (in usd per share) | $ / shares | 2.29 |
Outstanding (in usd per share) | $ / shares | $ 1.22 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 0% | 0.16% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Apr. 16, 2021 | Mar. 02, 2021 | Nov. 30, 2020 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Related Party Transaction [Line Items] | ||||||||
Note receivable from related party | $ 1,000,000 | $ 1,037 | $ 1,037 | $ 1,037 | ||||
Note receivable interest rate | 3.25% | |||||||
Purchase option | $ 8,000 | 0 | $ 8,000 | |||||
Purchase option, extended term | 1 year | |||||||
Related party manufacturing agreement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party expenses | 1,016 | $ 649 | $ 1,688 | $ 2,186 | ||||
Payment terms | 30 days | |||||||
Related party liability | 182 | $ 182 | $ 119 | |||||
Related party consulting services | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party expenses | 454 | $ 167 | 875 | |||||
Consulting agreement, extended term | 1 year | |||||||
Payments to related party | $ 2,081 | |||||||
Prepaid expense, current | $ 150 | $ 150 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event - USD ($) $ in Thousands | 1 Months Ended | |
Jul. 27, 2022 | Jul. 31, 2022 | |
Subsequent Event [Line Items] | ||
Income tax refund received | $ 7,600 | |
Debt fee paid | $ 20 |