Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 09, 2023 | |
Cover [Abstract] | ||
Entity Registrant Name | LOWELL FARMS INC. | |
Entity Central Index Key | 0001838128 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Jun. 30, 2023 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
Entity Ex Transition Period | false | |
Entity Common Stock Shares Outstanding | 112,761,904 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-56254 | |
Entity Tax Identification Number | 87-3037317 | |
Entity Interactive Data Current | Yes | |
Entity Address Address Line 1 | 19 Quail Run Circle - Suite B | |
Entity Address City Or Town | Salinas | |
Entity Address State Or Province | CA | |
Entity Address Postal Zip Code | 93907 | |
City Area Code | 831 | |
Local Phone Number | 998-8214 | |
Entity Incorporation State Country Code | Z4 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 8,422 | $ 1,098 |
Accounts receivable - net of allowance for doubtful accounts of $959 and $1,053 at June 30, 2023 and December 31, 2022, respectively. | 2,683 | 4,163 |
Inventory | 9,509 | 10,779 |
Prepaid expenses and other current assets | 736 | 1,522 |
Total current assets | 21,350 | 17,562 |
Property and equipment, net | 14,772 | 31,284 |
Right of use assets, net | 54,142 | 27,362 |
Other intangibles, net | 41,999 | 42,202 |
Other assets | 672 | 413 |
Total assets | 132,935 | 118,823 |
Current liabilities: | ||
Accounts payable | 3,074 | 2,307 |
Accrued payroll and benefits | 298 | 350 |
Notes payable, current portion | 8 | 282 |
Lease obligation, current portion | 1,592 | 2,659 |
Convertible debentures | 21,854 | 21,398 |
Other current liabilities | 3,770 | 3,654 |
Total current liabilities | 30,596 | 30,650 |
Notes payable | 1 | 3 |
Lease obligation | 58,233 | 31,340 |
Mortgage obligation | 0 | 8,713 |
Total liabilities | 88,830 | 70,706 |
STOCKHOLDERS' EQUITY | ||
Share capital | 191,843 | 191,742 |
Accumulated deficit | (147,738) | (143,625) |
Total stockholders' equity | 44,105 | 48,117 |
Total liabilities and stockholders' equity | $ 132,935 | $ 118,823 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance For Doubtful Accounts | $ 959 | $ 1,053 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (unaudited) | ||||
Net revenue | $ 7,032 | $ 13,181 | $ 14,558 | $ 25,589 |
Cost of goods sold | 7,373 | 11,687 | 14,767 | 22,522 |
Gross profit (loss) | (341) | 1,494 | (209) | 3,067 |
Operating expenses | ||||
General and administrative | 1,561 | 2,649 | 3,184 | 4,813 |
Sales and marketing | 638 | 1,747 | 1,373 | 3,508 |
Depreciation and amortization | 108 | 123 | 215 | 231 |
Total operating expenses | 2,307 | 4,519 | 4,772 | 8,552 |
Loss from operations | (2,648) | (3,025) | (4,981) | (5,485) |
Other income/(expense) | ||||
Other income (expense) | 3,803 | (156) | 3,805 | (295) |
Unrealized change in fair value of investment | (27) | (36) | (28) | (107) |
Interest expense | (1,151) | (1,337) | (2,810) | (2,649) |
Total other income (expense) | 2,625 | (1,529) | 967 | (3,051) |
Loss before provision for income taxes | (23) | (4,554) | (4,014) | (8,536) |
Provision for income taxes | 50 | 60 | 99 | 135 |
Net loss | $ (73) | $ (4,614) | $ (4,113) | $ (8,671) |
Net loss per share: | ||||
Basic | $ (0.01) | $ (0.04) | $ (0.03) | $ (0.08) |
Diluted | $ (0.01) | $ (0.04) | $ (0.03) | $ (0.08) |
Weighted average shares outstanding: | ||||
Basic | 121,770 | 112,026 | 121,770 | 111,981 |
Diluted | 121,770 | 112,026 | 121,770 | 111,981 |
CONDENDSED CONSOLIDATED STATEME
CONDENDSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) (Unaudited) - USD ($) $ in Thousands | Total | Subordinate Voting Shares | Super Voting Shares | Share Capital | Accumulated Deficit |
Balance, shares at Dec. 31, 2021 | 111,806 | 203 | |||
Balance, amount at Dec. 31, 2021 | $ 70,307 | $ 189,368 | $ (119,061) | ||
Net loss | (8,671) | 0 | (8,671) | ||
Share-based compensation expense, shares | 220 | ||||
Share-based compensation expense, amount | 318 | 318 | 0 | ||
Balance, shares at Jun. 30, 2022 | 112,026 | 203 | |||
Balance, amount at Jun. 30, 2022 | 61,954 | 189,686 | (127,732) | ||
Balance, shares at Mar. 31, 2022 | 112,026 | 203 | |||
Balance, amount at Mar. 31, 2022 | 66,411 | 189,529 | (123,118) | ||
Net loss | (4,614) | 0 | (4,614) | ||
Share-based compensation expense, amount | 157 | 157 | 0 | ||
Balance, shares at Jun. 30, 2022 | 112,026 | 203 | |||
Balance, amount at Jun. 30, 2022 | 61,954 | 189,686 | (127,732) | ||
Balance, shares at Dec. 31, 2022 | 121,770 | 203 | |||
Balance, amount at Dec. 31, 2022 | 48,117 | 191,742 | (143,625) | ||
Net loss | (4,113) | 0 | (4,113) | ||
Share-based compensation expense, amount | 101 | 101 | 0 | ||
Balance, shares at Jun. 30, 2023 | 121,770 | 203 | |||
Balance, amount at Jun. 30, 2023 | 44,105 | 191,843 | (147,738) | ||
Balance, shares at Mar. 31, 2023 | 121,770 | 203 | |||
Balance, amount at Mar. 31, 2023 | 44,137 | 191,802 | (147,665) | ||
Net loss | (73) | 0 | (73) | ||
Share-based compensation expense, amount | 41 | 41 | 0 | ||
Balance, shares at Jun. 30, 2023 | 121,770 | 203 | |||
Balance, amount at Jun. 30, 2023 | $ 44,105 | $ 191,843 | $ (147,738) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CASH FLOW FROM OPERATING ACTIVITIES | ||
Net loss | $ (4,113) | $ (8,671) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,644 | 3,433 |
Amortization of debt issuance costs | 484 | 451 |
Share-based compensation expense | 101 | 318 |
Provision for doubtful accounts | 116 | 459 |
Gain on sale leaseback | (3,004) | 0 |
Gain on lease settlement | (880) | 0 |
Loss on sale of assets | 0 | 8 |
Unrealized loss on change in fair value of investments | 28 | 107 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,364 | 1,723 |
Inventory | 1,270 | (1,587) |
Prepaid expenses and other current assets | 466 | (904) |
Other assets | (387) | 0 |
Accounts payable and accrued expenses | 1,488 | 1,277 |
Net cash used in operating activities | (423) | (3,386) |
CASH FLOW FROM INVESTING ACTIVITIES | ||
Proceeds from asset sales | 0 | 5 |
Purchases of property and equipment | (19) | (1,030) |
Net cash used in investing activities | (19) | (1,025) |
CASH FLOW FROM FINANCING ACTIVITIES | ||
Proceeds from sale leaseback | 8,991 | |
Principal payments on lease obligations | (1,142) | (1,196) |
Payments on notes payable | (83) | (75) |
Net cash used in financing activities | 7,766 | (1,271) |
Change in cash and cash equivalents | 7,324 | (5,682) |
Cash and cash equivalents-beginning of year | 1,098 | 7,887 |
Cash, cash equivalents -end of period | 8,422 | 2,205 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid during the period for interest | 1,821 | 2,655 |
Cash paid during the period for income taxes | 87 | 60 |
