Lowell Farms (LOWLF) 10-Q 14 Nov 22 2022 Q3 Quarterly report Financial data

Cover

Cover - shares	9 Months Ended
	Sep. 30, 2022	Nov. 14, 2022
Cover [Abstract]
Entity Registrant Name	LOWELL FARMS INC.
Entity Central Index Key	0001838128
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Current Reporting Status	Yes
Document Period End Date	Sep. 30, 2022
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Entity Ex Transition Period	false
Entity Common Stock Shares Outstanding		100,613,094
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-56254
Entity Incorporation State Country Code	Z4
Entity Interactive Data Current	Yes
Entity Address Address Line 1	19 Quail Run Circle - 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 (unaudited) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 3,292	$ 7,887
Accounts Receivable - net of allowance for doubtful accounts of $1,053 and $1,139 at September 30, 2022 and December 31, 2021, respectively.	5,824	8,222
Inventory	14,243	13,343
Prepaid expenses and other current assets	2,108	1,976
Total current assets	25,467	31,428
Property and equipment, net	62,722	64,779
Other intangibles, net	40,512	40,756
Other assets	915	416
Total assets	129,616	137,379
Current liabilities:
Accounts payable	2,346	3,102
Accrued payroll and benefits	500	650
Notes payable, current portion	301	221
Lease obligation, current portion	2,625	2,444
Other current liabilities	4,564	3,706
Total current liabilities	10,336	10,123
Notes payable	6	28
Lease obligation	32,053	34,052
Convertible debentures	21,177	14,012
Mortgage obligation	8,760	8,857
Total liabilities	72,332	67,072
STOCKHOLDERS' EQUITY
Share capital	189,795	189,368
Accumulated deficit	(132,511)	(119,061)
Total stockholders' equity	57,284	70,307
Total liabilities and stockholders' equity	$ 129,616	$ 137,379

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
Allowance For Doubtful Accounts	$ 1,053	$ 1,139

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited)
Net revenue	$ 8,657	$ 12,467	$ 34,247	$ 38,653
Cost of goods sold	10,553	12,403	33,075	34,317
Gross profit (loss)	(1,896)	64	1,172	4,336
Operating expenses
General and administrative	2,620	4,211	7,433	10,496
Sales and marketing	601	2,544	4,109	6,210
Depreciation and amortization	109	260	340	751
Total operating expenses	3,330	7,015	11,882	17,457
Loss from operations	(5,226)	(6,951)	(10,710)	(13,121)
Other income/(expense)
Other income (expense)	2,771	(219)	2,472	1,633
Unrealized change in fair value of investment	(16)	(90)	(122)	35
Interest expense	(2,218)	(1,365)	(4,865)	(3,019)
Total other income (expense)	537	(1,674)	(2,515)	(1,351)
Loss before provision for income taxes	(4,689)	(8,625)	(13,225)	(14,472)
Provision for income taxes	90	75	225	213
Net loss	$ (4,779)	$ (8,700)	$ (13,450)	$ (14,685)
Net income (loss) per share:
Basic	$ (0.04)	$ (0.10)	$ (0.12)	$ (0.15)
Diluted	$ (0.04)	$ (0.10)	$ (0.12)	$ (0.15)
Weighted average shares outstanding:
Basic	112,026	84,922	111,995	98,949
Diluted	112,026	84,922	111,995	98,949

CONDENDSED CONSOLIDATED STATEME

CONDENDSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) (Unaudited) - USD ($) $ in Thousands	Total	Subordinate Voting Shares	Super Voting Shares	Share Capital	Accumulated Deficit
Balance, shares at Dec. 31, 2020		57,617,000	203,000
Balance, amount at Dec. 31, 2020	$ 31,156			$ 125,540	$ (94,384)
Net loss	(14,685)			0	(14,685)
Shares issued in connection with conversion of convertible debentures, shares		2,580,000
Shares issued in connection with conversion of convertible debentures, amount	514			514	0
Issuance of shares associated with acquisitions, shares		30,641,000
Issuance of shares associated with acquisitions, amount	43,259			43,259	0
Issuance of shares associated with subordinate voting share offering, shares		18,000,000
Issuance of shares associated with subordinate voting share offering, amount	17,970			17,970	0
Exercise of warrants, shares		1,511,000
Exercise of warrants, amount	718			718	0
Exercise of options, shares		78,000
Exercise of options, amount	48			48	0
Share-based compensation expense, shares		460,000
Share-based compensation expense, amount	986			986	0
Balance, shares at Sep. 30, 2021		110,887,000	203,000
Balance, amount at Sep. 30, 2021	79,966			189,035	(109,069)
Balance, shares at Jun. 30, 2021		92,423,000	203,000
Balance, amount at Jun. 30, 2021	70,244			170,613	(100,369)
Net loss	(8,700)			0	(8,700)
Shares issued in connection with conversion of convertible debentures, shares		187,000
Shares issued in connection with conversion of convertible debentures, amount	37			37	0
Issuance of shares associated with subordinate voting share offering, shares		18,000,000
Issuance of shares associated with subordinate voting share offering, amount	17,970			17,970	0
Exercise of warrants, shares		2,000
Exercise of warrants, amount	2			2	0
Exercise of options, shares		186,000
Exercise of options, amount	52			52	0
Share-based compensation expense, shares		89,000
Share-based compensation expense, amount	361			361	0
Balance, shares at Sep. 30, 2021		110,887,000	203,000
Balance, amount at Sep. 30, 2021	79,966			189,035	(109,069)
Balance, shares at Dec. 31, 2021		111,806,000	203,000
Balance, amount at Dec. 31, 2021	70,307			189,368	(119,061)
Net loss	$ (13,450)			0	(13,450)
Exercise of options, shares	0
Share-based compensation expense, shares		220,000
Share-based compensation expense, amount	$ 427			427	0
Balance, shares at Sep. 30, 2022		112,026,000	203,000
Balance, amount at Sep. 30, 2022	57,284			189,795	(132,511)
Balance, shares at Jun. 30, 2022		112,026,000	203,000
Balance, amount at Jun. 30, 2022	61,954			189,686	(127,732)
Net loss	(4,779)			0	(4,779)
Share-based compensation expense, amount	109			109	0
Balance, shares at Sep. 30, 2022		112,026,000	203,000
Balance, amount at Sep. 30, 2022	$ 57,284			$ 189,795	$ (132,511)

