Cover
Cover | 6 Months Ended |
Jun. 30, 2021 | |
Cover [Abstract] | |
Entity Registrant Name | Lowell Farms Inc. |
Entity Central Index Key | 0001838128 |
Document Type | S-1 |
Amendment Flag | false |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Filer Category | Non-accelerated Filer |
Entity Ex Transition Period | false |
Entity Incorporation State Country Code | Z4 |
Entity Address Address Line 1 | 19 Quail Run Circle |
Entity Address Address Line 2 | Suite B |
Entity Address City Or Town | Salinas |
Entity Address State Or Province | CA |
Entity Address Postal Zip Code | 93907 |
City Area Code | 831 |
Local Phone Number | 998-8214 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | |||
Cash and cash equivalents | $ 9,113,000 | $ 25,751,000 | $ 1,344,000 |
Accounts Receivable - net of allowance for doubtful accounts of $1,024 and $1,389 at June 30, 2021 and December 2020, respectively | 6,223,000 | 4,529,000 | 6,890,000 |
Inventory | 14,736,000 | 9,933,000 | 10,418,000 |
Prepaid expenses and other current assets | 4,144,000 | 6,391,000 | 2,729,000 |
Total current assets | 34,216,000 | 46,604,000 | 21,381,000 |
Long-term investments | 202 | 397 | |
Property and equipment, net | 64,496,000 | 49,243,000 | 42,972,000 |
Goodwill | 357,000 | 357,000 | 357,000 |
Other intangibles, net | 40,919,000 | 736,000 | 1,153,000 |
Other assets | 601,000 | 476,000 | 2,274,000 |
Total assets | 140,589,000 | 97,416,000 | 68,534,000 |
Current liabilities: | |||
Accounts payable | 3,313,000 | 2,137,000 | 4,704,000 |
Accrued payroll and benefits | 1,142,000 | 1,212,000 | 531,000 |
Notes payable, current portion | 369,000 | 1,213,000 | 135,000 |
Lease obligation, current portion | 2,410,000 | 2,301,000 | 2,325,000 |
Other current liabilities | 5,012,000 | 8,860,000 | 4,356,000 |
Total current liabilities | 12,246,000 | 15,723,000 | 12,051,000 |
Notes payable | 258,000 | 303,000 | 371,000 |
Lease obligation | 35,260,000 | 36,533,000 | 31,480,000 |
Convertible debentures | 13,646,000 | 13,701,000 | 0 |
Mortgage obligation | 8,938,000 | 0 | |
Other long-term liabilities | 946 | ||
Total liabilities | 70,348,000 | 66,260,000 | 44,848,000 |
STOCKHOLDERS' EQUITY | |||
Share capital | 170,613,000 | 125,540,000 | 96,160,000 |
Accumulated deficit | (100,372,000) | (94,384,000) | (72,474,000) |
Total stockholders' equity | 70,241,000 | 31,156,000 | 23,686,000 |
Total liabilities and stockholders' equity | $ 140,589,000 | $ 97,416,000 | $ 68,534,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
Allowance for doubtful accounts | $ 1,024 | $ 1,389 | $ 2,595 |
CONDENDSED CONSOLIDATED STATEME
CONDENDSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($) | Total | Class A/B Shares | Subordinate Voting Shares | Super Voting Shares | Share Capital | Accumulated Deficit |
Balance, shares at Dec. 31, 2017 | 16,631,000 | |||||
Balance, amount at Dec. 31, 2017 | $ (5,211,000) | $ 7,772,000 | $ (12,982,000) | |||
Net loss | (8,711,000) | $ 0 | $ 0 | $ 0 | 0 | (8,711,000) |
Shares issued in connection with conversion of convertible debentures, shares | 1,947,000 | |||||
Shares issued in connection with conversion of convertible debentures, amount | 3,961,000 | 3,961,000 | 0 | |||
Issuance of shares associated with acquisitions, shares | 88,000 | |||||
Issuance of shares associated with acquisitions, amount | 370,000 | 370,000 | 0 | |||
Issuance of Series B preferred stock, net of issuance costs, shares | 9,831,000 | |||||
Issuance of Series B preferred stock, net of issuance costs, amount | 41,873,000 | 41,873,000 | 0 | |||
Issuance of warrants in exchange for services, amount | 87,000 | 87,000 | ||||
Share-based compensation expense, amount | 270,000 | 270,000 | ||||
Balance, shares at Dec. 31, 2018 | 28,497,000 | |||||
Balance, amount at Dec. 31, 2018 | 32,640,000 | 54,333,000 | (21,693,000) | |||
Net loss | (49,934,000) | $ 0 | $ 0 | $ 0 | 0 | (49,934,000) |
Share-based compensation expense, amount | 3,385,000 | 3,385,000 | 0 | |||
Adoption of lease accounting standard, amount | (847,000) | (847,000) | ||||
Issuance of subordinate voting shares in exchange for Class A/B shares, net, shares | (28,497,000) | 28,497,000 | ||||
Issuance of subordinate voting shares in exchange for Class A/B shares, net, amount | 0 | 0 | 0 | |||
Private placement in connection with reverse takeover, net, shares | 3,433,000 | |||||
Private placement in connection with reverse takeover, net, amount | 36,762,000 | 36,762,000 | 0 | |||
Shares issued to acquiree in connection with reverse takeover, shares | 130,000 | |||||
Shares issued to acquiree in connection with reverse takeover, amount | 1,513,000 | 1,513,000 | 0 | |||
Issuance of supervoting shares, shares | 203,000 | |||||
Issuance of supervoting shares, amount | 40,000 | 40,000 | 0 | |||
Exercise of options, shares | 125,000 | |||||
Exercise of options, amount | 127,000 | 127,000 | 0 | |||
Share-based compensation expense, shares | 659,000 | |||||
Issuance of warrants | 2,291,000 | |||||
Balance, shares at Dec. 31, 2019 | 32,844,000 | 203,000 | ||||
Balance, amount at Dec. 31, 2019 | 23,686,000 | 96,160,000 | (72,474,000) | |||
Net loss | (16,631,000) | $ 0 | $ 0 | 0 | (16,631,000) | |
Shares issued in connection with conversion of convertible debentures, shares | 250,000 | |||||
Shares issued in connection with conversion of convertible debentures, amount | 62,000 | 0 | 62,000 | 0 | ||
Share-based compensation expense, amount | 1,825,000 | 0 | 1,825,000 | 0 | ||
Share-based compensation expense, shares | 248,000 | |||||
Issuance of warrants | 1,556,000 | $ 0 | $ 0 | 1,556,000 | 0 | |
Balance, shares at Jun. 30, 2020 | 33,342,000 | 203,000 | ||||
Balance, amount at Jun. 30, 2020 | 10,498,000 | 99,603,000 | (89,105,000) | |||
Balance, shares at Dec. 31, 2019 | 32,844,000 | 203,000 | ||||
Balance, amount at Dec. 31, 2019 | 23,686,000 | 96,160,000 | (72,474,000) | |||
Net loss | (21,910,000) | (21,910,000) | ||||
Shares issued in connection with conversion of convertible debentures, shares | 375,000 | |||||
Shares issued in connection with conversion of convertible debentures, amount | 75,000 | 75,000 | 0 | |||
Issuance of shares associated with acquisitions, shares | 150,000 | |||||
Issuance of shares associated with acquisitions, amount | 179,000 | 179,000 | ||||
Share-based compensation expense, amount | $ 2,200,000 | 2,200,000 | 0 | |||
Exercise of options, shares | 0 | |||||
Share-based compensation expense, shares | 248,000 | |||||
Issuance of warrants | $ 1,620,000 | |||||
Issuance of stock warrants, amount | 1,556,000 | 1,556,000 | 0 | |||
Shares issued in connection with convertible debenture offering, shares | 250,000 | |||||
Shares issued in connection with convertible debenture offering, amount | 62,000 | 62,000 | 0 | |||
Shares issued in connection with subordinate voting share offering, shares | 23,000,000 | |||||
Shares issued in connection with subordinate voting share offering, amount | 25,021,000 | 25,021,000 | 0 | |||
Issuance of stock options associated with acquisitions, amount | 116,000 | 116,000 | 0 | |||
Reduction in supervoting share purchase price, amount | (39,000) | (39,000) | 0 | |||
Exercise of warrants, shares | 750,000 | |||||
Exercise of warrants, amount | 210,000 | 210,000 | 0 | |||
Balance, shares at Dec. 31, 2020 | 57,617,000 | 203,000 | ||||
Balance, amount at Dec. 31, 2020 | 31,156,000 | 125,540,000 | (94,384,000) | |||
Balance, shares at Mar. 31, 2020 | 32,988,000 | 203,000 | ||||
Balance, amount at Mar. 31, 2020 | 17,424,000 | 97,772,000 | (80,348,000) | |||
Net loss | (8,757,000) | $ 0 | $ 0 | 0 | (8,757,000) | |
Shares issued in connection with conversion of convertible debentures, shares | 250,000 | |||||
Shares issued in connection with conversion of convertible debentures, amount | 62,000 | 0 | 62,000 | 0 | ||
Share-based compensation expense, amount | 213,000 | 0 | 213,000 | 0 | ||
Share-based compensation expense, shares | 104,000 | |||||
Issuance of warrants | 1,556,000 | $ 0 | $ 0 | 1,556,000 | 0 | |
Balance, shares at Jun. 30, 2020 | 33,342,000 | 203,000 | ||||
Balance, amount at Jun. 30, 2020 | 10,498,000 | 99,603,000 | (89,105,000) | |||
Balance, shares at Dec. 31, 2020 | 57,617,000 | 203,000 | ||||
Balance, amount at Dec. 31, 2020 | 31,156,000 | 125,540,000 | (94,384,000) | |||
Net loss | (5,988,000) | $ 0 | $ 0 | 0 | (5,988,000) | |
Shares issued in connection with conversion of convertible debentures, shares | 2,393,000 | |||||
Shares issued in connection with conversion of convertible debentures, amount | 478,000 | 478,000 | 0 | |||
Issuance of shares associated with acquisitions, shares | 30,641,000 | |||||
Issuance of shares associated with acquisitions, amount | 43,259,000 | 0 | 43,259,000 | 0 | ||
Share-based compensation expense, amount | $ 625,000 | 625,000 | 0 | |||
Exercise of options, shares | 0 | 76,000 | ||||
Exercise of options, amount | $ 46,000 | 46,000 | ||||
Share-based compensation expense, shares | 371,000 | |||||
Issuance of warrants | 0 | |||||
Exercise of warrants, shares | 1,325,000 | |||||
Exercise of warrants, amount | 665,000 | $ 0 | 665,000 | |||
Balance, shares at Jun. 30, 2021 | 92,423,000 | 203,000 | ||||
Balance, amount at Jun. 30, 2021 | 70,241,000 | 170,613,000 | (100,372,000) | |||
Balance, shares at Mar. 31, 2021 | 83,221,000 | 203,000 | ||||
Balance, amount at Mar. 31, 2021 | 59,903,000 | 161,006,000 | (101,103,000) | |||
Net loss | 731,000 | $ 0 | $ 0 | 0 | 731,000 | |
Shares issued in connection with conversion of convertible debentures, shares | 1,003,000 | |||||
Shares issued in connection with conversion of convertible debentures, amount | 200,000 | $ 0 | 200,000 | 0 | ||
Issuance of shares associated with acquisitions, shares | 7,998,000 | |||||
Issuance of shares associated with acquisitions, amount | 9,023,000 | 0 | 9,023,000 | 0 | ||
Share-based compensation expense, amount | 338,000 | 0 | 338,000 | 0 | ||
Exercise of options, shares | 76,000 | |||||
Exercise of options, amount | 46,000 | $ 0 | 46,000 | 0 | ||
Share-based compensation expense, shares | 125,000 | |||||
Balance, shares at Jun. 30, 2021 | 92,423,000 | 203,000 | ||||
Balance, amount at Jun. 30, 2021 | $ 70,241,000 | $ 170,613,000 | $ (100,372,000) |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) | |||||||
Net revenue | $ 15,157,000 | $ 9,894,000 | $ 26,183,000 | $ 19,336,000 | $ 42,618,000 | $ 37,045,000 | $ 17,199,000 |
Cost of goods sold | 9,413,000 | 11,157,000 | 21,915,000 | 22,328,000 | 40,413,000 | 47,790,000 | 13,136,000 |
Gross profit (loss) | 5,744,000 | (1,263,000) | 4,268,000 | (2,992,000) | 2,205,000 | (10,745,000) | 4,063,000 |
Operating expenses | |||||||
General and administrative | 3,817,000 | 1,456,000 | 6,285,000 | 4,733,000 | 11,762,000 | 25,814,000 | 8,779,000 |
Sales and marketing | 2,233,000 | 1,184,000 | 3,667,000 | 2,410,000 | 5,169,000 | 8,029,000 | 2,513,000 |
Depreciation and amortization | 167,000 | 885,000 | 491,000 | 1,762,000 | 1,082,000 | 993,000 | 101,000 |
Total operating expenses | 6,217,000 | 3,525,000 | 10,443,000 | 8,905,000 | 18,013,000 | 34,836,000 | 11,393,000 |
Loss from operations | (473,000) | (4,788,000) | (6,175,000) | (11,897,000) | (15,808,000) | (45,581,000) | (7,330,000) |
Other income/(expense) | |||||||
Other income (expense) | 1,858,000 | 0 | 1,416,000 | 25,000 | 1,486,000 | 95,000 | (106,000) |
Loss on termination of investment | 0 | (3,524,000) | 0 | (3,524,000) | 4,201,000 | 0 | 0 |
Unrealized gain on change in fair value of investment | 18,000 | 306,000 | 124,000 | 391,000 | 168,000 | (2,250,000) | 0 |
Gain/(Loss) on foreign currency | 0 | 159,000 | 0 | ||||
Interest expense | (598,000) | (726,000) | (1,215,000) | (1,576,000) | (3,331,000) | (2,152,000) | (1,178,000) |
Total other income (expense) | 1,278,000 | (3,944,000) | 325,000 | (4,684,000) | (5,878,000) | (4,148,000) | (1,284,000) |
Income (loss) before provision for income taxes | 805,000 | (8,732,000) | (5,850,000) | (16,581,000) | (21,686,000) | (49,729,000) | (8,614,000) |
Provision for income taxes | 74,000 | 25,000 | 138,000 | 50,000 | 224,000 | 205,000 | 97,000 |
Net income (loss) | $ 731,000 | $ (8,757,000) | $ (5,988,000) | $ (16,631,000) | $ (21,910,000) | $ (49,934,000) | $ (8,711,000) |
Net income (loss) per share: | |||||||
Basic | $ 0.01 | $ (0.26) | $ (0.10) | $ (0.50) | $ (0.65) | $ (1.59) | |
Diluted | $ 0 | $ (0.26) | $ (0.10) | $ (0.50) | $ (0.65) | $ (1.59) | |
Weighted average shares outstanding: | |||||||
Basic | 71,021,000 | 33,307,000 | 61,956,000 | 33,025,000 | 33,940,000 | 31,379,000 | |
Diluted | 201,278,000 | 33,307,000 | 61,956,000 | 33,025,000 | 33,940,000 | 31,379,000 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOW FROM OPERATING ACTIVITIES | |||||
Net loss | $ (5,988,000) | $ (16,631,000) | $ (21,910,000) | $ (49,934,000) | $ (8,711,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depreciation and amortization | 1,858,000 | 1,762,000 | 3,912,000 | 3,914,000 | 455,000 |
Amortization of debt issuance costs | 420,000 | 0 | 481,000 | 0 | 321,000 |
Share-based compensation expense | 625,000 | 1,825,000 | 2,200,000 | 3,385,000 | 270,000 |
Provision for doubtful accounts | 173,000 | 720,000 | 1,195,000 | 2,346,000 | 175,000 |
Allowance for inventory obsolescence | 0 | 700,000 | 0 | ||
Loss on termination of investment | 0 | 3,524,000 | (4,201,000) | 0 | 0 |
Loss on sale of assets | 0 | 446,000 | 0 | ||
Warrants issued in exchange for services | 0 | 0 | 87,000 | ||
Termination of branding rights agreement | 152,000 | 0 | |||
Unrealized gain on change in fair value of investments | (125,000) | (395,000) | (548,000) | 1,713,000 | 0 |
Changes in operating assets and liabilities: | |||||
Accounts receivable | (1,526,000) | 1,390,000 | 966,000 | (6,230,000) | (1,693,000) |
Inventory | (1,501,000) | 1,980,000 | 485,000 | 1,580,000 | (8,127,000) |
Prepaid expenses and other current assets | (553,000) | (333,000) | (1,043,000) | (463,000) | (1,568,000) |
Other assets | 0 | 0 | 18,000 | (2,000,000) | (7,000) |
Accounts payable and accrued expenses | (4,320,000) | 2,307,000 | 2,222,000 | 5,207,000 | (651,000) |
Net cash received from disposition of business interest | 500,000 | 0 | |||
Other current and long-term liabilities | 0 | (98,000) | (90,000) | 13,000 | 1,217,000 |
Net cash used in operating activities | (10,785,000) | (7,473,000) | (7,752,000) | (39,323,000) | (18,232,000) |
CASH FLOW FROM INVESTING ACTIVITIES | |||||
Proceeds from asset sales | 1,979,000 | 0 | 743,000 | 1,455,000 | 0 |
Purchases of property and equipment | (608,000) | 4,110,000 | 6,850,000 | (9,991,000) | (2,628,000) |
Disposition of business interest, net of cash received | 0 | 2,743,000 | 500,000 | 0 | |
Acquisition of business assets, net | (6,642,000) | 0 | |||
Investment in corporate interests | 0 | 0 | 0 | (1,525,000) | (148,000) |
Net cash used in investing activities | (5,271,000) | (1,367,000) | (5,607,000) | (10,061,000) | (2,776,000) |
CASH FLOW FROM FINANCING ACTIVITIES | |||||
Principal payments on lease obligations | (1,164,000) | (1,053,000) | (2,951,000) | (1,155,000) | (40,000) |
Payments on notes payable | (128,000) | (31,000) | (4,267,000) | (106,000) | (850,000) |
Proceeds from convertible notes, net of financing costs | 0 | 13,663,000 | |||
Issuance of warrants associated with convertible notes offering | 0 | 1,556,000 | |||
Proceeds from brokered private placement | 0 | 62,000 | 0 | 40,195,000 | 0 |
Fees on public brokered private placement | 0 | (1,919,000) | 0 | ||
Proceeds from lease financing | 0 | 0 | 671,000 | 0 | 0 |
Proceeds from notes payable | 0 | 0 | 3,800,000 | 76,000 | 500,000 |
Proceeds from convertible debentures, net of financing costs | 15,281,000 | 0 | 0 | ||
Proceeds from exercise of warrants and options | 710,000 | 0 | 0 | 127,000 | 0 |
Issuance of subordinate voting shares for acquisition | 0 | 0 | 0 | 3,200,000 | 0 |
Proceeds from exercise of warrants | 210,000 | 0 | 0 | ||
Proceeds from subordinate voting share offering | 26,930,000 | 0 | 0 | ||
Fees on subordinate voting share offering | (1,909,000) | 0 | 0 | ||
Proceeds from share offering | 0 | 0 | 29,479,000 | ||
Payment of debt issuance costs | 0 | 0 | |||
Net cash (used) provided by financing activities | (582,000) | 14,197,000 | 37,765,000 | 40,418,000 | 29,089,000 |
Change in cash and cash equivalents and restricted cash | (16,638,000) | 5,357,000 | 24,407,000 | (8,966,000) | 8,081,000 |
Cash and cash equivalents-beginning of year | 25,751,000 | 1,344,000 | 1,344,000 | 10,310,000 | 2,229,000 |
Cash, cash equivalents and restricted cash-end of period | 9,113,000 | 6,701,000 | 25,751,000 | 1,344,000 | 10,310,000 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||
Cash paid during the period for interest | 605,000 | 1,403,000 | 3,332,000 | 2,147,000 | 114,000 |
Cash paid during the period for income taxes | 187,000 | 0 | 262,000 | 105,000 | 33,000 |
OTHER NONCASH INVESTING AND FINANCING ACTIVITIES | |||||
Purchase of property and equipment not yet paid for | 362,000 | 0 | 0 | ||
Property and equipment acquired via capital lease | 0 | 578,000 | 7,416,000 | 0 | 207,000 |
Shares Issued in exchange for asset investment | 179,000 | 0 | 350,000 | ||
Disposition of business interests | 0 | 2,743,000 | |||
Issuance of warrants | 0 | 1,556,000 | 1,620,000 | 2,291,000 | |
Shares issued for services in connection with convertible debenture offering | 0 | 62,000 | 75,000 | 0 | 0 |
Shares issued to acquiree in connection with reverse takeover | 0 | 1,513,000 | 0 | ||
Issuance of subordinate voting shares in exchange for net assets acquired | 43,259,000 | 0 | |||
Issuance of supervoting shares | (39,000) | 40,000 | 0 | ||
Shares issued in connection with debt and accured interest conversion | 0 | 0 | 13,006,000 | ||
Stock options issued associated with an acquisition | 116,000 | 0 | 0 | ||
Liabilities assumed and receivable forgiveness in exchange for net assets acquired | 2,910,000 | 0 | |||
Acquisition of private entities | $ 0 | $ 1,028,000 | $ 571,000 | ||
Debt and associated accrued interest converted to subordinate voting shares | $ 478,000 | $ 0 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2020 | |
NATURE OF OPERATIONS | |
1. NATURE OF OPERATIONS | 1. NATURE OF OPERATIONS On November 13, 2018, Indus Holding Company (a wholly owned subsidiary of Indus Holdings, Inc.) and Mezzotin Minerals Inc. (“Mezzotin”) entered into a combination agreement whereby the parties agreed to combine their respective businesses, which would result in the reverse takeover of Mezzotin by the security holders of Indus. Mezzotin Minerals was originally incorporated under the Business Corporations Act (Ontario) on October 27, 2005 as Zoolander Corporation. On September 10, 2013, Zoolander changed its name to Mezzotin Minerals Inc. On April 26, 2019, the reverse takeover transaction concluded. In connection with the agreement, Mezzotin changed its name from Mezzotin Minerals Inc. to Indus Holdings, Inc. (the “Company”, “Pubco”, or “Indus”). Effective at the close of markets on April 29, 2019, the common shares of the Company (“Existing Mezzotin Shares”) were delisted from the NEX board of the TSX Venture Exchange, and the subordinate voting shares of the Company commenced trading on the Canadian Stock Exchange effective at market open on April 30, 2019, under the new symbol “INDS”. Indus Holding Company (“IHC”), a Delaware corporation, was formed in 2014. Indus Holdings, Inc. became the indirect parent of IHC in connection with the reverse takeover transaction. Indus Holdings, Inc., through its licensed subsidiaries, is a vertically integrated cannabis company that owns, manages and operates cultivation, extraction, distribution and manufacturing facilities in California. Effective March 1, 2021, Indus Holdings, Inc. changed its name to Lowell Farms Inc. See Note 23. The Company’s corporate office and principal place of business is located at 19 Quail Run Circle, Salinas, California. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
NATURE OF OPERATIONS | ||
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The interim unaudited condensed consolidated financial statements included herein have been prepared by Lowell Farms Inc. (the “Company” or “Lowell”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The interim unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary (consisting only of normal recurring adjustments), to present a fair statement of results for the interim periods presented. The operating results for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Form 10 filed for the year ended December 31, 2020. There have been no material changes to our significant accounting policies as of and for the six months ended June 30, 2021. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all intercompany balances and transactions. The condensed consolidated balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include allowance for doubtful accounts and credit losses, carrying value of inventory, revenue recognition, accounting for stock-based compensation expense, and income taxes. Actual results could differ from those estimates. The global COVID-19 pandemic has impacted the operations and purchasing decisions of companies worldwide. It also has created and may continue to create significant uncertainty in the global economy. The Company has undertaken measures to protect its employees, partners, customers, and vendors. In addition, the Company’s personnel are subject to various travel restrictions, which limit the ability of the Company to provide services to customers and affiliates. This impacts the Company's normal operations. To date, the Company has been able to provide uninterrupted access to its products and services, including certain employees that are working remotely, and its pre-existing infrastructure that supports secure access to the Company’s internal systems. If, however, the COVID-19 pandemic has a substantial impact on the productivity of the Company’s employees or its partners’ or customers’ decision to use the Company’s products and services, the results of the Company’s operations and overall financial performance may be adversely impacted. The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require updates to the Company’s estimates and judgments or revisions to the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements. Recently Adopted Accounting Standards In May 2020, the SEC adopted the final rule under SEC release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, amending Rule 1-02(w)(2) which includes amendments to certain of its rules and forms related to the disclosure of financial information regarding acquired or disposed businesses. Among other changes, the amendments impact SEC rules relating to (1) the definition of “significant” subsidiaries, (2) requirements to provide financial statements for “significant” acquisitions, and (3) revisions to the formulation and usage of pro forma financial information. The final rule became effective on January 1, 2021; however, voluntary early adoption was permitted. The Company early adopted the provisions of the final rule in 2020. The guidance did not have a material impact on the Company’s condensed consolidated financial statements and disclosures. In February 2016, FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use (ROU) asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases Topic 842 Target improvements, which provides an additional (and optional) transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements, which further clarifies the determination of fair value of the underlying asset by lessors that are not manufacturers or dealers and modifies transition disclosure requirements for changes in accounting principles and other technical updates. The Company adopted the standard effective January 1, 2019 using the modified retrospective adoption method which allowed it to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit. In connection with the adoption of the new lease pronouncement, the Company recorded a charge to accumulated deficit of $847. Refer to the Summary of Effects of Lease Accounting Standard Update Adopted in First Quarter of 2019 in the audited consolidated financial statements and notes thereto in the Company’s Form 10 filed for the year ended December 31, 2020. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and subsequent amendments to the initial guidance: ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”, ASU 2019-04 “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”, ASU 2019-05 “Financial Instruments-Credit Losses”, ASU 2019-11 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (collectively, Topic 326),ASU 2020-02 Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842) and ASU 2020-03 Codification Improvements to Financial Instruments. Topic 326 requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for the year ended December 31, 2020. The Company believes that the most notable impact of this ASU will relate to its processes around the assessment of the adequacy of its allowance for doubtful accounts on trade accounts receivable and the recognition of credit losses. We continue to monitor the economic impact of the COVID-19 pandemic, however based on current market conditions, the adoption of the ASU did not have a material impact on the condensed consolidated financial statements. In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808), Clarifying the Interaction between Topic 808 and Topic 606. This guidance amended Topic 808 and Topic 606 to clarify that transactions in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer for a distinct good or service (i.e., unit of account). The amendments preclude an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. This guidance is effective for the year ended December 31, 2020. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance removes certain exceptions to the general principles in Topic 740 and enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. This guidance was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and did not have a material impact on our condensed consolidated financial statements. In January 2020, the FASB issued ASU 2020-01 Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This guidance addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. We are currently evaluating the impact of ASU 2020-01 on our Consolidated Financial Statements, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and did not have a material impact on our condensed consolidated financial statements. Accounting standards not yet adopted In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021, which means it will be effective for our fiscal year beginning January 1, 2022. Early adoption is permitted. We are currently evaluating the impact of ASU 2020-06 on our condensed consolidated financial statements. No other recently issued accounting pronouncements had or are expected to have a material impact on our condensed consolidated financial statements. | 2. SIGNIFICANT ACCOUNTING POLICIES Estimates The World Health Organization categorized the Coronavirus disease 2019 (COVID-19) as a pandemic. The COVID-19 pandemic has caused a severe global health crisis, along with economic and societal disruptions and uncertainties, which have negatively impacted business and healthcare activity globally. As a result of healthcare systems responding to the demands of managing the pandemic, governments around the world imposing measures designed to reduce the transmission of the COVID-19 virus, and individuals responding to the concerns of contracting the COVID-19 virus, many optical practitioners & retailers, hospitals, medical offices and fertility clinics closed their facilities, restricted access, or delayed or canceled patient visits, exams and elective medical procedures, and many customers that have reopened are experiencing reduced patient visits. This has had, and we believe will continue to have, an adverse effect on our sales, operating results and cash flows. The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of net sales and expenses during the reporting period. Actual results could differ from those estimates particularly as it relates to estimates reliant on forecasts and other assumptions reasonably available to the Company and the uncertain future impacts of the COVID-19 pandemic and related economic disruptions. The extent to which the COVID-19 pandemic and related economic disruptions impact our business and financial results will depend on future developments including, but not limited to, the continued spread, duration and severity of the COVID-19 pandemic; the occurrence, spread, duration and severity of any subsequent wave or waves of outbreaks; the actions taken by the U.S. and foreign governments to contain the COVID-19 pandemic, address its impact or respond to the reduction in global and local economic activity; the occurrence, duration and severity of a global, regional or national recession, depression or other sustained adverse market event; the impact of the developments described above on our customers and suppliers; and how quickly and to what extent normal economic and operating conditions can resume. The accounting matters assessed included, but were not limited to: ● allowance for doubtful accounts and credit losses ● carrying value of inventory ● the carrying value of goodwill and other long-lived assets. There was not a material impact to the above estimates in the Company’s Consolidated Financial Statements for fiscal 2020. The Company continually monitors and evaluates the estimates used as additional information becomes available. Adjustments will be made to these provisions periodically to reflect new facts and circumstances that may indicate that historical experience may not be indicative of current and/or future results. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material changes to the estimates and material impacts to the Company’s Consolidated Financial Statements in future reporting periods. Basis of Preparation Management’s significant accounting policies include estimates and judgments which are an integral part of financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP). We believe that the accounting policies described in this section address the more significant policies utilized by management when preparing our consolidated financial statements in accordance with GAAP. We believe that the accounting policies and estimates employed are appropriate and resulting balances are reasonable; however, actual results could differ from the original estimates, requiring adjustment to these balances in future periods. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most important to aid in fully understanding and evaluating our reported financial results are: Basis of Measurement These consolidated financial statements have been prepared on the going concern basis, under the historical cost convention, except for certain financial instruments, which are measured at fair value. Historical cost is generally based upon the fair value of the consideration given in exchange for assets. Functional Currency The Company and its subsidiaries’ functional currency, as determined by management, is the United States (“U.S.”) dollar. These consolidated financial statements are presented in U.S. dollars, unless otherwise stated. Financial and other metrics, such as shares outstanding, are presented in thousands unless otherwise noted. Basis of Consolidation Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly and indirectly, to govern the financial and operating policies of an entity and be exposed to the variable returns from its activities. The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. These consolidated financial statements include the accounts of the Company and its subsidiaries: ● Indus Holding Company, a Delaware corporation, wholly owned by Indus Holdings, Inc. ● Cypress Holding Company, a Delaware limited liability company, wholly owned by Indus Holding Company ● Cypress Manufacturing Company, a California corporation, wholly owned by Indus Holding Company ● Indus Nevada LLC, a Nevada limited liability corporation, wholly owned by Indus Holding Company ● Wellness Innovation Group Incorporated, a California corporation, wholly owned by Indus Holding Company Intercompany balances, and any unrealized gains and losses or income and expenses arising from transactions with subsidiaries, are eliminated. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash deposits in financial institutions, and other deposits that are readily convertible into cash. The Company considers all short-term, highly liquid investments purchased with maturities of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. Accounts Receivable Accounts receivables are classified as loans and receivable financial assets. Accounts receivables are recognized initially at fair value and subsequently measured at amortized cost, less any provisions for impairment. When an accounts receivable is uncollectible, it is written off against the provision. Subsequent recoveries of amounts previously written off are credited to the consolidated statements of operations. Inventories Inventories are valued at the lower of cost and net realizable value. Costs related to raw materials and finished goods are determined on the first-in, first-out basis. Specific identification and average cost methods are also used primarily for certain packing materials and operating supplies. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventory is written-down to net realizable value. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and impairment losses, if any. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms and methods: Category Useful Life Leasehold improvements The lesser of the estimated useful life or length of the lease Office equipment 3–5 years Furniture and fixtures 3–7 years Vehicles 4–5 years Machinery and equipment 3–6 years Buildings 35 years Construction in progress Not depreciated The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively if appropriate. An item of equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the consolidated statements of operations in the year the asset is derecognized. Goodwill Goodwill represents the excess of the purchase price paid for the acquisition of an entity over the fair value of the net tangible and intangible assets acquired. Goodwill that has an indefinite useful life is not subject to amortization and is tested annually for impairment, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. Any goodwill impairment loss is recognized in the consolidated statements of operations in the period in which the impairment is identified. Impairment losses on goodwill are not subsequently reversed. Intangible Assets Intangible assets are recorded at cost, less accumulated amortization and impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Amortization is recorded on a straight-line basis over their estimated useful lives, which do not exceed the contractual period, if any. The estimated useful lives, residual values, and amortization methods are reviewed at each year-end, and any changes in estimates are accounted for prospectively. Branding rights are measured at fair value at the time of acquisition and are amortized on a straight-line basis over a period of 15 years. In addition, the Company has certain brand and tradenames with indefinite lives, which are evaluated for impairment on an annual basis. Impairment of Long-lived Assets Long-lived assets, including property, plant and equipment and intangible assets are reviewed for impairment at each statement of financial position date or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit, or “CGU”). The recoverable amount of an asset or a CGU is the higher of its fair value, less costs to sell, and its value in use. If the carrying amount of an asset exceeds its recoverable amount, an impairment charge is recognized immediately in profit or loss equal to the amount by which the carrying amount exceeds the recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of the revised estimate of the recoverable amount, and the carrying amount that would have been recorded had no impairment loss been recognized previously. Leased Assets A lease of property and equipment is classified as a capital lease if it transfers substantially all the risks and rewards incidental to ownership to the Company. Lease right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make payments arising from the lease agreement. These assets and liabilities are recognized at the commencement of the lease based upon the present value of the future minimum lease payments over the lease term. The lease term reflects the noncancelable period of the lease together with periods covered by an option to extend or terminate the lease when management is reasonably certain that it will exercise such option. Changes in the lease term assumption could impact the right-of-use assets and lease liabilities recognized on the balance sheet. As our leases typically do not contain a readily determinable implicit rate, we determine the present value of the lease liability using our incremental borrowing rate at the lease commencement date based on the lease term on a collateralized basis. Income Taxes The Company is a United States C corporation for income tax purposes. Income tax expense consisting of current and deferred tax expense is recognized in the consolidated statements of operations. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end, adjusted for amendments to tax payable with regards to previous years. Deferred tax assets and liabilities and the related deferred income tax expense or recovery are recognized for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs. A deferred tax asset is recognized to the extent that it is probable that future taxable income will be available against which the asset can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. Branded Products For the Company’s branded products, revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a customer. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. Third Party Manufactured Products The Company has certain licenses to manufacture and distribute third party products to retail dispensaries and deliveries in return for paying royalty payments to the third parties. The Company is a principal in the arrangement, it assumes primary responsibility for fulfilling the customer promise to retail dispensaries and deliveries, and it holds the inventory risk. Revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a retail dispensary or retail delivery. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. Distribution The Company distributes certain third party brands and bulk flower. The Company is a principal in the arrangement, it assumes primary responsibility for fulfilling the customer promise to retail dispensaries and deliveries and other wholesale customers, and it holds the inventory risk. Revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a customer. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. Research and Development Research costs are expensed as incurred. For the years ended December 31, 2020 and December 31, 2019, research costs are immaterial. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete the development to use or sell the asset. To date, no development costs have been capitalized. Share-Based Compensation The Company has a share-based compensation plan. The Company measures equity settled share-based payments based on their fair value at the grant date and recognizes compensation expense over the vesting period based on the Company’s estimate of equity instruments that will eventually vest. For shares granted to non-employees, the compensation expense is measured at the fair value of the goods and services received, except where the fair value cannot be estimated, in which case, it is measured at the fair value of the equity instruments granted. The fair value of share-based compensation to non-employees is periodically re-measured until counterparty performance is complete, and any change therein is recognized over the period and in the same manner as if the Company had paid cash instead of paying with or using equity instruments. Business Combinations A business combination is defined as an acquisition of assets and liabilities that constitute a business. A business consists of inputs, including non-current assets and processes, including operational processes, that when applied to those inputs have the ability to create outputs that provide a return to the Company. Business combinations are accounted for using the acquisition method of accounting. The consideration of each acquisition is measured at the aggregate of the fair values of tangible and intangible assets obtained, liabilities and contingent liabilities incurred or assumed, and equity instruments issued by the Company at the date of acquisition. Key assumptions routinely utilized in allocation of purchase price to intangible assets include projected financial information such as revenue projections for companies acquired. As of the acquisition date, goodwill is measured as the excess of consideration given, generally measured at fair value, and the net of the acquisition date fair values of the identifiable assets acquired and the liabilities assumed. Significant Accounting, Estimates and Assumptions The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the review affects both current and future periods. Significant judgments, estimates and assumptions that have the most significant effect on the amounts recognized in the consolidated financial statements are described below. ● Estimated Useful Lives and Depreciation of Property and Equipment– Depreciation of property and equipment is dependent upon estimates of useful lives which are determined through the exercise of judgment. The assessment of any impairment of these assets is dependent upon estimates of recoverable amounts that take into account factors such as economic and market conditions and the useful lives of assets. ● Estimated Useful Lives and Amortization of Intangible Assets– Amortization of intangible assets is recorded on a straight-line basis over their estimated useful lives, which do not exceed the contractual period, if any. ● Fair Value of Investments in Private Entities – The Company uses discounted cash flow model to determine fair value of its investment in private entities. In estimating fair value, management is required to make certain assumptions and estimates such as discount rate, long term growth rate, estimated free cash flows. ● Share-Based Compensation– The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options and warrants granted. In estimating fair value, management is required to make certain assumptions and estimates such as the expected life of units, volatility of the Company’s future share price, risk free rates, future dividend yields and estimated forfeitures at the initial grant date. Changes in assumptions used to estimate fair value could result in materially different results. ● Deferred Tax Asset and Valuation Allowance– Deferred tax assets, including those arising from tax loss carry-forwards, requires management to assess the likelihood that the Company will generate sufficient taxable earnings in future periods in order to utilize recognized deferred tax assets. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. In addition, future changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted. Restatement The Company previously filed its consolidated financial statements for the periods ended December 31, 2020 and 2019, and for each of the years in the three-year period ended December 31, 2020 with incorrect calculations within the consolidated statements of financial position and consolidated statement of operations related to the conversion from international financial reporting standards to GAAP. The financial statements have been restated to properly reflect inventory and cost of goods sold in accordance with GAAP. The effect of the restatement was to decrease inventory and increase accumulated deficit $4,765 at December 31, 2020, increase inventory and reduce accumulated deficit by $6,183 at December 31, 2019 and change cost of goods sold by $10,498, $(316) and $(5,867) for the years ended December 31, 2020, 2019 and 2018, respectively and earnings per share by $(0.32) and $0.01 for the years ended December 31, 2020 and 2019, respectively. Additionally, the Company reclassified certain depreciation expense from operating expense to cost of goods sold to reflect depreciation expense associated with right of use operating assets in cost of goods sold. The effect of the reclassification was to increase cost of goods sold and decrease operating expenses by $2,589 and $2,329 for the years ended December 31, 2020 and 2019, respectively. The consolidated statements of cash flows were impacted by the resulting offsetting changes in net loss and inventory, resulting in no change in net cash used in operating activities for the periods presented. The consolidated statements of change in stockholders’ equity were impacted by the change in net loss for the periods presented. |
CHANGES IN OR ADOPTION OF ACCOU
CHANGES IN OR ADOPTION OF ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2020 | |
CHANGES IN OR ADOPTION OF ACCOUNTING POLICIES | |
3.CHANGES IN OR ADOPTION OF ACCOUNTING POLICIES | 3. CHANGES IN OR ADOPTION OF ACCOUNTING POLICIES The following accounting pronouncements were recently adopted: In May 2020, the SEC adopted the final rule under SEC release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses In February 2016, FASB issued ASU 2016-02, Leases (Topic 842) Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases Topic 842 Target improvements, Leases (Topic 842) Codification Improvements Effects of Adoption The Company has elected to use the practical expedient package that allows us to not reassess: (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. The Company additionally elected to use the practical expedients that allow lessees to: (1) treat the lease and non-lease components of leases as a single lease component for all of its leases and (2) not recognize on its balance sheet leases with terms less than twelve months. The Company determines if an arrangement is a lease at inception. The Company leases certain manufacturing facilities, warehouses, offices, machinery and equipment, vehicles and office equipment under operating leases. Under the new standard, operating leases result in the recognition of ROU assets and lease liabilities on the consolidated balance sheet. ROU assets represent our right to use the leased asset for the lease term and lease liabilities represent our obligation to make lease payments. Under the new standard, operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, upon adoption of the new standard, we used our estimated incremental borrowing rate based on the information available, including lease term, as of January 1, 2019 to determine the present value of lease payments. Operating lease ROU assets are adjusted for any lease payments made prior to January 1, 2019 and any lease incentives. Certain of our leases may include options to extend or terminate the original lease term. The Company generally concluded that it is not reasonably certain to exercise these options due primarily to the length of the original lease term and its assessment that economic incentives are not reasonably certain to be realized. Operating lease expense under the new standard is recognized on a straight-line basis over them lease term. Current finance lease obligations consist primarily of cultivation, manufacturing and distribution facility leases. Refer to the Summary of Effects of Lease Accounting Standard Update Adopted in First Quarter of 2019 Leases accounted for under the new standard have initial remaining lease terms of one to seven years. Certain of our lease agreements include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Summary of Effects of Lease Accounting Standard Update Adopted in First Quarter of 2019 The cumulative effects of the changes made to our consolidated balance sheet as of the beginning of the first quarter of 2019 as a result of the adoption of the accounting standard update on leases were as follows: Effects of adoption of lease accounting standard update related to: (in thousands, $US) As filed December 31, 2018 Operating Leases Total Effects of Adoption With effect of lease accounting standard update January 1, 2019 Assets Property and equipment, net $ 4,063 $ 23,594 $ 23,594 $ 27,656 Liabilities Current portion of long-term debt 147 1,492 1,492 1,639 Long-term debt, net 389 22,948 22,948 23,337 Equity Accumulated Deficit (20,201 ) (847 ) (847 ) (21,047 ) Total $ 23,728 $ - $ - $ 23,728 In June 2016, the FASB issued ASU No. 2016-13, ”Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ”Codification Improvements to Topic 326, Financial Instruments-Credit Losses Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” Financial Instruments-Credit Losses Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (collectively, Topic 326), Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842) Codification Improvements to Financial Instruments. In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808), Clarifying the Interaction between Topic 808 and Topic 606. The following accounting pronouncements issued have not yet been adopted: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. In January 2020, the FASB issued ASU 2020-01 Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. In August 2020, the FASB issued ASU 2020-06, Debt— Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) No other recently issued accounting pronouncements had or are expected to have a material impact on our Consolidated Financial Statements. |
REVERSE TAKEOVER AND PRIVATE PL
REVERSE TAKEOVER AND PRIVATE PLACEMENT | 12 Months Ended |
Dec. 31, 2020 | |
REVERSE TAKEOVER AND PRIVATE PLACEMENT | |