OTHER NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Purchase of property and equipment not yet paid for | $ 0 | $ 58 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis Of Presentation And Summary Of Significant Accounting Policies | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The interim unaudited condensed consolidated financial statements included herein have been prepared by Lowell Farms Inc. (the “Company” or “Lowell”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. The interim unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary (consisting only of normal recurring adjustments), to present a fair statement of results for the interim periods presented. The operating results for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Form 10-K filed for the year ended December 31, 2022. There have been no material changes to our significant accounting policies as of and for the three and six months ended June 30, 2023. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all intercompany balances and transactions. The condensed consolidated balance sheet at December 31, 2022, has been derived from the audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. All dollar amounts in the notes to condensed consolidated financial statements are expressed in thousands of United States dollars (“$” or “US$”), unless otherwise indicated. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include allowance for doubtful accounts and credit losses, carrying value of inventory, revenue recognition, accounting for stock-based compensation expense, and income taxes. Actual results could differ from those estimates. The global COVID-19 pandemic impacted the operations and purchasing decisions of companies worldwide. It also created significant uncertainty in the global economy. The Company has undertaken measures to protect its employees, partners, customers, and vendors. To date, the Company has been able to provide uninterrupted access to its products and services, including certain employees that are working remotely, and its pre-existing infrastructure that supports secure access to the Company’s internal systems. If the COVID-19 pandemic were to have an increased forward-looking 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. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require updates to the Company’s estimates and judgments or revisions to the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements. Recently Adopted Accounting Standards In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021. We evaluated the impact of ASU 2020-06, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2022 and it did not have a material impact on our consolidated financial statements. 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. We evaluated the impact of ASU 2021-08 on our consolidated financial statements and it did not have a material impact. No other recently issued accounting pronouncements had or are expected to have a material impact on our condensed consolidated financial statements. |
PREPAID AND OTHER CURRENT ASSET
PREPAID AND OTHER CURRENT ASSETS | 6 Months Ended |
Jun. 30, 2023 | |
PREPAID AND OTHER CURRENT ASSETS | |
Prepaid And Other Current Assets | 2. PREPAID AND OTHER CURRENT ASSETS Prepaid and other current assets were comprised of the following items: June 30, December 31, (in thousands) 2023 2022 Deposits $ 92 $ 595 Insurance 206 235 Supplier advances 120 375 Interest and taxes - 69 Licenses and payments 292 146 Other 26 102 Total prepaid and other current assets $ 736 $ 1,522 |
INVENTORY
INVENTORY | 6 Months Ended |
Jun. 30, 2023 | |
INVENTORY | |
Inventory | 3. INVENTORY Inventory was comprised of the following items: June 30, December 31, (in thousands) 2023 2022 Raw materials $ 6,278 $ 7,431 Work in process 461 940 Finished goods 2,770 2,408 Total inventory $ 9,509 $ 10,779 |
Other current liabilities
Other current liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Other current liabilities | |
Other Current Liabilities | 4. Other current liabilities Other current liabilities were comprised of the following items: June 30, December 31, (in thousands) 2023 2022 Interest and tax accrual $ 1,241 $ 921 Equipment purchase accrual 724 724 ERC commission accrual 441 441 Excise and cannabis tax 238 948 Accrued discounts and promotions 133 97 Insurance and professional fee accrual 196 158 Third-party brand distribution accrual 274 17 Accrued rent 184 - Other 339 348 Total other current liabilities $ 3,770 $ 3,654 On July 26, 2022, subsidiaries of the Company entered into an agreement with an institutional investor pursuant to which the investor purchased a participation (“Transferred Interests”) in all rights to payment from the United States Internal Revenue Service in respect of the Company’s employee retention credits for the first and second quarters of 2021 (the “ERC Claim”). The purchase price paid for the derivative payment rights was $2.45 million, which was paid in immediately available funds. For the 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. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2023 | |
PROPERTY AND EQUIPMENT | |
Property And Equipment | 5. PROPERTY AND EQUIPMENT A reconciliation of the beginning and ending balances of property and equipment and accumulated depreciation during the six months ended June 30, 2023 and property and equipment, net as of December 31, 2022, 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, 2022 $ 15,719 $ 12,437 $ 50 $ 6,499 $ 830 $ 35 $ 37,081 $ 72,651 Additions - 29 - (10 ) - - 29,647 29,666 Disposals (15,719 ) (203 ) - - - - - (15,922 ) Lease remeasurement - - - - - - (1,477 ) (1,477 ) Balance – June 30, 2023 $ - $ 12,263 $ 50 $ 6,489 $ 830 $ 35 $ 65,251 $ 84,918 Accumulated Depreciation Balance - December 31, 2022 $ (315 ) $ (1,815 ) $ (49 ) $ (1,498 ) $ (608 ) $ - $ (9,719 ) $ (14,004 ) Depreciation (71 ) (426 ) - (481 ) (73 ) - (1,390 ) (2,441 ) Disposals 386 55 - - - - - 441 Balance - June 30, 2023 $ - $ (2,186 ) $ (49 ) $ (1,979 ) $ (681 ) $ - $ (11,109 ) $ (16,004 ) Net Book Value - June 30, 2023 $ - $ 10,077 $ 1 $ 4,510 $ 149 $ 35 $ 54,142 $ 68,914 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 $1,346 and $1,841 were recorded for the three months ended June 30, 2023 and 2022, respectively, of which $1,318 and $1,456 respectively, were included in cost of goods sold. Depreciation expense of $0 and $171 was also recorded in other income (expense) for the three months ended June 30, 2023 and 2022, respectively. Depreciation expense of $2,441 and $3,270 were recorded for the six months ended June 30, 2023 and 2022, respectively, of which $2,387 and $2,888 respectively, were included in cost of goods sold. Depreciation expense of $0 and $314 was also recorded in other income (expense) for the six months ended June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023, the Company renegotiated the monthly payments on certain leases for its facilities. These revised leases resulted in a remeasurement of both the right of use asset and lease liability of $1,477. During the three months ended June 30, 2023, the Company completed a sale leaseback of the Company’s drying and midstream processing facility. As a result of the transaction, the Company disposed of buildings, land and leasehold improvements with a net book value of $15,481. The Company additionally recorded a right of use asset and liability of $29,647 to reflect the value of the leased property. |