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss)	$ (13,450)	$ (14,685)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	5,161	2,894
Amortization of debt issuance costs	688	643
Share-based compensation expense	427	986
Provision for doubtful accounts	551	657
Goodwill impairment	0	357
Loss on sale of assets	41	0
Termination of branding rights agreement	0	152
Unrealized loss (gain) on change in fair value of investments	122	(125)
Changes in operating assets and liabilities:
Accounts receivable	1,847	(2,418)
Inventory	(900)	(2,307)
Prepaid expenses and other current assets	(132)	(149)
Other Assets	(621)	57
Accounts payable and accrued expenses	(48)	(4,525)
Net cash used in operating activities	(6,314)	(18,463)
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from asset sales	19	1,979
Purchases of property and equipment	(2,920)	(2,057)
Acquisition of business assets, net	0	(6,643)
Net cash used in investing activities	(2,901)	(6,721)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from convertible notes, net of financing costs	6,558	0
Principal payments on lease obligations	(1,818)	(1,744)
Payments on notes payable	(120)	(563)
Proceeds from subordinate voting share offering	0	18,000
Issuance costs related to subordinate voting share offering	0	(30)
Proceeds from exercise of warrants and options	0	765
Net cash provided by financing activities	4,620	16,428
Change in cash and cash equivalents	(4,595)	(8,756)
Cash and cash equivalents-beginning of year	7,887	25,751
Cash, cash equivalents -end of period	3,292	16,995
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest	3,276	2,995
Cash paid during the period for income taxes	182	227
OTHER NONCASH INVESTING AND FINANCING ACTIVITIES
Purchase of property and equipment not yet paid for	47	0
Issuance of subordinate voting shares in exchange for net assets acquired	0	43,259
Liabilities assumed and receivable forgiveness in exchange for net assets acquired	0	2,910
Debt and associated accrued interest converted to subordinate voting shares	$ 0	$ 478

BASIS OF PRESENTATION AND SUMMA

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2022
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 (the “SEC”), including the instructions to the Quarterly Report on Form 10-Q and 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 ("U.S. GAAP") 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-K filed for the year ended December 31, 2021. There have been no material changes to our significant accounting policies as of and for the three and nine months ended September 30, 2022. 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, 2021, has been derived from the audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. All dollar amounts in the notes to condensed consolidated financial statements are expressed in thousands of United States dollars (“$” or “US$”), unless otherwise indicated. Use of Estimates The preparation of financial statements in conformity with 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. 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 consolidated financial statements and disclosures. In December 2019, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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 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 evaluated the impact of ASU 2020-01, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and it did not have a material impact on our consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, 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. We evaluated the impact of ASU 2020-06, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2022 and it did not have a material impact on our consolidated financial statements. No other recently issued accounting pronouncements had or are expected to have a material impact on our condensed consolidated financial statements.

ACQUISITIONS

ACQUISITIONS	9 Months Ended
	Sep. 30, 2022
ACQUISITIONS
Acquisitions	2. ACQUISITIONS Recently Completed Acquisitions The Company recently completed the following asset acquisitions, and allocated the purchase price as follows: The Hacienda Lowell Farm (in thousands) Company, LLC Services Total CONSIDERATION Cash $ 4,019 $ - $ 4,019 Transaction costs 428 190 618 Note payable and other obligations 3,115 9,000 12,115 Fair value of subordinate voting shares 34,358 9,610 43,968 Total consideration $ 41,920 $ 18,800 $ 60,720 PURCHASE PRICE ALLOCATION Assets Acquired Inventories $ 3,300 $ - $ 3,300 Accounts receivable - net 1,312 - 1,312 Land - 8,261 8,261 Buildings - 6,268 6,268 Equipment - 1,221 1,221 Other tangible assets 739 - 739 Intangible assets - brands and tradenames 37,299 - 37,299 Intangible assets - technology and know-how and other - 3,050 3,050 Liabilities assumed Payables and other liabilities (730 ) - (730 ) Fair value of net assets acquired $ 41,920 $ 18,800 $ 60,720 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, the Company 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 provides drying, bucking, trimming, sorting, grading, and packaging operations for up to 250,000 lbs. of wholesale cannabis flower annually. The new facility processes 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 engages 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 became operational during the third quarter of 2021.

PREPAID AND OTHER CURRENT ASSET

PREPAID AND OTHER CURRENT ASSETS	9 Months Ended
	Sep. 30, 2022
PREPAID AND OTHER CURRENT ASSETS
Prepaid And Other Current Assets	3. PREPAID AND OTHER CURRENT ASSETS Prepaid and other current assets were comprised of the following items: September 30, December 31, (in thousands) 2022 2021 Deposits $ 58 $ 548 Insurance 233 624 Supplier advances 396 575 Interest and taxes 748 147 Licenses and permits 310 78 Other 363 4 Total prepaid and other current assets $ 2,108 $ 1,976

INVENTORY

INVENTORY	9 Months Ended
	Sep. 30, 2022
INVENTORY
Inventory	4. INVENTORY Inventory was comprised of the following items: September 30, December 31, (in thousands) 2022 2021 Raw materials $ 10,539 $ 8,558 Work in process 12 292 Finished goods 3,692 4,493 Total inventory $ 14,243 $ 13,343

Other current liabilities

Other current liabilities	9 Months Ended
	Sep. 30, 2022
Other current liabilities
Other Current Liabilities	5. Other current liabilities Other current liabilities were comprised of the following items: September 30, December 31, (in thousands) 2022 2021 Excise and cannabis tax $ 3,201 $ 2,830 Third party brand distribution accrual - 78 Insurance and professional fee accrual 118 651 Interest and tax accrual 590 57 Other 655 90 Total other current liabilities $ 4,564 $ 3,706 On July 26, 2022, subsidiaries of the Company entered into an agreement with an institutional investor pursuant to which the investor purchased a participation ("Transferred Interests") in all rights to payment from the United States Internal Revenue Service in respect of the Company’s employee retention credits for the first and second quarters of 2021 (the “ERC Claim”). The purchase price paid for the derivative payment rights was $2.45 million, which was paid in immediately available funds. For the three and nine months ended September 30, 2022, the Company recorded net other income of $2,014 and an accrued other liability of $431 to be paid to facilitate the sale of the ERC Claim. Included in interest expense is $863 of financing related charges.

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	9 Months Ended
	Sep. 30, 2022
PROPERTY AND EQUIPMENT
Property And Equipment	6. PROPERTY AND EQUIPMENT A reconciliation of the beginning and ending balances of property and equipment and accumulated depreciation during the nine months ended September 30, 2022 and property and equipment, net as of December 31, 2021, 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, 2021 $ 15,907 $ 13,950 $ 50 $ 2,992 $ 921 $ 703 $ 41,530 $ 76,053 Additions - 215 - 2,142 - 563 - 2,920 Disposals - - - - (62 ) (24 ) - (86 ) Transfers (188 ) 1,135 - 69 - (1,016 ) - - Balance - September 30, 2022 $ 15,719 $ 15,300 $ 50 $ 5,203 $ 859 $ 226 $ 41,530 $ 78,887 Accumulated Depreciation Balance - December 31, 2021 $ (132 ) $ (980 ) $ (48 ) $ (618 ) $ (566 ) $ - $ (8,930 ) $ (11,274 ) Depreciation (130 ) (1,714 ) (1 ) (472 ) (125 ) - (2,475 ) (4,917 ) Disposals and other - - - - 26 - - 26 Balance - September 30, 2022 $ (262 ) $ (2,694 ) $ (49 ) $ (1,090 ) $ (665 ) $ - $ (11,405 ) $ (16,165 ) Net Book Value - September 30, 2022 $ 15,457 $ 12,606 $ 1 $ 4,113 $ 194 $ 226 $ 30,125 $ 62,722 Net Book Value - December 31, 2021 $ 15,775 $ 12,970 $ 2 $ 2,374 $ 355 $ 703 $ 32,600 $ 64,779 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 $1,647 and $1,040 were recorded for the three months ended September 30, 2022 and 2021, respectively, of which $1,527 and $584 respectively, were included in cost of goods sold. Depreciation expense of $104 and $196 was also recorded in other income (expense) for the three months ended September 30, 2022 and 2021, respectively. Depreciation expense of $4,917 and $2,798 were recorded for the nine months ended September 30, 2022 and 2021, respectively, of which $4,416 and $1,752 respectively, were included in cost of goods sold. Depreciation expense of $419 and $391 was also recorded in other income (expense) for the nine months ended September 30, 2022 and 2021, respectively.

