Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 27, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Entity Registrant Name | LOWELL FARMS INC. | ||
Entity Central Index Key | 0001838128 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | true | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Entity Ex Transition Period | false | ||
Entity Common Stock Shares Outstanding | 112,761,904 | ||
Entity Public Float | $ 21,064,979 | ||
Entity File Number | 000-56254 | ||
Entity Incorporation State Country Code | Z4 | ||
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 | ||
Entity Interactive Data Current | Yes | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Firm Id | 6580 | ||
Auditor Name | GreenGrowth CPAs | ||
Auditor Location | Los Angeles, California |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 1,098 | $ 7,887 |
Accounts Receivable - net of allowance for doubtful accounts of $1,053 and $1,139 at December 31, 2022 and December 31, 2021, respectively | 4,163 | 8,222 |
Inventory | 10,779 | 13,343 |
Prepaid expenses and other current assets | 1,522 | 1,976 |
Total current assets | 17,562 | 31,428 |
Property and equipment, net | 31,284 | 32,179 |
Right of use assets, net | 27,362 | 32,600 |
Other intangibles, net | 42,202 | 40,756 |
Other assets | 413 | 416 |
Total assets | 118,823 | 137,379 |
Current liabilities: | ||
Accounts payable | 2,307 | 3,102 |
Accrued payroll and benefits | 350 | 650 |
Notes payable, current portion | 282 | 221 |
Lease obligation, current portion | 2,659 | 2,444 |
Convertible debentures | 21,398 | 0 |
Other current liabilities | 3,654 | 3,706 |
Total current liabilities | 30,650 | 10,123 |
Notes payable | 3 | 28 |
Lease obligation | 31,340 | 34,052 |
Convertible debentures | 0 | 14,012 |
Mortgage obligation | 8,713 | 8,857 |
Total liabilities | 70,706 | 67,072 |
STOCKHOLDERS' EQUITY | ||
Share capital | 191,742 | 189,368 |
Accumulated deficit | (143,625) | (119,061) |
Total stockholders' equity | 48,117 | 70,307 |
Total liabilities and stockholders' equity | $ 118,823 | $ 137,379 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance For Doubtful Accounts | $ 1,053 | $ 1,139 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENTS OF INCOME (LOSS) | ||
Net revenue | $ 43,535 | $ 53,723 |
Cost of goods sold | 45,376 | 51,246 |
Gross profit (loss) | (1,841) | 2,477 |
Operating expenses | ||
General and administrative | 9,553 | 13,907 |
Sales and marketing | 5,274 | 8,559 |
Depreciation and amortization | 448 | 1,313 |
Total operating expenses | 15,275 | 23,779 |
Loss from operations | (17,116) | (21,302) |
Other income/(expense) | ||
Other income (expense) | 2,455 | 1,390 |
Unrealized loss on change in fair value of investment | (109) | (60) |
Impairment | (3,240) | 0 |
Interest expense | (6,363) | (4,492) |
Total other income (expense) | (7,257) | (3,162) |
Loss before provision for income taxes | (24,373) | (24,464) |
Provision for income taxes | 191 | 213 |
Net loss | $ (24,564) | $ (24,677) |
Net loss per share: | ||
Basic | $ (0.22) | $ (0.27) |
Diluted | $ (0.22) | $ (0.27) |
Weighted average shares outstanding: | ||
Basic | 113,183 | 90,746 |
Diluted | 113,183 | 90,746 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) - 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 | (24,677) | 0 | (24,677) | ||
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 | 17,934 | 17,934 | 0 | ||
Exercise of warrants, shares | 1,511,000 | ||||
Exercise of warrants, amount | 718 | 718 | 0 | ||
Exercise of options, shares | 167,000 | ||||
Exercise of options, amount | 48 | 48 | 0 | ||
Share-based compensation expense, shares | 1,290,000 | ||||
Share-based compensation expense, amount | 1,355 | 1,355 | 0 | ||
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 | (24,564) | 0 | (24,564) | ||
Issuance of shares associated with acquisitions, shares | 10,000,000 | ||||
Issuance of shares associated with acquisitions, amount | $ 1,800 | 1,800 | 0 | ||
Exercise of options, shares | 64 | ||||
Share-based compensation expense, shares | 220,000 | ||||
Share-based compensation expense, amount | $ 564 | 564 | 0 | ||
Share re-purchase, shares | 400,000 | ||||
Share re-purchase, amount | 0 | 0 | 0 | ||
Issuance of vested RSUs, shares | 144,000 | ||||
Issuance of vested RSUs, amount | 10 | 10 | 0 | ||
Balance, shares at Dec. 31, 2022 | 121,770,000 | 203,000 | |||
Balance, amount at Dec. 31, 2022 | $ 48,117 | $ 191,742 | $ (143,625) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CASH FLOW FROM OPERATING ACTIVITIES | ||
Net loss | $ (24,564,000) | $ (24,677,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 7,376,000 | 4,236,000 |
Amortization of debt issuance costs | 937,000 | 643,000 |
Share-based compensation expense | 564,000 | 1,355,000 |
Provision for doubtful accounts | 517,000 | 870,000 |
Loss on sale of assets | 59,000 | 0 |
Goodwill impairment | 0 | 357,000 |
Termination of branding rights agreement | 0 | 152,000 |
Unrealized loss (gain) on change in fair value of investments | (109,000) | (60,000) |
Impairment expense | (3,240,000) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,542,000 | (4,222,000) |
Inventory | 2,564,000 | (108,000) |
Prepaid expenses and other current assets | 454,000 | 1,615,000 |
Other assets | (106,000) | 120,000 |
Accounts payable and accrued expenses | (1,136,000) | (6,329,000) |
Net cash used in operating activities | (6,444,000) | (26,048,000) |
CASH FLOW FROM INVESTING ACTIVITIES | ||
Proceeds from asset sales | 60,000 | 1,978,000 |
Purchases of property and equipment | (4,250,000) | (3,593,000) |
Acquisition of business assets, net | 0 | (6,156,000) |
Net cash used in investing activities | (4,190,000) | (7,771,000) |
CASH FLOW FROM FINANCING ACTIVITIES | ||
Proceeds from convertible notes, net of financing costs | 6,552,000 | 0 |
Principal payments on lease obligations | (2,497,000) | (2,338,000) |
Payments on notes payable | (210,000) | (407,000) |
Proceeds from subordinate voting share offering | 0 | 18,000,000 |
Issuance costs related to subordinate voting share offering | 0 | (66,000) |
Proceeds from exercise of warrants and options | 0 | 766,000 |
Net cash provided by financing activities | 3,845,000 | 15,955,000 |
Change in cash and cash equivalents and restricted cash | (6,789,000) | (17,864,000) |
Cash and cash equivalents-beginning of year | 7,887,000 | 25,751,000 |
Cash, cash equivalents and restricted cash-end of period | 1,098,000 | 7,887,000 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid during the period for interest | 4,215,000 | 4,200,000 |
Cash paid during the period for income taxes | 171,000 | 268,000 |
OTHER NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Purchase of property and equipment not yet paid for | 819,000 | 79,000 |
Issuance of subordinate voting shares to acquire purchase rights | 1,800,000 | 0 |
Issuance of subordinate voting shares in exchange for net assets acquired | 0 | 43,259,000 |
Liabilities assumed and receivable forgiveness in exchange for net assets acquired | 0 | 2,361,000 |
Debt and associated accrued interest converted to subordinate voting shares | $ 0 | $ 514,000 |
BUSINESS, BASIS OF PRESENTATION