Other Intangible Assets
Other Intangible Assets | 6 Months Ended |
Jun. 30, 2023 | |
Other Intangible Assets | |
Other Intangible Assets | 6. Other Intangible Assets A reconciliation of the beginning and ending balances of intangible assets and accumulated amortization during the six months ended June 30, 2023 and intangible assets, net as of December 31, 2022, are as follows: Definite Life Intangibles Technology/ Acquired Indefinite Life Intangibles Brands & (in thousands) Know How Purchase Rights Tradenames Total Costs Balance-December 31, 2022 $ 3,258 $ 1,800 $ 37,707 $ 42,765 Business acquisition - - - - Agreement termination - - - - Balance-June 30, 2023 $ 3,258 $ 1,800 $ 37,707 $ 42,765 Accumulated Amortization Balance-December 31, 2022 $ (535 ) $ (28 ) $ - $ (563 ) Amortization (162 ) (41 ) - (203 ) Balance-June 30, 2023 $ (697 ) $ (69 ) $ - $ (766 ) Net Book Value December 31, 2022 $ 2,723 $ 1,772 $ 37,707 $ 42,202 Net Book Value June 30, 2023 $ 2,561 $ 1,731 $ 37,707 $ 41,999 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 $203 and $163 for the six months ended June 30, 2023, and 2022, respectively. The Company estimates that amortization expense for our existing other intangible assets will average $399 annually for the next five fiscal years. Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, changes in useful lives or other relevant factors or changes. |
SHAREHOLDERS EQUITY
SHAREHOLDERS EQUITY | 6 Months Ended |
Jun. 30, 2023 | |
SHAREHOLDERS EQUITY | |
Shareholders Equity | 7. SHAREHOLDERS’ EQUITY Shares Outstanding The table below details the change in Company shares outstanding by class during the six months ended June 30, 2023: Subordinate Super (in thousands) Voting Shares Voting Shares Balance-December 31, 2022 121,770 203 Balance-June 30, 2023 121,770 203 Warrants A reconciliation of the beginning and ending balances of warrants outstanding is as follows: (in thousands) Balance-December 31, 2022 173,435 Balance-June 30, 2023 173,435 |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2023 | |
DEBT | |
Debt | 8. DEBT Debt at June 30, 2023 and December 31, 2022, was comprised of the following: June 30, December 31, (in thousands) 2023 2022 Current portion of long-term debt Vehicle loans (1) $ 8 $ 15 Mortgage payable (2) - 257 Note payable - 10 Convertible debenture (3) 21,854 21,398 Total short-term debt 21,862 21,680 Long-term debt, net Vehicle loans (1) 1 3 Mortgage payable (2) - 8,713 Total long-term debt 1 8,716 Total Indebtedness $ 21,863 $ 30,396 ______________________ (1) Primarily fixed term loans on transportation vehicles. Weighted average interest rate at June 30, 2023 and December 31, 2022 was 6.3% and 6.4%, respectively. (2) Mortgage payable associated with the acquired processing facility. Weighted average interest rate at December 31, 2022 was 12.5%,. Net of deferred financing costs as of December 31, 2022 $296. (3) Net of deferred financing costs at June 30, 2023 and December 31, 2022 of $303 and $759, respectively. Stated maturities of debt obligations are as follows as of June 30, 2023: June 30, (in thousands) 2023 Balance of 2023 $ 22,166 2024 1 Total debt obligations $ 22,167 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2023 | |
LEASES | |
Leases | 9. LEASES A reconciliation of lease obligations for the six months ended June 30, 2023, is as follows: (in thousands) Lease obligation December 31, 2022 $ 33,999 Sale leaseback additions 29,647 Lease principal payments (1,142 ) Lease remeasurement (1,477 ) Lease settlement (1,202 ) June 30, 2023 $ 59,825 During the three months ended June 30, 2023, the Company completed a sale leaseback of the Company’s drying and midstream processing facility. As a result of the transaction, the Company recorded a lease liability of $29,647. During the three months ended June 30, 2023, the Company disposed of $1,202 of lease liabilities related to its Los Angeles distribution facility. In conjunction with the settlement, net of closing entries, the Company negotiated a $300 payment and recognized a $880 gain in other income on the consolidated statement of income. All extension options that are reasonably certain to be exercised have been included in the measurement of lease obligations. The Company reassesses the likelihood of extension option exercise if there is a significant event or change in circumstances within its control. Current and long-term portions of lease obligations at June 30, 2023 and December 31, 2022, are as follows: June 30, December 31, (in thousands) 2023 2022 Lease obligation, current portion $ 1,592 $ 2,659 Lease obligation, long-term portion 58,233 31,340 Total $ 59,825 $ 33,999 The key assumptions used in accounting for leases as of June 30, 2023 were a weighted average remaining lease term of 17.8 years and a weighted average discount rate of 7.0%. 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 6.0%. The components of lease expense for the three and six months ended June 30, 2023 and 2022, are as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2023 2022 2023 2022 Amortization of leased assets (1) $ 817 $ 840 $ 1,390 $ 1,657 Interest on lease liabilities (2) 482 561 982 1,134 Total $ 1,299 $ 1,401 $ 2,372 $ 2,791 1) Included in cost of goods sold, general and administrative and other income/expense in the Condensed Consolidated Statements of Income (Loss). 2) Included in interest expense in the Condensed Consolidated Statements of Income (Loss). The future lease payments with initial remaining terms in excess of one year as of June 30, 2023 were as follows: (in thousands) June 30, 2023 Balance of 2023 $ 2,923 2024 5,541 2025 5,559 2026 5,587 2027 and beyond 90,806 Total lease payments 110,416 Less imputed interest (50,591 ) Total $ 59,825 |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2023 | |
SHARE BASED COMPENSATION | |