Other Intangible Assets

Other Intangible Assets	9 Months Ended
	Sep. 30, 2022
Other Intangible Assets
Other Intangible Assets	7. Other Intangible Assets A reconciliation of the beginning and ending balances of intangible assets and accumulated amortization during the nine months ended September 30, 2022 and intangible assets, net as of December 31, 2021, are as follows: Definite Life Intangibles Indefinite Life Intangibles Technology/ Brands & (in thousands) Know How Tradenames Total Costs Balance-December 31, 2021 $ 3,258 $ 37,707 $ 40,965 Business acquisition - - - Agreement termination - - - Balance-September 30, 2022 $ 3,258 $ 37,707 $ 40,965 Accumulated Amortization Balance-December 31, 2021 $ (209 ) $ - $ (209 ) Amortization (244 ) - (244 ) Balance-September 30, 2022 $ (453 ) $ - $ (453 ) Net Book Value September 30, 2022 $ 2,805 $ 37,707 $ 40,512 Net Book Value December 31, 2021 $ 3,049 $ 37,707 $ 40,756 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 $244 and $96 for the nine months ended September 30, 2022, and 2021, respectively. The Company estimates that amortization expense for our existing other intangible assets will be approximately $326 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.

SHAREHOLDERS EQUITY

SHAREHOLDERS EQUITY	9 Months Ended
	Sep. 30, 2022
SHAREHOLDERS EQUITY
Shareholders Equity	8. SHAREHOLDERS’ EQUITY Shares Outstanding The table below details the change in Company shares outstanding by class during the nine months ended September 30, 2022: Subordinate Super (in thousands) Voting Shares Voting Shares Balance-December 31, 2021 111,806 203 Issuance of vested restricted stock units 220 - Balance-September 30, 2022 112,026 203 Warrants A reconciliation of the beginning and ending balances of warrants outstanding is as follows: (in thousands) Balance-December 31, 2021 101,906 Warrants issued in conjunction with convertible debenture offering 72,081 Balance-September 30, 2022 173,987

DEBT

DEBT	9 Months Ended
	Sep. 30, 2022
DEBT
Debt	9. DEBT Debt at September 30, 2022 and December 31, 2021, was comprised of the following: September 30, December 31, (in thousands) 2022 2021 Current portion of long-term debt Vehicle loans (1) $ 27 $ 50 Mortgage payable (2) 249 105 Note payable 25 66 Total short-term debt 301 221 Long-term debt, net Vehicle loans (1) 6 28 Mortgage payable (2) 8,760 8,857 Convertible debenture (3) 21,177 14,012 Total long-term debt 29,943 22,897 Total Indebtedness $ 30,244 $ 23,118 ______________________ (1) Primarily fixed term loans on transportation vehicles. Weighted average interest rate at September 30, 2022 and December 31, 2021 was 6.7% and 7.8%, respectively. (2) Mortgage payable associated with the acquired processing facility. Weighted average interest rate at September 30, 2022 and December 31, 2021 was 12.5%. Net of deferred financing costs as September 30, 2022 and December 31, 2021 of $317 and $398, respectively. (3) Net of deferred financing costs at September 30, 2022 and December 31, 2021 of $980 and $1,477, respectively. Stated maturities of debt obligations are as follows as of September 30, 2022: September 30, (in thousands) 2022 Balance of 2022 $ 112 2023 22,421 2024 288 2025 330 2026 and thereafter 8,390 Total debt obligations $ 31,541

LEASES

LEASES	9 Months Ended
	Sep. 30, 2022
LEASES
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 nine months ended September 30, 2022, is as follows: (in thousands) Lease obligation December 31, 2021 $ 36,496 Lease principal payments (1,818 ) September 30, 2022 $ 34,678 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. Current and long-term portions of lease obligations at September 30, 2022 and December 31, 2021, are as follows: September 30, December 31, (in thousands) 2022 2021 Lease obligation, current portion $ 2,625 $ 2,444 Lease obligation, long-term portion 32,053 34,052 Total $ 34,678 $ 36,496 The key assumptions used in accounting for leases as of September 30, 2022 were a weighted average remaining lease term of 14.75 years and a weighted average discount rate of 6.0%. The key assumptions used in accounting for leases as of December 31, 2021 were a weighted average remaining lease term of 17.2 years and a weighted average discount rate of 6.0%. The components of lease expense for the three and nine months ended September 30, 2022 and 2021, are as follows: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) 2022 2021 2022 2021 Amortization of leased assets (1) $ 818 $ 741 $ 2,475 $ 2,268 Interest on lease liabilities (2) 549 531 1,683 1,728 Total $ 1,367 $ 1,272 $ 4,158 $ 3,996 1) Included in cost of goods sold, general and administrative and other income/expense in the Condensed Consolidated Statements of Income (Loss). 2) Included in interest expense in the Condensed Consolidated Statements of Income (Loss). The future lease payments with initial remaining terms in excess of one year as of September 30, 2022 were as follows: (in thousands) September 30, 2022 Balance of 2022 $ 1,163 2023 4,706 2024 4,096 2025 3,267 2026 and beyond 40,469 Total lease payments 53,701 Less imputed interest (19,023 ) Total $ 34,678