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis Of Presentation And Summary Of Significant Accounting Policies | 1. BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Lowell Farms Inc. is governed by the laws of British Columbia, Canada. On April 26, 2019, the Company completed a reverse takeover transaction with Indus Holding Company, a Delaware corporation, incorporated in 2014. Effective March 1, 2021, the Company changed its name to Lowell Farms Inc. and is a California-based cannabis company with vertically integrated operations including large scale cultivation, extraction, processing, manufacturing, branding, packaging and wholesale distribution to retail dispensaries. The Company manufactures and distributes proprietary and third-party brands throughout the State of California, the largest cannabis market in the world. The Company also provides manufacturing, extraction and distribution services to third-party cannabis and cannabis branding companies. The Company’s corporate office and principal place of business is located at 19 Quail Run Circle, Salinas, California. Basis of Presentation The consolidated financial statements of Lowell Farms Inc. and its wholly owned subsidiaries (collectively, the “Company,” “we,” “us” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). All intercompany transactions and balances have been eliminated in consolidation. All dollar amounts in the consolidated financial statements and notes to 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 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. Significant Accounting Policies 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. Intangible assets acquired in an asset purchase are valued at their purchase price. 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 The Company adopted FASB Topic 842, Leases (“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 lease pronouncement, the Company recorded a charge to accumulated deficit of $847. 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, 2022 and 2021, research costs are immaterial. For the year ended December 31, 2022, the Company incurred certain development expenditures related to the Lowell 35s product line that launched during the third quarter of the year ended December 31, 2022. Development costs of approximately $78 were expensed during the year ended December 31, 2022 to validate that the product line was commercially and technically feasible and to bring the product to market. Development expenditures are capitalized only if development costs are material, can be measured reliably, 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. 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 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 September 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 was effective for the year ended December 31, 2020. The guidance did not have a material impact on the Company’s consolidated financial statements and disclosures. 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 was effective for the year ended December 31, 2020. The adoption of this guidance did not have a material impact on our 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 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 on our Consolidated Financial Statements, 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-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 was effective for our fiscal year beginning January 1, 2022 and did not have a material impact on our consolidated financial statements. Accounting standards not yet adopted In October 2021, the FASB issued ASU 2021-08-Business Combinations (“Topic 805”): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in ASU 2021-08 require that an entity recognizes and measures contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers (“Topic 606”). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The amendments improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2022, which means it will be effective for our fiscal year beginning January 1, 2023. Early adoption is permitted. We are currently evaluating the impact of ASU 2021-08 on our consolidated financial statements. No other recently issued accounting pronouncements had or are expected to have a material impact on our consolidated financial statements. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2022 | |
ACQUISITIONS | |
Acquisitions | 2. ACQUISITIONS Completed 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 The Company completed the following asset acquisitions, and allocated the purchase price as follows: The Hacienda Company, LLC acquisition and the Lowell Farm Services acquisition qualified as asset acquisitions 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 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. Refer to “ Subsequent Events · Lowell Farm Services On June 29, 2021, we acquired real property and related assets of a 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 provide 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 | 12 Months Ended |
Dec. 31, 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: December 31, December 31, (in thousands) 2022 2021 Deposits $ 595 $ 548 Insurance 235 624 Supplier advances 375 575 Interest and taxes 69 147 Licenses and payments 146 78 Other 102 4 Total prepaid and other current assets $ 1,522 $ 1,976 |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORY | |
Inventory | 4. INVENTORY Inventory was comprised of the following items: December 31, December 31, (in thousands) 2022 2021 Raw materials $ 7,431 $ 8,558 Work in process 940 292 Finished goods 2,408 4,493 Total inventory $ 10,779 $ 13,343 |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
OTHER CURRENT LIABILITIES | |
Other Current Liabilities | 5. OTHER CURRENT LIABILITIES Other current liabilities were comprised of the following items: December 31, December 31, (in thousands) 2022 2021 Excise and cannabis tax $ 948 $ 2,830 Third party brand distribution accrual 17 78 Insurance and professional fee accrual 158 651 Interest and tax accrual 921 - Employee Retention Credit financing accrual 441 - Equipment purchase accrual 724 - Other 445 147 Total other current liabilities $ 3,654 $ 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 IRS 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 $2,446, which was paid in immediately available funds. For the year ended December 31, 2022, the Company recorded net other income of $2,014 and an accrued other liability of $441 to be paid to facilitate the sale of the ERC Claim. Included in interest expense is $864 of financing related charges. |
PROPERTY AND EQUIPMENT AND RIGH
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS | |
Property And Equipment And Right Of Use Assets | 6. PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS A reconciliation of the beginning and ending balances of property and equipment, right of use assets and accumulated depreciation during the years ended December 31, 2022 and 2021, and property and equipment, net and right of use assets, net as of for the same years 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 - 81 - 770 67 2,091 - 3,010 Business Acquisitions 15,538 - - 468 - - - 16,006 Disposals and Transfers 369 3,069 - 478 - (3,916 ) - (0 ) Balance-December 31, 2021 $ 15,907 $ 13,949 $ 50 $ 2,992 $ 921 $ 704 $ 41,530 $ 76,053 Accumulated Depreciation Balance-December 31, 2020 $ - $ (634 ) $ (47 ) $ (427 ) $ (411 ) $ - $ (5,692 ) $ (7,211 ) Depreciation (132 ) (346 ) (1 ) (191 ) (155 ) - (3,238 ) (4,063 ) Disposals - - - - - - - - Balance-December 31, 2021 $ (132 ) $ (980 ) $ (48 ) $ (618 ) $ (566 ) $ - $ (8,930 ) $ (11,274 ) Net Book Value-December 31, 2021 $ 15,775 $ 12,970 $ 2 $ 2,374 $ 355 $ 704 $ 32,600 $ 64,779 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 $ 13,949 $ 50 $ 2,992 $ 921 $ 704 $ 41,530 $ 76,053 Additions - 269 - 3,415 - 565 - 4,249 Disposals - - - - (177 ) (29 ) (122 ) (328 ) Transfers (188 ) 1,209 98 86 (1,205 ) - - Impairments - (2,991 ) - (6 ) - - (4,327 ) (7,324 ) Balance-December 31, 2022 $ 15,719 $ 12,437 $ 50 $ 6,499 $ 830 $ 35 $ 37,081 $ 72,650 Accumulated Depreciation Balance-December 31, 2021 $ (132 ) $ (980 ) $ (48 ) $ (618 ) $ (566 ) $ - $ (8,930 ) (11,274 ) Depreciation (183 ) (2,085 ) (1 ) (880 ) (118 ) - (3,755 ) (7,022 ) Disposals - - - - 132 - 76 208 Transfers - 56 - - (56 ) - - - Impairments - 1,194 - - - 2,890 4,084 Balance-December 31, 2022 $ (315 ) $ (1,815 ) $ (49 ) $ (1,498 ) $ (608 ) $ - $ (9,719 ) $ (14,004 ) Net Book Value-December 31, 2022 $ 15,404 $ 10,621 $ 1 $ 5,001 $ 222 $ 35 $ 27,362 $ 58,646 Construction in process represents assets under construction related to cultivation, manufacturing, and distribution facilities not yet completed or otherwise not placed in service. Depreciation expense of $7,022, and $4,063, were recorded for the years ended December 31, 2022 and 2021 respectively, of which $6,292 and $2,336, respectively, were included in cost of goods sold. Depreciation expense of $608 and $587 was also recorded in other expense for the years ended December 31, 2022 and 2021, respectively. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | |
Other Intangible Assets | 7. GOODWILL AND INTANGIBLE ASSETS Goodwill A reconciliation of the beginning and ending balances of goodwill during the year ended December 31, 2021 is as follows: (in thousands) Costs Balance - December 31, 2020 $ 357 Additions - Business Acquisitions - Impairment (357 ) Balance - December 31, 2021 $ - No goodwill was recorded during the year ended December 31, 2022. 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. As a result of its annual impairment assessment in the third quarter of fiscal 2021, the Company realized a $357 impairment of goodwill related to its investment in the assets of Acme Inc., a manufacturer of vape cartridges and disposable pens, which is recorded in general and administrative expenses in our consolidated financial statements for the year ended December 31, 2021. Other Intangible Assets A reconciliation of the beginning and ending balances of intangible assets and accumulated amortization during the years ended December 31, 2022 and 2021 are as follows: Definite Life Intangibles Indefinite Life Intangibles Technology/ Acquired Brands & (in thousands) Know How Purchase Rights Tradenames Total Costs Balance-December 31, 2021 $ 3,258 $ - $ 37,707 $ 40,965 Purchase Agreement - 1,800 - 1,800 Balance-December 31, 2022 $ 3,258 $ 1,800 $ 37,707 $ 42,765 Accumulated Amortization Balance-December 31, 2021 $ (209 ) $ - $ - $ (209 ) Amortization (326 ) (28 ) - (354 ) Balance-December 31, 2022 $ (535 ) $ (28 ) $ - $ (563 ) Net Book Value December 31, 2021 $ 3,049 $ - $ 37,707 $ 40,756 Net Book Value December 31, 2022 $ 2,723 $ 1,772 $ 37,707 $ 42,202 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 $354, and $177 for the years ended December 31, 2022, and 2021, respectively. During the year ended December 31, 2022, the Company acquired rights to purchase additional manufacturing equipment related to the Lowell 35s automated pre-roll line. Per the terms of the purchase agreement, the Company acquired the rights to acquire eight pre-roll machines and one packaging machine and received 15% of the issued and outstanding shares of the selling company, which have a fair market value of $nil. For the year ended December 31, 2022, one pre-roll machine and the packaging machine were received and in use and the acquired purchase rights are being amortized over the five year useful life of the machines. As consideration for the purchase of the acquisition rights, the Company paid for deposits on a portion of the machines, which are reflected as additions within Property and Equipment The Company estimates that amortization expense for our existing other intangible assets will average approximately $346 annually for the next nine and a half 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. The Company signed the LOI to sell certain brands and the related intangible assets in March of 2023. While the deal has not closed, refer to “Subsequent Events” |
SHAREHOLDERS EQUITY
SHAREHOLDERS EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
SHAREHOLDERS EQUITY | |
Shareholders Equity | 8. SHAREHOLDERS’ EQUITY Shares Outstanding The table below details the change in Company shares outstanding by class during year ended December 31, 2022: Subordinate Super (in thousands) Voting Shares Voting Shares Balance-December 31, 2021 111,806 203 Issuance of vested restricted stock units 364 - Issuance of shares associated with asset acquisition 10,000 - Shares re-purchased (400 ) - Balance-December 31, 2022 121,770 203 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 debt offering 72,081 Warrants expired (552 ) Balance-December 31, 2022 173,435 The Company signed the LOI in 2023 to cancel outstanding warrants related to our convertible debentures. While the deal has not closed, refer to “Subsequent Events” |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2022 | |
DEBT | |
Debt | 9. DEBT Debt at December 31, 2022 and 2021, was comprised of the following: December 31, December 31, (in thousands) 2022 2021 Current portion of long-term debt Vehicle loans (1) $ 15 $ 50 Mortgage payable (2) 257 105 Note payable 10 66 Convertible debt (3) 21,398 - Total short-term debt 21,680 221 Long-term debt, net Vehicle loans (1) 3 28 Mortgage payable (2) 8,713 8,857 Convertible debenture (3) - 14,012 Total long-term debt 8,716 22,897 Total Indebtedness $ 30,396 $ 23,118 _____________ (1) Primarily fixed term loans on transportation vehicles. Weighted average interest rate at December 31, 2022 and December 31, 2021 was 6.4% and 7.8%, respectively. (2) Mortgage payable associated with the acquired processing facility. Weighted average interest rate at December 31, 2022 and December 31, 2021 was 12.5%. Net of deferred financing costs as December 31, 2022 and December 31, 2021 of $296 and $398, respectively (3) Net of deferred financing costs at December 31, 2022 and December 31, 2021 of $759 and $1,477, respectively. Matures October 31, 2023 The Company signed the LOI to forgive the outstanding indebtedness owing under the convertible debentures in March of 2023. While the deal has not closed, refer to “Subsequent Events” Stated maturities of debt obligations are as follows as of December 31, 2022: December 31, (in thousands) 2022 2023 $ 22,440 2024 291 2025 330 2026 8,390 Total debt obligations $ 31,451 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Leases | 10. LEASES A reconciliation of lease obligations for the years ended December 31, 2022 and 2021, is as follows: (in thousands) Lease obligation December 31, 2021 $ 36,496 Lease principal payments (2,443 ) Lease settlement (54 ) December 31, 2021 $ 33,999 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 years ended December 31, 2022, and 2021, are as follows: Years Ended December 31, December 31, (in thousands) 2022 2021 Amortization of leased assets (1) $ 3,755 $ 3,238 Interest on lease liabilities (2) 2,219 2,406 Total $ 5,974 $ 5,644 ____________ (1) Included in cost of goods sold, general and administrative expenses and other expenses 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, 2022, were a weighted average remaining lease term of 14.6 years and a weighted average discount rate of 6%. 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%. The future lease payments with initial remaining terms in excess of one year as of December 31, 2022 were as follows: December 31, (in thousands) 2022 2023 $4,666 2024 4,076 2025 3,267 2026 3,209 2027 and beyond 37,260 Total lease payments $ 52,478 Less imputed interest (18,479 ) Total $ 33,999 |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 12 Months Ended |
Dec. 31, 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 December 31, 2022, 13.2 million shares have been authorized to be issued under the Plan and 3.6 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 years December 31, 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 years ended December 31, 2022, and 2021 share-based compensation expense was as follows: Years Ended December 31, December 31, (in thousands) 2022 2021 Cost of goods sold $ - $ - General and administrative expense 564 1,355 Total share-based compensation $ 564 $ 1,355 The following table summarizes the status of stock option grants and unvested awards at and for the year ended December 31, 2022: Weighted- Weighted- Average Stock 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 6,680 0.21 - Expired (64 ) 1.02 - Cancelled (3,145 ) 0.99 - Outstanding-December 31, 2022 10,069 0.47 4.6 - Exercisable-December 31, 2022 3,764 0.71 3.7 - Vested and expected to vest-December 31, 2022 10,069 0.47 4.6 - The weighted-average fair value of options granted during the year ended December 31, 2022, estimated as of the grant date was $0.21. As of December 31, 2022, there was $498 of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a remaining weighted-average vesting period of 1.3 years. The following table summarizes the status of restricted stock unit (“RSU”) grants and unvested awards at and for the year ended December 31, 2022: Weighted-Average (in thousands except per share amounts) RSUs Fair Value Outstanding-December 31, 2021 642 $ 1.18 Granted - - Vested (270 ) 1.28 Cancelled (164 ) 1.10 Outstanding-December 31, 2022 208 $ 1.10 As of December 31, 2022, there was $154 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 12 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. No RSUs were granted for the year ending December 31, 2022. Options Years Ended December 31, December 31, 2022 2021 