Share-based Compensation | 10. SHARE-BASED COMPENSATION During 2019 the Company’s Board of Directors (the “Board”), adopted the 2019 Stock and Incentive Plan (the “Plan”), which was amended in April 2020, February 2021 and June 2023. The Plan permits the issuance of stock options, stock appreciation rights, stock awards, share units, performance shares, performance units and other stock-based awards. On June 22, 2023 at the Annual General Meeting of the Shareholders, the total number of shares was increased to 23.2 million shares from 13.2 million shares authorized to be issued under the Plan and as of June 30, 2023, 16.2 million shares are available for future grants. The Plan provides for the grant of options as either non-statutory stock options or incentive stock options and restricted stock units to employees, officers, directors, and consultants of the Company to attract and retain persons of ability to perform services for the Company and to reward such individuals who contribute to the achievement by the Company of its economic objectives. The awards granted generally vest in 25% increments over a four-year period and option awards expire 6 years from grant date. The Plan is administered by the Board or a committee appointed by the Board, which determines the persons to whom the awards will be granted, the type of awards to be granted, the number of awards to be granted, and the specific terms of each grant, including the vesting thereof, subject to the provisions of the Plan. No grants were made to employees during the three and six months ended June 30, 2023. During the six months ended June 30, 2022, the Company granted shares to certain employees as compensation for services. These shares were accounted for in accordance with ASC 718 - Compensation - Stock Compensation. The Company amortizes awards over the service period and until awards are fully vested. For the three and six months ended June 30, 2023 and 2022, share-based compensation expense was as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2023 2022 2023 2022 Cost of goods sold $ - $ - $ - $ - General and administrative expense 41 157 101 318 Total share-based compensation $ 41 $ 157 $ 101 $ 318 The following table summarizes the status of stock option grants and unvested awards at and for the six months ended June 30, 2023: Stock Weighted-Average Weighted Average Remaining Aggregate (in thousands except per share amounts) Options Exercise Price Contractual Life Intrinsic Value Outstanding-December 31, 2022 10,069 $ 0.47 4.6 $ - Granted - - - - Exercised - - - - Cancelled (2,663 ) 0.44 - - Outstanding-June 30, 2023 7,406 $ 0.48 4.1 - Exercisable-June 30, 2023 3,761 $ 0.67 3.4 $ - Vested and expected to vest-June 30, 2023 7,406 $ 0.48 4.1 $ - The weighted-average fair value of options granted during the three and six months ended June 30, 2022, estimated as of the grant date were $0.31. As of June 30, 2023, there was $287 of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a remaining weighted-average vesting period of 1.2 years. The following table summarizes the status of restricted stock unit (“RSU”) grants and unvested awards at and for the six months ended June 30, 2023: Weighted-Average (in thousands) RSUs Fair Value Outstanding-December 31, 2022 208 $ 1.1 Granted - - Vested - - Cancelled (87 ) 1.02 Outstanding-June 30, 2023 121 $ 1.1 As of June 30, 2023, there was $37 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 4.5 months. For the three and six months ended June 30, 2022, the fair value of the stock options granted were determined using the Black-Scholes option-pricing model with the following weighted average assumptions at the time of grant. No options were granted for the three and six months ended June 30, 2023. No RSUs were granted for the three and six months ended June 30, 2023 or June 30, 2022. Stock Options Six Months Ended June 30, 2022 Expected volatility 50 % Dividend yield 0 % Risk-free interest rate 1.0 % Expected term in years 4.50 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2023 | |
INCOME TAXES | |
Income Taxes | 11. INCOME TAXES Coronavirus Aid, Relief and Economic Security Act On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and signed into law in response to the market volatility and instability resulting from the COVID-19 pandemic. It includes a significant number of tax provisions and lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the “2017 Act”). The changes are mainly related to: (1) the business interest expense disallowance rules for 2019 and 2020; (2) net operating loss rules; (3) charitable contribution limitations; (4) employee retention credit; and (5) the realization of corporate alternative minimum tax credits. The Company continues to assess the impact and future implication of these provisions; however, it does not anticipate any amounts that could give rise to a material impact to the overall consolidated financial statements. The provision for income tax expense for the three months ended June 30, 2023, was $50, representing an effective tax rate of -217%, compared to an income tax expense of $60 for the three months ended June 30, 2022, representing an effective tax rate of -1.32%. The provision for income tax expense for the six months ended June 30, 2023, was $99, representing an effective tax rate of -2.47%, compared to an income tax expense of $135 for the six months ended June 30, 2022, representing an effective tax rate of -1.58%. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 6 Months Ended |
Jun. 30, 2023 | |
NET LOSS PER SHARE | |
Net Loss Per Share | 12. NET 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 as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands except per share amounts) 2023 2022 2023 2022 Net loss $ (73 ) $ (4,614 ) $ (4,113 ) $ (8,671 ) Net loss per share: Basic $ (0.01 ) $ (0.04 ) $ (0.03 ) $ (0.08 ) Diluted $ (0.01 ) $ (0.04 ) $ (0.03 ) $ (0.08 ) Weighted average shares outstanding: Basic 121,770 112,026 121,770 111,981 Diluted 121,770 112,026 121,770 111,981 Weighted average potentially diluted shares (1): Basic shares 121,770 112,026 121,770 111,981 Total weighted average potentially diluted shares: 121,770 112,026 121,770 111,981 (1) For the above net loss periods, the inclusion of options, warrants, convertible debentures and restricted stock units in the calculation of diluted earnings per share would be anti-dilutive, and accordingly, were excluded from the diluted loss per share calculation. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2023 | |
FAIR VALUE MEASUREMENTS | |
Fair Value Measurements | 13. FAIR VALUE MEASUREMENTS Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. An asset’s or liability’s level is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are valued and disclosed in one of the following three levels of the valuation hierarchy: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions. At June 30, 2023 and December 31, 2022 the carrying value of cash and cash equivalents, accounts receivable, prepaid expense and other current assets, accounts payable and other current liabilities approximate fair value due to the short-term nature of such instruments. The carrying value of the Company’s debt approximates fair value based on current market rates (Level 2). Nonrecurring fair value measurements The Company uses fair value measures when determining assets and liabilities acquired in an acquisition as described above in the Notes to Condensed Consolidated Financial Statements, which are considered a Level 3 measurement. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2023 | |
Commitments And Contingencies Disclosure Abstract | |