4. REVERSE TAKEOVER AND PRIVATE PLACEMENT | 4. REVERSE TAKEOVER AND PRIVATE PLACEMENT Reverse Takeover As discussed in Note 1, on November 13, 2018, Indus Holding Company (“IHC”), a wholly owned subsidiary of Indus Holdings, Inc., and Mezzotin Minerals Inc. (“Mezzotin”) entered into a combination agreement whereby the parties agreed to combine their respective businesses, which would result in the reverse takeover of Mezzotin by the security holders of Indus. On March 29, 2019, IHC and Mezzotin signed the Definitive Agreement subject to regulatory approval and on April 26, 2019 concluded the transaction. In connection with the agreement, Mezzotin changed its name from Mezzotin Minerals Inc. to Indus Holdings, Inc. Effective at the close of markets on April 29, 2019, the common shares of the Company (“Existing Mezzotin Shares”) were delisted from the NEX board of the TSX Venture Exchange, and the subordinate voting shares of the Company (“Subordinate Voting Shares”) commenced trading on the Canadian Securities Exchange effective at market open on April 30, 2019, under the new symbol “INDS”. Pursuant to the Transaction, the Existing Mezzotin Shares were redesignated as a new class of Subordinate Voting Shares on the basis of one Subordinate Voting Shares for every 485.3 Existing Mezzotin Shares. In addition, Indus created a new class of voting common shares and a new class of non-voting redeemable common shares (“Convertible Shares”) and the outstanding shares of Indus (“Indus Shares”) were reclassified as Convertible Shares at a rate of one (1) Convertible Share for every one (1) Indus Share held. The Company also amended its articles in connection with the Transaction to (i) continue from the Province of Ontario to the Province of British Columbia; and (ii) change its name from Mezzotin Minerals Inc. to Indus Holdings, Inc. The transaction has been accounted for in accordance with ASC 805 as an asset acquisition. In consideration for the acquisition of Mezzotin, Indus is deemed to have issued 130 shares of Indus subordinate voting shares representing $1,513 total value based on the concurrent financing subscription price of CAD$15.65 (US$11.60). The excess of the purchase price over net assets acquired was charged to the consolidated statements of operations as RTO expense. Mezzotin equity was eliminated. (in thousands) CONSIDERATION Fair value of subordinate voting shares issued $ 1,513 Transaction costs 191 Total consideration $ 1,704 ASSETS ACQUIRED Total identifiable net assets acquired - Listing expenses 1,704 Total purchase price $ 1,704 Under the Transaction: (i) non-U.S. shareholders of Indus (and such U.S. shareholders of Indus as elected to participate) then contributed their Convertible Shares to the Company in exchange for Subordinate Voting Shares at a rate of one (1) Subordinate Voting Share for every one (1) Convertible Share contributed, and on a going-forward basis, U.S. shareholders of Indus may from time to time elect to redeem their Convertible Shares in exchange for Subordinate Voting Shares at the same rate (or under certain circumstances for the cash value of such shares as provided in the share terms for the Convertible Shares); (ii) a designated founder of Indus subscribed for non-participating, super-voting shares of the Company carrying voting rights that, in the aggregate, represent approximately 85% of the voting rights of the Company upon completion of the Transaction on a fully diluted basis; (iii) all warrants of Indus (including compensation options issued to financial advisors) remained outstanding and will now entitle the holders thereof to acquire Convertible Shares on the same terms and conditions and on an economically equivalent basis; and (iv) all stock options of Indus outstanding under Indus’ existing equity incentive plan were assumed by the Company and will now entitle the holders thereof to acquire Subordinate Voting Shares on the same terms and conditions and on an economically equivalent basis in lieu of securities of Indus. Private Placement In connection with the Transaction, Indus completed a private placement offering (the “Private Placement”) through a special purpose finance company (“FinanceCo”) on April 2, 2019, pursuant to which FinanceCo issued an aggregate of 3,436 subscription receipts (“Subscription Receipts”) at a price of CDN$15.65 per Subscription Receipt to raise aggregate gross proceeds of approximately US$40 million. The gross proceeds of the Private Placement, less certain associated expenses, were deposited into escrow (the “Escrowed Proceeds”) pending satisfaction of certain specified release conditions (the “Escrow Release Conditions”), all of which were satisfied immediately prior to the completion of the Transaction. As a result, the Escrowed Proceeds were released to FinanceCo prior to the closing of the Transaction, and each Subscription Receipt was automatically converted, for no additional consideration, into one common share of FinanceCo. Following satisfaction of the Escrow Release Conditions, in connection with the Transaction, the Company acquired all of the issued and outstanding FinanceCo shares pursuant to a three-cornered amalgamation, and the former holders thereof (including the former holders of FinanceCo Shares acquired upon conversion of the Subscription Receipts) each received one Subordinate Voting Share in exchange for each FinanceCo share held. Also in connection with the Private Placement, FinanceCo issued an aggregate of 198 broker warrants to the agents under the offering as partial consideration for their services in connection with the Private Placement, each of which was exercisable to acquire one FinanceCo share at an exercise price of CDN$15.65 for a period of two (2) years from the satisfaction of the Escrow Release Conditions. Upon completion of the amalgamation, the Broker Warrants were exchanged for compensation options of the Company which are exercisable to acquire Subordinate Voting Shares in lieu of FinanceCo Shares, otherwise upon the same terms and conditions. |
ACQUISITIONS
ACQUISITIONS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
ACQUISITIONS | ||
2. ACQUISITIONS | 2. ACQUISITIONS Completed Acquisitions (1 ) (2) (3) (4) The Humble The Hacienda Lowell Farm (in thousands) Kaizen Inc. Flower Co. Company, LLC Services Total CONSIDERATION Contingent Payment $ 50 $ 44 $ - $ - $ 94 Cash 4,019 - 4,019 Transaction costs 428 190 618 Note payable and other obligations 200 65 3,115 9,000 12,380 Fair value of subordinate voting shares 62 55 34,358 9,610 44,085 Total consideration $ 312 $ 164 $ 41,920 $ 18,800 $ 61,196 PURCHASE PRICE ALLOCATION Assets Acquired Inventories $ - $ 6 $ 3,300 $ - $ 3,306 Accounts receivable - net - - 1,312 - 1,312 Other tangible assets - - 739 15,750 16,489 Intangible assets - brands and tradenames 104 80 37,299 - 37,483 Intangible assets - technology and know-how and other 208 78 - 3,050 3,336 Liabilities assumed Payables and other liabilities - - (730 ) - (730 ) Fair value of net assets acquired $ 312 $ 164 $ 41,920 $ 18,800 $ 61,196 The Company completed the following asset acquisitions, and allocated the purchase price as follows: The Kaizen Inc. and The Humble Flower Co. acquisitions qualified as a business combination under ASC 805. The Hacienda Company, LLC acquisition qualified as an asset acquisition under ASU 2017.01. Consideration has been allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. No goodwill was recognized. The results of these acquisitions are included in the Company’s net earnings from the date of acquisition. The fair value of the assets acquired and the liabilities assumed for Kaizen Inc. and the Humble Flower Company were finalized in the quarter ended June 30, 2020. ● Kaizen Inc. On May 1, 2019, the Company acquired all of the assets, global rights and business interests of Kaizen Inc. for a purchase price of $556 that will be paid as and if financial performance targets are met during the period beginning on May 1, 2019 and ending on April 30, 2023. Kaizen is a premium brand offering a full spectrum of cannabis concentrates. Effective July 15, 2020 the asset purchase agreement was modified, eliminating payments associated with meeting financial performance targets in exchange for the issuance of 225 thousand options to purchase Subordinate Voting Shares and a note payable of $200, with payments over two years. Had the modifications been reflected as of the date of acquisition, net assets would have decreased $223 at December 31, 2019 and net loss in 2019 would have been reduced by $21. ● The Humble Flower Co. On April 18, 2019, the Company acquired all of the assets, global rights and business interests associated with the brand Humble Flower Co. for a purchase price of $472 that will be paid as and if financial performance targets are met during the period beginning on April 19, 2019 and ending on April 18, 2023. The acquisition marks the Company’s expansion into cannabis-infused topical creams, balms, and oils. Effective June 1, 2020 the asset purchase agreement was modified, eliminating payments associated with meeting financial performance targets in exchange for the issuance of 225 thousand options to purchase Subordinate Voting Shares and a note payable of $65, with payments commencing on January 1, 2021 for 24 months. Had the modifications been reflected as of the date of acquisition, net assets would have decreased $308 at December 31, 2019 and net loss in 2019 would have been reduced by $34. ● The Hacienda Company, LLC. On February 25, 2021, the Company acquired substantially all of the assets of the Lowell Herb Co. and Lowell Smokes trademark brands, product portfolio, and production assets from The Hacienda Company, LLC for a purchase price of $41,920. Lowell Herb Co. is a leading California cannabis brand that manufactures and distributes distinctive and highly regarded premium packaged flower, pre-roll, concentrates, and vape products. The acquisition consideration was comprised of $4.1 million in cash and the issuance of 22,643,678 subordinate voting shares and obligations assumed. In connection with this acquisition, the Company completed a change in its corporate name to Lowell Farms Inc. effective March 1, 2021. ● Lowell Farm Services On June 29, 2021, we acquired real property and related assets of a first-of-its-kind cannabis drying and midstream processing facility located in Monterey County for a purchase price of $18,800. The 10-acre, 40,000 square foot processing facility will provide drying, bucking, trimming, sorting, grading, and packaging operations for up to 250,000 lbs. of wholesale cannabis flower annually. The new facility will process nearly all the cannabis that we grow at our existing cultivation operations. Additionally, we commissioned a new business unit called Lowell Farm Services (“LFS”), which will engage in fee-based processing services for regional growers from the Salinas Valley area. The acquisition consideration was comprised primarily of a note payable of $9.0 million and the issuance of 7,997,520 subordinate voting shares and obligations assumed. LFS operations are expected to become operational during the third quarter of 2021. Terminated Acquisition On May 14, 2019, the Company entered into a definitive agreement to acquire the assets of W The Brand (“W Vapes”), a manufacturer and distributor in Nevada and Oregon of cannabis concentrates, cartridges and disposable pens, in a cash and stock transaction. Under the terms of the agreement, the purchase consideration to W Vapes shareholders consisted of $10 million in cash and $10 million in Subordinate Voting Shares (based on a deemed value of CDN$15.65 per share). In November 2019, the definitive agreement was amended whereby the Company advanced $2 million in non-recourse funds to the seller in exchange for release of $10 million of cash held in escrow related to the acquisition and in December 2019, the Company purchased the Las Vegas, Nevada facility for $4.1 million. On July 17, 2020, the Company announced the termination of the definitive agreement with W Vapes and the obligation to acquire the assets of W Vapes was terminated. The termination coincided with an asset acquisition announcement between W Vapes and Planet 13 Holdings Inc. (“Planet 13”). Additionally, the Company sold the Las Vegas facility to certain affiliates of Planet 13 for a cash payment of approximately $500, and an additional cash payment of approximately $2.8 million upon regulatory approval of the W Vapes and Planet 13 transaction which was received in January 2021, and in the third quarter the Company finalized a note payable of $843 to the owners of W Vapes, payable coinciding with the receipt of the $2.8 million payment from the facility sale, which was paid in January 2021. As a result, the Company reflected a $4.4 million loss in loss on termination of investments, net on its consolidated statement of operations for the year ended December 31, 2020. | 5. ACQUISITIONS Completed Acquisitions During 2019, the Company completed the following acquisitions, and allocated the purchase price as follows: (Amounts Expressed in United States Dollars Unless Otherwise Stated) (2) (1) The Humble (in thousands) Kaizen Inc. Flower Co. Total CONSIDERATION Contingent Payment $ 50 $ 44 $ 94 Note Payable 200 65 265 Fair value of subordinate voting shares 62 55 117 Total consideration $ 312 $ 164 $ 476 PURCHASE PRICE ALLOCATION Assets Acquired Inventories $ - $ 6 6 Intangible assets - brands and trademarks 104 80 184 Intangible assets - technology and know-how 208 78 286 Liabilities assumed Notes payable - - - Total identifiable net assets 312 164 476 Noncontrolling interest - - - Fair value of net assets acquired $ 312 $ 164 $ 476 These acquisitions qualified as a business combination under ASC 805 and the consideration has been allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. No goodwill was recognized. The purchases have been accounted for by the acquisition method, with the results included in the Company’s net earnings from the date of acquisition. The fair value of the assets acquired and the liabilities assumed were finalized in the quarter ended June 30, 2020. The Company also incurred $47 in transactional costs related to the above acquisitions which were recorded in general and administrative expenses in the Consolidated Statements of Operations. ● Kaizen Inc. On May 1, 2019, the Company acquired all of the assets, global rights and business interests of Kaizen Inc. for a purchase price of $556 that will be paid as and if financial performance targets are met during the period beginning on May 1, 2019 and ending on April 30, 2023. Kaizen is a premium brand offering a full spectrum of cannabis concentrates. Effective July 15, 2020 the asset purchase agreement was modified, eliminating payments associated with meeting financial performance targets in exchange for the issuance of 225 thousand options to purchase Subordinate Voting Shares and a note payable of $200, with payments over two years. Had the modifications been reflected as of the date of acquisition, net assets would have decreased $223 at December 31, 2019 and net loss in 2019 would have been reduced by $21. ● The Humble Flower Co. On April 18, 2019, the Company acquired all of the assets, global rights and business interests associated with the brand Humble Flower Co. for a purchase price of $472 that will be paid as and if financial performance targets are met during the period beginning on April 19, 2019 and ending on April 18, 2023. The acquisition marks the Company’s expansion into cannabis-infused topical creams, balms, and oils. Effective June 1, 2020 the asset purchase agreement was modified, eliminating payments associated with meeting financial performance targets in exchange for the issuance of 225 thousand options to purchase Subordinate Voting Shares and a note payable of $65, with payments commencing on January 1, 2021 for 24 months. Had the modifications been reflected as of the date of acquisition, net assets would have decreased $308 at December 31, 2019 and net loss in 2019 would have been reduced by $34. ● Shredibles LLC On June 12, 2019, the Company completed the acquisition of 70% of the outstanding capital stock of Shredibles LLC (“Shredibles”), a manufacturer of CBD infused health products, from its shareholders. In February 2020, the Company determined that Shredibles was not a strategic fit for the Company and reached an agreement with the Shredibles co-founders to nullify the investment. The termination has been reflected as being effective as of December 31, 2019 in the consolidated financial statements. The operations of Shredibles, and the termination of the agreement, did not have a material impact on the results of operations of the Company in 2019. Terminated Acquisition On May 14, 2019, the Company entered into a definitive agreement to acquire the assets of W The Brand (“W Vapes”), a manufacturer and distributor in Nevada and Oregon of cannabis concentrates, cartridges and disposable pens, in a cash and stock transaction. Under the terms of the agreement, the purchase consideration to W Vapes shareholders consisted of $10 million in cash and $10 million in Subordinate Voting Shares (based on a deemed value of CDN$15.65 per share). In November 2019, the definitive agreement was amended whereby the Company advanced $2 million in non-recourse funds to the seller in exchange for release of $10 million of cash held in escrow related to the acquisition and in December 2019, the Company purchased the Las Vegas, Nevada facility for $4.1 million. On July 17, 2020, the Company announced the termination of the definitive agreement with W Vapes and is no longer obligated to acquire the assets of W Vapes. The termination of the agreement coincided with an asset acquisition announcement between W Vapes and Planet 13 Holdings Inc. (“Planet 13”). Additionally, the Company sold the Las Vegas facility to certain affiliates of Planet 13 for a cash payment of approximately $500, and an additional cash payment of approximately $2.8 million upon regulatory approval of the W Vapes and Planet 13 transaction which was received in January 2021, and in the third quarter the Company finalized a note payable of $843 to the owners of W Vapes, payable coinciding with the receipt of the $2.8 million payment from the facility sale, which was paid in January 2021. As a result, the Company has reflected a $4.4 million loss in loss on termination of investments, net on its consolidated statement of operations. The Company incurred $251 in transactional costs related to the above acquisition for the year ended December 31, 2019, which were recorded in general and administrative expenses in the Consolidated Statements of Operations. |
PREPAID AND OTHER CURRENT ASSET
PREPAID AND OTHER CURRENT ASSETS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
PREPAID AND OTHER CURRENT ASSETS | ||
3. PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3. PREPAID AND OTHER CURRENT ASSETS Prepaid and other current assets were comprised of the following items: June 30, December 31, (in thousands) 2021 2020 Deposits $ 533 $ 572 Insurance 917 593 Supplier advances 1,623 504 Nevada building sale proceeds - 2,800 Other 1,071 1,922 Total prepaid and other current assets $ 4,144 $ 6,391 | 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets were comprised of the following items: (Amounts Expressed in United States Dollars Unless Otherwise Stated) December 31, (in thousands) 2020 2019 Deposits $ 572 $ 542 Insurance 593 854 Supplier advances 504 742 Nevada building sale proceeds 2,800 - Other 1,922 591 Total Prepaid Expenses and Other Current Assets $ 6,391 $ 2,729 |
INVENTORY
INVENTORY | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
INVENTORY | ||
4. INVENTORY | 4. INVENTORY Inventory was comprised of the following items: June 30, December 31, (in thousands) 2021 2020 Raw materials $ 11,852 $ 7,950 Work in process 45 - Finished goods 2,839 1,983 Total inventory $ 14,736 $ 9,933 | 7. INVENTORY Inventory was comprised of the following items: (Amounts Expressed in United States Dollars Unless Otherwise Stated) December 31, (in thousands) 2020 2019 Raw materials $ 7,950 $ 7,645 Work in process - 34 Finished goods 1,983 2,739 Total Inventory $ 9,933 $ 10,418 |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
OTHER CURRENT LIABILITIES | ||
5. OTHER CURRENT LIABILITIES | 5. OTHER CURRENT LIABILITIES Other current liabilities were comprised of the following items: June 30, December 31, (in thousands) 2021 2020 Excise and cannabis tax $ 3,912 $ 5,780 Third party brand distribution accrual 269 584 Insurance and professional fee accrual 820 746 Other 11 1,750 Total other current liabilities $ 5,012 $ 8,860 | 8. OTHER CURRENT LIABILITIES Other current liabilities were comprised of the following items: (Amounts Expressed in United States Dollars Unless Otherwise Stated) December 31, (in thousands) 2020 2019 Excise and cannabis tax $ 5,780 $ 2,903 Third party brand distribution accrual 584 80 Insurance and professional accrual 746 576 Other 1,750 797 Total Accrued Liabilities $ 8,860 $ 4,356 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT | ||
6. PROPERTY AND EQUIPMENT | 6. PROPERTY AND EQUIPMENT A reconciliation of the beginning and ending balances of property and equipment and accumulated depreciation during the six months ended June 30, 2021 and property and equipment, net as of December 31, 2020, are as follows: Land and Leasehold Furniture Construction Right of (in thousands) Buildings Improvements and Fixtures Equipment Vehicles in Process Use Assets Total Costs Balance—December 31, 2020 $ - $ 10,799 $ 50 $ 1,276 $ 854 $ 2,528 $ 41,530 $ 57,037 Additions - 73 - 268 - 814 - 1,155 Business Acquisitions 14,529 - - 1,413 - - - 15,942 Disposals - - - - - - - - Balance—June 30, 2021 $ 14,529 $ 10,872 $ 50 $ 2,957 $ 854 $ 3,342 $ 41,530 $ 74,134 Accumulated Depreciation Balance—December 31, 2020 $ - $ (634 ) $ (47 ) $ (427 ) $ (411 ) $ - $ (6,275 ) $ (7,794 ) Depreciation - (167 ) (1 ) (72 ) (77 ) - (1,527 ) (1,844 ) Disposals - - - - - - - - Balance—June 30, 2021 $ - $ (801 ) $ (48 ) $ (499 ) $ (488 ) $ - $ (7,802 ) $ (9,638 ) Net Book Value-June 30, 2021 $ 14,529 $ 10,071 $ 2 $ 2,458 $ 366 $ 3,342 $ 33,728 $ 64,496 Net Book Value -December 31, 2020 $ - $ 10,165 $ 3 $ 849 $ 443 $ 2,528 $ 35,255 $ 49,243 Construction in process represent assets under construction related to cultivation, manufacturing, and distribution facilities not yet completed or otherwise not placed in service. Depreciation expense of $946 and $1,044 were recorded for the three months ended June 30, 2021 and 2020, respectively, of which $584 and $769 respectively, were included in cost of goods sold. Depreciation expense of $195 was also recorded in other income (expense) for the three months ended June 30, 2021. Depreciation expense of $1,844 and $1,909 were recorded for the six months ended June 30, 2021 and 2020, respectively, of which $1,168 and $1,283 respectively, were included in cost of goods sold. Depreciation expense of $195 was also recorded in other income (expense) for the six months ended June 30, 2021. | 9. PROPERTY AND EQUIPMENT A reconciliation of the beginning and ending balances of property and equipment and accumulated depreciation during the years ended December 31, 2020 and 2019 is as follows: (Amounts Expressed in United States Dollars Unless Otherwise Stated) Land and Leasehold Furniture Construction Right of (in thousands) Buildings Improvements and Fixtures Equipment Vehicles in Process Use Assets Total Costs Balance—December 31, 2018 $ - $ 1,509 $ 49 $ 2,062 $ 516 $ 895 $ - $ 5,031 Additions 4,098 2,766 - 1,192 297 1,638 10,520 20,511 IFRS 16 Adoption - - - - - - 23,594 23,594 Business Acquisitions - - - 25 - - - 25 Disposals - - - (2,179 ) - - - (2,179 ) Balance—December 31, 2019 $ 4,098 $ 4,275 $ 49 $ 1,100 $ 813 $ 2,533 $ 34,114 $ 46,982 Additions 8 1,937 1 154 41 4,604 106 6,851 Lease Option Reassessment - - - - - - 7,310 7,310 Disposals/Transfers (4,106 ) 4,587 - 22 - (4,609 ) - (4,106 ) Balance—December 31, 2020 $ - $ 10,799 $ 50 $ 1,276 $ 854 $ 2,528 $ 41,530 $ 57,037 Accumulated Depreciation Balance—December 31, 2018 $ - $ (260 ) $ (44 ) $ (570 ) $ (95 ) $ - $ - $ (969 ) Depreciation (8 ) (186 ) (3 ) (478 ) (155 ) - (3,025 ) $ (3,854 ) Disposals - 24 - 786 2 - - $ 812 Balance—December 31, 2019 $ (8 ) $ (422 ) $ (46 ) $ (261 ) $ (249 ) $ - $ (3,025 ) $ (4,011 ) Depreciation (57 ) (212 ) (1 ) (166 ) (162 ) - (3,250 ) (3,848 ) Disposals 65 - - - - - - 65 Balance—December 31, 2020 $ - $ (634 ) $ (47 ) $ (427 ) $ (411 ) $ - $ (6,275 ) $ (7,794 ) Net Book Value December 31, 2018 $ - $ 1,249 $ 5 $ 1,492 $ 421 $ 895 $ - $ 4,063 December 31, 2019 $ 4,090 $ 3,853 $ 3 $ 839 $ 565 $ 2,533 $ 31,089 $ 42,972 Balance—December 31, 2020 $ - $ 10,165 $ 3 $ 849 $ 443 $ 2,528 $ 35,255 $ 49,243 Construction in progress represent assets under construction related to cultivation, manufacturing, and distribution facilities not yet completed or otherwise not placed in service. Depreciation expense of $3,848, $3,854 and $312 were recorded for the years ended December 31, 2020, 2019 and 2018, respectively, of which $2,830, $2,921 and $211, respectively, were included in cost of goods sold. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
GOODWILL AND INTANGIBLE ASSETS | ||