Expected volatility 50 % 50 % Dividend yield 0 % 0 % Risk-free interest rate 2.48 % 0.87 % Expected term in years 3.9 4.3 RSUs Years Ended December 31, December 31, 2022 2021 Expected volatility - 50 % Dividend yield - 0 % Risk-free interest rate - 0.71 % Expected term in years - 0.74 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 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 year ended December 31, 2022, was $191, representing an effective tax rate of (0.78)%, compared to an income tax expense of $213 for the year ended December 31, 2021, representing an effective tax rate of (0.87)%. The provision for income tax expense for the years ended December 31, 2022 and 2021, consisted of the following: Years Ended (in thousands) 2022 2021 Current Federal $ - $ - State 191 213 Total Current 191 213 Deferred tax benefit Federal (1,987 ) (1,528 ) State (15,293 ) (13,339 ) Total deferred tax benefit (17,280 ) (14,867 ) Valuation allowance 17,280 14,867 Income tax expense $ 191 $ 213 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 into law what is referred to as the 2017 Tax Act, which contains many significant changes to the U.S. tax laws, including, but not limited to, reducing the 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. 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 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, 2022 and 2021, are as follows: Years Ended (in thousands) 2022 2021 Deferred tax assets Net operating loss carryforwards $ 17,038 $ 13,192 Accruals and reserves - - Depreciation - - Other - - Valuation allowance (17,038 ) (13,192 ) Total deferred tax assets - - Accruals and reserves - - Share-based compensation - - Total deferred tax liabilities - - Net deferred tax liabilities $ - $ - |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2022 | |
Net loss per share: | |
Net Income (loss) Per Share | 13. NET INCOME (LOSS) PER SHARE Net 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. Years Ended December 31, December 31, (in thousands except per share amounts) 2022 2021 Net loss $ (24,564 ) $ (24,677 ) Net loss per share: Basic $ (0.22 ) $ (0.27 ) Diluted $ (0.22 ) $ (0.27 ) Weighted average shares outstanding: Basic 113,183 90,746 Diluted 113,183 90,746 Weighted average potentially diluted shares (1): Basic shares 113,183 90,746 Options - - Warrants - - Convertible debentures - - Restricted stock units - - Total weighted average potentially diluted shares: 113,183 90,746 ________________ (1) For the above 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 | 12 Months Ended |
Dec. 31, 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 December 31, 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 Consolidated Financial Statements, which are considered a Level 3 measurement. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments And Contingencies Disclosure Abstract | |
Commitments And Contingencies | 15. COMMITMENTS AND CONTINGENCIES Commitments As of December 31, 2022, the Company has entered into purchase commitments for additional manufacturing equipment. Of the total remaining purchase commitment of $2.9 million, approximately $724k is accrued but unpaid within Other Current Liabilities on the Consolidated Balance Sheet and the remaining purchase commitment of $2.2 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 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, 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. The Company is being audited by the IRS for years 2019 and 2020 and may be subject to additional taxes, penalties and interest. 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 December 31, 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 of material consequences 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 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, and is included in other income (expense) in the accompanying consolidated statements of income (loss). |
GENERAL AND ADMINISTRATIVE EXPE
GENERAL AND ADMINISTRATIVE EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
GENERAL AND ADMINISTRATIVE EXPENSES | |
General And Administrative Expenses | 16. GENERAL AND ADMINISTRATIVE EXPENSES For the years ended December 31, 2022 and 2021, general and administrative expenses were comprised of: Years Ended December 31, December 31, (in thousands) 2022 2021 Salaries and benefits $ 5,286 $ 6,234 Professional fees 465 1,924 Share-based compensation 564 1,355 Goodwill impairment - 357 Insurance 1,344 1,457 Administrative 1,894 2,580 Total general and administrative expenses $ 9,553 $ 13,907 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 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 years ended December 31, 2022 and 2021, were $36 and $nil, respectively. During October 2022, Cannaco Research Corporation, an existing customer, became a related party when Ms. Lawrence, a new member joined the Board of Directors. Total sales recognized for Cannaco Research Corporation for the years ended December 31, 2022 and 2021 were $274 and $117, respectively. For the years ended December 31, 2022 and 2021, cash collected from Cannaco Research Corporation was $223 and $93, respectively. In December, 2022, the Company entered into an agreement with Cannaco Research Corporation to lease approximately 2,000 square feet of warehouse space in Los Angeles to facilitate distribution services in the area. The lease is a 12 month storage agreement for the warehouse space. Total payments to Cannaco Research Corporation for the lease were $10 in the year ended December 31, 2022. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2022 | |
SEGMENT INFORMATION | |
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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
Subsequent Events | 19. SUBSEQUENT EVENTS The Company has evaluated subsequent events through March 30, 2023, the date the financial statements were available to be issued. Effective March 15, 2023, Lowell Farms Inc. entered into the LOI which will forgive indebtedness owing under the convertible debentures and cancel the related warrants to acquire approximately 212 million subordinate voting shares. The LOI sets out the general terms of the transaction and the parties have agreed to negotiate the precise terms and conditions of the transaction in good faith, however, the Company is not subject to an exclusivity provision and may solicit, initiate, entertain, or accept other offers. Details of the transaction are set forth below: · All indebtedness outstanding under the Debentures will be forgiven and all of the related warrants to acquire an aggregate of approximately 212 million subordinate voting shares of the Company will be cancelled; · The Company will sell to a newly formed company, BrandCo, all intellectual property arising out of or relating to the “Lowell Smokes” and “35s” brands and assign any existing, out-of-state license agreements (the “Assigned Contracts”) relating to the “Lowell” brand to BrandCo; · BrandCo will acquire approximately 100 million shares of the Company’s subordinate voting shares representing in the aggregate shares of the Company equal to no more than 49% of the then issued and outstanding number of subordinate voting shares; · The Company will receive future payments equal to 15% of net revenue received by BrandCo in connection with the assigned contracts for a period of six months following the closing date; and · The Company will receive a 42-month exclusive license agreement for use of the “Lowell Smokes” and “35s” brands within the State of California. George Allen resigned from the Board of Directors, effective March 15, 2023. Ann Lawrence was added to the Audit Committee and appointed Chairperson of the Board of Directors, effective March 15, 2023. |
BUSINESS, BASIS OF PRESENTATI_2