Commitments And Contingencies | 14. COMMITMENTS AND CONTINGENCIES Commitments As of June 30, 2023, the Company has entered into purchase commitments for additional manufacturing equipment. Of the total remaining purchase commitment of $2.9 million, approximately $0.7 million 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 June 30, 2023, 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 June 30, 2023, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations. There are also no proceedings in which any of the Company’s directors, officers or affiliates are an adverse party or have a material interest adverse to the Company’s interest. |
GENERAL AND ADMINISTRATIVE EXPE
GENERAL AND ADMINISTRATIVE EXPENSES | 6 Months Ended |
Jun. 30, 2023 | |
GENERAL AND ADMINISTRATIVE EXPENSES | |
General And Administrative Expenses | 15. GENERAL AND ADMINISTRATIVE EXPENSES For the six months ended June 30, 2023 and 2022, general and administrative expenses were comprised of: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2023 2022 2023 2022 Salaries and benefits $ 757 $ 1,488 $ 1,686 $ 2,458 Professional fees 364 263 527 522 Share-based compensation 41 157 101 318 Insurance 253 357 524 704 Administrative 146 384 346 810 Total general and administrative expenses $ 1,561 $ 2,649 $ 3,184 $ 4,813 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2023 | |
RELATED PARTY TRANSACTIONS | |
Related-party Transactions | 16. 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. During October 2022, Cannaco Research Corporation, an existing customer, became a related party when a new member joined the Board of Directors. Total sales recognized for Cannaco Research Corporation for the six months ended June 30, 2023 and 2022 were $180 and $36, respectively. For the six months ended June 30, 2023 and 2022, cash collected from Cannaco Research Corporation was $216 and $81, 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 $30 in the six months ended June 30, 2023. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2023 | |
SEGMENT INFORMATION | |
Segment Information | 17. SEGMENT INFORMATION The Company’s operations are comprised of a single reporting segment engaged in the production and sale of cannabis products in the United States. As the operations comprise a single reporting segment, amounts disclosed in the financial statements also represent a single reporting segment. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2023 | |
SUBSEQUENT EVENTS | |
Subsequent Events | 18. SUBSEQUENT EVENTS The Company has evaluated other potential subsequent events through August 10, 2023, the date the financial statements were available to be issued. No material subsequent events were identified. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis Of Presentation | The interim unaudited condensed consolidated financial statements included herein have been prepared by Lowell Farms Inc. (the “Company” or “Lowell”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. The interim unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary (consisting only of normal recurring adjustments), to present a fair statement of results for the interim periods presented. The operating results for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Form 10-K filed for the year ended December 31, 2022. There have been no material changes to our significant accounting policies as of and for the three and six months ended June 30, 2023. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all intercompany balances and transactions. The condensed consolidated balance sheet at December 31, 2022, has been derived from the audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. All dollar amounts in the notes to condensed consolidated financial statements are expressed in thousands of United States dollars (“$” or “US$”), unless otherwise indicated. |
Use Of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include allowance for doubtful accounts and credit losses, carrying value of inventory, revenue recognition, accounting for stock-based compensation expense, and income taxes. Actual results could differ from those estimates. The global COVID-19 pandemic impacted the operations and purchasing decisions of companies worldwide. It also created significant uncertainty in the global economy. The Company has undertaken measures to protect its employees, partners, customers, and vendors. To date, the Company has been able to provide uninterrupted access to its products and services, including certain employees that are working remotely, and its pre-existing infrastructure that supports secure access to the Company’s internal systems. If the COVID-19 pandemic were to have an increased forward-looking 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. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require updates to the Company’s estimates and judgments or revisions to the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements. |
Recently Adopted Accounting Standards | In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021. We evaluated the impact of ASU 2020-06, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2022 and it did not have a material impact on our consolidated financial statements. 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. We evaluated the impact of ASU 2021-08 on our consolidated financial statements and it did not have a material impact. No other recently issued accounting pronouncements had or are expected to have a material impact on our condensed consolidated financial statements. |
PREPAID AND OTHER CURRENT ASS_2
PREPAID AND OTHER CURRENT ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
PREPAID AND OTHER CURRENT ASSETS | |
Summary Of Prepaid Expenses And Other Current Assets | June 30, December 31, (in thousands) 2023 2022 Deposits $ 92 $ 595 Insurance 206 235 Supplier advances 120 375 Interest and taxes - 69 Licenses and payments 292 146 Other 26 102 Total prepaid and other current assets $ 736 $ 1,522 |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
INVENTORY | |
Summary Of Inventory | June 30, December 31, (in thousands) 2023 2022 Raw materials $ 6,278 $ 7,431 Work in process 461 940 Finished goods 2,770 2,408 Total inventory $ 9,509 $ 10,779 |
Other current liabilities (Tabl
Other current liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Other current liabilities | |
Schedule Of Other Current Liabilities | June 30, December 31, (in thousands) 2023 2022 Interest and tax accrual $ 1,241 $ 921 Equipment purchase accrual 724 724 ERC commission accrual 441 441 Excise and cannabis tax 238 948 Accrued discounts and promotions 133 97 Insurance and professional fee accrual 196 158 Third-party brand distribution accrual 274 17 Accrued rent 184 - Other 339 348 Total other current liabilities $ 3,770 $ 3,654 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
PROPERTY AND EQUIPMENT | |