SHARE BASED COMPENSATION

SHARE BASED COMPENSATION	9 Months Ended
	Sep. 30, 2022
SHARE BASED COMPENSATION
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 September 30, 2022, 13.2 million shares have been authorized to be issued under the Plan and 3.4 million are available for future grants. 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 nine months ended September 30, 2022 and 2021, 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 nine months ended September 30, 2022 and 2021, share-based compensation expense was as follows: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) 2022 2021 2022 2021 Cost of goods sold $ - $ - $ - $ - General and administrative expense 109 361 427 986 Total share-based compensation $ 109 $ 361 $ 427 $ 986 The following table summarizes the status of stock option grants and unvested awards at and for the nine months ended September 30, 2022: Stock Weighted-Average Weighted Average Remaining Aggregate (in thousands except per share amounts) Options Exercise Price Contractual Life Intrinsic Value Outstanding-December 31, 2021 6,598 $ 0.99 4.3 $ - Granted 3,770 0.30 - - Exercised - - - - Cancelled (1,906 ) 1.02 - - Outstanding-September 30, 2022 8,462 $ 0.64 4.2 - Exercisable-September 30, 2022 3,862 $ 0.82 3.6 $ - Vested and expected to vest-September 30, 2022 8,462 $ 0.64 4.2 $ - The weighted-average fair value of options granted during the three and nine months ended September 30, 2022, estimated as of the grant date were $0.23 and $0.30, respectively. As of September 30, 2022, there was $734 of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a remaining weighted-average vesting period of 1.32 years. The following table summarizes the status of restricted stock unit (“RSU”) grants and unvested awards at and for the nine months ended September 30, 2022: Weighted-Average (in thousands) RSUs Fair Value Outstanding-December 31, 2021 642 $ 1.18 Granted - - Vested (125 ) 1.49 Cancelled (43 ) 1.11 Outstanding-September 30, 2022 474 $ 1.11 As of September 30, 2022, there was $214 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 9 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 Nine Months Ended September 30, September 30, September 30, September 30, 2022 2021 2022 2021 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 3.2 % 1.0 % 1.3 % 0.9 % Expected term in years 4.50 4.25 4.5 4.25 RSUs Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2022 2021 2022 2021 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 0.7 % 0.9 % 0.7 % 0.9 % Expected term in years 1.00 0.74 1.00 0.74

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2022
INCOME TAXES
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 September 30, 2022, was $90, representing an effective tax rate of -1.92%, compared to an income tax expense of $75 for the three months ended September 30, 2021, representing an effective tax rate of -0.87%. The provision for income tax expense for the nine months ended September 30, 2022, was $225, representing an effective tax rate of -1.70%, compared to an income tax expense of $213 for the nine months ended September 30, 2021, representing an effective tax rate of -1.47%.

NET INCOME (LOSS) PER SHARE

NET INCOME (LOSS) PER SHARE	9 Months Ended
	Sep. 30, 2022
Net income (loss) per share:
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 was as follows: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands except per share amounts) 2022 2021 2022 2021 Net income (loss) $ (4,779 ) $ (8,700 ) $ (13,450 ) $ (14,685 ) Net income (loss) per share: Basic $ (0.04 ) $ (0.10 ) $ (0.12 ) $ (0.15 ) Diluted $ (0.04 ) $ (0.10 ) $ (0.12 ) $ (0.15 ) Weighted average shares outstanding: Basic 112,026 84,922 111,995 98,949 Diluted 112,026 84,922 111,995 98,949 Weighted average potentially diluted shares (1): Basic shares 112,026 84,922 111,995 98,949 Total weighted average potentially diluted shares: 112,026 84,922 111,981 98,949 (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.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2022
FAIR VALUE MEASUREMENTS
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 September 30, 2022 and December 31, 2021 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.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2022
Commitments And Contingencies Disclosure Abstract
Commitments And Contingencies	15. COMMITMENTS AND CONTINGENCIES Commitments As of September 30, 2022, the Company has entered into purchase commitments for additional manufacturing equipment. The remaining purchase commitment of $2.9 million is due in 2023 as the equipment is manufactured and delivered. Contingencies The Company’s operations are subject to a variety of local and state regulations. 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 regulations as of September 30, 2022, 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 2022, 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 and tax authorities do not grant relief from penalties, 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 September 30, 2022, 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 being recorded in the quarter ended June 30, 2021.

GENERAL AND ADMINISTRATIVE EXPE

GENERAL AND ADMINISTRATIVE EXPENSES	9 Months Ended
	Sep. 30, 2022
GENERAL AND ADMINISTRATIVE EXPENSES
General And Administrative Expenses	16. GENERAL AND ADMINISTRATIVE EXPENSES For the three and nine months ended September 30, 2022 and 2021, general and administrative expenses were comprised of: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) 2022 2021 2022 2021 Salaries and benefits $ 1,338 $ 2,142 $ 3,984 $ 4,540 Professional fees 212 413 734 1,672 Share-based compensation 109 361 427 986 Insurance 338 348 1,043 1,147 Administrative 623 947 1,245 2151 Total general and administrative expenses $ 2,620 $ 4,211 $ 7,433 $ 10,496

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2022
RELATED PARTY TRANSACTIONS
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. 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. Amounts paid to OMG for the three and nine months ended September 30, 2022 and 2021, were $36 and $nil, respectively.

SEGMENT INFORMATION

SEGMENT INFORMATION	9 Months Ended
	Sep. 30, 2022
SEGMENT INFORMATION
Segment Information	18. SEGMENT INFORMATION The Company’s operations are comprised of a single reporting 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	9 Months Ended
	Sep. 30, 2022
SUBSEQUENT EVENTS
Subsequent Events	19. SUBSEQUENT EVENTS Subsequent to September 30, 2022 the Company created a strategic alternatives committee of the Board to evaluate acquisition related inquiries of the Company. The Company has evaluated other potential subsequent events through November 14, 2022, the date the financial statements were available to be issued. No further material subsequent events were identified.

BASIS OF PRESENTATION AND SUM_2

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2022
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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 (the “SEC”), including the instructions to the Quarterly Report on Form 10-Q and 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 ("U.S. GAAP") 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-K filed for the year ended December 31, 2021. There have been no material changes to our significant accounting policies as of and for the three and nine months ended September 30, 2022. 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, 2021, has been derived from the audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. All dollar amounts in the notes to condensed consolidated financial statements are expressed in thousands of United States dollars (“$” or “US$”), unless otherwise indicated.
Use Of Estimates	The preparation of financial statements in conformity with 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. 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 consolidated financial statements and disclosures. In December 2019, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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 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 evaluated the impact of ASU 2020-01, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and it did not have a material impact on our consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, 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. We evaluated the impact of ASU 2020-06, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2022 and it did not have a material impact on our consolidated financial statements. No other recently issued accounting pronouncements had or are expected to have a material impact on our condensed consolidated financial statements.

ACQUISITIONS (Tables)

ACQUISITIONS (Tables)	9 Months Ended
	Sep. 30, 2022
ACQUISITIONS
Schedule Of Acquisitions	The Hacienda Lowell Farm (in thousands) Company, LLC Services Total CONSIDERATION Cash $ 4,019 $ - $ 4,019 Transaction costs 428 190 618 Note payable and other obligations 3,115 9,000 12,115 Fair value of subordinate voting shares 34,358 9,610 43,968 Total consideration $ 41,920 $ 18,800 $ 60,720 PURCHASE PRICE ALLOCATION Assets Acquired Inventories $ 3,300 $ - $ 3,300 Accounts receivable - net 1,312 - 1,312 Land - 8,261 8,261 Buildings - 6,268 6,268 Equipment - 1,221 1,221 Other tangible assets 739 - 739 Intangible assets - brands and tradenames 37,299 - 37,299 Intangible assets - technology and know-how and other - 3,050 3,050 Liabilities assumed Payables and other liabilities (730 ) - (730 ) Fair value of net assets acquired $ 41,920 $ 18,800 $ 60,720

