United States securities and exchange commission logo
May 5, 2021
Brian Shure
Chief Financial Officer
Lowell Farms Inc.
19 Quail Run Circle, Suite B
Salinas, CA 93907
Re: Lowell Farms Inc.
Amendment No. 2 to
Registration Statement on Form 10
Filed May 4, 2021
File No. 000-56254
Dear Mr. Shure:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Amendment No. 2 to Registration Statement on Form 10 filed May 4, 2021
Item 1A. Risk Factors.
Risks Related to the Securities of the Company, page 33
1. We note your response
to comment 9, and the added risk factor on page 29. Your revised
disclosure states,
"[b]ecause claims under the Exchange Act and the Securities Act are not
typically brought as
derivative claims, the Company does not believe that the exclusive
forum provision would
have a material impact on investors seeking recourse under those
statutes. With respect
to derivative actions, the choice of forum provision may limit an
investor s ability to
bring a derivative claim in a judicial forum of its choosing." Note,
however, that investors
have a right to bring derivative actions under the Exchange Act
and the Securities Act.
Please clarify, if true, that the exclusive forum provision does not
apply to Exchange Act
or Securities Act claims and ensure that the exclusive forum
provision in the
governing documents states this clearly, or tell us how you will inform
investors in future
filings that the provision does not apply to any actions arising under the
Brian Shure
Lowell Farms Inc.
May 5, 2021
Page 2
Securities Act or Exchange Act. In this regard, we further note that
Section 27 of the
Exchange Act creates exclusive federal jurisdiction over all suits
brought to enforce any
duty or liability created by the Exchange Act or the rules and
regulations thereunder, and
Section 22 of the Securities Act creates concurrent jurisdiction for
federal and state courts
over all suits brought to enforce any duty or liability created by the
Securities Act or the
rules and regulations thereunder. If the provision applies to
Securities Act claims, please
also revise your prospectus to state that there is uncertainty as to
whether a court would
enforce such provision, that investors cannot waive compliance with
the federal securities
laws and the rules and regulations thereunder, that the provision may
result in increased
costs to investors to bring a claim, may discourage investors from
bringing claims, and
may limit investors' ability to bring a claim in a judicial forum that
they find favorable.
Managements Discussion and Analysis of Financial Condition and Results of
Operations Results
of Operations
Cost of Sales, Gross Profit and Gross Margin, page 40
2. We have read your response to comment 12 from our letter dated April
5, 2021, and your
revised disclosure on page 40. While you discuss the changes in your
gross margin, you
do not specifically disclose why your cost of sales decreased
year-over-year despite an
increase in revenues. Please revise accordingly.
Item 4. Security Ownership of Certain Beneficial Owners and Management, page 49
3. We note your response to prior comment 13 and reissue. Beneficial
ownership is reported
in the table as determined pursuant to the definition in Exchange Act
Section 13(d)(3) and
Rule 13d-3. Refer to Item 4 of Form 10, which requires disclosure of
information
required by Item 403 of Regulation S-K. For additional guidance, refer
to the Compliance
and Disclosure Interpretations for Exchange Act Section 13(d) and
13(g) and Regulation
13D-G Beneficial Ownership Reporting, which are available on the
Division of
Corporation Finance website.
Item 9. Market Price of and Dividends on the Registrant's Common Equity and
Related
Stockholder Matters, page 56
4. We note your response to comment 16. You revised this section to state
that your shares
are traded in Canada under the symbols LOWL and LOWL.WT and are traded
in the
United States in the OTC Market Group, Inc., under the symbol LOWLF. In
your
organization chart, you indicate that you are registering the class of
stock that is the
FirstName LastNameBrian Shure
subordinate shares. Revise this section to clarify that the LOWL.WT are
the warrants.
Comapany
AlsoNameLowell Farms
revise to provide theInc.
disclosure required by Item 9 for the U.S.
market, including all
May 5,information
2021 Page 2required by Item 201(a)(1)(i)-(iii) of Regulation S-K.
FirstName LastName
Brian Shure
FirstName LastNameBrian Shure
Lowell Farms Inc.
Comapany
May 5, 2021NameLowell Farms Inc.
May 5,
Page 3 2021 Page 3
FirstName LastName
Item 11. Description of Registrant's Securities to be Registered, page 58
5. We note your response to comment 17. Revise this section to provide
all the information
required by Item 202 of Regulation S-K and remove the inappropriate
disclaimer that your
"summary . . . does not purport to be complete." Revise this section
to :
clarify the disparate voting rights between Subordinate Voting
Shares and Super
Voting Shares, including addressing matters for which holders of
Subordinate Voting
Shares will not be entitled to notice of a meeting;
clarify if there is any other class or are other classes of stock
authorized;
revise the second paragraph to eliminate the typographical errors
and to clarify on
what matters the vote differs "as required by applicable law"; and
in the third paragraph, disclose what shareholders rank in
priority in liquidation rights
above the Subordinate Voting Shares.
6. We note your response to comment 18. Revise your summary of the
support agreement to
disclose the material terms and to eliminate the inappropriate
disclaimer in the second
paragraph on page 58; and provide a risk factor outlining the risks to
investors related to
the Support Agreement in your "Risks Related to the Securities of the
Company."
SIGNATURES, page 63
7. Please ensure that your signature page is dated concurrent with the
date you file your
amendment.
Consolidated Financial Statements, page F-1
8. It appears that you have revised certain line items in your
consolidated financial
statements for Lowell Farms Inc. (formerly Indus Holdings Inc.) from
those previously
presented without any disclosure describing such changes. Please
explain the reasons for
such changes and provide any necessary disclosures required by ASC
250-10-50. In this
regard, clarify whether such changes were the result of a change in
estimate or correction
of an error and provide the required disclosures. Please also have
your independent
accounting firm consider any necessary revisions to their audit
opinion as a result of these
changes.
General
9. Pursuant to Section 12(g)(1) of the Exchange Act, the Form 10 becomes
effective
automatically 60 days after the initial filing date. At that time, you
will be subject to the
reporting requirements of the Exchange Act. In addition, we will
continue to review your
filing until all of our comments have been addressed. If the review
process has not been
completed before the effectiveness date you should consider
withdrawing the Form 10
registration statement to prevent it from becoming effective and, as
applicable, file a new
Form 10 registration at such time as you are able to respond to any
remaining issues or
comments.
Brian Shure
Lowell Farms Inc.
May 5, 2021
Page 4
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Tracey McKoy at 202-551-3772 or Angela Connell at
202-551-3426 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Abby Adams at 202-551-6902 or Jeffrey Gabor at 202-551-2544 with any
other
questions.
Sincerely,
FirstName LastNameBrian Shure
Division of
Corporation Finance
Comapany NameLowell Farms Inc.
Office of Life
Sciences
May 5, 2021 Page 4
cc: Kenneth G. Alberstadt, Esq.
FirstName LastName