Schedule Of Property And Equipment | Land and Leasehold Furniture Construction Right of (in thousands) Buildings Improvements and Fixtures Equipment Vehicles in Process Use Assets Total Costs Balance-December 31, 2022 $ 15,719 $ 12,437 $ 50 $ 6,499 $ 830 $ 35 $ 37,081 $ 72,651 Additions - 29 - (10 ) - - 29,647 29,666 Disposals (15,719 ) (203 ) - - - - - (15,922 ) Lease remeasurement - - - - - - (1,477 ) (1,477 ) Balance – June 30, 2023 $ - $ 12,263 $ 50 $ 6,489 $ 830 $ 35 $ 65,251 $ 84,918 Accumulated Depreciation Balance - December 31, 2022 $ (315 ) $ (1,815 ) $ (49 ) $ (1,498 ) $ (608 ) $ - $ (9,719 ) $ (14,004 ) Depreciation (71 ) (426 ) - (481 ) (73 ) - (1,390 ) (2,441 ) Disposals 386 55 - - - - - 441 Balance - June 30, 2023 $ - $ (2,186 ) $ (49 ) $ (1,979 ) $ (681 ) $ - $ (11,109 ) $ (16,004 ) Net Book Value - June 30, 2023 $ - $ 10,077 $ 1 $ 4,510 $ 149 $ 35 $ 54,142 $ 68,914 Net Book Value - December 31, 2022 $ 15,404 $ 10,621 $ 1 $ 5,001 $ 222 $ 35 $ 27,362 $ 58,646 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Other Intangible Assets | |
Schedule Of Intangible Assets | Definite Life Intangibles Technology/ Acquired Indefinite Life Intangibles Brands & (in thousands) Know How Purchase Rights Tradenames Total Costs Balance-December 31, 2022 $ 3,258 $ 1,800 $ 37,707 $ 42,765 Business acquisition - - - - Agreement termination - - - - Balance-June 30, 2023 $ 3,258 $ 1,800 $ 37,707 $ 42,765 Accumulated Amortization Balance-December 31, 2022 $ (535 ) $ (28 ) $ - $ (563 ) Amortization (162 ) (41 ) - (203 ) Balance-June 30, 2023 $ (697 ) $ (69 ) $ - $ (766 ) Net Book Value December 31, 2022 $ 2,723 $ 1,772 $ 37,707 $ 42,202 Net Book Value June 30, 2023 $ 2,561 $ 1,731 $ 37,707 $ 41,999 |
SHAREHOLDERS EQUITY (Tables)
SHAREHOLDERS EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
SHAREHOLDERS EQUITY | |
Schedule Of Shares Outstanding | Subordinate Super (in thousands) Voting Shares Voting Shares Balance-December 31, 2022 121,770 203 Balance-June 30, 2023 121,770 203 |
Schedule Of Warrants Outstanding | (in thousands) Balance-December 31, 2022 173,435 Balance-June 30, 2023 173,435 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
DEBT | |
Schedule Of Debt | June 30, December 31, (in thousands) 2023 2022 Current portion of long-term debt Vehicle loans (1) $ 8 $ 15 Mortgage payable (2) - 257 Note payable - 10 Convertible debenture (3) 21,854 21,398 Total short-term debt 21,862 21,680 Long-term debt, net Vehicle loans (1) 1 3 Mortgage payable (2) - 8,713 Total long-term debt 1 8,716 Total Indebtedness $ 21,863 $ 30,396 ______________________ (1) Primarily fixed term loans on transportation vehicles. Weighted average interest rate at June 30, 2023 and December 31, 2022 was 6.3% and 6.4%, respectively. (2) Mortgage payable associated with the acquired processing facility. Weighted average interest rate at December 31, 2022 was 12.5%,. Net of deferred financing costs as of December 31, 2022 $296. (3) Net of deferred financing costs at June 30, 2023 and December 31, 2022 of $303 and $759, respectively. |
Schedule Of Maturities Of Debt Obligations | June 30, (in thousands) 2023 Balance of 2023 $ 22,166 2024 1 Total debt obligations $ 22,167 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
LEASES | |
Schedule Of Reconciliation Of Lease Obligations | (in thousands) Lease obligation December 31, 2022 $ 33,999 Sale leaseback additions 29,647 Lease principal payments (1,142 ) Lease remeasurement (1,477 ) Lease settlement (1,202 ) June 30, 2023 $ 59,825 |
Schedule Of Lease Obligations | June 30, December 31, (in thousands) 2023 2022 Lease obligation, current portion $ 1,592 $ 2,659 Lease obligation, long-term portion 58,233 31,340 Total $ 59,825 $ 33,999 |
Schedule Of Lease Expense | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2023 2022 2023 2022 Amortization of leased assets (1) $ 817 $ 840 $ 1,390 $ 1,657 Interest on lease liabilities (2) 482 561 982 1,134 Total $ 1,299 $ 1,401 $ 2,372 $ 2,791 |
Schedule of future lease payments | (in thousands) June 30, 2023 Balance of 2023 $ 2,923 2024 5,541 2025 5,559 2026 5,587 2027 and beyond 90,806 Total lease payments 110,416 Less imputed interest (50,591 ) Total $ 59,825 |
SHARE BASED COMPENSATION (Table
SHARE BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
SHARE BASED COMPENSATION | |
Schedule Of Share-based Compensation Expense | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2023 2022 2023 2022 Cost of goods sold $ - $ - $ - $ - General and administrative expense 41 157 101 318 Total share-based compensation $ 41 $ 157 $ 101 $ 318 |
Schedule Of Stock Option Activity | Stock Weighted-Average Weighted Average Remaining Aggregate (in thousands except per share amounts) Options Exercise Price Contractual Life Intrinsic Value Outstanding-December 31, 2022 10,069 $ 0.47 4.6 $ - Granted - - - - Exercised - - - - Cancelled (2,663 ) 0.44 - - Outstanding-June 30, 2023 7,406 $ 0.48 4.1 - Exercisable-June 30, 2023 3,761 $ 0.67 3.4 $ - Vested and expected to vest-June 30, 2023 7,406 $ 0.48 4.1 $ - |
Schedule Of Restricted Stock Unit Activity | Weighted-Average (in thousands) RSUs Fair Value Outstanding-December 31, 2022 208 $ 1.1 Granted - - Vested - - Cancelled (87 ) 1.02 Outstanding-June 30, 2023 121 $ 1.1 |
Schedule Of Weighted Average Assumptions | Six Months Ended June 30, 2022 Expected volatility 50 % Dividend yield 0 % Risk-free interest rate 1.0 % Expected term in years 4.50 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
NET LOSS PER SHARE | |
Schedule Of Net Earnings/(loss) Per Share | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands except per share amounts) 2023 2022 2023 2022 Net loss $ (73 ) $ (4,614 ) $ (4,113 ) $ (8,671 ) Net loss per share: Basic $ (0.01 ) $ (0.04 ) $ (0.03 ) $ (0.08 ) Diluted $ (0.01 ) $ (0.04 ) $ (0.03 ) $ (0.08 ) Weighted average shares outstanding: Basic 121,770 112,026 121,770 111,981 Diluted 121,770 112,026 121,770 111,981 Weighted average potentially diluted shares (1): Basic shares 121,770 112,026 121,770 111,981 Total weighted average potentially diluted shares: 121,770 112,026 121,770 111,981 |
PREPAID AND OTHER CURRENT ASS_3
PREPAID AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
PREPAID AND OTHER CURRENT ASSETS | ||
Deposits | $ 92 | $ 595 |
Insurance | 206 | 235 |
Supplier Advances | 120 | 375 |
Interest And Taxes | 0 | 69 |
Licenses and payments | 292 | 146 |
Other | 26 | 102 |
Prepaid Expenses And Other Current Assets | $ 736 | $ 1,522 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
INVENTORY | ||
Raw Materials | $ 6,278 | $ 7,431 |
Work In Process | 461 | 940 |
Finished Goods | 2,770 | 2,408 |
Total inventory | $ 9,509 | $ 10,779 |
Other current liabilities (Deta
Other current liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Other current liabilities | ||
Interest and tax accrual | $ 1,241 | $ 921 |
Equipment Purchase Accrual | 724 | 724 |
ERC Commission Accrual | 441 | 441 |
Excise And Cannabis Tax | 238 | 948 |
Accrued Discounts and Promotions | 133 | 97 |
Insurance And Professional Fee Accrual | 196 | 158 |
Third-Party Brand Distribution Accrual | 274 | 17 |
Accrued rent | 184 | 0 |
Other | 339 | 348 |
Total Other Current Liabilities | $ 3,770 | $ 3,654 |
Other current liabilities (De_2
Other current liabilities (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Accrued other liability | $ 339 | $ 348 |