PREPAID AND OTHER CURRENT ASS_2

PREPAID AND OTHER CURRENT ASSETS (Tables)	9 Months Ended
	Sep. 30, 2022
PREPAID AND OTHER CURRENT ASSETS
Summary Of Prepaid Expenses And Other Current Assets	September 30, December 31, (in thousands) 2022 2021 Deposits $ 58 $ 548 Insurance 233 624 Supplier advances 396 575 Interest and taxes 748 147 Licenses and permits 310 78 Other 363 4 Total prepaid and other current assets $ 2,108 $ 1,976

INVENTORY (Tables)

INVENTORY (Tables)	9 Months Ended
	Sep. 30, 2022
INVENTORY
Summary Of Inventory	September 30, December 31, (in thousands) 2022 2021 Raw materials $ 10,539 $ 8,558 Work in process 12 292 Finished goods 3,692 4,493 Total inventory $ 14,243 $ 13,343

Other current liabilities (Tabl

Other current liabilities (Tables)	9 Months Ended
	Sep. 30, 2022
Other current liabilities
Schedule Of Other Current Liabilities	September 30, December 31, (in thousands) 2022 2021 Excise and cannabis tax $ 3,201 $ 2,830 Third party brand distribution accrual - 78 Insurance and professional fee accrual 118 651 Interest and tax accrual 590 57 Other 655 90 Total other current liabilities $ 4,564 $ 3,706

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	9 Months Ended
	Sep. 30, 2022
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, 2021 $ 15,907 $ 13,950 $ 50 $ 2,992 $ 921 $ 703 $ 41,530 $ 76,053 Additions - 215 - 2,142 - 563 - 2,920 Disposals - - - - (62 ) (24 ) - (86 ) Transfers (188 ) 1,135 - 69 - (1,016 ) - - Balance - September 30, 2022 $ 15,719 $ 15,300 $ 50 $ 5,203 $ 859 $ 226 $ 41,530 $ 78,887 Accumulated Depreciation Balance - December 31, 2021 $ (132 ) $ (980 ) $ (48 ) $ (618 ) $ (566 ) $ - $ (8,930 ) $ (11,274 ) Depreciation (130 ) (1,714 ) (1 ) (472 ) (125 ) - (2,475 ) (4,917 ) Disposals and other - - - - 26 - - 26 Balance - September 30, 2022 $ (262 ) $ (2,694 ) $ (49 ) $ (1,090 ) $ (665 ) $ - $ (11,405 ) $ (16,165 ) Net Book Value - September 30, 2022 $ 15,457 $ 12,606 $ 1 $ 4,113 $ 194 $ 226 $ 30,125 $ 62,722 Net Book Value - December 31, 2021 $ 15,775 $ 12,970 $ 2 $ 2,374 $ 355 $ 703 $ 32,600 $ 64,779

Other Intangible Assets (Tables

Other Intangible Assets (Tables)	9 Months Ended
	Sep. 30, 2022
Other Intangible Assets
Schedule Of Intangible Assets	Definite Life Intangibles Indefinite Life Intangibles Technology/ Brands & (in thousands) Know How Tradenames Total Costs Balance-December 31, 2021 $ 3,258 $ 37,707 $ 40,965 Business acquisition - - - Agreement termination - - - Balance-September 30, 2022 $ 3,258 $ 37,707 $ 40,965 Accumulated Amortization Balance-December 31, 2021 $ (209 ) $ - $ (209 ) Amortization (244 ) - (244 ) Balance-September 30, 2022 $ (453 ) $ - $ (453 ) Net Book Value September 30, 2022 $ 2,805 $ 37,707 $ 40,512 Net Book Value December 31, 2021 $ 3,049 $ 37,707 $ 40,756

SHAREHOLDERS EQUITY (Tables)

SHAREHOLDERS EQUITY (Tables)	9 Months Ended
	Sep. 30, 2022
STOCKHOLDERS' EQUITY
Schedule Of Shares Outstanding	Subordinate Super (in thousands) Voting Shares Voting Shares Balance-December 31, 2021 111,806 203 Issuance of vested restricted stock units 220 - Balance-September 30, 2022 112,026 203
Schedule Of Warrants Outstanding	(in thousands) Balance-December 31, 2021 101,906 Warrants issued in conjunction with convertible debenture offering 72,081 Balance-September 30, 2022 173,987

DEBT (Tables)

DEBT (Tables)	9 Months Ended
	Sep. 30, 2022
DEBT
Schedule Of Debt	September 30, December 31, (in thousands) 2022 2021 Current portion of long-term debt Vehicle loans (1) $ 27 $ 50 Mortgage payable (2) 249 105 Note payable 25 66 Total short-term debt 301 221 Long-term debt, net Vehicle loans (1) 6 28 Mortgage payable (2) 8,760 8,857 Convertible debenture (3) 21,177 14,012 Total long-term debt 29,943 22,897 Total Indebtedness $ 30,244 $ 23,118 ______________________ (1) Primarily fixed term loans on transportation vehicles. Weighted average interest rate at September 30, 2022 and December 31, 2021 was 6.7% and 7.8%, respectively. (2) Mortgage payable associated with the acquired processing facility. Weighted average interest rate at September 30, 2022 and December 31, 2021 was 12.5%. Net of deferred financing costs as September 30, 2022 and December 31, 2021 of $317 and $398, respectively. (3) Net of deferred financing costs at September 30, 2022 and December 31, 2021 of $980 and $1,477, respectively.
Schedule Of Maturities Of Debt Obligations	September 30, (in thousands) 2022 Balance of 2022 $ 112 2023 22,421 2024 288 2025 330 2026 and thereafter 8,390 Total debt obligations $ 31,541

LEASES (Tables)

LEASES (Tables)	9 Months Ended
	Sep. 30, 2022
LEASES
Schedule Of Reconciliation Of Lease Obligations	(in thousands) Lease obligation December 31, 2021 $ 36,496 Lease principal payments (1,818 ) September 30, 2022 $ 34,678
Schedule Of Lease Obligations	September 30, December 31, (in thousands) 2022 2021 Lease obligation, current portion $ 2,625 $ 2,444 Lease obligation, long-term portion 32,053 34,052 Total $ 34,678 $ 36,496
Schedule Of Lease Expense	Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) 2022 2021 2022 2021 Amortization of leased assets (1) $ 818 $ 741 $ 2,475 $ 2,268 Interest on lease liabilities (2) 549 531 1,683 1,728 Total $ 1,367 $ 1,272 $ 4,158 $ 3,996
Schedule of future lease payments	(in thousands) September 30, 2022 Balance of 2022 $ 1,163 2023 4,706 2024 4,096 2025 3,267 2026 and beyond 40,469 Total lease payments 53,701 Less imputed interest (19,023 ) Total $ 34,678