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business | Lowell Farms Inc. is governed by the laws of British Columbia, Canada. On April 26, 2019, the Company completed a reverse takeover transaction with Indus Holding Company, a Delaware corporation, incorporated in 2014. Effective March 1, 2021, the Company changed its name to Lowell Farms Inc. and is a California-based cannabis company with vertically integrated operations including large scale cultivation, extraction, processing, manufacturing, branding, packaging and wholesale distribution to retail dispensaries. The Company manufactures and distributes proprietary and third-party brands throughout the State of California, the largest cannabis market in the world. The Company also provides manufacturing, extraction and distribution services to third-party cannabis and cannabis branding companies. The Company’s corporate office and principal place of business is located at 19 Quail Run Circle, Salinas, California. |
Basis Of Presentation | The consolidated financial statements of Lowell Farms Inc. and its wholly owned subsidiaries (collectively, the “Company,” “we,” “us” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). All intercompany transactions and balances have been eliminated in consolidation. All dollar amounts in the consolidated financial statements and notes to 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 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. |
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. Intangible assets acquired in an asset purchase are valued at their purchase price. 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 | The Company adopted FASB Topic 842, Leases (“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 lease pronouncement, the Company recorded a charge to accumulated deficit of $847. 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, 2022 and 2021, research costs are immaterial. For the year ended December 31, 2022, the Company incurred certain development expenditures related to the Lowell 35s product line that launched during the third quarter of the year ended December 31, 2022. Development costs of approximately $78 were expensed during the year ended December 31, 2022 to validate that the product line was commercially and technically feasible and to bring the product to market. Development expenditures are capitalized only if development costs are material, can be measured reliably, 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. |
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 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 September 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 was effective for the year ended December 31, 2020. The guidance did not have a material impact on the Company’s consolidated financial statements and disclosures. 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 was effective for the year ended December 31, 2020. The adoption of this guidance did not have a material impact on our 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 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 on our Consolidated Financial Statements, 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-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 was effective for our fiscal year beginning January 1, 2022 and did not have a material impact on our consolidated financial statements. |
Accounting standards not yet adopted | In October 2021, the FASB issued ASU 2021-08-Business Combinations (“Topic 805”): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in ASU 2021-08 require that an entity recognizes and measures contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers (“Topic 606”). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The amendments improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2022, which means it will be effective for our fiscal year beginning January 1, 2023. Early adoption is permitted. We are currently evaluating the impact of ASU 2021-08 on our consolidated financial statements. No other recently issued accounting pronouncements had or are expected to have a material impact on our consolidated financial statements. |
BUSINESS, BASIS OF PRESENTATI_3
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule Of Property and equipment estimated useful life | 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 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 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) | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID AND OTHER CURRENT ASSETS | |
Summary Of Prepaid Expenses And Other Current Assets | December 31, December 31, (in thousands) 2022 2021 Deposits $ 595 $ 548 Insurance 235 624 Supplier advances 375 575 Interest and taxes 69 147 Licenses and payments 146 78 Other 102 4 Total prepaid and other current assets $ 1,522 $ 1,976 |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INVENTORY | |
Summary Of Inventory | December 31, December 31, (in thousands) 2022 2021 Raw materials $ 7,431 $ 8,558 Work in process 940 292 Finished goods 2,408 4,493 Total inventory $ 10,779 $ 13,343 |
Other current liabilities (Tabl
Other current liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
OTHER CURRENT LIABILITIES | |
Schedule Of Other Current Liabilities | December 31, December 31, (in thousands) 2022 2021 Excise and cannabis tax $ 948 $ 2,830 Third party brand distribution accrual 17 78 Insurance and professional fee accrual 158 651 Interest and tax accrual 921 - Employee Retention Credit financing accrual 441 - Equipment purchase accrual 724 - Other 445 147 Total other current liabilities $ 3,654 $ 3,706 |
PROPERTY AND EQUIPMENT AND RI_2
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS | |
Schedule Of Property And Equipment And Right Of Use Assets | 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 - 81 - 770 67 2,091 - 3,010 Business Acquisitions 15,538 - - 468 - - - 16,006 Disposals and Transfers 369 3,069 - 478 - (3,916 ) - (0 ) Balance-December 31, 2021 $ 15,907 $ 13,949 $ 50 $ 2,992 $ 921 $ 704 $ 41,530 $ 76,053 Accumulated Depreciation Balance-December 31, 2020 $ - $ (634 ) $ (47 ) $ (427 ) $ (411 ) $ - $ (5,692 ) $ (7,211 ) Depreciation (132 ) (346 ) (1 ) (191 ) (155 ) - (3,238 ) (4,063 ) Disposals - - - - - - - - Balance-December 31, 2021 $ (132 ) $ (980 ) $ (48 ) $ (618 ) $ (566 ) $ - $ (8,930 ) $ (11,274 ) Net Book Value-December 31, 2021 $ 15,775 $ 12,970 $ 2 $ 2,374 $ 355 $ 704 $ 32,600 $ 64,779 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 $ 13,949 $ 50 $ 2,992 $ 921 $ 704 $ 41,530 $ 76,053 Additions - 269 - 3,415 - 565 - 4,249 Disposals - - - - (177 ) (29 ) (122 ) (328 ) Transfers (188 ) 1,209 98 86 (1,205 ) - - Impairments - (2,991 ) - (6 ) - - (4,327 ) (7,324 ) Balance-December 31, 2022 $ 15,719 $ 12,437 $ 50 $ 6,499 $ 830 $ 35 $ 37,081 $ 72,650 Accumulated Depreciation Balance-December 31, 2021 $ (132 ) $ (980 ) $ (48 ) $ (618 ) $ (566 ) $ - $ (8,930 ) (11,274 ) Depreciation (183 ) (2,085 ) (1 ) (880 ) (118 ) - (3,755 ) (7,022 ) Disposals - - - - 132 - 76 208 Transfers - 56 - - (56 ) - - - Impairments - 1,194 - - - 2,890 4,084 Balance-December 31, 2022 $ (315 ) $ (1,815 ) $ (49 ) $ (1,498 ) $ (608 ) $ - $ (9,719 ) $ (14,004 ) Net Book Value-December 31, 2022 $ 15,404 $ 10,621 $ 1 $ 5,001 $ 222 $ 35 $ 27,362 $ 58,646 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule Of Intangible Assets | Definite Life Intangibles Indefinite Life Intangibles Technology/ Acquired Brands & (in thousands) Know How Purchase Rights Tradenames Total Costs Balance-December 31, 2021 $ 3,258 $ - $ 37,707 $ 40,965 Purchase Agreement - 1,800 - 1,800 Balance-December 31, 2022 $ 3,258 $ 1,800 $ 37,707 $ 42,765 Accumulated Amortization Balance-December 31, 2021 $ (209 ) $ - $ - $ (209 ) Amortization (326 ) (28 ) - (354 ) Balance-December 31, 2022 $ (535 ) $ (28 ) $ - $ (563 ) Net Book Value December 31, 2021 $ 3,049 $ - $ 37,707 $ 40,756 Net Book Value December 31, 2022 $ 2,723 $ 1,772 $ 37,707 $ 42,202 |
Schedule Of Goodwill | (in thousands) Costs Balance - December 31, 2020 $ 357 Additions - Business Acquisitions - Impairment (357 ) Balance - December 31, 2021 $ - |
SHAREHOLDERS EQUITY (Tables)
SHAREHOLDERS EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SHAREHOLDERS 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 364 - Issuance of shares associated with asset acquisition 10,000 - Shares re-purchased (400 ) - Balance-December 31, 2022 121,770 203 |
Schedule Of Warrants Outstanding | (in thousands) Balance-December 31, 2021 101,906 Warrants issued in conjunction with convertible debt offering 72,081 Warrants expired (552 ) Balance-December 31, 2022 173,435 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DEBT | |