7. GOODWILL AND INTANGIBLE ASSETS | 7. GOODWILL AND INTANGIBLE ASSETS Goodwill A reconciliation of the beginning and ending balances of goodwill during the six months ended June 30, 2021 is as follows: (in thousands) Costs Balance - December 31, 2020 $ 357 Additions - Business Acquisitions - Impairment - Balance - June 30, 2021 $ 357 The Company evaluates goodwill for impairment annually during the fiscal third quarter and when an event occurs, or circumstances change such that it is reasonably possible that impairment may exist. The Company accounts for goodwill and evaluates its goodwill balances and tests them for impairment in accordance with related accounting standards. The Company performed its annual impairment assessment in its third quarter of fiscal 2020, and its analysis indicated that the Company had no impairment of goodwill. Other Intangible Assets A reconciliation of the beginning and ending balances of intangible assets and accumulated amortization during the six months ended June 30, 2021 and intangible assets, net as of December 31, 2020, are as follows: Definite Life Intangibles Indefinite Life Intangibles Branding Technology/ Brands & (in thousands) Rights Know How Tradenames Total Costs Balance—December 31, 2020 $ 250 $ 208 $ 408 $ 866 Business acquisition - 3,050 37,299 40,349 Agreement termination (250 ) - - (250 ) Balance—June 30, 2021 $ - $ 3,258 $ 37,707 $ 40,965 Accumulated Amortization Balance—December 31, 2020 $ (93 ) $ (37 ) $ - $ (130 ) Agreement termination 98 - - 98 Amortization (5 ) (9 ) - (14 ) Other - - - - Balance—June 30, 2021 $ - $ (46 ) $ - $ (46 ) Net Book Value June 30, 2021 $ - $ 3,212 $ 37,707 $ 40,919 Net Book Value December 31, 2020 $ 157 $ 171 $ 408 $ 736 Intangible assets with finite lives are amortized over their estimated useful lives. Amortization periods of assets with finite lives are based on management's estimates at the date of acquisition. The Company recorded amortization expense of $14, and $44 for the six months ended June 30, 2021, and 2020, respectively. The Company estimates that amortization expense for our existing other intangible assets will be approximately $220 annually for each of the next five fiscal years. Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, changes in useful lives or other relevant factors or changes. | 10. GOODWILL AND INTANGIBLE ASSETS Goodwill A reconciliation of the beginning and ending balances of goodwill during the year ended December 31, 2020 is as follows: (in thousands) Costs Balance—December 31, 2019 $ 357 Additions - Business Acquisitions - Impairment - Balance—December 31, 2020 $ 357 The Company evaluates goodwill for impairment annually during the fiscal third quarter and when an event occurs, or circumstances change such that it is reasonably possible that impairment may exist. The Company accounts for goodwill and evaluates its goodwill balances and tests them for impairment in accordance with related accounting standards. The Company performed its annual impairment assessment in its third quarter of fiscal 2020, and its analysis indicated that the Company had no impairment of goodwill. Other Intangible Assets A reconciliation of the beginning and ending balances of intangible assets and accumulated amortization during the year ended December 31, 2020 is as follows: (Amounts Expressed in United States Dollars Unless Otherwise Stated) Definite Life Intangibles Indefinite Life Intangibles Branding Customer Technology/ Other Brands & (in thousands) Rights Relationships KnowHow Intangibles Tradenames Total Costs Balance—December 31, 2019 $ 250 $ 40 $ 421 $ 40 $ 522 $ 1,273 Business acquisition - - - - 179 179 Purchase price adjustment - (40 ) (213 ) (40 ) (293 ) (586 ) Balance—December 31, 2020 $ 250 $ - $ 208 $ - $ 408 $ 866 Accumulated Amortization Balance—December 31, 2019 $ (76 ) $ (8 ) $ (28 ) $ (8 ) $ - $ (120 ) Purchase price adjustment - 12 30 12 - 54 Amortization (17 ) (4 ) (39 ) (4 ) - (64 ) Balance—December 31, 2020 $ (93 ) $ - $ (37 ) $ - $ - $ (130 ) Net Book Value December 31, 2019 $ 174 $ 32 $ 393 $ 32 $ 522 $ 1,153 December 31, 2020 $ 157 $ - $ 171 $ - $ 408 $ 736 Intangible assets with finite lives are amortized over their estimated useful lives. Amortization periods of assets with finite lives are based on management’s estimates at the date of acquisition. The Company recorded amortization expense of $64, $71 and $17 for the years ended December 31, 2020, 2019 and 2018, respectively. As described in Note 4, during the quarter ended June 30, 2020, the Company modified certain purchase agreements resulting in adjustments to certain intangible assets. The Company estimates that amortization expense for our existing other intangible assets will be approximately $40 annually for each of the next five fiscal years. Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, changes in useful lives or other relevant factors or changes. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2020 | |
INVESTMENTS | |
10.INVESTMENTS | 11. INVESTMENTS The Company from time to time acquires interest in various corporate entities for investment purposes. In March 2019, the Company entered into a strategic partnership with Orchid Ventures (“Orchid”). Under the terms of the partnership, Indus secured the exclusive sales and distribution rights to Orchid’s line of Orchid Essentials vape devices in California. In addition, Indus acquired an interest in Orchid for $1,500 during Orchid’s RTO financing round. The Company’s investment in Orchid is accounted for in accordance with ASC 321 and classified as Level 1 in the fair value hierarchy. The Company adjusted its carrying value based on the share price at the balance sheet date, recognizing an unrecognized gain of $73 in its Statements of Operations for the year ended December 31, 2020. In October 2018, the Company contributed 77,689 shares of Series B preferred shares at a value of $350, to a joint venture arrangement with Dametra LLC, in which each partner has 50% ownership. Under the arrangement Indus is the exclusive manufacturer and distributor of Canna Stripe branded products in the state of California. The investment was accounted for in accordance with ASC 323 . In the fourth quarter of 2018, the Company acquired an interest for $148 in a long-standing business partner who creates and markets cannabis brands. The business partner was acquired by Green Thumb Industries in February 2019. The Company’s investment in Green Thumb Industries is accounted for in accordance with ASC 321. The Company sold approximately 66% and the remaining 34% of its interests in 2019 and 2020, respectively, recognizing a realized gain of $476 and $656 in 2019 and 2020, respectively. The Company issued 325 shares of common stock valued at $650 in exchange for shares in Haight & Ashbury Corp, a technology company developing an e-commerce platform. Due to the lack of extensive roll out of the e-commerce platform with brands and dispensaries within California and in other states, the Company determined that the carrying value of the investment was nominal. As such, a ($650) loss was recognized in 2019. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
STOCKHOLDERS' EQUITY | ||
8. SHAREHOLDERS' EQUITY | 8. SHAREHOLDERS’ EQUITY Shares Outstanding The table below details the change in Company shares outstanding by class during the six months ended June 30, 2021: Subordinate Super (in thousands) Voting Shares Voting Shares Balance—December 31, 2020 57,617 203 Shares issued in connection with exercise of warrants 1,325 - Shares issued in connection with conversion of convertible debentures 2,393 - Shares issued in connection with asset acquisition 30,641 - Issuance of vested restricted stock units 371 - Stock issued in connection with exercised of stock options 76 - Balance—June 30, 2021 92,423 203 (in thousands) Balance—December 31, 2020 93,898 Warrants issued in conjunction with broker option exercise (1) 163 Warrants expired (358 ) Warrants converted into subordinate voting shares (1,000 ) Balance—June 30, 2021 92,703 (1) Excluded 390 warrants issuable should underwriter options be exercised. | 12. SHAREHOLDERS’ EQUITY Shares Outstanding The table below details the change in Company shares outstanding by class during the year ended December 31, 2020: Subordinate Super (in thousands) Voting Shares Voting Shares Balance—December 31, 2019 32,844 203 Shares issued in connection with convertible debenture offering 250 - Shares issued in connection with subordinate voting share offering 23,000 - Shares issued in connection with exercise of warrants 750 - Shares issued in connection with conversion of convertible debentures 375 - Shares issued in connection with asset purchase 150 - Issuance of vested restricted stock units 248 - Balance—December 31, 2020 57,617 203 In December 2020, the Company complete a CAD$34.5 million share offering resulting in the issuance of 11.5 million subordinate voting shares priced at CAD$1.50 per share. The offering resulting in approximately $25 million in proceeds, net of offering expenses. The use of proceeds were for the development of a cultivation and production facility and working capital and other corporate purposes. As discussed in Note 4, in consideration for the acquisition of Mezzotin in connection with the reverse takeover, Indus issued 130 shares of Indus subordinate voting shares representing $1,513 total value based on the concurrent financing subscription price of CAD$15.65 (US$11.60). The excess of the purchase price over net assets acquired was charged to the consolidated statements of operations as RTO expense in general and administrative expenses. Warrants A reconciliation of the beginning and ending balance of warrants outstanding is as follows: (in thousands) Balance—December 31, 2019 2,769 Warrants issued in conjunction with convertible debenture offering 80,379 Warrants issued in conjunction with equity offering(1) 11,500 Warrants converted into subordinate voting shares (750 ) Balance—December 31, 2020 93,898 _____________ (1) Excludes 553 warrants issuable should underwriter options be exercised. |
DEBT
DEBT | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
DEBT | ||
9. DEBT | 9. DEBT Debt at June 30, 2021 and December 31, 2020, was comprised of the following: June 30, December 31, (in thousands) 2021 2020 Current portion of long-term debt Vehicle loans (1) $ 186 $ 170 Note payable (3) 183 1,043 Total short-term debt 369 1,213 Long-term debt, net Vehicle loans (1) 162 233 Note payable (2) 56 65 Note payable (3) 40 5 Mortgage payable (4) 8,938 - Convertible debenture (5) 13,646 13,701 Total long-term debt 22,842 14,004 Total Indebtedness $ 23,211 $ 15,217 (1) Primarily fixed term loans on transportation vehicles. Weighted average interest rate at June 30, 2021 was 8.1%. (2) Note payable in connection with Acme acquisition to be paid as and if financial performance targets are met over the earnout period. (3) Note payable in connection with Humble Flower and Kaizen acquisitions and termination of the W Vapes acquisition. Weighted average interest rate at June 30, 2021 was 4%. (4) Net of deferred financing costs of $422. (5) Net of deferred financing costs of $1,879. Stated maturities of debt obligations are as follows as of June 30, 2021: June 30, (in thousands) 2021 2021 $ 268 2022 321 2023 15,876 2024 383 2025 421 2026 and thereafter 8,113 Total debt obligations $ 25,382 | 13. DEBT Debt at December 31, 2020 and 2019 was comprised of the following: (Amounts Expressed in United States Dollars Unless Otherwise Stated) December 31, (in thousands) 2020 2019 Current portion of long-term debt Vehicle loans(1) $ 170 $ 135 Note payable(3) 1,043 - Total short-term debt 1,213 135 Long-term debt, net Vehicle loans(1) 233 233 Note payable(2) 65 138 Note payable(3) 5 - Convertible debenture(4) 13,701 - Total long-term debt 14,004 371 Total Indebtedness $ 15,217 $ 506 _____________ (1) Primarily fixed term loans on transportation vehicles. Weighted average interest rate at December 31, 2020 was 8.8%. (2) Note payable in connection with Acme acquisition to be paid as and if financial performance targets are met over the earnout period. (3) Note payable in connection with Humble Flower and Kaizen acquisitions and termination of the W Vapes acquisition. Weighted average interest rate at December 31, 2020 was 4%. (4) Net of deferred financing costs of $2,300. Stated maturities of debt obligations are as follows: December 31, (in thousands) 2020 2020 $ 35 2021 1,122 2022 228 2023 16,050 2024 21 2025 and thereafter 6 Total debt obligations $ 17,462 On April 13, 2020, the Company entered into a $15.1 million senior secured convertible debenture and warrant purchase agreement. In late April and May 2020 an additional $1 million was funded to bring the total convertible debenture amount to $16.1 million. The convertible debentures are convertible, at a conversion price of $0.20 per share, into an aggregate of 80.4 million subordinate voting shares of the Company, and the Company issued warrants to purchase an aggregate of 80.4 million subordinate voting shares at an exercise price of $.28 per share. The financing yielded the Company approximately $11.5 million after repayment of $3.8 million in bridge financing received during the first quarter, plus accrued interest thereon, and transaction related expenses of approximately $600. The debentures bear interest at 5.5% per annum and will mature in October 2023, and the warrants expire in October 2023. During 2020, $75 of convertible debentures were converted into 375 thousand subordinate voting shares. |
LEASES
LEASES | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
LEASES | ||
10. LEASES | 10. LEASES The Company adopted ASU 2016-02 (Topic 842) effective January 1, 2019 using the modified retrospective adoption method which allowed it to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit. In connection with the adoption of the new lease pronouncement, the Company recorded a charge to accumulated deficit of $847. A reconciliation of lease obligations for the six months ended June 30, 2021, is as follows: (in thousands) Lease Liability: December 31, 2020 $ 38,834 Lease principal payments (1,164 ) June 30, 2021 $ 37,670 June 30, 2021 Lease obligation, current portion $ 2,410 Lease obligation, long-term portion 35,260 Total $ 37,670 All extension options that are reasonably certain to be exercised have been included in the measurement of lease obligations. The Company reassesses the likelihood of extension option exercise if there is a significant event or change in circumstances within its control. The components of lease expense for the three and six months ended June 30, 2021 and 2020 are as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2021 2020 2021 2020 Amortization of leased assets (1) $ 785 $ 839 $ 1,527 $ 1,631 Interest on lease liabilities (2) 634 491 1,197 964 Total $ 1,419 $ 1,330 $ 2,724 $ 2,595 ____________ (1) Included in cost of goods sold and general and administrative in the consolidated statement of operations. (2) Included in interest expense in the consolidated statement of operations. The key assumptions used in accounting for leases as of June 30, 2021 were a weighted average remaining lease term of 17.6 years and a weighted average discount rate of 6%. The key assumptions used in accounting for leases as of December 31, 2020 were a weighted average remaining lease term of 18.1 years and a weighted average discount rate of 6.0%. The future lease payments with initial remaining terms in excess of one year as of June 30, 2021 were as follows: June 30, (in thousands) 2021 Balance of 2021 $ 1,187 2022 - 2023 5,137 2024 - 2025 3,844 2026 and beyond 27,502 Total $ 37,670 | 14. LEASES The Company adopted IFRS 16 - Leases A reconciliation of lease obligations for the year ended December 31, 2020 was comprised of the following: (Amounts Expressed in United States Dollars Unless Otherwise Stated) (in thousands) Lease Liability December 31, 2019 $ 33,805 Additions 120 Lease reassessment 7,310 Lease principal payments (2,401 ) December 31, 2020 $ 38,834 Lease obligation, current portion $ 2,301 Lease obligation, long-term portion $ 36,533 All extension options that are reasonably certain to be exercised have been included in the measurement of lease obligations. The Company reassesses the likelihood of extension option exercise if there is a significant event or change in circumstances within its control. The components of lease expense for the year ended December 31, 2020 were as follows: Year Ended December 31, (in thousands) 2020 Amortization of leased assets(1) $ 3,250 Interest on lease liabilities(2) 1,866 Total $ 5,116 (1) Included in cost of goods sold and general and administrative in the consolidated statement of operations. (2) Included in interest expense in the consolidated statement of operations. The key assumptions used in accounting for leases as of December 31, 2020 were a weighted average remaining lease term of 18.1 years and a weighted average discount rate of 6.0%. The future lease payments with initial remaining terms in excess of one year as of December 31, 2020 were as follows: (in thousands) December 31, 2020 1 - 3 years $ 14,138 4 - 5 Years 7,361 Greater than 5 years 17,335 Total $ 38,834 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
REVERSE TAKEOVER AND PRIVATE PLACEMENT | ||
11. SHARE-BASED COMPENSATION | 11. SHARE-BASED COMPENSATION During 2019 the Company’s Board of Directors adopted the 2019 Stock and Incentive Plan (the “Plan”), which was amended in April 2020 and March 2021. The Plan permits the issuance of stock options, stock appreciation rights, stock awards, share units, performance shares, performance units and other stock-based awards, and, as of June 30, 2021, 13.2 million shares have been authorized to be issued under the Plan and 4.6 million are available for future grant. The Plan provides for the grant of options as either non-statutory stock options or incentive stock options and restricted stock units to employees, officers, directors, and consultants of the Company to attract and retain persons of ability to perform services for the Company and to reward such individuals who contribute to the achievement by the Company of its economic objectives. The awards granted generally vest in 25% increments over a four-year period and option awards expire 6 years from grant date. The Plan is administered by the Board or a committee appointed by the Board, which determines the persons to whom the awards will be granted, the type of awards to be granted, the number of awards to be granted, and the specific terms of each grant, including the vesting thereof, subject to the provisions of the Plan. During the three and six months ended June 30, 2021 and 2020, the Company granted shares to certain employees as compensation for services. These shares were accounted for in accordance with ASC 718 – Compensation – Stock Compensation. The Company amortizes awards over the service period and until awards are fully vested. For the three and six months ended June 30, 2021 and 2020, share-based compensation expense was as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2021 2020 2021 2020 Cost of goods sold $ - $ - $ - $ - General and administrative expense 338 213 625 1,825 Total share-based compensation $ 338 $ 213 $ 625 $ 1,825 The following table summarizes the status of stock option grants and unvested awards at and for the six months ended June 30, 2021: Weighted-Average Stock Weighted-Average Remaining Aggregate (in thousands except per share amounts) Options Exercise Price Contractual Life Intrinsic Value Outstanding—December 31, 2020 6,260 $ 0.97 4.7 $ 3,162 Granted 1,880 1.41 Exercised - - Cancelled (1,153 ) 1.60 Outstanding—June 30, 2021 6,987 $ 0.95 2.6 Exercisable—June 30, 2021 1,677 $ 1.02 3 $ 69 Vested and expected to vest—June 30, 2021 6,987 $ 0.95 2.6 $ 2,254 The weighted-average fair value of options granted during the three and six months ended June 30, 2021, estimated as of the grant date, were $1.18 and $1.41, respectively. As of June 30, 2021, there was $1,252 of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a remaining weighted-average vesting period of 2.0 years. The following table summarizes the status of restricted stock unit (“RSU”) grants and unvested awards at and for the six months ended June 30, 2021: Weighted-Average (in thousands except per share amounts) RSUs Fair Value Outstanding—December 31, 2020 450 $ 0.33 Granted 1,395 1.15 Vested - - Cancelled (10 ) 1.11 Outstanding—June 30, 2021 1,835 $ 0.95 As of June 30, 2021, there was $963 of total unrecognized compensation cost related to non-vested restricted stock units, which is expected to be recognized over a remaining weighted-average vesting period of 20 months. The fair value of the stock options and RSUs granted were determined using the Black-Scholes option-pricing model with the following weighted average assumptions at the time of grant. Stock Options Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 1.1 % 2.2 % 0.9 % 2.2 % Expected term in years 4.25 4.12 4.25 4.14 RSUs Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 0.9 % 0.9 % 0.9 % 0.9 % Expected term in years 0.74 0.60 0.74 0.60 | 15. SHARE-BASED COMPENSATION During 2019 the Company’s Board of Directors adopted the 2019 Stock and Incentive Plan The Plan is administered by the Board or a committee appointed by the Board, which determines the persons to whom the awards will be granted, the type of awards to be granted, the number of awards to be granted, and the specific terms of each grant, including the vesting thereof, subject to the provisions of the Plan. During the year ended December 31, 2020, the Company granted shares to certain employees as compensation for services. These shares were accounted for in accordance with ASC 718 – Compensation – Stock Compensation. For the years ended December 31, 2020, 2019 and 2018, share-based compensation expense recorded to the Company’ s consolidated statements of operations were: (Amounts Expressed in United States Dollars Unless Otherwise Stated) Years Ended December 31, (in thousands) 2020 2019 2018 Cost of goods sold $ - $ - $ - General and administrative expense 2,200 3,385 270 Total share based compensation $ 2,200 $ 3,385 $ 270 The following table summarizes the status of stock option grants and unvested awards as at and for the year ended December 31, 2020: Weighted-Average Stock Weighted-Average Remaining Aggregate (in thousands except per share amounts) Options Exercise Price Contractual Life Intrinsic Value Outstanding—December 31, 2019 1,543 $ 2.53 4.3 $ - Granted 5,315 0.62 Exercised - - Cancelled (598 ) 1.67 Outstanding—December 31, 2020 6,260 $ 0.97 4.7 $ 3,162 Exercisable—December 31, 2020 739 $ 2.10 3.2 $ 25 Vested and expected to vest—December 31, 2020 6,260 $ 0.97 4.7 $ 3,162 The weighted-average fair value of each option granted during fiscal 2020, estimated as of the grant date, was $.25. As of December 31, 2020, there was $1,928 of total unrecognized compensation cost related to nonvested options, which is expected to be recognized over a remaining weighted-average vesting period of 4.7 years. Restricted Stock Weighted-Average (in thousands except per share amounts) Units Fair Value Outstanding—December 31, 2019 230 $ 2.53 Granted 913 0.62 Vested (634 ) 1.63 Cancelled (59 ) 1.67 Outstanding—December 31, 2020 450 $ 0.33 As of December 31, 2020, there was $81 of total unrecognized compensation cost related to nonvested restricted stock units, which is expected to be recognized over a remaining weighted-average vesting period of 10 months. The fair value of the restricted stock units and stock options granted was determined using the Black-Scholes option-pricing model with the following weighted average assumptions at the time of grant. Year Ended December 31, 2020 Expected volatility 50.0 % Dividend yield 0 % Risk-free interest rate 0.95 % Expected term in years 6.0 |
INCOME TAXES
INCOME TAXES | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
INCOME TAXES | ||
12. INCOME TAXES | 12. INCOME TAXES Coronavirus Aid, Relief and Economic Security Act On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and signed into law in response to the market volatility and instability resulting from the COVID-19 pandemic. It includes a significant number of tax provisions and lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the “2017 Act”). The changes are mainly related to: (1) the business interest expense disallowance rules for 2019 and 2020; (2) net operating loss rules; (3) charitable contribution limitations; (4) employee retention credit; and (5) the realization of corporate alternative minimum tax credits. The Company continues to assess the impact and future implication of these provisions; however, it does not anticipate any amounts that could give rise to a material impact to the overall consolidated financial statements. The provision for income tax expense for the three months ended June 30, 2021, was $74, representing an effective tax rate of 9.20%, compared to an income tax expense of $25 for the three months ended June 30, 2020, representing an effective tax rate of 0.29%. The provision for income tax expense for the six months ended June 30, 2021, was $138, representing a effective tax rate of 2.36% compared to an income tax expense of $50 for the six months ended June 30, 2020, representing an effective tax rate of 0.30%. | 16. INCOME TAXES Coronavirus Aid, Relief and Economic Security Act On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was enacted and signed into law in response to the market volatility and instability resulting from the COVID-19 pandemic. It includes a significant number of tax provisions and lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the 2017 Act). The changes are mainly related to: (1) the business interest expense disallowance rules for 2019 and 2020; (2) net operating loss rules; (3) charitable contribution limitations; (4) employee retention credit; and (5) the realization of corporate alternative minimum tax credits. The Company continues to assess the impact and future implications of these provisions; however, it does not anticipate any amounts that could give rise to a material impact to the overall consolidated financial statements. The provision for income tax expense for the years ended December 31, 2020, 2019 and 2018 consisted of the following: Years Ended December 31, (in thousands) 2020 2019 2018 Current Federal $ - $ - $ - State 224 205 97 Total Current 224 205 97 Deferred tax expense (benefit) Federal 900 (2,406 ) (601 ) State (9,127 ) (7,329 ) (646 ) Total deferred tax benefit (8,227 ) (9,735 ) (1,247 ) Valuation allowance 8,227 9,735 1,247 Income tax expense $ 224 $ 205 $ 97 As the Company operates in the cannabis industry, it is subject to the limitations of IRC Section 280E, under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. Therefore, the effective tax rate can be highly variable and may not necessarily correlate with pre-tax income or loss. In December 2017, the United States (“U.S.”) Congress passed and the President signed referred to as the 2017 Tax Act, which contains many significant changes to the U.S. tax laws, including, but not limited to, reducing theU.S. federal corporate tax rate from 35% to 21% and utilization limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017 to 80% of taxable income with an indefinite carryforward period. As the Company has a full valuation allowance against its U.S. deferred tax assets, the revaluation of net deferred tax assets resulting from the reduction in the U.S. federal corporate income tax rate did not impact the Company’s effective tax rate. Additional guidance may be issued by the U.S. Treasury Department, the Internal Revenue Service (“IRS”), or other standard-setting bodies, which may result in adjustments to the amounts recorded, including the valuation allowance. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2020 and 2019, are as follows: Years Ended December 31, (in thousands) 2020 2019 Deferred tax assets Net operating loss carryforwards $ 9,104 $ 10,836 Accruals and reserves - - Depreciation - - Other - - Valuation allowance (9,104 ) (10,836 ) Total deferred tax assets - - Accruals and reserves - - Share-based compensation - - Total deferred tax liabilities - - Net deferred tax liabilities $ - $ - Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative losses incurred through the year ended December 31, 2020. Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections for future growth. On the basis of this evaluation, the Company has determined that it is more likely than not that the Company will not recognize the benefits of the federal and state net deferred tax assets, and, as a result, a full valuation allowance totaling $12.0 million and $9.7 million has been recorded against its net deferred tax assets as of December 31, 2020 and 2019. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth. A reconciliation of the provision for income taxes attributable to income from operations and the amount computed by applying the statutory federal income tax rate of 21% to income before income taxes for the years ended December 31, 2020, 2019 and 2018 is as follows: Years Ended December 31, (in thousands) 2020 2019 2018 Computed expected provision (benefit) for taxes $ (4,554 ) $ (10,443 ) $ (1,809 ) Increase (Decrease) in taxes resulting from: State taxes 224 205 97 Non-deductible stock compensation 462 711 57 Non-deductible expenses under section 280e 5,099 7,965 2,605 Valuation allowance and other, net (1,007 ) 1,767 (853 ) Actual provision for income taxes $ 224 $ 205 $ 97 As of December 31, 2020 and 2019, the Company had federal net operating loss (“NOL”) carryforwards of approximately $16.8 million and $9.2 million respectively. The Company had state NOL carryforwards of approximately $86.3 million and $50.4 million, respectively, which will begin to expire in 2035. Utilization of some of the federal and state NOL carryforwards to reduce future income taxes will depend on the Company’s ability to generate sufficient taxable income prior to the expiration of the carryforwards. Under the provisions of the Internal Revenue Code, the NOLs and tax credit carryforwards are subject to review and possible adjustment by the IRS and state tax authorities. NOLs and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. The Company has not performed a comprehensive Section 382 study to determine any potential loss limitation with regard to the NOL carryforwards and tax credits. Any limitations would not impact the results of the Company’s operations and cash flows because the Company has recorded a valuation allowance against its net deferred tax assets. The Company recognizes the impact of a tax position in the financial statements if that position is more likely than not of being sustained on a tax return upon examination by the relevant taxing authority, based on the technical merits of the position. As of December 31, 2020 and 2019, the Company had no unrecognized tax benefits. The Company recognizes interest and penalties related to income tax matters in income tax expense. As of December 31, 2020 and 2019, the Company had no accrued interest and penalties related to uncertain tax positions. The Company is subject to examination for its US federal and state jurisdictions for each year in which a tax return was filed, due to the existence of NOL carryforwards. These tax filings in major U.S. jurisdictions are open to examination by tax authorities, such as the IRS from 2019 forward and by tax authorities in various US states from 2015 forward. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Net income (loss) per share: | ||