SHARE BASED COMPENSATION (Table

SHARE BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2022
SHARE BASED COMPENSATION
Schedule Of Share-based Compensation Expense	Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) 2022 2021 2022 2021 Cost of goods sold $ - $ - $ - $ - General and administrative expense 109 361 427 986 Total share-based compensation $ 109 $ 361 $ 427 $ 986
Schedule Of Stock Option Activity	Stock Weighted-Average Weighted Average Remaining Aggregate (in thousands except per share amounts) Options Exercise Price Contractual Life Intrinsic Value Outstanding-December 31, 2021 6,598 $ 0.99 4.3 $ - Granted 3,770 0.30 - - Exercised - - - - Cancelled (1,906 ) 1.02 - - Outstanding-September 30, 2022 8,462 $ 0.64 4.2 - Exercisable-September 30, 2022 3,862 $ 0.82 3.6 $ - Vested and expected to vest-September 30, 2022 8,462 $ 0.64 4.2 $ -
Schedule Of Restricted Stock Unit Activity	Weighted-Average (in thousands) RSUs Fair Value Outstanding-December 31, 2021 642 $ 1.18 Granted - - Vested (125 ) 1.49 Cancelled (43 ) 1.11 Outstanding-September 30, 2022 474 $ 1.11
Schedule Of Weighted Average Assumptions	Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2022 2021 2022 2021 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 3.2 % 1.0 % 1.3 % 0.9 % Expected term in years 4.50 4.25 4.5 4.25 Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2022 2021 2022 2021 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 0.7 % 0.9 % 0.7 % 0.9 % Expected term in years 1.00 0.74 1.00 0.74

NET INCOME (LOSS) PER SHARE (Ta

NET INCOME (LOSS) PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2022
Net income (loss) per share:
Schedule Of Net Earnings/(loss) Per Share	Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands except per share amounts) 2022 2021 2022 2021 Net income (loss) $ (4,779 ) $ (8,700 ) $ (13,450 ) $ (14,685 ) Net income (loss) per share: Basic $ (0.04 ) $ (0.10 ) $ (0.12 ) $ (0.15 ) Diluted $ (0.04 ) $ (0.10 ) $ (0.12 ) $ (0.15 ) Weighted average shares outstanding: Basic 112,026 84,922 111,995 98,949 Diluted 112,026 84,922 111,995 98,949 Weighted average potentially diluted shares (1): Basic shares 112,026 84,922 111,995 98,949 Total weighted average potentially diluted shares: 112,026 84,922 111,981 98,949

GENERAL AND ADMINISTRATIVE EX_2

GENERAL AND ADMINISTRATIVE EXPENSES (Tables)	9 Months Ended
	Sep. 30, 2022
GENERAL AND ADMINISTRATIVE EXPENSES
Schedule Of General And Administrative Expense	Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, (in thousands) 2022 2021 2022 2021 Salaries and benefits $ 1,338 $ 2,142 $ 3,984 $ 4,540 Professional fees 212 413 734 1,672 Share-based compensation 109 361 427 986 Insurance 338 348 1,043 1,147 Administrative 623 947 1,245 2151 Total general and administrative expenses $ 2,620 $ 4,211 $ 7,433 $ 10,496

ACQUISITIONS (Details)

ACQUISITIONS (Details)	9 Months Ended
	Sep. 30, 2022 USD ($)
Cash	$ 4,019,000
Transaction Costs	618,000
Note Payable And Other Obligations	12,115,000
Fair Value Of Subordinate Voting Shares	43,968,000
Total Consideration	60,720,000
Inventories	3,300,000
Accounts Receivable - Net	1,312,000
Land	0
Buildings	0
Equipment	0
Other Tangible Assets	739
Intangible Assets - Brands And Tradenames	37,299,000
Intangible Assets - Technology And Know-how	0
Payables And Other Liabilities	(730,000)
Total Identifiable Net Assets	60,720,000
The Hacienda Company, LLC
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
Land	8,261,000
Buildings	6,268,000
Equipment	1,221,000
Other Tangible Assets	739
Intangible Assets - Brands And Tradenames	37,299,000
Intangible Assets - Technology And Know-how	3,050,000
Payables And Other Liabilities	(730,000)
Total Identifiable Net Assets	41,920,000
LowellFarmService [Member]
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
Land	8,261,000
Buildings	6,268,000
Equipment	1,221,000
Other Tangible Assets	0
Intangible Assets - Brands And Tradenames	0
Intangible Assets - Technology And Know-how	3,050,000
Payables And Other Liabilities	0
Total Identifiable Net Assets	$ 18,800,000

ACQUISITIONS (Details Narrative

ACQUISITIONS (Details Narrative) - USD ($)	1 Months Ended
	Jun. 29, 2021	Feb. 25, 2021
The Hacienda Company, LLC
Purchase price		$ 41,920
Cash Consideration		$ 4,100,000
Issuance Of Subordinate Voting Shares		22,643,678
LowellFarmService [Member]
Purchase price	$ 18,800
Issuance Of Subordinate Voting Shares	7,997,520
Real Property Area Descriptions	The 10-acre, 40,000 square foot processing facility provides drying, bucking, trimming, sorting, grading, and packaging operations for up to 250,000 lbs. of wholesale cannabis flower annually.
Acquisition Consideration	$ 9,000,000

PREPAID AND OTHER CURRENT ASS_3

PREPAID AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
PREPAID AND OTHER CURRENT ASSETS
Deposits	$ 58	$ 548
Insurance	233	624
Supplier Advances	396	575
Licenses and permits	310	78
Interest And Taxes	748	147
Other	363	4
Prepaid Expenses And Other Current Assets	$ 2,108	$ 1,976

INVENTORY (Details)

INVENTORY (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
INVENTORY
Raw Materials	$ 10,539	$ 8,558
Work In Process	12	292
Finished Goods	3,692	4,493
Inventory	$ 14,243	$ 13,343

Other current liabilities (Deta

Other current liabilities (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Other current liabilities
Excise And Cannabis Tax	$ 3,201,000	$ 2,830,000
Third Party Brand Distribution Accrual	0	78,000
Interest and tax accrual	590,000	57,000
Insurance And Professional Accrual	118,000	651,000
Other	655,000	90,000
Total Other Current Liabilities	$ 4,564,000	$ 3,706,000

Other current liabilities (De_2

Other current liabilities (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Interest expense	$ 2,218,000	$ 1,365,000	$ 4,865,000	$ 3,019,000
ERC Claim [Member] | On 26 July, 2022
Accrued other liability	431,000		431,000
Purchase of derivative payment rights			2,450,000
Other income	2,014,000		2,014,000
Interest expense	$ 863		$ 863