Schedule Of Debt | December 31, December 31, (in thousands) 2022 2021 Current portion of long-term debt Vehicle loans (1) $ 15 $ 50 Mortgage payable (2) 257 105 Note payable 10 66 Convertible debt (3) 21,398 - Total short-term debt 21,680 221 Long-term debt, net Vehicle loans (1) 3 28 Mortgage payable (2) 8,713 8,857 Convertible debenture (3) - 14,012 Total long-term debt 8,716 22,897 Total Indebtedness $ 30,396 $ 23,118 |
Schedule Of Maturities Of Debt Obligations | December 31, (in thousands) 2022 2023 $ 22,440 2024 291 2025 330 2026 8,390 Total debt obligations $ 31,451 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Schedule Of Lease Obligations | (in thousands) Lease obligation December 31, 2021 $ 36,496 Lease principal payments (2,443 ) Lease settlement (54 ) December 31, 2021 $ 33,999 |
Schedule Of Lease Expense | Years Ended December 31, December 31, (in thousands) 2022 2021 Amortization of leased assets (1) $ 3,755 $ 3,238 Interest on lease liabilities (2) 2,219 2,406 Total $ 5,974 $ 5,644 |
Schedule of future lease payments | December 31, (in thousands) 2022 2023 $4,666 2024 4,076 2025 3,267 2026 3,209 2027 and beyond 37,260 Total lease payments $ 52,478 Less imputed interest (18,479 ) Total $ 33,999 |
SHARE BASED COMPENSATION (Table
SHARE BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SHARE BASED COMPENSATION | |
Schedule Of Share-based Compensation Expense | Years Ended December 31, December 31, (in thousands) 2022 2021 Cost of goods sold $ - $ - General and administrative expense 564 1,355 Total share-based compensation $ 564 $ 1,355 |
Schedule Of Stock Option Activity | Weighted- Weighted- Average Stock 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 6,680 0.21 - Expired (64 ) 1.02 - Cancelled (3,145 ) 0.99 - Outstanding-December 31, 2022 10,069 0.47 4.6 - Exercisable-December 31, 2022 3,764 0.71 3.7 - Vested and expected to vest-December 31, 2022 10,069 0.47 4.6 - |
Schedule Of Restricted Stock Unit Activity | Weighted-Average (in thousands except per share amounts) RSUs Fair Value Outstanding-December 31, 2021 642 $ 1.18 Granted - - Vested (270 ) 1.28 Cancelled (164 ) 1.10 Outstanding-December 31, 2022 208 $ 1.10 |
Schedule Of Weighted Average Assumptions | Options Years Ended December 31, December 31, 2022 2021 Expected volatility 50 % 50 % Dividend yield 0 % 0 % Risk-free interest rate 2.48 % 0.87 % Expected term in years 3.9 4.3 RSUs Years Ended December 31, December 31, 2022 2021 Expected volatility - 50 % Dividend yield - 0 % Risk-free interest rate - 0.71 % Expected term in years - 0.74 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule Of income tax expense | Years Ended (in thousands) 2022 2021 Current Federal $ - $ - State 191 213 Total Current 191 213 Deferred tax benefit Federal (1,987 ) (1,528 ) State (15,293 ) (13,339 ) Total deferred tax benefit (17,280 ) (14,867 ) Valuation allowance 17,280 14,867 Income tax expense $ 191 $ 213 |
Schedule Of deferred tax assets and liabilities | Years Ended (in thousands) 2022 2021 Deferred tax assets Net operating loss carryforwards $ 17,038 $ 13,192 Accruals and reserves - - Depreciation - - Other - - Valuation allowance (17,038 ) (13,192 ) Total deferred tax assets - - Accruals and reserves - - Share-based compensation - - Total deferred tax liabilities - - Net deferred tax liabilities $ - $ - |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Net loss per share: | |
Schedule Of Net Earnings/(loss) Per Share | Years Ended December 31, December 31, (in thousands except per share amounts) 2022 2021 Net loss $ (24,564 ) $ (24,677 ) Net loss per share: Basic $ (0.22 ) $ (0.27 ) Diluted $ (0.22 ) $ (0.27 ) Weighted average shares outstanding: Basic 113,183 90,746 Diluted 113,183 90,746 Weighted average potentially diluted shares (1): Basic shares 113,183 90,746 Options - - Warrants - - Convertible debentures - - Restricted stock units - - Total weighted average potentially diluted shares: 113,183 90,746 |
GENERAL AND ADMINISTRATIVE EX_2
GENERAL AND ADMINISTRATIVE EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
GENERAL AND ADMINISTRATIVE EXPENSES | |
Schedule Of General And Administrative Expense | Years Ended December 31, December 31, (in thousands) 2022 2021 Salaries and benefits $ 5,286 $ 6,234 Professional fees 465 1,924 Share-based compensation 564 1,355 Goodwill impairment - 357 Insurance 1,344 1,457 Administrative 1,894 2,580 Total general and administrative expenses $ 9,553 $ 13,907 |
BUSINESS, BASIS OF PRESENTATI_4
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Construction in Process | |
Description of useful life | Not depreciated |
Buildings [Member] | |
Estimated useful life | 35 years |
Leasehold improvements [Member] | |
Description of useful life | The lesser of the estimated useful life or length of the lease |
Minimum [Member] | Vehicles [Member] | |
Estimated useful life | 4 years |
Minimum [Member] | Machinery and equipment [Member] | |
Estimated useful life | 3 years |
Minimum [Member] | Office equipment [Member] | |
Estimated useful life | 3 years |
Minimum [Member] | Furniture and fixtures [Member] | |
Estimated useful life | 3 years |
Maximum [Member] | Vehicles [Member] | |
Estimated useful life | 5 years |
Maximum [Member] | Machinery and equipment [Member] | |
Estimated useful life | 6 years |
Maximum [Member] | Office equipment [Member] | |
Estimated useful life | 5 years |
Maximum [Member] | Furniture and fixtures [Member] | |
Estimated useful life | 7 years |
BUSINESS, BASIS OF PRESENTATI_5
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Changes in adoption accumulated deficit | $ 847 |
Straight line basis | 15 years |
ACQUISITIONS (Details)
ACQUISITIONS (Details) | 12 Months Ended |
Dec. 31, 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 | 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 |
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 | 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 |
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 | 24 Months Ended | |
Jun. 29, 2021 | Feb. 25, 2021 | Dec. 31, 2021 | |
Acquisition Consideration | $ 16,006,000 | ||
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 provide 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 | Dec. 31, 2022 | Dec. 31, 2021 |
PREPAID AND OTHER CURRENT ASSETS | ||
Deposits | $ 595 | $ 548 |
Insurance | 235 | 624 |
Supplier Advances | 375 | 575 |
Interest And Taxes | 69 | 147 |
Licenses and permits | 146 | 78 |
Other | 102 | 4 |
Prepaid Expenses And Other Current Assets | $ 1,522 | $ 1,976 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
INVENTORY | ||
Raw Materials | $ 7,431 | $ 8,558 |
Work In Process | 940 | 292 |
Finished Goods | 2,408 | 4,493 |
Inventory | $ 10,779 | $ 13,343 |
Other current liabilities (Deta
Other current liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
OTHER CURRENT LIABILITIES | ||
Excise And Cannabis Tax | $ 948 | $ 2,830 |
Third Party Brand Distribution Accrual | 17 | 78 |
Insurance And Professional Accrual | 158 | 651 |
Interest and tax accrual | 921 | 0 |
Employee Retention Credit financing accrual | 441 | 0 |
Equipment purchase accrual | 724 | 0 |
Other | 445 | 147 |
Total Other Current Liabilities | $ 3,654 | $ 3,706 |
Other current liabilities (De_2
Other current liabilities (Details Narrative) - E R C Claim [Member] - On Twenty Six July Two Thousand Twenty Two [Member] | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Purchase of derivative payment rights | $ 2,446 |
Other income | 2,014 |
Accrued other liability | 44 |
Interest Expense | $ 864 |
PROPERTY AND EQUIPMENT AND RI_3
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS (Details) - USD ($) | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2021 | |
Additions | $ 4,249,000 | $ 3,010,000 | |
Disposal | (328,000) | ||
Business Acquisitions | 16,006,000 | ||
Disposals of transfers | 0 | 0 | |
Impairments | (7,324) | ||
Property And Equipment Cost, Ending | 72,650,000 | $ 76,053,000 | 76,053,000 |
Accumulated Depreciation, Beginning | (11,274,000) | (7,211,000) | |
Depreciation | (7,022,000) | (4,063,000) | (4,063,000) |
Accumulated amortization disposals | 208 | ||
Accumulated amortization transfers | 0 | ||
Accumulated amortization impairments | 4,084 | ||
Accumulated Depreciation, Ending | (14,004,000) | (11,274,000) | |