13. NET INCOME (LOSS) PER SHARE | 13. NET INCOME (LOSS) PER SHARE Net income (loss) per share represents the net earnings/loss attributable to shareholders divided by the weighted average number of shares outstanding during the period on an as converted basis. Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands except per share amounts) 2021 2020 2021 2020 Net income (loss) $ 731 $ (8,757 ) $ (5,988 ) $ (16,631 ) Net income (loss) per share: Basic $ 0.01 $ (0.26 ) $ (0.10 ) $ (0.50 ) Diluted $ 0.00 $ (0.26 ) $ (0.10 ) $ (0.50 ) Weighted average shares outstanding: Basic 71,021 33,307 61,956 33,025 Diluted 201,278 33,307 61,956 33,025 Weighted average potentially diluted shares (1): Basic shares 71,021 33,307 61,956 33,025 Options 2,908 - - - Warrants 60,767 - - - Convertible debentures 64,796 - - - Restricted stock units 1,786 - - - Total weighted average potentially diluted shares: 201,278 33,307 61,956 33,025 (1) For the above net loss periods, the inclusion of options, warrants, convertible debentures and restricted stock units in the calculation of diluted earnings per share would be anti-dilutive, and accordingly, were excluded from the diluted loss per share calculation. | 17. EARNINGS/(LOSS) PER SHARE Net earnings/(loss) per share represents the net earnings/loss attributable to shareholders divided by the weighted average number of shares outstanding during the period on an as converted basis. (Amounts Expressed in United States Dollars Unless Otherwise Stated) Years Ended December 31, (in thousands except per share amounts) 2020 2019 Net earnings/(loss) $ (21,910 ) $ (49,934 ) Basic Weighted average subordinate voting shares(1) 33,940 31,379 Basic earnings (loss) per share $ (0.65 ) $ (1.59 ) Diluted Weighted average subordinate voting shares(1) 33,940 31,379 Effects of Potential Dilutive Shares Options - - Warrants - - Restricted stock units - - Diluted weighted average subordinate voting shares 33,940 31,379 Diluted earnings (loss) per share $ (0.65 ) $ (1.59 ) _____________ (1) On an as converted basis. As the Company is in a loss position for the years ended December 31, 2020 and 2019, the inclusion of options, warrants, convertible debentures and restricted stock units in the calculation of diluted earnings per share would be anti-dilutive, and accordingly, were excluded from the diluted loss per share calculation. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
FAIR VALUE MEASUREMENTS | ||
14. FAIR VALUE MEASUREMENTS | 14. FAIR VALUE MEASUREMENTS Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. An asset’s or liability’s level is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are valued and disclosed in one of the following three levels of the valuation hierarchy: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions. At June 30, 2021 and 2020, and December 31, 2020 the carrying value of cash and cash equivalents, accounts receivable, prepaid expense and other current assets, accounts payable and other current liabilities approximate fair value due to the short-term nature of such instruments. The carrying value of the Company's debt approximates fair value based on current market rates (Level 2). Nonrecurring fair value measurements The Company uses fair value measures when determining assets and liabilities acquired in an acquisition as described above in the Notes to Condensed Consolidated Financial Statements, which are considered a Level 3 measurement. | 18. FAIR VALUE MEASUREMENTS Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. An asset’s or liability’s level is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are valued and disclosed in one of the following three levels of the valuation hierarchy: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions. At December 31, 2020 and 2019, the carrying value of cash and cash equivalents, accounts receivable, prepaid expense and other current assets, accounts payable and other current liabilities approximate fair value due to the short-term nature of such instruments. The carrying value of the Company’s debt approximates fair value based on current market rates (Level 2). Nonrecurring fair value measurements The Company uses fair value measures when determining assets and liabilities acquired in an acquisition as described in Note 5 which are considered a Level 3 measurement. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | ||
15. COMMITMENTS AND CONTINGENCIES | 15. COMMITMENTS AND CONTINGENCIES Commitments In January 2021, the Company signed a letter of intent to expand its cultivation footprint. The agreement contemplates a land-lease from a developer that has prepared the property for cannabis cultivation. Lowell would be responsible for construction costs of greenhouses using cash raised in the equity offering in December 2020 and cash generated from operations. The transaction is subject to final site due-diligence and negotiation of construction contracts. In the event the transaction contemplated in the letter of intent is pursued, the Company anticipates the site will be ready for operation in 2023. Contingencies The Company’s operations are subject to a variety of local and state regulation. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance with applicable local and state regulation as of June 30, 2021, cannabis regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties or restrictions in the future. In 2020, the Company entered into a payment plan offered by California regulatory authorities to pay certain excise and cultivation taxes over a 12 month period. If such taxes are not paid in accordance with the agreed payment plan the Company could be subject to certain late payment penalties. Litigation and Claims From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of June 30, 2021, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations. There are also no proceedings in which any of the Company’s directors, officers or affiliates are an adverse party or have a material interest adverse to the Company’s interest. Insurance Claims In September 2020 the Company experienced a small fire at its manufacturing facility which resulted in suspending certain operations until the facility was repaired. As a result, the company filed a business interruption claim which resulted in a payment of $1.4 million from the insurance carrier in March 2021. The proceeds from the claim were reflected in other income on the consolidated statement of operations for the year ended December 31, 2020. In August 2020 the Company experienced adverse air quality conditions that resulted in the Company closing the air vents in its greenhouse facilities at a time when extreme temperatures existed. As a result, plant health suffered due to the situation. The Company filed a business interruption claim which resulted in a payment of $2.65 million from the insurance carrier in July 2021, and is included in other income (expense) in the accompanying condensed consolidated statements of income (loss). | 19. COMMITMENTS AND CONTINGENCIES Commitments In January 2021, the company signed a letter of intent to expand its cultivation footprint. The agreement contemplates a land-lease from a developer that has prepared the property for cannabis cultivation. Indus would be responsible for constructions costs of greenhouses using cash raised in the equity offering in December 2020. The transaction is subject to final site due-diligence and negotiation of construction contracts. In the event the transaction contemplated in the letter of intent is pursued, the Company anticipates the site will be ready for operation in the first half of 2022. Contingencies The Company’s operations are subject to a variety of local and state regulation. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance with applicable local and state regulation as of December 31, 2020, cannabis regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties or restrictions in the future. In 2020, the Company entered into a payment plan offered by California regulatory authorities to pay certain excise and cultivation taxes over a 12 month period. If such taxes are not paid in accordance to the agreed payment plan the Company could be subject to certain late payment penalties. Litigation and Claims From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. There are no proceedings in which any of the Company’s directors, officers or affiliates are an adverse party or have a material interest adverse to the Company’s interest. In November 2019, however, a putative class action captioned Guzman v. The Hacienda Company, LLC was filed asserting claims against Hacienda and individual and unnamed Doe defendants for alleged wage and hour violations, unfair competition and private attorney general claims. In February 2020, a second putative class action captioned Kincey v. Lowell Farms, LLC was filed asserting claims against a subsidiary of Hacienda and unnamed Doe defendants for alleged wage and hour violations and unfair competition general claims. The named plaintiff in the Guzman action and Hacienda have entered into a proposed settlement establishing a gross settlement fund of $1.2 million based on the assumptions set forth in the proposed settlement. If approved by the court before which the Guzman action is pending, the Company believes that the settlement will encompass claims in both the Guzman and Kincey actions. The claims in the Guzman and Kincey actions are non-assumed liabilities under the acquisition described in Note 15 – Subsequent Events for which Lowell Farms Inc. is indemnified. Insurance Claims In September 2020 the Company experienced a small fire at its manufacturing facility which resulted in suspending certain operations until the facility was repaired. As a result, the company filed a business interruption claim which resulted in a payment of $1.4 million from the insurance carrier in March 2021. The proceeds from the claim are reflected in other income on the consolidated statement of operations. In August 2020 the Company experienced adverse air quality conditions that resulted in the Company closing the air vents in its greenhouse facilities at a time when extreme temperatures existed. As a result, plant health suffered due to the situation. The Company has filed a business interruption claim which is presently being reviewed by the insurance carrier. There is no certainty on the results of the carrier review of the claim, and as a result, the Company has not recorded an estimate of claim proceeds as of December 31, 2020. The Company anticipates the claims process will be completed in the quarter ended June 30, 2021. |
GENERAL AND ADMINISTRATIVE EXPE
GENERAL AND ADMINISTRATIVE EXPENSES | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
GENERAL AND ADMINISTRATIVE EXPENSES | ||
16. GENERAL AND ADMINISTRATIVE EXPENSES | 16. GENERAL AND ADMINISTRATIVE EXPENSES For the three and six months ended June 30, 2021 and 2020, general and administrative expenses were comprised of: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2021 2020 2021 2020 Salaries and benefits $ 1,561 $ 980 $ 2,398 $ 1,976 Professional fees 777 251 1,259 850 Share-based compensation 336 213 625 1,825 Administrative 1,143 12 2,004 82 Total general and administrative expenses $ 3,817 $ 1,456 $ 6,286 $ 4,733 | 20. GENERAL AND ADMINISTRATIVE EXPENSES For the years ended December 31, 2020, 2019 and 2018, general and administrative expenses were comprised of: (Amounts Expressed in United States Dollars Unless Otherwise Stated) Years Ended December 31, (in thousands) 2020 2019 2018 Salaries and benefits $ 5,032 $ 12,697 $ 3,452 Professional fees 1,650 2,229 640 Licensing and supplies 267 870 556 Share-based compensation 2,200 3,385 270 Administrative 2,613 4,292 3,861 Transaction and other special charges(1) - 2,341 - Total general and administrative expenses $ 11,762 $ 25,814 $ 8,779 _______________ (1) Include charges associated with acquisitions and the Company’s reverse takeover. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
RELATED-PARTY TRANSACTIONS | ||
17. RELATED-PARTY TRANSACTIONS | 17. RELATED-PARTY TRANSACTIONS Transactions with related parties are entered into in the normal course of business and are measured at the amount established and agreed to by the parties. Lowell received certain administrative, operational and consulting services through a Management Services Agreement with Edible Management, LLC (“EM”). EM is a limited liability company owned by the co-founders of Lowell and was formed to provide Lowell with certain administrative functions comprising: cultivation, distribution, and production operations support; general administration; corporate development; human resources; finance and accounting; marketing; sales; legal and compliance. The agreement provided for the dollar-for-dollar reimbursement of expenses incurred by EM in performance of its services. Amounts paid to EM for the three and six months ended June 30, 2020 was $2,201 and $5,041, respectively. The Management Services Agreement with EM was terminated as of December 31, 2020. In April 2015, Lowell entered into a services agreement with Olympic Management Group (“OMG”), for advisory and technology support services, including the access and use of software licensed to OMG to perform certain data processing and enterprise resource planning (ERP) operational services. OMG is owned by one of the Company’s co-founders. The agreement provides for the dollar-for-dollar reimbursement of expenses incurred by OMG in performance of its services. There were no amounts paid to OMG for the quarters ended June 30, 2021 and 2020. Amounts paid to OMG for the six months ended June 30, 2021 and 2020, were $nil and $5, respectively. | 21. RELATED-PARTY TRANSACTIONS Transactions with related parties are entered into in the normal course of business and are measured at the amount established and agreed to by the parties. Indus receives certain administrative, operational and consulting services through a Management Services Agreement with Edibles Management, LLC (“EM”). EM is a limited liability company owned by the cofounders of Indus and was formed to provide Indus with certain administrative functions comprising: cultivation, distribution, and production operations support; general administration; corporate development; human resources; finance and accounting; marketing; sales; legal and compliance. The agreement provides for the dollar-for-dollar reimbursement of expenses incurred by EM in performance of its services. Amounts paid to EM for the years ended December 31, 2020 and 2019 were $11,385 and $15,858, respectively. The Management Services Agreement with EM was terminated as of December 31, 2020. In April 2015, Indus entered into a services agreement with Olympic Management Group (“OMG”), for advisory and technology support services, including the access and use of software licensed to OMG to perform certain data processing and enterprise resource planning (ERP) operational services. OMG is owned by one of the Company’s co-founders. The agreement provides for the dollar-for-dollar reimbursement of expenses incurred by OMG in performance of its services. Amounts paid to OMG for the years ended December 31, 2020 and 2019 were $5 and $86, respectively. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
SEGMENT INFORMATION | ||
18. SEGMENT INFORMATION | 18. SEGMENT INFORMATION The Company's operations are comprised of a single reporting operating segment engaged in the production and sale of cannabis products in the United States. As the operations comprise a single reporting segment, amounts disclosed in the financial statements also represent a single reporting segment. | 22. SEGMENT INFORMATION The Company’s operations are comprised of a single reporting operating segment engaged in the production and sale of cannabis products in the United States. As the operations comprise a single reporting segment, amounts disclosed in the financial statements also represent a single reporting segment. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
SUBSEQUENT EVENTS | ||
19. SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS The Company has evaluated subsequent events through August 16, 2021, the date the financial statements were available to be issued. | 23. SUBSEQUENT EVENTS On February 25, 2021, the Company announced the acquisition of substantially all of the assets of the Lowell Herb Co. and Lowell Smokes trademark brands, product portfolio, and production assets from The Hacienda Company, LLC, a California limited liability company (“Hacienda”). Lowell Herb Co. is a leading California cannabis brand that manufactures and distributes distinctive and highly regarded premium packaged flower, pre-roll, concentrates, and vape products. The acquisition was valued at approximately $39 million, comprised of $4.1 million in cash and the issuance of 22,643,678 subordinate voting shares. Hacienda has agreed to continue to produce Lowell products for an interim period for the account of the Company pending completion of the transfer of certain regulatory assets. In connection with this acquisition, the Company completed a change in its corporate name to Lowell Farms Inc effective March 1, 2021. The Company has evaluated subsequent events through April 12, 2021, the date the financial statements were available to be issued. (Amounts Expressed in United States Dollars Unless Otherwise Stated) VALUATION AND QUALIFYING ACCOUNTS Three Years Ended December 31, 2020 Additions Balance Charged to (Deductions) Balance Beginning Costs and Recoveries/ End of (in thousands) of Year Expenses Other(1) Year Allowance for doubtful accounts: Year Ended December 31, 2020 $ 2,595 $ 1,195 $ (2,401 ) $ 1,389 Year Ended December 31, 2019 $ 250 $ 2,346 $ (1 ) $ 2,595 Year Ended December 31, 2018 $ 165 $ 175 $ (90 ) $ 250 (1) Consists of recoveries, less deductions representing receivables written off as uncollectible. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
NATURE OF OPERATIONS | ||
Use of Estimates | The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include allowance for doubtful accounts and credit losses, carrying value of inventory, revenue recognition, accounting for stock-based compensation expense, and income taxes. Actual results could differ from those estimates. The global COVID-19 pandemic has impacted the operations and purchasing decisions of companies worldwide. It also has created and may continue to create significant uncertainty in the global economy. The Company has undertaken measures to protect its employees, partners, customers, and vendors. In addition, the Company’s personnel are subject to various travel restrictions, which limit the ability of the Company to provide services to customers and affiliates. This impacts the Company's normal operations. To date, the Company has been able to provide uninterrupted access to its products and services, including certain employees that are working remotely, and its pre-existing infrastructure that supports secure access to the Company’s internal systems. If, however, the COVID-19 pandemic has a substantial impact on the productivity of the Company’s employees or its partners’ or customers’ decision to use the Company’s products and services, the results of the Company’s operations and overall financial performance may be adversely impacted. The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require updates to the Company’s estimates and judgments or revisions to the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements. | The World Health Organization categorized the Coronavirus disease 2019 (COVID-19) as a pandemic. The COVID-19 pandemic has caused a severe global health crisis, along with economic and societal disruptions and uncertainties, which have negatively impacted business and healthcare activity globally. As a result of healthcare systems responding to the demands of managing the pandemic, governments around the world imposing measures designed to reduce the transmission of the COVID-19 virus, and individuals responding to the concerns of contracting the COVID-19 virus, many optical practitioners & retailers, hospitals, medical offices and fertility clinics closed their facilities, restricted access, or delayed or canceled patient visits, exams and elective medical procedures, and many customers that have reopened are experiencing reduced patient visits. This has had, and we believe will continue to have, an adverse effect on our sales, operating results and cash flows. The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of net sales and expenses during the reporting period. Actual results could differ from those estimates particularly as it relates to estimates reliant on forecasts and other assumptions reasonably available to the Company and the uncertain future impacts of the COVID-19 pandemic and related economic disruptions. The extent to which the COVID-19 pandemic and related economic disruptions impact our business and financial results will depend on future developments including, but not limited to, the continued spread, duration and severity of the COVID-19 pandemic; the occurrence, spread, duration and severity of any subsequent wave or waves of outbreaks; the actions taken by the U.S. and foreign governments to contain the COVID-19 pandemic, address its impact or respond to the reduction in global and local economic activity; the occurrence, duration and severity of a global, regional or national recession, depression or other sustained adverse market event; the impact of the developments described above on our customers and suppliers; and how quickly and to what extent normal economic and operating conditions can resume. The accounting matters assessed included, but were not limited to: ● allowance for doubtful accounts and credit losses ● carrying value of inventory ● the carrying value of goodwill and other long-lived assets. There was not a material impact to the above estimates in the Company’s Consolidated Financial Statements for fiscal 2020. The Company continually monitors and evaluates the estimates used as additional information becomes available. Adjustments will be made to these provisions periodically to reflect new facts and circumstances that may indicate that historical experience may not be indicative of current and/or future results. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material changes to the estimates and material impacts to the Company’s Consolidated Financial Statements in future reporting periods. |