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Property And Equipment Cost, Beginning			$ 76,053,000
Additions			2,920,000
Disposals			(86,000)
Transfers			0
Property And Equipment Cost, Ending	$ 78,887,000		78,887,000
Accumulated Depreciation, Beginning			11,274,000
Depreciation	(1,647,000)	$ (1,040,000)	(4,917,000)	$ (2,798,000)
Disposals and other			26,000
Accumulated Depreciation, Ending			16,165,000
Net Book Value	62,722,000		62,722,000		$ 64,779,000
Land and Buildings
Property And Equipment Cost, Beginning			15,907,000
Additions			0
Disposals			0
Transfers			(188,000)
Property And Equipment Cost, Ending	15,719,000		15,719,000
Accumulated Depreciation, Beginning			132,000
Depreciation			(130,000)
Disposals and other			0
Accumulated Depreciation, Ending			262,000
Net Book Value	15,457,000		15,457,000		15,775,000
Leasehold Improvements
Property And Equipment Cost, Beginning			13,950,000
Additions			215,000
Disposals			0
Transfers			1,135,000
Property And Equipment Cost, Ending	15,300,000		15,300,000
Accumulated Depreciation, Beginning			980,000
Depreciation			(1,714,000)
Disposals and other			0
Accumulated Depreciation, Ending			2,694,000
Net Book Value	12,606,000		12,606,000		12,970,000
Furniture and Fixtures
Property And Equipment Cost, Beginning			50,000
Additions			0
Disposals			0
Transfers			0
Property And Equipment Cost, Ending	50,000		50,000
Accumulated Depreciation, Beginning			48,000
Depreciation			(1,000)
Disposals and other			0
Accumulated Depreciation, Ending			49,000
Net Book Value	1,000		1,000		2,000
Equipment [Member]
Property And Equipment Cost, Beginning			2,992,000
Additions			2,142,000
Disposals			0
Transfers			69,000
Property And Equipment Cost, Ending	5,203,000		5,203,000
Accumulated Depreciation, Beginning			618,000
Depreciation			(472,000)
Disposals and other			0
Accumulated Depreciation, Ending			1,090,000
Net Book Value	4,113,000		4,113,000		2,374,000
Vehicles
Property And Equipment Cost, Beginning			921,000
Additions			0
Disposals			(62,000)
Transfers			0
Property And Equipment Cost, Ending	859,000		859,000
Accumulated Depreciation, Beginning			566,000
Depreciation			(125,000)
Disposals and other			26,000
Accumulated Depreciation, Ending			665,000
Net Book Value	194,000		194,000		355,000
Construction in Process
Property And Equipment Cost, Beginning			703,000
Additions			563,000
Disposals			(24,000)
Transfers			(1,016,000)
Property And Equipment Cost, Ending	226,000		226,000
Accumulated Depreciation, Beginning			0
Depreciation			0
Disposals and other			0
Accumulated Depreciation, Ending			0
Net Book Value	226,000		226,000		703,000
Right of Use Assets
Property And Equipment Cost, Beginning			41,530,000
Additions			0
Disposals			0
Transfers			0
Property And Equipment Cost, Ending	41,530,000		41,530,000
Accumulated Depreciation, Beginning			8,930,000
Depreciation			(2,475,000)
Disposals and other			0
Accumulated Depreciation, Ending			11,405,000
Net Book Value	$ 30,125,000		$ 30,125,000		$ 32,600,000

PROPERTY AND EQUIPMENT (Detai_2

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Depreciation	$ 1,647	$ 1,040	$ 4,917	$ 2,798
Cost of Goods Sold [Member]
Depreciation	1,527	584	4,416	1,752
Other Income Expense [Member]
Depreciation	$ 104	$ 196	$ 419	$ 391

Other Intangible Assets (Detail

Other Intangible Assets (Details) - USD ($)	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Definite Life Intangibles Cost,Beginning Balance		$ 40,965,000
Business Acquisition	$ 0
Agreement Termination	0
Definite Life Intangibles Cost,Ending Balance	40,965,000
Accumulated Amortization, Beginning	(209,000)	(209,000)
Amortization	(244,000)
Net Book Value	40,512,000	40,756,000
Brands & Tradenames
Definite Life Intangibles Cost,Beginning Balance		37,707,000
Definite Life Intangibles Cost,Ending Balance	37,707,000
Accumulated Amortization, Beginning	0	0
Amortization	(1,000)
Net Book Value	37,707,000	37,707,000
Business Acquisition	0
Agreement Termination	0
Accumulated Amortization, Ending	0	0
Technology/KnowHow
Definite Life Intangibles Cost,Beginning Balance		3,258,000
Business Acquisition	0
Agreement Termination	0
Accumulated Amortization, Beginning	(209,000)	(209,000)
Amortization	(244,000)
Net Book Value	2,805,000	$ 3,049,000
Definite Life Intangibles Cost,Ending Balance	$ 3,258,000

Other Intangible Assets (Deta_2

Other Intangible Assets (Details Narrative) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Other Intangible Assets
Amortization	$ 244	$ 96
Future Amortization Expense	$ 326

SHAREHOLDERS EQUITY (Details)

SHAREHOLDERS EQUITY (Details)	9 Months Ended
	Sep. 30, 2022 shares
Subordinate Voting Share [Member]
Beginning Balance, Shares	111,806,000
Issuance Of Vested Restricted Stock Units	220,000
Ending Balance, Shares	112,026,000
Super Voting Share [Member]
Beginning Balance, Shares	203,000
Issuance Of Vested Restricted Stock Units	0
Ending Balance, Shares	203,000

SHAREHOLDERS EQUITY (Details 1)

SHAREHOLDERS EQUITY (Details 1) shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($) shares
STOCKHOLDERS' EQUITY
Warrants, Beginning Balance	101,906
Warrants issued in conjunction with convertible debenture offering | $	$ 72,081
Warrants, Ending Balance	173,987

DEBT (Details)

DEBT (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Total short-term debt	$ 301,000	$ 221,000
Total long-term debt	29,943,000	22,897,000
Total Indebtedness	30,244,000	23,118,000
Convertible Debenture
Long-term Debt	21,177,000	14,012,000
Vehicle Loans
Short-term Debt	27,000	50,000
Long-term Debt	6,000	28,000
Mortgage Payable [Member]
Short-term Debt	249,000	105,000
Long-term Debt	8,760,000	8,857,000
Note Payable
Short-term Debt	25,000	66,000
Long-term Debt	$ 0	$ 0

DEBT (Details 1)

DEBT (Details 1) $ in Thousands	Sep. 30, 2022 USD ($)
DEBT
Balance of 2022	$ 112
2023	22,421
2024	288
2025	330
2026 And Thereafter	8,390
Total Debt Obligations	$ 31,541

DEBT (Details Narrative)

DEBT (Details Narrative) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Net Of Deferred Financing Costs	$ 980	$ 1,477
Vehicle Loans
Weighted average interest rate	6.70%	7.80%
Mortgage Payable [Member]
Net Of Deferred Financing Costs	$ 317	$ 398
Weighted average interest rate	12.50%	12.50%

LEASES (Details)

LEASES (Details)	9 Months Ended
	Sep. 30, 2022 USD ($)
LEASES
Lease Liability, Beginning	$ 36,496,000
Lease Principal Payments	(1,818,000)
June 30, 2022	$ 34,678

LEASES (Details 1)

LEASES (Details 1) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
LEASES
Lease Obligation, Current Portion	$ 2,625	$ 2,444
Lease Obligation, Long-term Portion	32,053	34,052
Total	$ 34,678	$ 36,496

LEASES (Details 2)

LEASES (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
LEASES
Amortization Of Leased Assets	$ 818	$ 741	$ 2,475	$ 2,268
Interest On Lease Liabilities	549	531	1,683	1,728
Total	$ 1,367	$ 1,272	$ 4,158	$ 3,996