Net Book Value | 58,646,000 | 64,779,000 | 64,779,000 |
Property And Equipment Cost, Beginning | 76,053,000 | 57,037,000 | |
Net Book Value | 31,284,000 | 32,179,000 | 32,179,000 |
Construction in Process | |||
Additions | 565,000 | 2,091,000 | |
Disposal | (29) | ||
Business Acquisitions | 0 | ||
Impairments | 0 | ||
Property And Equipment Cost, Ending | 35,000 | 704,000 | 704,000 |
Accumulated Depreciation, Beginning | 0 | 0 | |
Depreciation | 0 | 0 | |
Accumulated amortization disposals | 0 | ||
Accumulated amortization transfers | 0 | ||
Accumulated amortization impairments | 0 | ||
Accumulated Depreciation, Ending | 0 | 0 | |
Property And Equipment Cost, Beginning | 704,000 | 2,528,000 | |
Disposal of transfers | (1,205,000) | (3,916,000) | |
Net Book Value | 35,000 | 704,000 | 704,000 |
Land and Buildings | |||
Additions | 269,000 | 0 | |
Disposal | 0 | ||
Business Acquisitions | 15,538,000 | ||
Impairments | (2,991) | ||
Property And Equipment Cost, Ending | 12,437,000 | 15,907,000 | 15,907,000 |
Accumulated Depreciation, Beginning | (980,000) | 0 | |
Depreciation | (2,085,000) | (132,000) | |
Accumulated amortization disposals | 0 | ||
Accumulated amortization transfers | 56 | ||
Accumulated amortization impairments | 1,194 | ||
Accumulated Depreciation, Ending | (1,815,000) | (132,000) | |
Property And Equipment Cost, Beginning | 15,907,000 | 0 | |
Disposal of transfers | 1,209,000 | 369,000 | |
Net Book Value | 10,621,000 | 15,775,000 | 15,775,000 |
Leasehold Improvements | |||
Additions | 0 | 81,000 | |
Disposal | 0 | ||
Business Acquisitions | 0 | ||
Impairments | 0 | ||
Property And Equipment Cost, Ending | 15,719,000 | 13,949,000 | 13,949,000 |
Accumulated Depreciation, Beginning | (132,000) | (634,000) | |
Depreciation | (183,000) | (346,000) | |
Accumulated amortization disposals | 0 | ||
Accumulated amortization transfers | 0 | ||
Accumulated amortization impairments | 0 | ||
Accumulated Depreciation, Ending | (315,000) | (980,000) | |
Property And Equipment Cost, Beginning | 13,949,000 | 10,799,000 | |
Disposal of transfers | (188,000) | 3,069,000 | |
Net Book Value | 15,404,000 | 12,970,000 | 12,970,000 |
Furniture and Fixtures | |||
Additions | 0 | 0 | |
Disposal | 0 | ||
Business Acquisitions | 0 | ||
Impairments | 0 | ||
Property And Equipment Cost, Ending | 50,000 | 50,000 | 50,000 |
Accumulated Depreciation, Beginning | (48,000) | (47,000) | |
Depreciation | (1,000) | (1,000) | |
Accumulated amortization disposals | 0 | ||
Accumulated amortization transfers | 0 | ||
Accumulated amortization impairments | 0 | ||
Accumulated Depreciation, Ending | (49,000) | (48,000) | |
Property And Equipment Cost, Beginning | 50,000 | 50,000 | |
Disposal of transfers | 0 | 0 | |
Net Book Value | 1,000 | 2,000 | 2,000 |
Equipment [Member] | |||
Additions | 3,415,000 | 770,000 | |
Disposal | 0 | ||
Business Acquisitions | 468,000 | ||
Impairments | 0 | ||
Property And Equipment Cost, Ending | 6,499,000 | 2,992,000 | 2,992,000 |
Accumulated Depreciation, Beginning | (618,000) | (427,000) | |
Depreciation | (880,000) | (191,000) | |
Accumulated amortization disposals | 0 | ||
Accumulated amortization transfers | 0 | ||
Accumulated amortization impairments | 0 | ||
Accumulated Depreciation, Ending | (1,498,000) | (618,000) | |
Property And Equipment Cost, Beginning | 2,992,000 | 1,276,000 | |
Disposal of transfers | 98,000 | 478,000 | |
Net Book Value | 5,001,000 | 2,374,000 | 2,374,000 |
Vehicles [Member] | |||
Additions | 0 | 67,000 | |
Disposal | (177) | ||
Business Acquisitions | 0 | ||
Impairments | 0 | ||
Property And Equipment Cost, Ending | 830,000 | 921,000 | 921,000 |
Accumulated Depreciation, Beginning | (566,000) | (411,000) | |
Depreciation | (118,000) | (155,000) | |
Accumulated amortization disposals | 132 | ||
Accumulated amortization transfers | (56) | ||
Accumulated amortization impairments | 0 | ||
Accumulated Depreciation, Ending | (608,000) | (566,000) | |
Property And Equipment Cost, Beginning | 921,000 | 854,000 | |
Disposal of transfers | 86,000 | 0 | |
Net Book Value | 222,000 | 355,000 | 355,000 |
Right of Use Assets | |||
Additions | 0 | 0 | |
Disposal | (122) | ||
Business Acquisitions | 0 | ||
Impairments | (4,327) | ||
Property And Equipment Cost, Ending | 37,081,000 | 41,530,000 | 41,530,000 |
Accumulated Depreciation, Beginning | 8,930,000 | (5,692,000) | |
Depreciation | (3,755,000) | (3,238,000) | |
Accumulated amortization disposals | 76 | ||
Accumulated amortization transfers | 0 | ||
Accumulated amortization impairments | 2,890 | ||
Accumulated Depreciation, Ending | (9,719,000) | 11,405,000 | |
Property And Equipment Cost, Beginning | 41,530,000 | 41,530,000 | |
Disposal of transfers | 0 | 0 | |
Net Book Value | $ 27,362,000 | $ 32,600,000 | $ 32,600,000 |
PROPERTY AND EQUIPMENT AND RI_4
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2021 | |
Depreciation | $ 7,022 | $ 4,063 | $ 4,063 |
Other Income Expense [Member] | |||
Depreciation | 608 | 587 | |
Cost of Goods Sold [Member] | |||
Depreciation | $ 6,292 | $ 2,336 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
GOODWILL AND INTANGIBLE ASSETS | |
Goodwill, beginning | $ 357 |
Additions | 0 |
Business Acquisitions | 0 |
Impairment | (357) |
Goodwill, ending | $ 0 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS (Details 1) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Definite life intangibles cost, beginning | $ 40,965 |
Net book value, ending balance | 42,202 |
Net book value, beginning balance | 40,756 |
Amortization | (354) |
Accumulated amortization, beginning | (209) |
Accumulated amortization, ending | (563) |
Purchase Agreement | 1,800 |
Business Acquisitions | 0 |
Impairment | (357) |
Definite life intangibles cost, ending | 42,765 |
Brands & Tradenames [Member] | |
Definite life intangibles cost, beginning | 37,707 |
Net book value, ending balance | 37,707 |
Net book value, beginning balance | 37,707 |
Amortization | 0 |
Accumulated amortization, beginning | 0 |
Accumulated amortization, ending | 0 |
Purchase Agreement | 0 |
Business Acquisitions | 0 |
Definite life intangibles cost, ending | 37,707 |
Technology/KnowHow | |
Definite life intangibles cost, beginning | 3,258 |
Net book value, ending balance | 2,723 |
Net book value, beginning balance | 3,049 |
Amortization | (326) |
Accumulated amortization, beginning | (209) |
Accumulated amortization, ending | (535) |
Purchase Agreement | 0 |
Definite life intangibles cost, ending | 3,258 |
Acquired Purchase Rights [Member] | |
Definite life intangibles cost, beginning | 0 |
Net book value, ending balance | 1,772 |
Net book value, beginning balance | 0 |
Amortization | (28) |
Accumulated amortization, beginning | 0 |
Accumulated amortization, ending | (28) |
Purchase Agreement | 1,800 |
Additions | 1,800 |
Definite life intangibles cost, ending | $ 0 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS (Details Narrative) - USD ($) shares in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Amortization | $ (354) | $ 177 | |
Impairment of goodwill | $ 357 | $ 0 | $ 357,000 |
Percentage of issued and outstanding shares | 15% | ||
Subordinate voting shares issued | 10 | ||
Fair market value of shares | $ 1,800 | ||
Other Intangible Assets [Member] | |||
Amortization | $ 346 |
SHAREHOLDERS EQUITY (Details)
SHAREHOLDERS EQUITY (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2022 shares | |
Subordinate Voting Share [Member] | |
Beginning Balance, Shares | 111,806 |
Issuance Of Vested Restricted Stock Units | 364 |
Issuance of shares associated with asset acquisition | 10,000 |
Shares re-purchased | (400) |
Ending Balance, Shares | 121,770 |
Shares re-purchased | 400 |
Super Voting Share [Member] | |
Beginning Balance, Shares | 203 |
Ending Balance, Shares | 203 |
SHAREHOLDERS EQUITY (Details 1)
SHAREHOLDERS EQUITY (Details 1) shares in Thousands, $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) shares | |
SHAREHOLDERS EQUITY | |
Warrants, Beginning Balance | shares | 101,906 |
Warrants issued in conjunction with convertible debenture offering | $ | $ 72,081 |
Warrants expired | $ | $ (552) |
Warrants, Ending Balance | shares | 173,435 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Total short-term debt | $ 21,680 | $ 221 |
Total long-term debt | 8,716 | 22,897 |