Future Amortization Expense | 2,450 | |
Other income | 2,014 | |
ERC Claim Member | ||
Accrued other liability | $ 441 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Property and equipment cost, Beginning | $ 72,651 | ||||
Additions | 29,666 | ||||
Disposals | (15,922) | ||||
Lease remeasurement | (1,477) | ||||
Property and equipment cost, Ending | $ 84,918 | 84,918 | |||
Accumulated Depreciation, Beginning | (14,004) | ||||
Depreciation | (1,346) | $ (1,841) | (2,441) | $ (3,270) | |
Disposals accumulated depreciation | 441 | ||||
Accumulated Depreciation, Ending | (16,004) | ||||
Net Book Value | 68,914 | 68,914 | $ 58,646 | ||
Land and Buildings | |||||
Property and equipment cost, Beginning | 15,719 | ||||
Additions | 0 | ||||
Disposals | (15,719) | ||||
Lease remeasurement | 0 | ||||
Property and equipment cost, Ending | 0 | 0 | |||
Accumulated Depreciation, Beginning | (315) | ||||
Depreciation | (71) | ||||
Disposals accumulated depreciation | 386 | ||||
Accumulated Depreciation, Ending | 0 | ||||
Net Book Value | 0 | 0 | 15,404 | ||
Leasehold Improvements | |||||
Property and equipment cost, Beginning | 12,437 | ||||
Additions | 29 | ||||
Disposals | (203) | ||||
Property and equipment cost, Ending | 12,263 | 12,263 | |||
Accumulated Depreciation, Beginning | (1,815) | ||||
Depreciation | (426) | ||||
Disposals accumulated depreciation | 55 | ||||
Accumulated Depreciation, Ending | (2,186) | ||||
Net Book Value | 10,077 | 10,077 | 10,621 | ||
Lease remeasurement | 0 | ||||
Furniture and Fixtures | |||||
Property and equipment cost, Beginning | 50 | ||||
Additions | 0 | ||||
Disposals | 0 | ||||
Lease remeasurement | 0 | ||||
Property and equipment cost, Ending | 50 | 50 | |||
Accumulated Depreciation, Beginning | (49) | ||||
Depreciation | 0 | ||||
Disposals accumulated depreciation | 0 | ||||
Accumulated Depreciation, Ending | (49) | ||||
Net Book Value | 1 | 1 | 1 | ||
Equipment [Member] | |||||
Property and equipment cost, Beginning | 6,499 | ||||
Additions | 10 | ||||
Disposals | 0 | ||||
Lease remeasurement | 0 | ||||
Property and equipment cost, Ending | 6,489 | 6,489 | |||
Accumulated Depreciation, Beginning | (1,498) | ||||
Depreciation | (481) | ||||
Disposals accumulated depreciation | 0 | ||||
Accumulated Depreciation, Ending | (1,979) | ||||
Net Book Value | 4,510 | 4,510 | 5,001 | ||
Vehicles | |||||
Property and equipment cost, Beginning | 830 | ||||
Additions | 0 | ||||
Disposals | 0 | ||||
Lease remeasurement | 0 | ||||
Property and equipment cost, Ending | 830 | 830 | |||
Accumulated Depreciation, Beginning | (608) | ||||
Depreciation | (73) | ||||
Disposals accumulated depreciation | 0 | ||||
Accumulated Depreciation, Ending | (681) | ||||
Net Book Value | 149 | 149 | 222 | ||
Construction in Process | |||||
Property and equipment cost, Beginning | 35 | ||||
Additions | 0 | ||||
Disposals | 0 | ||||
Lease remeasurement | 0 | ||||
Property and equipment cost, Ending | 35 | 35 | |||
Accumulated Depreciation, Beginning | 0 | ||||
Depreciation | 0 | ||||
Disposals accumulated depreciation | 0 | ||||
Accumulated Depreciation, Ending | 0 | ||||
Net Book Value | 35 | 35 | 35 | ||
Right of Use Assets | |||||
Property and equipment cost, Beginning | 37,081 | ||||
Additions | 29,647 | ||||
Disposals | 0 | ||||
Lease remeasurement | (1,477) | ||||
Property and equipment cost, Ending | 65,251 | 65,251 | |||
Accumulated Depreciation, Beginning | (9,719) | ||||
Depreciation | (1,390) | ||||
Disposals accumulated depreciation | 0 | ||||
Accumulated Depreciation, Ending | (11,109) | ||||
Net Book Value | $ 54,142 | $ 54,142 | $ 27,362 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Description | a result of the transaction, the Company disposed of buildings, land and leasehold improvements with a net book value of $15,481. The Company additionally recorded a right of use asset and liability of $29,647 to reflect the value of the leased property | These revised leases resulted in a remeasurement of both the right of use asset and lease liability of $1,477 | ||
Depreciation | $ 1,346,000 | $ 1,841,000 | $ 2,441,000 | $ 3,270,000 |
Cost Of Good Sold Member | ||||
Depreciation | 1,318,000 | 1,456,000 | 2,387,000 | 2,888,000 |
Other Income Expenses Member | ||||
Depreciation | $ 0 | $ 171 | $ 0 | $ 314 |
Other Intangible Assets (Detail
Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | |
Definite Life Intangibles Cost,Beginning Balance | $ 42,765 | ||
Business Acquisition | 0 | ||
Agreement Termination | 0 | ||
Definite Life Intangibles Cost, Ending | 42,765 | ||
Accumulated Amortization, Beginning | $ (563) | ||
Amortization | $ (163) | (203) | |
Accumulated Amortization, Ending | (766) | ||
Net Book Value | 41,999 | 42,202 | |
Brands & Tradenames | |||
Definite Life Intangibles Cost,Beginning Balance | 37,707 | ||
Definite Life Intangibles Cost, Ending | 37,707 | ||
Accumulated Amortization, Beginning | 0 | ||
Amortization | 0 | ||
Accumulated Amortization, Ending | 0 | ||
Net Book Value | 37,707 | 37,707 | |
Business Acquisition | 0 | ||
Agreement Termination | 0 | ||
Technology/KnowHow | |||
Definite Life Intangibles Cost,Beginning Balance | 3,258 | ||
Business Acquisition | 0 | ||
Agreement Termination | 0 | ||
Definite Life Intangibles Cost, Ending | 3,258 | ||
Accumulated Amortization, Beginning | (535) | ||
Amortization | 162 | ||
Accumulated Amortization, Ending | (697) | ||
Net Book Value | 2,561 | 2,723 | |
Acquired Purchase Rights | |||
Definite Life Intangibles Cost,Beginning Balance | 1,800 | ||
Business Acquisition | 0 | ||
Agreement Termination | 0 | ||
Definite Life Intangibles Cost, Ending | 1,800 | ||
Accumulated Amortization, Beginning | (28) | ||
Amortization | 41 | ||
Accumulated Amortization, Ending | (69) | ||
Net Book Value | $ 1,731 | $ 1,772 |
Other Intangible Assets (Deta_2
Other Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended |
Mar. 31, 2022 | Jun. 30, 2023 | |
Other Intangible Assets | ||
Future Amortization Expenses | $ 399 | |
Amortization | $ 163,000 | $ 203,000 |
SHAREHOLDERS EQUITY (Details)
SHAREHOLDERS EQUITY (Details) - shares shares in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Subordinate Voting Share [Member] | ||
Shares Outstanding | 121,770 | 121,770 |
Super Voting Share [Member] | ||
Shares Outstanding | 203 | 203 |
SHAREHOLDERS EQUITY (Details 1)
SHAREHOLDERS EQUITY (Details 1) - shares shares in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
SHAREHOLDERS EQUITY | ||
Warrants | 173,435 | 173,435 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Total short-term debt | $ 21,862 | $ 21,680 |
Total long-term debt | 1 | 8,716 |
Total Indebtedness | 21,863 | 30,396 |
Convertible Debenture | ||
Long-term Debt | 21,854 | 21,398 |
Vehicle Loans | ||
Short-term Debt | 8 | 15 |
Long-term Debt | 0 | 3 |
Mortgage Payable [Member] | ||
Short-term Debt | 0 | 257 |
Long-term Debt | 1 | 8,713 |
Note Payable | ||
Short-term Debt | $ 0 | $ 10 |
DEBT (Details 1)