Basis of Presentation | The interim unaudited condensed consolidated financial statements included herein have been prepared by Lowell Farms Inc. (the “Company” or “Lowell”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The interim unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary (consisting only of normal recurring adjustments), to present a fair statement of results for the interim periods presented. The operating results for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Form 10 filed for the year ended December 31, 2020. There have been no material changes to our significant accounting policies as of and for the six months ended June 30, 2021. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all intercompany balances and transactions. The condensed consolidated balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. | Management’s significant accounting policies include estimates and judgments which are an integral part of financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP). We believe that the accounting policies described in this section address the more significant policies utilized by management when preparing our consolidated financial statements in accordance with GAAP. We believe that the accounting policies and estimates employed are appropriate and resulting balances are reasonable; however, actual results could differ from the original estimates, requiring adjustment to these balances in future periods. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most important to aid in fully understanding and evaluating our reported financial results are: |
Recently Adopted Accounting Standards | In May 2020, the SEC adopted the final rule under SEC release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, amending Rule 1-02(w)(2) which includes amendments to certain of its rules and forms related to the disclosure of financial information regarding acquired or disposed businesses. Among other changes, the amendments impact SEC rules relating to (1) the definition of “significant” subsidiaries, (2) requirements to provide financial statements for “significant” acquisitions, and (3) revisions to the formulation and usage of pro forma financial information. The final rule became effective on January 1, 2021; however, voluntary early adoption was permitted. The Company early adopted the provisions of the final rule in 2020. The guidance did not have a material impact on the Company’s condensed consolidated financial statements and disclosures. In February 2016, FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use (ROU) asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases Topic 842 Target improvements, which provides an additional (and optional) transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements, which further clarifies the determination of fair value of the underlying asset by lessors that are not manufacturers or dealers and modifies transition disclosure requirements for changes in accounting principles and other technical updates. The Company adopted the standard effective January 1, 2019 using the modified retrospective adoption method which allowed it to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit. In connection with the adoption of the new lease pronouncement, the Company recorded a charge to accumulated deficit of $847. Refer to the Summary of Effects of Lease Accounting Standard Update Adopted in First Quarter of 2019 in the audited consolidated financial statements and notes thereto in the Company’s Form 10 filed for the year ended December 31, 2020. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and subsequent amendments to the initial guidance: ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”, ASU 2019-04 “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”, ASU 2019-05 “Financial Instruments-Credit Losses”, ASU 2019-11 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (collectively, Topic 326),ASU 2020-02 Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842) and ASU 2020-03 Codification Improvements to Financial Instruments. Topic 326 requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for the year ended December 31, 2020. The Company believes that the most notable impact of this ASU will relate to its processes around the assessment of the adequacy of its allowance for doubtful accounts on trade accounts receivable and the recognition of credit losses. We continue to monitor the economic impact of the COVID-19 pandemic, however based on current market conditions, the adoption of the ASU did not have a material impact on the condensed consolidated financial statements. In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808), Clarifying the Interaction between Topic 808 and Topic 606. This guidance amended Topic 808 and Topic 606 to clarify that transactions in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer for a distinct good or service (i.e., unit of account). The amendments preclude an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. This guidance is effective for the year ended December 31, 2020. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance removes certain exceptions to the general principles in Topic 740 and enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. This guidance was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and did not have a material impact on our condensed consolidated financial statements. In January 2020, the FASB issued ASU 2020-01 Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This guidance addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. We are currently evaluating the impact of ASU 2020-01 on our Consolidated Financial Statements, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and did not have a material impact on our condensed consolidated financial statements. | |
Accounting standards not yet adopted | In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021, which means it will be effective for our fiscal year beginning January 1, 2022. Early adoption is permitted. We are currently evaluating the impact of ASU 2020-06 on our condensed consolidated financial statements. No other recently issued accounting pronouncements had or are expected to have a material impact on our condensed consolidated financial statements. | |
Basis of Measurement | These consolidated financial statements have been prepared on the going concern basis, under the historical cost convention, except for certain financial instruments, which are measured at fair value. Historical cost is generally based upon the fair value of the consideration given in exchange for assets. | |
Functional Currency | The Company and its subsidiaries’ functional currency, as determined by management, is the United States (“U.S.”) dollar. These consolidated financial statements are presented in U.S. dollars, unless otherwise stated. Financial and other metrics, such as shares outstanding, are presented in thousands unless otherwise noted. | |
Basis of Consolidation | Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly and indirectly, to govern the financial and operating policies of an entity and be exposed to the variable returns from its activities. The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. These consolidated financial statements include the accounts of the Company and its subsidiaries: ● Indus Holding Company, a Delaware corporation, wholly owned by Indus Holdings, Inc. ● Cypress Holding Company, a Delaware limited liability company, wholly owned by Indus Holding Company ● Cypress Manufacturing Company, a California corporation, wholly owned by Indus Holding Company ● Indus Nevada LLC, a Nevada limited liability corporation, wholly owned by Indus Holding Company ● Wellness Innovation Group Incorporated, a California corporation, wholly owned by Indus Holding Company Intercompany balances, and any unrealized gains and losses or income and expenses arising from transactions with subsidiaries, are eliminated. | |
Cash and Cash Equivalents | Cash and cash equivalents include cash on hand, cash deposits in financial institutions, and other deposits that are readily convertible into cash. The Company considers all short-term, highly liquid investments purchased with maturities of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. | |
Accounts Receivable | Accounts receivables are classified as loans and receivable financial assets. Accounts receivables are recognized initially at fair value and subsequently measured at amortized cost, less any provisions for impairment. When an accounts receivable is uncollectible, it is written off against the provision. Subsequent recoveries of amounts previously written off are credited to the consolidated statements of operations. | |
Inventories | Inventories are valued at the lower of cost and net realizable value. Costs related to raw materials and finished goods are determined on the first-in, first-out basis. Specific identification and average cost methods are also used primarily for certain packing materials and operating supplies. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventory is written-down to net realizable value. | |
Property and Equipment | Property and equipment are stated at cost, net of accumulated depreciation and impairment losses, if any. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms and methods: Category Useful Life Leasehold improvements The lesser of the estimated useful life or length of the lease Office equipment 3–5 years Furniture and fixtures 3–7 years Vehicles 4–5 years Machinery and equipment 3–6 years Buildings 35 years Construction in progress Not depreciated The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively if appropriate. An item of equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the consolidated statements of operations in the year the asset is derecognized. | |
Goodwill | Goodwill represents the excess of the purchase price paid for the acquisition of an entity over the fair value of the net tangible and intangible assets acquired. Goodwill that has an indefinite useful life is not subject to amortization and is tested annually for impairment, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. Any goodwill impairment loss is recognized in the consolidated statements of operations in the period in which the impairment is identified. Impairment losses on goodwill are not subsequently reversed. | |
Intangible Assets | Intangible assets are recorded at cost, less accumulated amortization and impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Amortization is recorded on a straight-line basis over their estimated useful lives, which do not exceed the contractual period, if any. The estimated useful lives, residual values, and amortization methods are reviewed at each year-end, and any changes in estimates are accounted for prospectively. Branding rights are measured at fair value at the time of acquisition and are amortized on a straight-line basis over a period of 15 years. In addition, the Company has certain brand and tradenames with indefinite lives, which are evaluated for impairment on an annual basis. | |
Impairment of Long-lived Assets | Long-lived assets, including property, plant and equipment and intangible assets are reviewed for impairment at each statement of financial position date or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating unit, or “CGU”). The recoverable amount of an asset or a CGU is the higher of its fair value, less costs to sell, and its value in use. If the carrying amount of an asset exceeds its recoverable amount, an impairment charge is recognized immediately in profit or loss equal to the amount by which the carrying amount exceeds the recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of the revised estimate of the recoverable amount, and the carrying amount that would have been recorded had no impairment loss been recognized previously. | |
Leased Assets | A lease of property and equipment is classified as a capital lease if it transfers substantially all the risks and rewards incidental to ownership to the Company. Lease right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make payments arising from the lease agreement. These assets and liabilities are recognized at the commencement of the lease based upon the present value of the future minimum lease payments over the lease term. The lease term reflects the noncancelable period of the lease together with periods covered by an option to extend or terminate the lease when management is reasonably certain that it will exercise such option. Changes in the lease term assumption could impact the right-of-use assets and lease liabilities recognized on the balance sheet. As our leases typically do not contain a readily determinable implicit rate, we determine the present value of the lease liability using our incremental borrowing rate at the lease commencement date based on the lease term on a collateralized basis. | |
Income Taxes | The Company is a United States C corporation for income tax purposes. Income tax expense consisting of current and deferred tax expense is recognized in the consolidated statements of operations. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end, adjusted for amendments to tax payable with regards to previous years. Deferred tax assets and liabilities and the related deferred income tax expense or recovery are recognized for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs. A deferred tax asset is recognized to the extent that it is probable that future taxable income will be available against which the asset can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. | |
Revenue Recognition | Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. | |
Branded Products | For the Company’s branded products, revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a customer. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. | |
Third Party Manufactured Products | The Company has certain licenses to manufacture and distribute third party products to retail dispensaries and deliveries in return for paying royalty payments to the third parties. The Company is a principal in the arrangement, it assumes primary responsibility for fulfilling the customer promise to retail dispensaries and deliveries, and it holds the inventory risk. Revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a retail dispensary or retail delivery. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. | |
Distribution | The Company distributes certain third party brands and bulk flower. The Company is a principal in the arrangement, it assumes primary responsibility for fulfilling the customer promise to retail dispensaries and deliveries and other wholesale customers, and it holds the inventory risk. Revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a customer. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. | |
Research and Development | Research costs are expensed as incurred. For the years ended December 31, 2020 and December 31, 2019, research costs are immaterial. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete the development to use or sell the asset. To date, no development costs have been capitalized. | |
Share-Based Compensation | The Company has a share-based compensation plan. The Company measures equity settled share-based payments based on their fair value at the grant date and recognizes compensation expense over the vesting period based on the Company’s estimate of equity instruments that will eventually vest. For shares granted to non-employees, the compensation expense is measured at the fair value of the goods and services received, except where the fair value cannot be estimated, in which case, it is measured at the fair value of the equity instruments granted. The fair value of share-based compensation to non-employees is periodically re-measured until counterparty performance is complete, and any change therein is recognized over the period and in the same manner as if the Company had paid cash instead of paying with or using equity instruments. | |
Business Combinations | A business combination is defined as an acquisition of assets and liabilities that constitute a business. A business consists of inputs, including non-current assets and processes, including operational processes, that when applied to those inputs have the ability to create outputs that provide a return to the Company. Business combinations are accounted for using the acquisition method of accounting. The consideration of each acquisition is measured at the aggregate of the fair values of tangible and intangible assets obtained, liabilities and contingent liabilities incurred or assumed, and equity instruments issued by the Company at the date of acquisition. Key assumptions routinely utilized in allocation of purchase price to intangible assets include projected financial information such as revenue projections for companies acquired. As of the acquisition date, goodwill is measured as the excess of consideration given, generally measured at fair value, and the net of the acquisition date fair values of the identifiable assets acquired and the liabilities assumed. | |
Significant Accounting, Estimates and Assumptions | The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the review affects both current and future periods. Significant judgments, estimates and assumptions that have the most significant effect on the amounts recognized in the consolidated financial statements are described below. ● Estimated Useful Lives and Depreciation of Property and Equipment– Depreciation of property and equipment is dependent upon estimates of useful lives which are determined through the exercise of judgment. The assessment of any impairment of these assets is dependent upon estimates of recoverable amounts that take into account factors such as economic and market conditions and the useful lives of assets. ● Estimated Useful Lives and Amortization of Intangible Assets– Amortization of intangible assets is recorded on a straight-line basis over their estimated useful lives, which do not exceed the contractual period, if any. ● Fair Value of Investments in Private Entities – The Company uses discounted cash flow model to determine fair value of its investment in private entities. In estimating fair value, management is required to make certain assumptions and estimates such as discount rate, long term growth rate, estimated free cash flows. ● Share-Based Compensation– The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options and warrants granted. In estimating fair value, management is required to make certain assumptions and estimates such as the expected life of units, volatility of the Company’s future share price, risk free rates, future dividend yields and estimated forfeitures at the initial grant date. Changes in assumptions used to estimate fair value could result in materially different results. ● Deferred Tax Asset and Valuation Allowance– Deferred tax assets, including those arising from tax loss carry-forwards, requires management to assess the likelihood that the Company will generate sufficient taxable earnings in future periods in order to utilize recognized deferred tax assets. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. In addition, future changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted. | |
Restatement | The Company previously filed its consolidated financial statements for the periods ended December 31, 2020 and 2019, and for each of the years in the three-year period ended December 31, 2020 with incorrect calculations within the consolidated statements of financial position and consolidated statement of operations related to the conversion from international financial reporting standards to GAAP. The financial statements have been restated to properly reflect inventory and cost of goods sold in accordance with GAAP. The effect of the restatement was to decrease inventory and increase accumulated deficit $4,765 at December 31, 2020, increase inventory and reduce accumulated deficit by $6,183 at December 31, 2019 and change cost of goods sold by $10,498, $(316) and $(5,867) for the years ended December 31, 2020, 2019 and 2018, respectively and earnings per share by $(0.32) and $0.01 for the years ended December 31, 2020 and 2019, respectively. Additionally, the Company reclassified certain depreciation expense from operating expense to cost of goods sold to reflect depreciation expense associated with right of use operating assets in cost of goods sold. The effect of the reclassification was to increase cost of goods sold and decrease operating expenses by $2,589 and $2,329 for the years ended December 31, 2020 and 2019, respectively. The consolidated statements of cash flows were impacted by the resulting offsetting changes in net loss and inventory, resulting in no change in net cash used in operating activities for the periods presented. The consolidated statements of change in stockholders’ equity were impacted by the change in net loss for the periods presented. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
ACQUISITIONS | ||
Schedule of Acquisitions | (1 ) (2) (3) (4) The Humble The Hacienda Lowell Farm (in thousands) Kaizen Inc. Flower Co. Company, LLC Services Total CONSIDERATION Contingent Payment $ 50 $ 44 $ - $ - $ 94 Cash 4,019 - 4,019 Transaction costs 428 190 618 Note payable and other obligations 200 65 3,115 9,000 12,380 Fair value of subordinate voting shares 62 55 34,358 9,610 44,085 Total consideration $ 312 $ 164 $ 41,920 $ 18,800 $ 61,196 PURCHASE PRICE ALLOCATION Assets Acquired Inventories $ - $ 6 $ 3,300 $ - $ 3,306 Accounts receivable - net - - 1,312 - 1,312 Other tangible assets - - 739 15,750 16,489 Intangible assets - brands and tradenames 104 80 37,299 - 37,483 Intangible assets - technology and know-how and other 208 78 - 3,050 3,336 Liabilities assumed Payables and other liabilities - - (730 ) - (730 ) Fair value of net assets acquired $ 312 $ 164 $ 41,920 $ 18,800 $ 61,196 | (2) (1) The Humble (in thousands) Kaizen Inc. Flower Co. Total CONSIDERATION Contingent Payment $ 50 $ 44 $ 94 Note Payable 200 65 265 Fair value of subordinate voting shares 62 55 117 Total consideration $ 312 $ 164 $ 476 PURCHASE PRICE ALLOCATION Assets Acquired Inventories $ - $ 6 6 Intangible assets - brands and trademarks 104 80 184 Intangible assets - technology and know-how 208 78 286 Liabilities assumed Notes payable - - - Total identifiable net assets 312 164 476 Noncontrolling interest - - - Fair value of net assets acquired $ 312 $ 164 $ 476 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACQUISITIONS | |
Schedule of property and equipment | Category Useful Life Leasehold improvements The lesser of the estimated useful life or length of the lease Office equipment 3–5 years Furniture and fixtures 3–7 years Vehicles 4–5 years Machinery and equipment 3–6 years Buildings 35 years Construction in progress Not depreciated |
CHANGES IN OR ADOPTION OF ACC_2
CHANGES IN OR ADOPTION OF ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACQUISITIONS | |
Schedule of lease accountng standard | Effects of adoption of lease accounting standard update related to: (in thousands, $US) As filed December 31, 2018 Operating Leases Total Effects of Adoption With effect of lease accounting standard update January 1, 2019 Assets Property and equipment, net $ 4,063 $ 23,594 $ 23,594 $ 27,656 Liabilities Current portion of long-term debt 147 1,492 1,492 1,639 Long-term debt, net 389 22,948 22,948 23,337 Equity Accumulated Deficit (20,201 ) (847 ) (847 ) (21,047 ) Total $ 23,728 $ - $ - $ 23,728 |
REVERSE TAKEOVER AND PRIVATE _2
REVERSE TAKEOVER AND PRIVATE PLACEMENT (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
ACQUISITIONS | |
Schedule of identifiable assets | There were no identifiable assets of Mezzotin on the date of acquisition. The acquisition costs have been allocated as follows: (in thousands) CONSIDERATION Fair value of subordinate voting shares issued $ 1,513 Transaction costs 191 Total consideration $ 1,704 ASSETS ACQUIRED Total identifiable net assets acquired - Listing expenses 1,704 Total purchase price $ 1,704 |
PREPAID AND OTHER CURRENT ASS_2
PREPAID AND OTHER CURRENT ASSETS (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
PREPAID AND OTHER CURRENT ASSETS | ||
Summary of Prepaid expenses and other current assets | June 30, December 31, (in thousands) 2021 2020 Deposits $ 533 $ 572 Insurance 917 593 Supplier advances 1,623 504 Nevada building sale proceeds - 2,800 Other 1,071 1,922 Total prepaid and other current assets $ 4,144 $ 6,391 | December 31, (in thousands) 2020 2019 Deposits $ 572 $ 542 Insurance 593 854 Supplier advances 504 742 Nevada building sale proceeds 2,800 - Other 1,922 591 Total Prepaid Expenses and Other Current Assets $ 6,391 $ 2,729 |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
INVENTORY | ||
Summary of Inventory | June 30, December 31, (in thousands) 2021 2020 Raw materials $ 11,852 $ 7,950 Work in process 45 - Finished goods 2,839 1,983 Total inventory $ 14,736 $ 9,933 | December 31, (in thousands) 2020 2019 Raw materials $ 7,950 $ 7,645 Work in process - 34 Finished goods 1,983 2,739 Total Inventory $ 9,933 $ 10,418 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