Total Indebtedness | 30,396 | 23,118 |
Convertible Debenture | ||
Long-term Debt | 21,398 | 0 |
Vehicle Loans | ||
Short-term Debt | 15 | 50 |
Long-term Debt | 3 | 28 |
Mortgage Payable [Member] | ||
Short-term Debt | 257 | 105 |
Long-term Debt | 8,713 | 8,857 |
Note Payable | ||
Short-term Debt | $ 10 | $ 66 |
DEBT (Details 1)
DEBT (Details 1) $ in Thousands | Dec. 31, 2022 USD ($) |
DEBT | |
2023 | $ 22,440 |
2024 | 291 |
2025 | 330 |
2026 | 8,390 |
Total Debt Obligations | $ 31,451 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Net Of Deferred Financing Costs | $ 759 | $ 1,477 |
Vehicle Loans | ||
Weighted average interest rate | 6.40% | 7.80% |
Mortgage Payable [Member] | ||
Weighted average interest rate | 12.50% | 12.50% |
Net Of Deferred Financing Costs | $ 296 | $ 398 |
LEASES (Details)
LEASES (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
LEASES | |
Lease Liability, Beginning | $ 36,496,000 |
Lease Principal Payments | (2,443,000) |
Lease Settlement | 54,000 |
Lease Liability, ending | $ 33,999 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
LEASES | ||
Amortization Of Leased Assets | $ 3,755 | $ 3,238 |
Interest On Lease Liabilities | 2,219 | 2,406 |
Total | $ 5,974 | $ 5,644 |
LEASES (Details 2)
LEASES (Details 2) $ in Thousands | Dec. 31, 2022 USD ($) |
LEASES | |
2023 | $ 4,666 |
2024 | 4,076 |
2025 | 3,267 |
2026 | 3,209 |
2027 - And Beyond | 37,260 |
Total lease payments | 52,478 |
Less Imputed Interest | (18,479) |
Total | $ 33,999 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 30, 2021 | Dec. 31, 2021 | |
LEASES | |||
Weighted Average Remaining Lease Term | 14 years 7 months 6 days | 17 years 2 months 12 days | |
Weighted Average Discount Rate | 6% | 6% |
SHARE BASED COMPENSATION (Detai
SHARE BASED COMPENSATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based compensation expense | $ 564 | $ 1,355 |
General And Administrative Expense [Member] | ||
Share-based compensation expense | 564 | 1,355 |
Cost of Goods Sold [Member] | ||
Share-based compensation expense | $ 0 | $ 0 |
SHARE BASED COMPENSATION (Det_2
SHARE BASED COMPENSATION (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SHARE BASED COMPENSATION | ||
Stock Options Outstanding, Beginning | 6,598,000 | |
Stock Options, Granted | 6,680,000 | |
Stock Options, Exercised | (64) | |
Stock Options, Cancelled | (3,145,000) | |
Stock Options Outstanding, Ending | 10,069,000 | 6,598,000 |
Stock Options Exercisable | 3,764,000 | |
Stock Options Vested and expected | 10,069,000 | |
Weighted-average Exercise Price Outstanding, Beginning | $ 0.99 | |
Weighted-average Exercise Price, Granted | 0.21 | |
Weighted-average Exercise Price, Exercised | 1.02 | |
Weighted-average Exercise Price, Cancelled | 0.99 | |
Weighted-average Exercise Price Outstanding, Ending | 0.47 | $ 0.99 |
Weighted-average Exercise Price Exercisable | 0.71 | |
Weighted-average Exercise Price Vested and expected | $ 0.47 | |
Weighted-average Remaining Contactual Life Outstanding, Beginning Balance | 4 years 3 months 18 days | 4 years 3 months 18 days |
Weighted-average Remaining Contactual Life Outstanding, Ending Balance | 4 years 7 months 6 days | 4 years 7 months 6 days |
Weighted-average Remaining Contactual Life, Exercisable | 3 years 8 months 12 days | |
Weighted-average Remaining Contactual Life, Vested And Expected To Vest | 4 years 7 months 6 days | |
Aggregate Intrinsic Value Outstanding, Beginning | $ 0 | |
Aggregate Intrinsic Value Outstanding, Ending | 0 | $ 0 |
Aggregate Intrinsic Value, Granted | 0 | |
Aggregate Intrinsic Value, Exercised | 0 | |
Aggregate Intrinsic Value, Expired | 0 | |
Aggregate Intrinsic Value, Cancelled | 0 | |
Aggregate Intrinsic Value vested and expected | $ 0 |
SHARE BASED COMPENSATION (Det_3
SHARE BASED COMPENSATION (Details 2) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
SHARE BASED COMPENSATION | |
RSUs Outstanding, Beginning Balance | shares | 642 |
RSUs Vested | shares | (270,000) |
RSUs Cancelled | shares | (164,000) |
RSUs Outstanding, Ending Balance | shares | 208,000 |
Weighted-average Fair Value Outstanding, Beginning Balance | $ 1.18 |
Weighted-average Fair Value Granted | 0 |
Weighted-average Fair Value Vested | 1.28 |
Weighted-average Fair Value Cancelled | 1.10 |
Weighted-average Fair Value Outstanding, Ending Balance | $ 1.10 |
SHARE BASED COMPENSATION (Det_4
SHARE BASED COMPENSATION (Details 3) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Option [Member] | ||
Expected Volatility | 50% | 50% |
Dividend Yield | 0% | 0% |
Risk-free Interest Rate | 2.48% | 0.87% |
Expected Term In Years | 3 years 10 months 24 days | 4 years 3 months 18 days |
Restricted Stock Units (RSUs) [Member] | ||
Expected Volatility | 50% | |
Dividend Yield | 0% | |
Risk-free Interest Rate | 0.71% | |
Expected Term In Years | 8 months 26 days |
SHARE BASED COMPENSATION (Det_5
SHARE BASED COMPENSATION (Details Narrative) $ / shares in Units, $ in Thousands, shares in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
Proceeds From Issuance Of Stock Options | shares | 13.2 |
Stock Option For Future Grant | shares | 3.6 |
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 | $ 0.21 |
Unrecognized Compensation Cost Related To Nonvested Restricted Stock Units | $ | $ 498 |
Vesting Period | 1 year 3 months 18 days |
Restricted Stock Units (RSUs) [Member] | |
Unrecognized Compensation Cost Related To Nonvested Restricted Stock Units | $ | $ 154 |
Vesting Period | 12 months |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current | ||
Federal | $ 0 | $ 0 |
State | 191 | 213 |
Total Current | 191 | 213 |
Deferred tax benefit | ||
Federal | (1,987) | (1,528) |
State | (15,293) | (13,339) |
Total deferred tax benefit | (17,280) | (14,867) |
Valuation allowance | 17,280 | 14,867 |
Income tax expense | $ 191 | $ 213 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
INCOME TAXES | ||
Net operating loss carryforwards | $ 17,038 | $ 13,192 |
Accruals and reserves | 0 | 0 |
Depreciation | 0 | 0 |
Other | 0 | 0 |
Valuation allowance | (17,038) | (13,192) |
Total deferred tax assets | 0 | 0 |
Accruals and reserves | 0 | 0 |
Share-based compensation | 0 | 0 |
Total deferred tax liabilities | 0 | 0 |
Net deferred tax liabilities | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Provision For Income Taxes | $ 191 | $ 213 |
Effective Tax Rate | 0.78% | 0.87% |
NET INCOME (LOSS) PER SHARE (De
NET INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Net loss per share: | ||
Net income (loss) | $ (24,564) | $ (24,677) |
Net Loss Per Share: | ||
Basic | $ (0.22) | $ (0.27) |
Diluted | $ (0.22) | $ (0.27) |
Weighted Average Shares Outstanding: | ||
Basic | 113,183 | 90,746 |
Diluted | 113,183 | 90,746 |
Weighted average potentially diluted shares: | ||
Basic Shares | 113,183 | 90,746 |
Total Weighted Average Potentially Diluted Shares | 113,183 | 90,746 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Remaining purchase commitment | $ 2,200 |
Due date of commitment | 2023 |
Total Remaining purchase commitment | $ 2,900 |
September 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 | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
General and administrative | $ 9,553 | $ 13,907 |
Goodwill impairment | ||
General and administrative | 0 | 357 |
Salaries and Benefits | ||
General and administrative | 5,286 | 6,234 |
Professional Fees | ||
General and administrative | 465 | 1,924 |
Share-based Compensation | ||
General and administrative | 564 | 1,355 |
Administrative | ||
General and administrative | 1,894 | 2,580 |
Insurance | ||
General and administrative | $ 1,344 | $ 1,457 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transactions | $ 223,000 | $ 93,000 |
Total sales | 274,000 | 117,000 |
Total payment | $ 10,000 | |
Lease term | 12 months | |
OMG | ||
Related Party Transactions | $ 36,000 | $ 0 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] shares in Millions | Mar. 15, 2023 shares |
Warrants subordinate voting shares | 212 |
Warrants to acquire share | 212 |
BrandCo [Member] | |
Acquired shares | 100 |
Share acquire description | the Company’s subordinate voting shares representing in the aggregate shares of the Company equal to no more than 49% of the then issued and outstanding number of subordinate voting shares; |
Revenue percentage receive | 15% |