DEBT (Details 1) $ in Thousands | Jun. 30, 2023 USD ($) |
DEBT | |
Balance of 2023 | $ 22,166 |
2024 | 1 |
Total Debt Obligations | $ 22,167 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Net Of Deferred Financing Costs | $ 303 | $ 759 |
Vehicle Loans | ||
Weighted average interest rate | 12.50% | 12.50% |
Mortgage Payable [Member] | ||
Net Of Deferred Financing Costs | $ 296 | |
Weighted average interest rate | 6.30% | 6.40% |
LEASES (Details)
LEASES (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
LEASES | |
Lease Liability, Beginning | $ 33,999 |
Sale leaseback additions | 29,647 |
Lease Principal Payments | (1,142) |
Lease remeasurement | (1,477) |
Lease settlement | (1,202) |
Lease Liability, Ending | $ 59,825 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
LEASES | ||
Lease Obligation, Current Portion | $ 1,592 | $ 2,659 |
Lease Obligation, Long-term Portion | 58,233 | 31,340 |
Total | $ 59,825 | $ 33,999 |
LEASES (Details 2)
LEASES (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
LEASES | ||||
Amortization Of Leased Assets | $ 817 | $ 840 | $ 1,390 | $ 1,657 |
Interest On Lease Liabilities | 482 | 561 | 982 | 1,134 |
Total | $ 1,299 | $ 1,401 | $ 2,372 | $ 2,791 |
LEASES (Details 3)
LEASES (Details 3) $ in Thousands | Jun. 30, 2023 USD ($) |
LEASES | |
Balance of 2023 | $ 2,923 |
2024 | 5,541 |
2025 | 5,559 |
2026 | 5,587 |
2027 and beyond | 90,806 |
Total lease payments | 110,416 |
Less Imputed Interest | (50,591) |
Total | $ 59,825 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Dec. 30, 2022 | Dec. 31, 2022 | Jun. 30, 2022 | |
Weighted Average Remaining Lease Term | 17 months 24 days | 14 months 18 days | ||
Weighted Average Discount Rate | 7% | 6% | ||
lease liability | $ 29,647 | $ 1,202 | ||
Payment | 300 | |||
Other income | 2,014,000 | |||
Lease Agreements Member | ||||
Other income | $ 880,000 |
SHARE BASED COMPENSATION (Detai
SHARE BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Employee Benefits and Share-Based Compensation | $ 41 | $ 157 | $ 101 | $ 318 |
Cost Of Goods Sold [Member] | ||||
Employee Benefits and Share-Based Compensation | 0 | 0 | 0 | 0 |
General And Administrative Expense [Member] | ||||
Employee Benefits and Share-Based Compensation | $ 41 | $ 157 | $ 101 | $ 318 |
SHARE BASED COMPENSATION (Det_2
SHARE BASED COMPENSATION (Details 1) $ / shares in Units, shares in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) $ / shares shares | |
SHARE BASED COMPENSATION | |
Stock Options Outstanding, Beginning | shares | 10,069 |
Stock Options, Cancelled | shares | (2,663) |
Stock Options Outstanding, Ending | shares | 7,406 |
Stock option, Exercisable | shares | 3,761 |
Stock options, Vested and expected to vest | shares | 7,406 |
Weighted-average Exercise Price Outstanding, Beginning | $ 0.47 |
Weighted-average Exercise Price, Granted | 0 |
Weighted-average Exercise Price, Exercised | 0 |
Weighted-average Exercise Price, Cancelled | 0.44 |
Weighted-average Exercise Price Outstanding, Ending | 0.48 |
Weighted-Average Exercise Price, Exercisable | 0.67 |
Weighted-Average Exercise Price, Vested and expected to vest | $ 0.23 |
Weighted-average Remaining Contactual Life Outstanding, Beginning Balance | 4 years 7 months 6 days |
Weighted-average Remaining Contactual Life Outstanding, Ending Balance | 4 years 1 month 6 days |
Weighted-average Remaining Contactual Life, Exercisable | 3 years 4 months 24 days |
Weighted-average Remaining Contactual Life, Vested And Expected To Vest | 4 years 1 month 6 days |
Aggregate Intrinsic Value Outstanding, Beginning | $ | $ 0 |
Aggregate Intrinsic Value, Granted | $ | 0 |
Aggregate Intrinsic Value, Exercised | $ | 0 |
Aggregate Intrinsic Value, Cancelled | $ | $ 0 |
SHARE BASED COMPENSATION (Det_3
SHARE BASED COMPENSATION (Details 2) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) $ / shares shares | |
SHARE BASED COMPENSATION | |
RSUs Outstanding, Beginning Balance | shares | 208 |
RSUs Cancelled | shares | (87) |
RSUs Outstanding, Ending Balance | $ | $ 121 |
Weighted-average Fair Value Outstanding, Beginning Balance | $ 1.1 |
Weighted-average Fair Value Granted | 0 |
Weighted-average Fair Value Vested | 0 |
Weighted-average Fair Value Cancelled | 1.02 |
Weighted-average Fair Value Outstanding, Ending Balance | $ 1.1 |
SHARE BASED COMPENSATION (Det_4
SHARE BASED COMPENSATION (Details 3) - Stock Option [Member] | 6 Months Ended |
Jun. 30, 2023 | |
Expected Volatility | 50% |
Dividend Yield | 0% |
Risk-free Interest Rate | 1% |
Expected Term In Years | 4 months 15 days |
SHARE BASED COMPENSATION (Det_5
SHARE BASED COMPENSATION (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 6 Months Ended | |
Jun. 30, 2023 | Mar. 31, 2023 | |
Proceeds From Issuance Of Stock Options | 23.2 | |
Stock Option For Future Grant | 16.2 | |
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 | $ 0.31 | |
Unrecognized Compensation Cost Related To Nonvested Restricted Stock Units | $ 287 | |
Vesting Period | 1 month 6 days | |
Restricted Stock Units (RSUs) [Member] | ||
Unrecognized Compensation Cost Related To Nonvested Restricted Stock Units | $ 37 | |
Vesting Period | 4 months 15 days |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
INCOME TAXES | ||||
Provision For Income Taxes | $ 50 | $ 60 | $ 99 | $ 135 |
Effective Tax Rate | (217.00%) | (1.32%) | (2.47%) | (1.58%) |
NET LOSS PER SHARE (Details)
NET LOSS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
NET LOSS PER SHARE | ||||
Net loss | $ (73) | $ (4,614) | $ (4,113) | $ (8,671) |
Net Loss Per Share: | ||||
Basic | $ (0.01) | $ (0.04) | $ (0.03) | $ (0.08) |
Diluted | $ (0.01) | $ (0.04) | $ (0.03) | $ (0.08) |
Weighted Average Shares Outstanding: | ||||
Basic | 121,770 | 112,026 | 121,770 | 111,981 |
Diluted | 121,770 | 112,026 | 121,770 | 111,981 |
Weighted average potentially diluted shares: | ||||
Basic Shares | 121,770 | 112,026 | 121,770 | 111,981 |
Diluted Shares | 121,770 | 112,026 | 121,770 | 111,981 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Commitments And Contingencies Disclosure Abstract | |
Total remaining purchase commitment | $ 2,900 |
Remaining purchase commitment | $ 7 |
Due date of commitment | 2023 |
Payment for insurance claim | $ 2,200 |
GENERAL AND ADMINISTRATIVE EX_2
GENERAL AND ADMINISTRATIVE EXPENSES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
General and administrative | $ 1,561 | $ 2,649 | $ 3,184 | $ 4,813 |
Salaries and Benefits | ||||
General and administrative | 757 | 1,488 | 1,686 | 2,458 |
Professional Fees | ||||
General and administrative | 364 | 263 | 527 | 522 |
Share-based Compensation | ||||
General and administrative | 41 | 157 | 101 | 318 |
Insurance | ||||
General and administrative | 253 | 357 | 524 | 704 |
Administrative | ||||
General and administrative | $ 146 | $ 384 | $ 346 | $ 810 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Related Party Transactions | $ 216 | $ 81 |
Total sales | $ 180 | $ 36 |
Lease term | 12 months | |
OMG | ||
Related Party Transactions | $ 30 |