OTHER CURRENT LIABILITIES | ||
Schedule of Other current liabilities | June 30, December 31, (in thousands) 2021 2020 Excise and cannabis tax $ 3,912 $ 5,780 Third party brand distribution accrual 269 584 Insurance and professional fee accrual 820 746 Other 11 1,750 Total other current liabilities $ 5,012 $ 8,860 | December 31, (in thousands) 2020 2019 Excise and cannabis tax $ 5,780 $ 2,903 Third party brand distribution accrual 584 80 Insurance and professional accrual 746 576 Other 1,750 797 Total Accrued Liabilities $ 8,860 $ 4,356 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT | ||
Schedule of Property and equipment | Land and Leasehold Furniture Construction Right of (in thousands) Buildings Improvements and Fixtures Equipment Vehicles in Process Use Assets Total Costs Balance—December 31, 2020 $ - $ 10,799 $ 50 $ 1,276 $ 854 $ 2,528 $ 41,530 $ 57,037 Additions - 73 - 268 - 814 - 1,155 Business Acquisitions 14,529 - - 1,413 - - - 15,942 Disposals - - - - - - - - Balance—June 30, 2021 $ 14,529 $ 10,872 $ 50 $ 2,957 $ 854 $ 3,342 $ 41,530 $ 74,134 Accumulated Depreciation Balance—December 31, 2020 $ - $ (634 ) $ (47 ) $ (427 ) $ (411 ) $ - $ (6,275 ) $ (7,794 ) Depreciation - (167 ) (1 ) (72 ) (77 ) - (1,527 ) (1,844 ) Disposals - - - - - - - - Balance—June 30, 2021 $ - $ (801 ) $ (48 ) $ (499 ) $ (488 ) $ - $ (7,802 ) $ (9,638 ) Net Book Value-June 30, 2021 $ 14,529 $ 10,071 $ 2 $ 2,458 $ 366 $ 3,342 $ 33,728 $ 64,496 Net Book Value -December 31, 2020 $ - $ 10,165 $ 3 $ 849 $ 443 $ 2,528 $ 35,255 $ 49,243 | Land and Leasehold Furniture Construction Right of (in thousands) Buildings Improvements and Fixtures Equipment Vehicles in Process Use Assets Total Costs Balance—December 31, 2018 $ - $ 1,509 $ 49 $ 2,062 $ 516 $ 895 $ - $ 5,031 Additions 4,098 2,766 - 1,192 297 1,638 10,520 20,511 IFRS 16 Adoption - - - - - - 23,594 23,594 Business Acquisitions - - - 25 - - - 25 Disposals - - - (2,179 ) - - - (2,179 ) Balance—December 31, 2019 $ 4,098 $ 4,275 $ 49 $ 1,100 $ 813 $ 2,533 $ 34,114 $ 46,982 Additions 8 1,937 1 154 41 4,604 106 6,851 Lease Option Reassessment - - - - - - 7,310 7,310 Disposals/Transfers (4,106 ) 4,587 - 22 - (4,609 ) - (4,106 ) Balance—December 31, 2020 $ - $ 10,799 $ 50 $ 1,276 $ 854 $ 2,528 $ 41,530 $ 57,037 Accumulated Depreciation Balance—December 31, 2018 $ - $ (260 ) $ (44 ) $ (570 ) $ (95 ) $ - $ - $ (969 ) Depreciation (8 ) (186 ) (3 ) (478 ) (155 ) - (3,025 ) $ (3,854 ) Disposals - 24 - 786 2 - - $ 812 Balance—December 31, 2019 $ (8 ) $ (422 ) $ (46 ) $ (261 ) $ (249 ) $ - $ (3,025 ) $ (4,011 ) Depreciation (57 ) (212 ) (1 ) (166 ) (162 ) - (3,250 ) (3,848 ) Disposals 65 - - - - - - 65 Balance—December 31, 2020 $ - $ (634 ) $ (47 ) $ (427 ) $ (411 ) $ - $ (6,275 ) $ (7,794 ) Net Book Value December 31, 2018 $ - $ 1,249 $ 5 $ 1,492 $ 421 $ 895 $ - $ 4,063 December 31, 2019 $ 4,090 $ 3,853 $ 3 $ 839 $ 565 $ 2,533 $ 31,089 $ 42,972 Balance—December 31, 2020 $ - $ 10,165 $ 3 $ 849 $ 443 $ 2,528 $ 35,255 $ 49,243 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
GOODWILL AND INTANGIBLE ASSETS | ||
Schedule of Intangible assets | A reconciliation of the beginning and ending balances of intangible assets and accumulated amortization during the six months ended June 30, 2021 and intangible assets, net as of December 31, 2020, are as follows: Definite Life Intangibles Indefinite Life Intangibles Branding Technology/ Brands & (in thousands) Rights Know How Tradenames Total Costs Balance—December 31, 2020 $ 250 $ 208 $ 408 $ 866 Business acquisition - 3,050 37,299 40,349 Agreement termination (250 ) - - (250 ) Balance—June 30, 2021 $ - $ 3,258 $ 37,707 $ 40,965 Accumulated Amortization Balance—December 31, 2020 $ (93 ) $ (37 ) $ - $ (130 ) Agreement termination 98 - - 98 Amortization (5 ) (9 ) - (14 ) Other - - - - Balance—June 30, 2021 $ - $ (46 ) $ - $ (46 ) Net Book Value June 30, 2021 $ - $ 3,212 $ 37,707 $ 40,919 Net Book Value December 31, 2020 $ 157 $ 171 $ 408 $ 736 | Definite Life Intangibles Indefinite Life Intangibles Branding Customer Technology/ Other Brands & (in thousands) Rights Relationships KnowHow Intangibles Tradenames Total Costs Balance—December 31, 2019 $ 250 $ 40 $ 421 $ 40 $ 522 $ 1,273 Business acquisition - - - - 179 179 Purchase price adjustment - (40 ) (213 ) (40 ) (293 ) (586 ) Balance—December 31, 2020 $ 250 $ - $ 208 $ - $ 408 $ 866 Accumulated Amortization Balance—December 31, 2019 $ (76 ) $ (8 ) $ (28 ) $ (8 ) $ - $ (120 ) Purchase price adjustment - 12 30 12 - 54 Amortization (17 ) (4 ) (39 ) (4 ) - (64 ) Balance—December 31, 2020 $ (93 ) $ - $ (37 ) $ - $ - $ (130 ) Net Book Value December 31, 2019 $ 174 $ 32 $ 393 $ 32 $ 522 $ 1,153 December 31, 2020 $ 157 $ - $ 171 $ - $ 408 $ 736 |
Schedule of Goodwill | A reconciliation of the beginning and ending balances of goodwill during the six months ended June 30, 2021 is as follows: (in thousands) Costs Balance - December 31, 2020 $ 357 Additions - Business Acquisitions - Impairment - Balance - June 30, 2021 $ 357 | (in thousands) Costs Balance—December 31, 2019 $ 357 Additions - Business Acquisitions - Impairment - Balance—December 31, 2020 $ 357 |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
STOCKHOLDERS' EQUITY | ||
Schedule of warrants outstanding | (in thousands) Balance—December 31, 2019 2,769 Warrants issued in conjunction with convertible debenture offering 80,379 Warrants issued in conjunction with equity offering(1) 11,500 Warrants converted into subordinate voting shares (750 ) Balance—December 31, 2020 93,898 | |
Schedule of Shares outstanding | Subordinate Super (in thousands) Voting Shares Voting Shares Balance—December 31, 2020 57,617 203 Shares issued in connection with exercise of warrants 1,325 - Shares issued in connection with conversion of convertible debentures 2,393 - Shares issued in connection with asset acquisition 30,641 - Issuance of vested restricted stock units 371 - Stock issued in connection with exercised of stock options 76 - Balance—June 30, 2021 92,423 203 (in thousands) Balance—December 31, 2020 93,898 Warrants issued in conjunction with broker option exercise (1) 163 Warrants expired (358 ) Warrants converted into subordinate voting shares (1,000 ) Balance—June 30, 2021 92,703 | Subordinate Super (in thousands) Voting Shares Voting Shares Balance—December 31, 2019 32,844 203 Shares issued in connection with convertible debenture offering 250 - Shares issued in connection with subordinate voting share offering 23,000 - Shares issued in connection with exercise of warrants 750 - Shares issued in connection with conversion of convertible debentures 375 - Shares issued in connection with asset purchase 150 - Issuance of vested restricted stock units 248 - Balance—December 31, 2020 57,617 203 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
DEBT | ||
Schedule of Maturities of debt obligations | June 30, (in thousands) 2021 2021 $ 268 2022 321 2023 15,876 2024 383 2025 421 2026 and thereafter 8,113 Total debt obligations $ 25,382 | December 31, (in thousands) 2020 2020 $ 35 2021 1,122 2022 228 2023 16,050 2024 21 2025 and thereafter 6 Total debt obligations $ 17,462 |
Schedule of Debt | June 30, December 31, (in thousands) 2021 2020 Current portion of long-term debt Vehicle loans (1) $ 186 $ 170 Note payable (3) 183 1,043 Total short-term debt 369 1,213 Long-term debt, net Vehicle loans (1) 162 233 Note payable (2) 56 65 Note payable (3) 40 5 Mortgage payable (4) 8,938 - Convertible debenture (5) 13,646 13,701 Total long-term debt 22,842 14,004 Total Indebtedness $ 23,211 $ 15,217 | December 31, (in thousands) 2020 2019 Current portion of long-term debt Vehicle loans(1) $ 170 $ 135 Note payable(3) 1,043 - Total short-term debt 1,213 135 Long-term debt, net Vehicle loans(1) 233 233 Note payable(2) 65 138 Note payable(3) 5 - Convertible debenture(4) 13,701 - Total long-term debt 14,004 371 Total Indebtedness $ 15,217 $ 506 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
LEASES | ||
Schedule of Lease expense | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2021 2020 2021 2020 Amortization of leased assets (1) $ 785 $ 839 $ 1,527 $ 1,631 Interest on lease liabilities (2) 634 491 1,197 964 Total $ 1,419 $ 1,330 $ 2,724 $ 2,595 | Year Ended December 31, (in thousands) 2020 Amortization of leased assets(1) $ 3,250 Interest on lease liabilities(2) 1,866 Total $ 5,116 |
Schedule of Future lease payments | June 30, (in thousands) 2021 Balance of 2021 $ 1,187 2022 - 2023 5,137 2024 - 2025 3,844 2026 and beyond 27,502 Total $ 37,670 | (in thousands) December 31, 2020 1 - 3 years $ 14,138 4 - 5 Years 7,361 Greater than 5 years 17,335 Total $ 38,834 |
Schedule of Lease obligations | (in thousands) Lease Liability: December 31, 2020 $ 38,834 Lease principal payments (1,164 ) June 30, 2021 $ 37,670 June 30, 2021 Lease obligation, current portion $ 2,410 Lease obligation, long-term portion 35,260 Total $ 37,670 | (in thousands) Lease Liability December 31, 2019 $ 33,805 Additions 120 Lease reassessment 7,310 Lease principal payments (2,401 ) December 31, 2020 $ 38,834 Lease obligation, current portion $ 2,301 Lease obligation, long-term portion $ 36,533 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
REVERSE TAKEOVER AND PRIVATE PLACEMENT | ||
Schedule of Share-based compensation expense | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2021 2020 2021 2020 Cost of goods sold $ - $ - $ - $ - General and administrative expense 338 213 625 1,825 Total share-based compensation $ 338 $ 213 $ 625 $ 1,825 | Years Ended December 31, (in thousands) 2020 2019 2018 Cost of goods sold $ - $ - $ - General and administrative expense 2,200 3,385 270 Total share based compensation $ 2,200 $ 3,385 $ 270 |
Schedule of Stock option activity | Weighted-Average Stock Weighted-Average Remaining Aggregate (in thousands except per share amounts) Options Exercise Price Contractual Life Intrinsic Value Outstanding—December 31, 2020 6,260 $ 0.97 4.7 $ 3,162 Granted 1,880 1.41 Exercised - - Cancelled (1,153 ) 1.60 Outstanding—June 30, 2021 6,987 $ 0.95 2.6 Exercisable—June 30, 2021 1,677 $ 1.02 3 $ 69 Vested and expected to vest—June 30, 2021 6,987 $ 0.95 2.6 $ 2,254 | Weighted-Average Stock Weighted-Average Remaining Aggregate (in thousands except per share amounts) Options Exercise Price Contractual Life Intrinsic Value Outstanding—December 31, 2019 1,543 $ 2.53 4.3 $ - Granted 5,315 0.62 Exercised - - Cancelled (598 ) 1.67 Outstanding—December 31, 2020 6,260 $ 0.97 4.7 $ 3,162 Exercisable—December 31, 2020 739 $ 2.10 3.2 $ 25 Vested and expected to vest—December 31, 2020 6,260 $ 0.97 4.7 $ 3,162 |
Schedule of Restricted stock unit activity | Weighted-Average (in thousands except per share amounts) RSUs Fair Value Outstanding—December 31, 2020 450 $ 0.33 Granted 1,395 1.15 Vested - - Cancelled (10 ) 1.11 Outstanding—June 30, 2021 1,835 $ 0.95 | Restricted Stock Weighted-Average (in thousands except per share amounts) Units Fair Value Outstanding—December 31, 2019 230 $ 2.53 Granted 913 0.62 Vested (634 ) 1.63 Cancelled (59 ) 1.67 Outstanding—December 31, 2020 450 $ 0.33 |
Schedule of Weighted average assumptions | Stock Options Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 1.1 % 2.2 % 0.9 % 2.2 % Expected term in years 4.25 4.12 4.25 4.14 RSUs Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 0.9 % 0.9 % 0.9 % 0.9 % Expected term in years 0.74 0.60 0.74 0.60 | Year Ended December 31, 2020 Expected volatility 50.0 % Dividend yield 0 % Risk-free interest rate 0.95 % Expected term in years 6.0 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
REVERSE TAKEOVER AND PRIVATE PLACEMENT | ||
Schedule of weighted average number of shares outstanding | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands except per share amounts) 2021 2020 2021 2020 Net income (loss) $ 731 $ (8,757 ) $ (5,988 ) $ (16,631 ) Net income (loss) per share: Basic $ 0.01 $ (0.26 ) $ (0.10 ) $ (0.50 ) Diluted $ 0.00 $ (0.26 ) $ (0.10 ) $ (0.50 ) Weighted average shares outstanding: Basic 71,021 33,307 61,956 33,025 Diluted 201,278 33,307 61,956 33,025 Weighted average potentially diluted shares (1): Basic shares 71,021 33,307 61,956 33,025 Options 2,908 - - - Warrants 60,767 - - - Convertible debentures 64,796 - - - Restricted stock units 1,786 - - - Total weighted average potentially diluted shares: 201,278 33,307 61,956 33,025 | |
Schedule of deferred tax assets and liabilities | Years Ended December 31, (in thousands) 2020 2019 Deferred tax assets Net operating loss carryforwards $ 9,104 $ 10,836 Accruals and reserves - - Depreciation - - Other - - Valuation allowance (9,104 ) (10,836 ) Total deferred tax assets - - Accruals and reserves - - Share-based compensation - - Total deferred tax liabilities - - Net deferred tax liabilities $ - $ - | |
Schedule of provision for income tax expense | Years Ended December 31, (in thousands) 2020 2019 2018 Current Federal $ - $ - $ - State 224 205 97 Total Current 224 205 97 Deferred tax expense (benefit) Federal 900 (2,406 ) (601 ) State (9,127 ) (7,329 ) (646 ) Total deferred tax benefit (8,227 ) (9,735 ) (1,247 ) Valuation allowance 8,227 9,735 1,247 Income tax expense $ 224 $ 205 $ 97 | |
Schedule of statutory federal income | Years Ended December 31, (in thousands) 2020 2019 2018 Computed expected provision (benefit) for taxes $ (4,554 ) $ (10,443 ) $ (1,809 ) Increase (Decrease) in taxes resulting from: State taxes 224 205 97 Non-deductible stock compensation 462 711 57 Non-deductible expenses under section 280e 5,099 7,965 2,605 Valuation allowance and other, net (1,007 ) 1,767 (853 ) Actual provision for income taxes $ 224 $ 205 $ 97 |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Net income (loss) per share: | ||
Schedule of Net earnings/(loss) per share | Years Ended December 31, (in thousands except per share amounts) 2020 2019 Net earnings/(loss) $ (21,910 ) $ (49,934 ) Basic Weighted average subordinate voting shares(1) 33,940 31,379 Basic earnings (loss) per share $ (0.65 ) $ (1.59 ) Diluted Weighted average subordinate voting shares(1) 33,940 31,379 Effects of Potential Dilutive Shares Options - - Warrants - - Restricted stock units - - Diluted weighted average subordinate voting shares 33,940 31,379 Diluted earnings (loss) per share $ (0.65 ) $ (1.59 ) |
GENERAL AND ADMINISTRATIVE EX_2
GENERAL AND ADMINISTRATIVE EXPENSES (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
GENERAL AND ADMINISTRATIVE EXPENSES | ||
Schedule of General and administrative expense | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2021 2020 2021 2020 Salaries and benefits $ 1,561 $ 980 $ 2,398 $ 1,976 Professional fees 777 251 1,259 850 Share-based compensation 336 213 625 1,825 Administrative 1,143 12 2,004 82 Total general and administrative expenses $ 3,817 $ 1,456 $ 6,286 $ 4,733 | Years Ended December 31, (in thousands) 2020 2019 2018 Salaries and benefits $ 5,032 $ 12,697 $ 3,452 Professional fees 1,650 2,229 640 Licensing and supplies 267 870 556 Share-based compensation 2,200 3,385 270 Administrative 2,613 4,292 3,861 Transaction and other special charges(1) - 2,341 - Total general and administrative expenses $ 11,762 $ 25,814 $ 8,779 |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
GENERAL AND ADMINISTRATIVE EXPENSES | |
Schedule of valuation and qualifying accounts | Additions Balance Charged to (Deductions) Balance Beginning Costs and Recoveries/ End of (in thousands) of Year Expenses Other(1) Year Allowance for doubtful accounts: Year Ended December 31, 2020 $ 2,595 $ 1,195 $ (2,401 ) $ 1,389 Year Ended December 31, 2019 $ 250 $ 2,346 $ (1 ) $ 2,595 Year Ended December 31, 2018 $ 165 $ 175 $ (90 ) $ 250 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Assets Acquired | |||
Contingent payment | $ 94,000 | $ 94,000 | |
Cash | 4,019,000 | ||
Transaction costs | 618,000 | ||
Note payable and other obligations | 12,380,000 | 265,000 | |
Fair value of subordinate voting shares | 44,085,000 | 117,000 | |
Total consideration | 61,196,000 | $ 1,704,000 | 476,000 |
Inventories | 3,306,000 | 6,000 | |
Accounts receivable - net | 1,312,000 | ||
Other tangible assets | 16,489,000 | ||
Intangible assets - brands and tradenames | 37,483,000 | 184,000 | |
Intangible assets - technology and know-how | 3,336,000 | 286,000 | |
Fair value of net assets acquired | 61,196,000 | 476,000 | |
Total identifiable net assets | 476 | ||
Liabilities Assumed | |||
Payables and other liabilities | (730,000) | ||
LowellFarmService [Member] | |||
Assets Acquired | |||
Contingent payment | 0 | ||
Cash | 0 | ||
Transaction costs | 190,000 | ||
Note payable and other obligations | 9,000,000 | ||
Fair value of subordinate voting shares | 9,610,000 | ||
Total consideration | 18,800,000 | ||
Inventories | 0 | ||
Accounts receivable - net | 0 | ||
Other tangible assets | 15,750,000 | ||
Intangible assets - brands and tradenames | 0 | ||
Intangible assets - technology and know-how | 3,050,000 | ||
Fair value of net assets acquired | 18,800,000 | ||
Liabilities Assumed | |||
Payables and other liabilities | 0 | ||
Kaizen Inc, | |||
Assets Acquired | |||
Contingent payment | 50,000 | 50,000 | |
Cash | 0 | 0 | |
Transaction costs | 0 | 0 | |
Note payable and other obligations | 200,000 | 200,000 | |
Fair value of subordinate voting shares | 62,000 | 62,000 | |
Total consideration | 312,000 | 312,000 | |
Inventories | 0 | ||
Accounts receivable - net | 0 | ||
Other tangible assets | 0 | ||
Intangible assets - brands and tradenames | 104,000 | 104,000 | |
Intangible assets - technology and know-how | 208,000 | 208,000 | |
Fair value of net assets acquired | 312,000 | 312,000 | |
Total identifiable net assets | 312 | ||
Liabilities Assumed | |||
Payables and other liabilities | 0 | ||
The Humble Flower Co. | |||
Assets Acquired | |||
Contingent payment | 44,000 | 44,000 | |
Cash | 0 | ||
Transaction costs | 0 | ||
Note payable and other obligations | 65,000 | 65,000 | |
Fair value of subordinate voting shares | 55,000 | 55,000 | |
Total consideration | 164,000 | 164,000 | |
Inventories | 6,000 | 6,000 | |
Accounts receivable - net | 0 | ||
Other tangible assets | 0 | ||
Intangible assets - brands and tradenames | 80,000 | 80,000 | |
Intangible assets - technology and know-how | 78,000 | 78,000 | |
Fair value of net assets acquired | 164,000 | 164,000 | |
Total identifiable net assets | 164 | ||
Liabilities Assumed | |||
Payables and other liabilities | 0 | $ 0 | |
The Hacienda Company, LLC | |||
Assets Acquired | |||
Contingent payment | 0 | ||
Cash | 4,019,000 | ||
Transaction costs | 428,000 | ||
Note payable and other obligations | 3,115,000 | ||
Fair value of subordinate voting shares | 34,358,000 | ||
Total consideration | 41,920,000 | ||
Inventories | 3,300,000 | ||
Accounts receivable - net | 1,312,000 | ||
Other tangible assets | 739,000 | ||
Intangible assets - brands and tradenames | 37,299,000 | ||
Intangible assets - technology and know-how | 0 | ||
Fair value of net assets acquired | 41,920,000 | ||
Liabilities Assumed | |||
Payables and other liabilities | $ (730,000) |
ACQUISITIONS (Details Narrative
ACQUISITIONS (Details Narrative) - USD ($) | Jul. 15, 2020 | May 14, 2019 | Jun. 29, 2021 | Feb. 25, 2021 | Jan. 31, 2021 | Jul. 17, 2020 | Nov. 30, 2019 | Apr. 18, 2019 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Loss on termination of investment | $ 0 | $ 3,524,000 | $ 0 | $ 3,524,000 | $ (4,201,000) | $ 0 | $ 0 | |||||||||
Issuance of subordinate voting shares | 22,643,678 | 11,500,000 | ||||||||||||||
LowellFarmService [Member] | ||||||||||||||||
Notes payable | $ 9,000,000 | |||||||||||||||
Maturity date of assets | Apr. 30, 2023 | |||||||||||||||
Purchase price of assets | $ 18,800,000 | |||||||||||||||
Issuance of subordinate voting shares | 7,997,520,000 | |||||||||||||||
The Hacienda Company, LLC | ||||||||||||||||
Purchase price of assets | $ 41,920,000 | |||||||||||||||
Issuance of subordinate voting shares | 22,643,678,000 | |||||||||||||||
Cash Consideration | $ 4,100,000 | |||||||||||||||
Fair Value of Net Assets Acquired [Member] | ||||||||||||||||
Transactional costs | $ 47,000 | |||||||||||||||
Terminated Acqusition [Member] | ||||||||||||||||
Transactional costs | 251,000 | |||||||||||||||
Cash payment for acquire asset | $ 500,000 | |||||||||||||||
Additional cash payment | $ 2,800,000 | 2,800,000 | ||||||||||||||
Notes payable | 843,000 | |||||||||||||||
Loss on termination of investment | 4,400,000 | |||||||||||||||
Asset Purchase Agreement [Member] | The Humble Flower Co | ||||||||||||||||
Notes payable | $ 65,000 | |||||||||||||||
Maturity date of assets | Apr. 18, 2023 | |||||||||||||||
Purchase price of assets | $ 472,000 | |||||||||||||||
Net loss | 34,000 | |||||||||||||||
Net assets | 308,000 | |||||||||||||||
Issuance of subordinate voting shares | 225,000 | |||||||||||||||
Asset Purchase Agreement [Member] | Kaizen Inc, | May 1, 2019 | ||||||||||||||||
Notes payable | $ 200,000 | |||||||||||||||
Purchase price of assets | $ 556,000 | $ 556,000 | ||||||||||||||
Net loss | 21,000 | |||||||||||||||
Net assets | $ 223,000 | |||||||||||||||
Issuance of subordinate voting shares | 225,000 | |||||||||||||||
Purchase Agreement [Member] | W Vapes | ||||||||||||||||
Cash purchase consideration | $ 10,000,000 | |||||||||||||||
Subordinated voting shares, consideration | $ 10,000,000 | |||||||||||||||
Advance received from non recourse fund | $ 2,000,000 | |||||||||||||||
Cash held in Escrow | $ 10,000,000 | |||||||||||||||
Purchase Agreement [Member] | Las Vegas | ||||||||||||||||
Cash payment for acquire asset | 500,000 | |||||||||||||||
Additional cash payment | $ 2,800,000 | |||||||||||||||
Notes payable | $ 843,000 | |||||||||||||||
Loss on termination of investment | $ 4,400,000 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Buildings [Member] | |
estimated useful life | 35 years |
Leasehold improvements [Member] | |
Estimated useful life description | The lesser of the estimated useful life or length of the lease |
Constructioninprogress [Member] | |
Estimated useful life description | Not depreciated |
Minimum [Member] | Office equipment [Member] | |
estimated useful life | 3 years |
Minimum [Member] | Furniture and fixtures [Member] | |
estimated useful life | 3 years |
Minimum [Member] | Vehicles [Member] | |
estimated useful life | 4 years |
Minimum [Member] | Machinery and equipment [Member] | |
estimated useful life | 3 years |
Maximum [Member] | Office equipment [Member] | |
estimated useful life | 5 years |
Maximum [Member] | Furniture and fixtures [Member] | |
estimated useful life | 7 years |
Maximum [Member] | Vehicles [Member] | |
estimated useful life | 5 years |
Maximum [Member] | Machinery and equipment [Member] | |
estimated useful life | 6 years |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
ACQUISITIONS | |||
Accumulated deficit | $ (4,765) | $ (6,183) | |
Cost of goods sold | $ 10,498 | $ 316 | $ 5,867 |
Straight line basis | 15 years | ||
Price per share | $ (0.32) | $ (0.01) | |
Operating expenses | $ 2,589 | $ 2,329 |
CHANGES IN OR ADOPTION OF ACC_3
CHANGES IN OR ADOPTION OF ACCOUNTING POLICIES (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
With effect of lease accounting standard update January 1, 2019 | $ 23,728 |
As filed December 31, 2018 | 23,728 |
Operating Leases | 0 |
Total Effects of Adoption | 0 |
Accumulated Deficit [Member] | |
With effect of lease accounting standard update January 1, 2019 | (21,047) |
As filed December 31, 2018 | (20,201) |
Operating Leases | 847 |
Total Effects of Adoption | (847) |
Property and equipment, net [Member] | |
With effect of lease accounting standard update January 1, 2019 | 27,656 |
As filed December 31, 2018 | 4,063 |
Operating Leases | 23,594 |
Total Effects of Adoption | 23,594 |
Current portion of long-term debt [Member] | |
With effect of lease accounting standard update January 1, 2019 | 1,639 |
As filed December 31, 2018 | 147 |
Operating Leases | 1,492 |
Total Effects of Adoption | 1,492 |
Long-term debt, net [Member] | |
With effect of lease accounting standard update January 1, 2019 | 23,337 |
As filed December 31, 2018 | 389 |
Operating Leases | 22,948 |
Total Effects of Adoption | $ 22,948 |
CHANGES IN OR ADOPTION OF ACC_4
CHANGES IN OR ADOPTION OF ACCOUNTING POLICIES (Details NARRATIVE) | Dec. 31, 2020USD ($) |
January 1, 2019 [Member] | |
Changes in adoption accumulated deficit | $ (847) |
REVERSE TAKEOVER AND PRIVATE _3
REVERSE TAKEOVER AND PRIVATE PLACEMENT (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONSIDERATION | |||
Fair value of subordinate voting shares issued | $ 1,513 | ||
Transaction costs | 191 | ||
Total consideration | $ 61,196 | 1,704 | $ 476 |
ASSETS ACQUIRED | |||
Total identifiable net assets acquired | 0 | ||
Listing expenses | 1,704 | ||
Total purchase price | $ 1,704 |
REVERSE TAKEOVER AND PRIVATE _4
REVERSE TAKEOVER AND PRIVATE PLACEMENT (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended |
Apr. 02, 2019 | Dec. 31, 2020 | |
Fair value of subordinate voting shares issued | $ 1,513,000 | |
Private Placements [Member] | ||
Subscription price per share | $ 11.60 | |
Subscription receipts | $ 3,436 | |
Gross proceeds | $ 40,000,000 |
PREPAID AND OTHER CURRENT ASS_3
PREPAID AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
PREPAID AND OTHER CURRENT ASSETS | |||
Deposits | $ 533 | $ 572 | $ 542 |
Insurance | 917 | 593 | 854 |
Supplier advances | 1,623 | 504 | 742 |
Nevada building sale proceeds | 0 | 2,800 | 0 |
Other | 1,071 | 1,922 | 591 |
Total prepaid expenses and other current assets | $ 4,144 | $ 6,391 | $ 2,729 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
INVENTORY | |||
Raw materials | $ 11,852 | $ 7,950 | $ 7,645 |
Work in process | 45 | 0 | 34 |
Finished goods | 2,839 | 1,983 | 2,739 |
Total inventory | $ 14,736 | $ 9,933 | $ 10,418 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
OTHER CURRENT LIABILITIES | |||
Excise and cannabis tax | $ 3,912 | $ 5,780 | $ 2,903 |