LEASES (Details 3)

LEASES (Details 3) $ in Thousands	Sep. 30, 2022 USD ($)
LEASES
2022	$ 1,163
2023	4,706
2024	4,096
2025	3,267
2026 - And Beyond	40,469
Total lease payments	53,701
Less Imputed Interest	(19,023)
Total	$ 34,678

LEASES (Details Narrative)

LEASES (Details Narrative) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 30, 2021	Dec. 31, 2021
Weighted Average Remaining Lease Term	14 years 9 months	17 years 2 months 12 days
Weighted Average Discount Rate	6%		6%
Accumulated Deficit	$ (132,511)		$ (119,061)
ASU 2016-02 [Member]
Accumulated Deficit	$ 847

SHARE BASED COMPENSATION (Detai

SHARE BASED COMPENSATION (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-based compensation expense	$ 109,000	$ 361,000	$ 427,000	$ 986,000
Cost Of Goods Sold [Member]
Share-based compensation expense	0	0	0	0
General And Administrative Expense [Member]
Share-based compensation expense	$ 109,000	$ 361,000	$ 427,000	$ 986,000

SHARE BASED COMPENSATION (Det_2

SHARE BASED COMPENSATION (Details 1)	9 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares
SHARE BASED COMPENSATION
Stock Options Outstanding, Beginning | shares	6,598,000
Stock Options, Granted | shares	3,770,000
Stock Options, Exercised | shares	0
Stock Options, Cancelled | shares	(1,906,000)
Stock Options Outstanding, Ending | shares	8,462,000
Stock option, Exercisable | shares	3,862,000
Stock options, Vested and expected to vest | shares	8,462,000
Weighted-average Exercise Price Outstanding, Beginning | $ / shares	$ 0.99
Weighted-average Exercise Price, Granted | $ / shares	0.30
Weighted-average Exercise Price, Exercised | $ / shares	0
Weighted-average Exercise Price, Cancelled | $ / shares	1.02
Weighted-average Exercise Price Outstanding, Ending | $ / shares	0.64
Weighted-Average Exercise Price, Exercisable | $ / shares	0.82
Weighted-Average Exercise Price, Vested and expected to vest | $ / shares	$ 0.64
Weighted-average Remaining Contactual Life Outstanding, Beginning Balance	4 years 3 months 18 days
Weighted-average Remaining Contactual Life Outstanding, Ending Balance	4 years 2 months 12 days
Weighted-average Remaining Contactual Life, Exercisable	3 years 7 months 6 days
Weighted-average Remaining Contactual Life, Vested And Expected To Vest	4 years 2 months 12 days
Aggregate Intrinsic Value Outstanding, Beginning | $	$ 0
Aggregate Intrinsic Value, Granted | $	0
Aggregate Intrinsic Value, Exercised | $	0
Aggregate Intrinsic Value, Cancelled | $	0
Aggregate Intrinsic Value Outstanding, Ending | $	$ 0

SHARE BASED COMPENSATION (Det_3

SHARE BASED COMPENSATION (Details 2) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares
SHARE BASED COMPENSATION
RSUs Outstanding, Beginning Balance | shares	642
RSUs Granted | shares	0
RSUs Vested | shares	(125,000)
RSUs Cancelled | shares	(43,000)
RSUs Outstanding, Ending Balance | $	$ 474
Weighted-average Fair Value Outstanding, Beginning Balance	$ 1.18
Weighted-average Fair Value Granted	0
Weighted-average Fair Value Vested	1.49
Weighted-average Fair Value Cancelled	1.11
Weighted-average Fair Value Outstanding, Ending Balance	$ 1.11

SHARE BASED COMPENSATION (Det_4

SHARE BASED COMPENSATION (Details 3)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Stock Option [Member]
Expected Volatility	50%	50%	50%	50%
Dividend Yield	0%	0%	0%	0%
Risk-free Interest Rate	3.20%	1%	1.30%	0.90%
Expected Term In Years	4 years 6 months	4 years 3 months	4 years 6 months	4 years 3 months
Restricted Stock Units (RSUs) [Member]
Expected Volatility	50%	50%	50%	50%
Dividend Yield	0%	0%	0%	0%
Risk-free Interest Rate	0.70%	0.90%	0.70%	0.90%
Expected Term In Years	1 year	8 months 26 days	1 year	8 months 26 days

SHARE BASED COMPENSATION (Det_5

SHARE BASED COMPENSATION (Details Narrative) $ / shares in Units, $ in Thousands, shares in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2022 USD ($) $ / shares shares	Sep. 30, 2022 USD ($) $ / shares shares
Proceeds From Issuance Of Stock Options | shares	13.2	13.2
Stock Option For Future Grant | shares	3.4	3.4
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.
Weighted-average Exercise Price Granted | $ / shares	$ 0.23	$ 0.30
Unrecognized Compensation Cost Related To Nonvested Restricted Stock Units | $	$ 734	$ 734
Vesting Period		1 year 3 months 25 days
Restricted Stock Units (RSUs) [Member]
Unrecognized Compensation Cost Related To Nonvested Restricted Stock Units | $	$ 214	$ 214
Vesting Period		9 years

INCOME TAXES (Details Narrative

INCOME TAXES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
INCOME TAXES
Provision For Income Taxes	$ 90	$ 75	$ 225	$ 213
Effective Tax Rate	1.92%	(0.87%)	1.70%	1.47%

NET INCOME (LOSS) PER SHARE (De

NET INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Net income (loss) per share:
Net income (loss)	$ (4,779)	$ (8,700)	$ (13,450)	$ (14,685)
Net Loss Per Share:
Basic	$ (0.04)	$ (0.10)	$ (0.12)	$ (0.15)
Diluted	$ (0.04)	$ (0.10)	$ (0.12)	$ (0.15)
Weighted Average Shares Outstanding:
Basic	112,026	84,922	111,995	98,949
Diluted	112,026	111,995	84,922	98,949
Weighted average potentially diluted shares:
Basic Shares	112,026	84,922	111,995	98,949
Total Weighted Average Potentially Diluted Shares	112,026	84,922	111,981	98,949

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details Narrative) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Remaining purchase commitment	$ 2,900
Due date of commitment	2023
September 2020
Insurance maturity date	March 2021
Payment for insurance claim	$ 1,400
August 2020
Insurance maturity date	June 30, 2021
Payment for insurance claim	$ 2,650

GENERAL AND ADMINISTRATIVE EX_3

GENERAL AND ADMINISTRATIVE EXPENSES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
General and administrative	$ 2,620	$ 4,211	$ 7,433	$ 10,496
Salaries and Benefits
General and administrative	1,338	2,142	3,984	4,540
Professional Fees
General and administrative	212	413	734	1,672
Share-based Compensation
General and administrative	109	361	427	986
Administrative
General and administrative	623	947	1,245	2,151
Insurance
General and administrative	$ 338	$ 348	$ 1,043	$ 1,147

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
OMG
Related Party Transactions	$ 36,000	$ 36,000	$ 0	$ 0