Third party brand distribution accrual | 269 | 584 | 80 |
Insurance and professional accrual | 820 | 746 | 576 |
Other | 11 | 1,750 | 797 |
Total accrued liabilities | $ 5,012 | $ 8,860 | $ 4,356 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property and equipment cost, beginning | $ 57,037,000 | $ 46,982,000 | $ 5,031,000 | |
Additions | 1,155,000 | 6,851,000 | 20,511,000 | |
Business acquisitions | 15,942,000 | 25,000 | ||
IFRS 16 Adoption | 23,594 | |||
Lease Option Reassessment | 7,310 | |||
Disposals | 0 | (4,106,000) | (2,179,000) | |
Property and equipment cost, ending | 74,134 | 57,037 | 46,982 | |
Accumulated depreciation, beginning | (7,794,000) | (4,011,000) | (969,000) | |
Depreciation | (1,844,000) | (3,848,000) | (3,854,000) | |
Accumulated depreciation, Disposals | 65 | 812 | ||
Accumulated depreciation, ending | (9,638,000) | (7,794,000) | (4,011,000) | |
Net book value | 64,496,000 | 49,243,000 | 42,972,000 | $ 4,063,000 |
Land and Buildings | ||||
Property and equipment cost, beginning | 0 | 4,098,000 | 0 | |
Additions | 0 | 8,000 | 4,098,000 | |
Business acquisitions | 14,529,000 | 14,529,000 | 0 | |
IFRS 16 Adoption | 0 | |||
Lease Option Reassessment | 0 | |||
Disposals | 0 | (4,106,000) | ||
Property and equipment cost, ending | 14,529 | 0 | 4,098 | |
Accumulated depreciation, beginning | (8,000) | 0 | ||
Depreciation | 0 | (57,000) | (8,000) | |
Accumulated depreciation, Disposals | 65 | 0 | ||
Accumulated depreciation, ending | 0 | 0 | (8,000) | |
Net book value | 14,529,000 | 0 | 4,090,000 | 0 |
Leasehold Improvements | ||||
Property and equipment cost, beginning | 10,799,000 | 4,275,000 | 1,509,000 | |
Additions | 73,000 | 1,937,000 | 2,766,000 | |
Business acquisitions | 0 | 0 | ||
IFRS 16 Adoption | 0 | |||
Lease Option Reassessment | 0 | |||
Disposals | 0 | 4,587,000 | 0 | |
Property and equipment cost, ending | 10,872 | 10,799 | 4,275 | |
Accumulated depreciation, beginning | (634,000) | (422,000) | (260,000) | |
Depreciation | (167,000) | (212,000) | (186,000) | |
Accumulated depreciation, Disposals | 0 | 24 | ||
Accumulated depreciation, ending | (801,000) | (634,000) | (422,000) | |
Net book value | 10,071,000 | 10,165,000 | 3,853,000 | 1,249,000 |
Furniture and Fixtures | ||||
Property and equipment cost, beginning | 50,000 | 49,000 | 49,000 | |
Additions | 0 | 1,000 | 0 | |
Business acquisitions | 0 | 0 | ||
IFRS 16 Adoption | 0 | |||
Lease Option Reassessment | 0 | |||
Disposals | 0 | 0 | 0 | |
Property and equipment cost, ending | 50 | 50 | 49 | |
Accumulated depreciation, beginning | (47,000) | (46,000) | (44,000) | |
Depreciation | (1,000) | 1,000 | 3,000 | |
Accumulated depreciation, Disposals | 0 | 0 | ||
Accumulated depreciation, ending | (48,000) | (47,000) | (46,000) | |
Net book value | 2,000 | 3,000 | 3,000 | 5,000 |
Equipment [Member] | ||||
Property and equipment cost, beginning | 1,276,000 | 1,100,000 | 2,062,000 | |
Additions | 268,000 | 154,000 | 1,192,000 | |
Business acquisitions | 1,413,000 | 25,000 | ||
IFRS 16 Adoption | 0 | 0 | ||
Lease Option Reassessment | 0 | |||
Disposals | 0 | 22,000 | (2,179,000) | |
Property and equipment cost, ending | 2,957 | 1,276 | 1,100 | |
Accumulated depreciation, beginning | (427,000) | (261,000) | (570,000) | |
Depreciation | (72,000) | 166,000 | 478,000 | |
Accumulated depreciation, Disposals | 0 | 786 | ||
Accumulated depreciation, ending | (499,000) | (427,000) | (261,000) | |
Net book value | 2,458,000 | 849,000 | 839,000 | 1,492,000 |
Vehicles [Member] | ||||
Property and equipment cost, beginning | 854,000 | 813,000 | 516,000 | |
Additions | 0 | 41,000 | 297,000 | |
Business acquisitions | 0 | 0 | ||
IFRS 16 Adoption | 0 | |||
Lease Option Reassessment | 0 | |||
Disposals | 0 | 0 | 0 | |
Property and equipment cost, ending | 854 | 854 | 813 | |
Accumulated depreciation, beginning | (411,000) | (249,000) | (95,000) | |
Depreciation | (77,000) | 162,000 | 155,000 | |
Accumulated depreciation, Disposals | 0 | 2 | ||
Accumulated depreciation, ending | (488,000) | (411,000) | (249,000) | |
Net book value | 366,000 | 443,000 | 565,000 | 421,000 |
Construction in Process | ||||
Property and equipment cost, beginning | 2,528,000 | 2,533,000 | 895,000 | |
Additions | 814,000 | 4,604,000 | 1,638,000 | |
Business acquisitions | 0 | 0 | ||
IFRS 16 Adoption | 0 | |||
Lease Option Reassessment | 0 | |||
Disposals | 0 | (4,609,000) | 0 | |
Property and equipment cost, ending | 3,342 | 2,528 | 2,533 | |
Accumulated depreciation, beginning | 0 | 0 | 0 | |
Depreciation | 0 | 0 | 0 | |
Accumulated depreciation, Disposals | 0 | 0 | ||
Accumulated depreciation, ending | 0 | 0 | 0 | |
Net book value | 3,342,000 | 2,528,000 | 2,533,000 | 895,000 |
Right of Use Assets | ||||
Property and equipment cost, beginning | 41,530,000 | 34,114,000 | 0 | |
Additions | 0 | 106,000 | 10,520,000 | |
Business acquisitions | 0 | 0 | ||
IFRS 16 Adoption | 23,594 | |||
Lease Option Reassessment | 7,310 | |||
Disposals | 0 | 0 | 0 | |
Property and equipment cost, ending | 41,530 | 41,530 | 34,114 | |
Accumulated depreciation, beginning | (6,275,000) | (3,025,000) | 0 | |
Depreciation | (1,527,000) | 3,025,000 | 3,025,000 | |
Accumulated depreciation, Disposals | (3,250) | 0 | ||
Accumulated depreciation, ending | (7,802,000) | (6,275,000) | (3,025,000) | |
Net book value | $ 33,728,000 | $ 35,255,000 | $ 31,089,000 | $ 0 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Other Income | $ 195 | $ 195 | |||||
Cost of Goods Sold | |||||||
Depreciation | 584,000 | $ 769,000 | 1,168,000 | $ 1,283,000 | $ 2,830,000 | $ 2,921,000 | $ 211,000 |
Property and equipment, net [Member] | |||||||
Depreciation | $ 946,000 | $ 1,044,000 | $ 1,844,000 | $ 1,909,000 | $ 3,848,000 | $ 3,854,000 | $ 312,000 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
GOODWILL AND INTANGIBLE ASSETS | ||
Goodwill, beginning | $ 357 | $ 357 |
Additions | 0 | 0 |
Business acquisitions | 0 | 0 |
Impairment | 0 | 0 |
Goodwill, ending | $ 357 | $ 357 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS (Details 1) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Business acquisition | $ 40,349,000 | $ 179,000 | |||
Accumulated amortization, ending | (46,000) | (130,000) | |||
Other Accumulated Amortization | 0 | ||||
Amortization | (14,000) | $ (44,000) | (64,000) | $ (71,000) | $ (17,000) |
Agreement termination, amortization | 98,000 | ||||
Accumulated amortization, beginning | (130,000) | (120,000) | |||
Agreement termination | (250,000) | ||||
Definite life intangibles cost, beginning | 866,000 | 1,273,000 | 1,273,000 | ||
Net book value | 736,000 | 1,153,000 | |||
Purchase price adjustment | (586,000) | ||||
Definite life intangibles cost, ending | 866,000 | ||||
Accumulated amortization, Purchase price adjustment | 54,000 | ||||
Total other intangible assets | 40,965 | ||||
Business acquisition | 0 | ||||
Brands & Tradenames | |||||
Accumulated amortization, ending | 0 | 0 | |||
Other Accumulated Amortization | 0 | ||||
Amortization | 0 | 0 | |||
Agreement termination, amortization | 0 | ||||
Accumulated amortization, beginning | 0 | 0 | |||
Definite life intangibles cost, beginning | 408,000 | 522,000 | 522,000 | ||
Net book value | 37,707,000 | 0 | 32,000 | ||
Purchase price adjustment | (293,000) | ||||
Definite life intangibles cost, ending | 408,000 | ||||
Accumulated amortization, Purchase price adjustment | 0 | ||||
Business acquisition | 37,299,000 | 179,000 | |||
Agreement termination | 0 | ||||
Indefinite Life Intangibles | Brands & Tradenames | |||||
Net book value | 408,000 | 522,000 | |||
Indefinite life intangibles, ending | 37,707,000 | ||||
Branding Rights | |||||
Accumulated amortization, ending | 0 | (93,000) | |||
Other Accumulated Amortization | 0 | ||||
Amortization | (5,000) | (17,000) | |||
Agreement termination, amortization | 98,000 | ||||
Accumulated amortization, beginning | (93,000) | (76,000) | |||
Definite life intangibles cost, beginning | 250,000 | 250,000 | 250,000 | ||
Net book value | 0 | 157,000 | 174,000 | ||
Purchase price adjustment | 0 | ||||
Definite life intangibles cost, ending | 250,000 | ||||
Accumulated amortization, Purchase price adjustment | 0 | ||||
Business acquisition | 0 | 0 | |||
Agreement termination | (250,000) | ||||
Customer Relationships | |||||
Business acquisition | 0 | ||||
Accumulated amortization, ending | 0 | ||||
Agreement termination, amortization | (4,000) | ||||
Accumulated amortization, beginning | (8,000) | ||||
Definite life intangibles cost, beginning | 40,000 | 40,000 | |||
Net book value | 32,000 | 0 | |||
Purchase price adjustment | (40,000) | ||||
Definite life intangibles cost, ending | 0 | ||||
Accumulated amortization, Purchase price adjustment | 12,000 | ||||
Other Intangibles | |||||
Business acquisition | 0 | ||||
Accumulated amortization, ending | 0 | ||||
Agreement termination, amortization | (4,000) | ||||
Accumulated amortization, beginning | (8,000) | ||||
Definite life intangibles cost, beginning | 40,000 | 40,000 | |||
Net book value | 40,919,000 | 736,000 | |||
Purchase price adjustment | (40,000) | ||||
Definite life intangibles cost, ending | 0 | ||||
Accumulated amortization, Purchase price adjustment | 12,000 | ||||
Technology/KnowHow | |||||
Accumulated amortization, ending | (46,000) | (37,000) | |||
Other Accumulated Amortization | 0 | ||||
Amortization | (9,000) | (39,000) | |||
Agreement termination, amortization | 0 | ||||
Accumulated amortization, beginning | (37,000) | (28,000) | |||
Definite life intangibles cost, beginning | 208,000 | $ 421,000 | 421,000 | ||
Net book value | 3,212,000 | 171,000 | $ 393,000 | ||
Purchase price adjustment | (213,000) | ||||
Definite life intangibles cost, ending | 208,000 | ||||
Accumulated amortization, Purchase price adjustment | 30,000 | ||||
Business acquisition | 3,050,000 | $ 0 | |||
Agreement termination | 0 | ||||
Technology/KnowHow | Definite Life Intangibles | |||||
Definite life intangibles cost, ending | $ 3,258,000 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
GOODWILL AND INTANGIBLE ASSETS | |||||
Amortization | $ 14 | $ 44 | $ 64 | $ 71 | $ 17 |
Actual amortization expense | $ 40 |
SHAREHOLDERS EQUITY (Details)
SHAREHOLDERS EQUITY (Details) - shares shares in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Subordinate Voting Shares [Member] | ||
Beginning balance, shares | 57,617 | 32,844 |
Shares issued in connection with exercise of warrants | 1,325 | 750 |
Shares issued in connection with convertible debenture offering | 250 | |
Shares issued in connection with conversion of convertible debentures | 2,393 | 375 |
Shares issued in connection with subordinate voting share offering | 23,000 | |
Shares issued in connection with asset acquisition | 30,641 | 150 |
Issuance of vested restricted stock units | 371 | 248 |
Stock issued in connection with exercised of stock options | 76 | |
Ending balance, shares | 92,423 | 57,617 |
Super Voting Shares [Member] | ||
Beginning balance, shares | 203 | 203 |
Ending balance, shares | 203 | 203 |
SHAREHOLDERS EQUITY (Details 1)
SHAREHOLDERS EQUITY (Details 1) - shares shares in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
STOCKHOLDERS' EQUITY | ||
Warrants issued in conjunction with convertible debenture offering | 80,379 | |
Warrants issued in conjunction with equity offering | 11,500 | |
Warrants, beginning balance | 93,898 | 2,769 |
Warrants issued in conjunction with broker option exercise | 163 | |
Warrants expired | 358 | |
Warrants converted into subordinate voting shares | (1,000) | (750) |
Warrants, ending balance | 92,703 | 93,898 |
SHAREHOLDERS EQUITY (Details Na
SHAREHOLDERS EQUITY (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended |
Feb. 25, 2021 | Dec. 31, 2020 | |
STOCKHOLDERS' EQUITY | ||
Proceed from subordinate voting shares | $ 25,000 | |
Issuance of subordinate voting shares | 22,643,678 | 11,500,000 |
Subordinate voting shares aquaire | 130,000 | |
Subordinate voting shares aquaired price | $ 1,513 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Short-term debt | $ 369 | $ 1,213 | $ 135 |
Long-term debt | 22,842 | 14,004 | 371 |
Total indebtness | 23,211 | 15,217 | 506 |
Convertible Debenture | |||
Long-term debt | 13,646 | 13,701 | 0 |
Vehicle Loans | |||
Short-term debt | 186 | 170 | 135 |
Long-term debt | 162 | 233 | 233 |
Note Payable | |||
Short-term debt | 183 | 1,043 | 0 |
Long-term debt | 56 | 65 | 138 |
Note Payable 1 | |||
Long-term debt | 40 | 5 | $ 0 |
Note Payable 2 | |||
Long-term debt | $ 8,938 | $ 0 |
DEBT (Details 1)
DEBT (Details 1) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
DEBT | ||
2020 | $ 35 | |
2021 | $ 268 | 1,122 |
2022 | 321 | 228 |
2023 | 15,876 | 16,050 |
2024 | 383 | 21 |
2025 | 421 | 6 |
2026 and thereafter | 8,113 | |
Total debt obligations | $ 25,382 | $ 17,462 |
DEBT (Details Narrative)
DEBT (Details Narrative) - Warrant Purchase Agreement [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Apr. 13, 2020 | May 31, 2020 | Apr. 30, 2020 | Dec. 30, 2020 |
Senior convertible debenture issued | $ 15,100 | $ 16,100 | ||
Additional convertible debenture funded | $ 1,000 | |||
Debenture convertible conversion price | $ 0.20 | |||
Aggregate of subordinate voting shares | 80,400 | |||
Subordinate voting exercise price per share | $ 0.28 | |||
Financing yield amount | $ 11,500 | |||
Repayment of financing received amount | 3,800 | |||
Transaction related expense | $ 600 | |||
Debt instrument, interest rate | 5.50% | |||
Debt instrument maturity date | Oct. 31, 2023 | |||
Convertible debenture amount | $ 75 | |||
Conversion of convertible subordinate shares | 375 |
LEASES (Details)
LEASES (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
LEASES | |||
Lease liability, beginning | $ 38,834,000 | ||
Lease principal payments | (1,164,000) | $ (2,401,000) | |
Additions | 120,000 | ||
Lease reassessment | 7,310 | ||
Lease liability, ending | 37,670,000 | 38,834,000 | |
Lease obligation, current portion | 2,410,000 | 2,301,000 | $ 2,325,000 |
Lease obligation, long-term portion | 35,260,000 | $ 36,533,000 | $ 31,480,000 |
Total | $ 37,670,000 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
LEASES | |||||
Amortization of leased assets | $ 785 | $ 839 | $ 1,527 | $ 1,631 | $ 3,250 |
Interest on lease liabilities | 634 | 491 | 1,197 | 964 | 1,866 |
Total | $ 1,419 | $ 1,330 | $ 2,724 | $ 2,595 | $ 5,116 |
LEASES (Details 2)
LEASES (Details 2) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
LEASES | ||
Balance of 2021 | $ 1,187 | |
2022 - 2023 | 5,137 | $ 14,138 |
2024 - 2025 | 3,844 | 7,361 |
2026 - and beyond | 27,502 | 17,335 |
Total | $ 37,670 | $ 38,834 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Dec. 30, 2020 | Dec. 31, 2020 | |
Weighted average remaining lease term | 17 years 7 months 6 days | 18 years 1 month 6 days | |
Weighted average discount rate | 6.00% | 6.00% | |
January 1, 2019 [Member] | |||
Accumulated deficits | $ (847) | $ (847) |
INVESTMENTS (Details Narrative)
INVESTMENTS (Details Narrative) - USD ($) shares in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Nov. 30, 2020 | Mar. 31, 2019 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Oct. 31, 2018 | |
Unrecognized gain | $ 18,000 | $ 306,000 | $ 124,000 | $ 391,000 | $ 168,000 | $ 73,000 | $ (2,250,000) | $ 0 | |||
Acquired interest on orchid round | $ 1,500,000 | ||||||||||
Recognized loss on investment | 350,000 | ||||||||||
Issuance of subordinated voting shares | 150 | ||||||||||
Fair value of subordinate voting shares | $ 170,000 | ||||||||||
Acquired interest on acquisitions | $ 148,000 | ||||||||||
Realized gain on investement | $ 656,000 | $ 476,000 | |||||||||
Common stock shares issued upon exchange | 325 | ||||||||||
Common stock value upon exhange share | $ 650,000 | ||||||||||
Series B Preferred Stock [Member] | |||||||||||
Preferred stock shares issued | 77,689 | ||||||||||
Preferred stock value | $ 350,000 | ||||||||||
Acquired ownership interest | 50.00% |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based compensation expense | $ 338,000 | $ 213,000 | $ 625,000 | $ 1,825,000 | $ 2,200,000 | $ 3,385,000 | $ 270,000 |
Cost of Goods Sold | |||||||
Share-based compensation expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
General and Administrative Expense | |||||||
Share-based compensation expense | $ 338,000 | $ 213,000 | $ 625,000 | $ 1,825,000 | $ 2,200,000 | $ 3,385,000 | $ 270,000 |
SHARE-BASED COMPENSATION (Det_2
SHARE-BASED COMPENSATION (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
REVERSE TAKEOVER AND PRIVATE PLACEMENT | |||
Stock options outstanding, beginning | 6,260,000 | 1,543,000 | |
Stock options granted | 1,880,000 | 5,315,000 | |
Stock options exercised | 0 | 0 | |
Stock options cancelled | (1,153,000) | 598,000 | |
Stock options outstanding, ending | 6,987,000 | 6,987,000 | 6,260,000 |
Stock options exercisable | 1,677,000 | 1,677,000 | 739,000 |
Stock options vested and expected to vest | 6,987,000 | 6,987,000 | 6,260,000 |
Weighted-average exercise price outstanding, beginning | $ 0.97 | $ 2.53 | |
Weighted-average exercise price granted | $ 1.18 | 1.41 | 0.62 |
Weighted-average exercise price exercised | 0 | 0 | |
Weighted-average exercise price cancelled | 1.60 | 1.67 | |
Weighted-average exercise price outstanding, ending | 0.95 | 0.95 | 0.97 |
Weighted-average exercise price exercisable | 1.02 | 1.02 | 2.10 |
Weighted-average exercise price vested and expected to vest | $ 0.95 | $ 0.95 | $ 0.97 |
Weighted-average remaining contactual life outstanding, beginning balance | 4 years 8 months 12 days | 4 years 3 months 18 days | |
Weighted-average remaining contactual life outstanding, ending balance | 2 years 7 months 6 days | 4 years 8 months 12 days | |
Weighted-average remaining contactual life exercisable | 3 years | 3 years 2 months 12 days | |
Weighted-average remaining contactual life vested and expected to vest | 2 years 7 months 6 days | 4 years 8 months 12 days | |
Aggregate intrinsic value outstanding | $ 3,162 | $ 3,162 | $ 3,162 |
Aggregate intrinsic value exercisable | 69 | 69 | 25 |
Aggregate intrinsic value vested and expected to vest | $ 2,254 | $ 2,254 | $ 3,162 |
SHARE-BASED COMPENSATION (Det_3
SHARE-BASED COMPENSATION (Details 2) - $ / shares shares in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
REVERSE TAKEOVER AND PRIVATE PLACEMENT | ||
RSUs granted | 1,395 | 913 |
RSUs outstanding, beginning balance | 450 | 230 |
RSUs vested | (634) | |
RSUs cancelled | (10) | (59) |
RSUs outstanding, ending balance | 1,835 | 450 |
Weighted-average fair value outstanding, beginning balance | $ 0.33 | $ 2.53 |
Weighted-average fair value granted | 1.15 | 0.62 |
Weighted-average fair value vested | 0 | 1.63 |
Weighted-average fair value cancelled | 1.11 | 1.67 |
Weighted-average fair value outstanding, ending balance | $ 0.95 | $ 0.33 |
SHARE-BASED COMPENSATION (Det_4
SHARE-BASED COMPENSATION (Details 3) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Expected volatility | 50.00% | 50.00% | 50.00% | 50.00% | |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% | |
Risk-free interest rate | 0.90% | 0.90% | 0.90% | 0.90% | |
Expected term in years | 8 months 26 days | 7 months 6 days | 8 months 26 days | 7 months 6 days | |
Stock Option [Member] | |||||
Expected volatility | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 1.10% | 2.20% | 0.90% | 2.20% | 0.95% |
Expected term in years | 4 years 3 months | 4 years 1 month 13 days | 4 years 3 months | 4 years 1 month 20 days | 6 years |
SHARE-BASED COMPENSATION (Det_5
SHARE-BASED COMPENSATION (Details Narrative) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
REVERSE TAKEOVER AND PRIVATE PLACEMENT | |||
Weighted-average exercise price granted | $ 1.18 | $ 1.41 | $ 0.62 |
Proceeds from issuance of stock options | 13,200 | 13,200 | 8,200 |
Unrecognized compensation cost related to nonvested options | $ 1,252 | $ 1,252 | $ 1,928 |
Stock option for future grant | 4,600 | 4,600 | 1,850 |
Vesting period descriptions | The awards granted generally vest in 25% increments over a four-year period and option awards expire 6 years from grant date. | ||
Vesting year | 2 years | 4 years 8 months 12 days | |
Unrecognized compensation cost related to nonvested restricted stock units | $ 963 | $ 963 | $ 81 |
Weighted-average vesting period | 10 years | ||
Option awards expire term | 6 years | ||
Option awards description | The awards granted generally vest in 25% increments over a four-year period and option awards expire 6 years from grant date. |
INCOME TAXES (Details )
INCOME TAXES (Details ) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Current | |||
Federal | $ 0 | $ 0 | $ 0 |
State | 224 | 205 | 97 |
Total Current | 224 | 205 | 97 |
Deferred tax expense (benefit) | |||
Deferred tax expense, Federal | 900 | (2,406) | (601) |
Deferred tax expense, State | (9,127) | (7,329) | (646) |
Total deferred tax benefit | (8,227) | (9,735) | (1,247) |
Valuation allowance | 8,227 | 9,735 | 1,247 |
Income tax expense | $ 224 | $ 205 | $ 97 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred tax assets | ||
Net operating loss carryforwards | $ 9,104 | $ 10,836 |
Accruals and reserves | 0 | 0 |
Depreciation, deferred tax assets | 0 | 0 |
Other | 0 | 0 |
Deferred tax assets, Valuation allowance | (9,104) | (10,836) |
Total deferred tax assets | 0 | 0 |
Deferred, Share-based compensation | 0 | 0 |
Total deferred tax liabilities | 0 | 0 |
Net deferred tax liabilities | 0 | 0 |
Deferred tax liabilities, Accruals and reserves | $ 0 | $ 0 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
INCOME TAXES | |||||||
Computed expected provision (benefit) for taxes | $ (4,554) | $ (10,443) | $ (1,809) | ||||
Increase (Decrease) in taxes resulting from: | |||||||
State taxes | 224 | 205 | 97 | ||||
Non-deductible stock compensation | 462 | 711 | 57 | ||||
Non-deductible expenses under section 280e | 5,099 | 7,965 | 2,605 | ||||
Valuation allowance and other, net | (1,007) | 1,767 | (853) | ||||
Actual provision for income taxes | $ 74 | $ 25 | $ 138 | $ 50 | $ 224 | $ 205 | $ 97 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 30, 2017 | |
INCOME TAXES | ||||||||
Net deferred tax assest, valuation allowance | $ 12,000 | $ 9,700 | ||||||
Federal net operating loss | 16,800 | 9,200 | ||||||
Net operating loss carry forward | 86,300 | 50,400 | ||||||
Provision for income taxes | $ 74 | $ 25 | $ 138 | $ 50 | $ 224 | $ 205 | $ 97 | |
Statutory federal income tax rate | 21.00% | |||||||
Effective tax rate | 9.20% | 0.29% | 2.36% | 0.30% | ||||
Us federal corporate tax rate descriptions | U.S. federal corporate tax rate from 35% to 21% and utilization limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017 to 80% of taxable income with an indefinite carryforward period. |
NET INCOME (LOSS) PER SHARE (De
NET INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net income (loss) per share: | |||||||
Net loss | $ 731 | $ (8,757) | $ (5,988) | $ (16,631) | $ (21,910) | $ (49,934) | $ (8,711) |
Net income loss per share | |||||||
Basic | $ 0.01 | $ (0.26) | $ (0.10) | $ (0.50) | $ (0.65) | $ (1.59) | |
Diluted | $ 0 | $ (0.26) | $ (0.10) | $ (0.50) | $ (0.65) | $ (1.59) | |
Weighted average shares outstanding: | |||||||
Weighted average subordinate voting shares - basic | 71,021,000 | 33,307 | 61,956 | 33,025 | 33,940 | 31,379 | |
Weighted average subordinate voting shares - diluted | 201,278,000 | 33,307 | 61,956 | 33,025 | 33,940 | 31,379 | |
Effects of Potential Dilutive Shares | |||||||
Basic shares | 71,021,000 | 33,307,000 | 61,956,000 | 33,025,000 | |||
Options | 2,908,000 | 0 | 0 | 0 | |||
Warrants | 60,767,000 | 0 | 0 | 0 | |||
Convertible debentures | 64,796,000 | 0 | 0 | 0 | |||
Restricted stock units | 1,786,000 | 0 | 0 | 0 | |||
Total weighted average potentially diluted shares | 201,278 | 33,307 | 61,956 | 33,025 | 33,940 | 31,379 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
September 2020 | ||
Payment for insurance claim | $ 1,400,000 | $ 1,400,000 |
Insurance maturity date | March 2021 | March 2021 |
February 2020 | ||
Gross settlement fund | $ 1,200,000 | |
August 2020 | ||
Payment for insurance claim | $ 2,650,000 | |
Insurance maturity date | July 2021 |
GENERAL AND ADMINISTRATIVE EX_3
GENERAL AND ADMINISTRATIVE EXPENSES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Total general and administrative expenses | $ 3,817 | $ 1,456 | $ 6,285 | $ 4,733 | $ 11,762 | $ 25,814 | $ 8,779 |
Transaction and other special charges | |||||||
Total general and administrative expenses | 0 | 2,341 | 0 | ||||
Licensing and Supplies | |||||||
Total general and administrative expenses | 267 | 870 | 556 | ||||
Salaries and Benefits | |||||||
Total general and administrative expenses | 1,561 | 980 | 2,398 | 1,976 | 5,032 | 12,697 | 3,452 |
Professional Fees | |||||||
Total general and administrative expenses | 777 | 251 | 1,259 | 850 | 1,650 | 2,229 | 640 |
Share-based Compensation | |||||||
Total general and administrative expenses | 336 | 213 | 625 | 1,825 | 2,200 | 3,385 | 270 |
Administrative | |||||||
Total general and administrative expenses | $ 1,143 | $ 12 | $ 2,004 | $ 82 | $ 2,613 | $ 4,292 | $ 3,861 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
EM | |||||
Related party transactions | $ 2,201,000 | $ 5,041,000 | $ 11,385,000 | $ 15,858,000 | |
OMG | |||||
Related party transactions | $ 0 | $ 5,000 | $ 5,000 | $ 86,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
RELATED-PARTY TRANSACTIONS | |||
Balance Beginning of year | $ 2,595 | $ 250 | $ 165 |
Additions charged to costs and expenses | 1,195 | 2,346 | 175 |
Deduction/ recoveries others | (2,401) | (1) | (90) |
Balance Ending of year | $ 1,389 | $ 2,595 | $ 250 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Feb. 25, 2021 | Dec. 31, 2020 | |
RELATED-PARTY TRANSACTIONS | ||
Issuance of subordinate voting shares | 22,643,678 | 11,500,000 |
Acquisition value in cash | $ 4.1 | |
Total acquisition value | $ 39 |