Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 13, 2021 | |
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, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Entity Ex Transition Period | false | |
Entity Common Stock Shares Outstanding | 78,805,938 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-56254 | |
Entity Incorporation State Country Code | Z4 | |
Entity Address Address Line 1 | 19 Quail Run Circle | |
Entity Address Address Line 2 | Suite B | |
Entity Address City Or Town | Salinas | |
Entity Address State Or Province | CA | |
Entity Address Postal Zip Code | 93907 | |
City Area Code | 831 | |
Local Phone Number | 998-8214 | |
Entity Interactive Data Current | Yes |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 9,113,000 | $ 25,751,000 |
Accounts Receivable - net of allowance for doubtful accounts of $1,024 and $1,389 at June 30, 2021 and December 2020, respectively | 6,223,000 | 4,529,000 |
Inventory | 14,736,000 | 9,933,000 |
Prepaid expenses and other current assets | 4,144,000 | 6,391,000 |
Total current assets | 34,216,000 | 46,604,000 |
Property and equipment, net | 64,496,000 | 49,243,000 |
Goodwill | 357,000 | 357,000 |
Other intangibles, net | 40,919,000 | 736,000 |
Other assets | 601,000 | 476,000 |
Total assets | 140,589,000 | 97,416,000 |
Current liabilities: | ||
Accounts payable | 3,313,000 | 2,137,000 |
Accrued payroll and benefits | 1,142,000 | 1,212,000 |
Notes payable, current portion | 369,000 | 1,213,000 |
Lease obligation, current portion | 2,410,000 | 2,301,000 |
Other current liabilities | 5,012,000 | 8,860,000 |
Total current liabilities | 12,246,000 | 15,723,000 |
Notes payable | 258,000 | 303,000 |
Lease obligation | 35,260,000 | 36,533,000 |
Convertible debentures | 13,646,000 | 13,701,000 |
Mortgage obligation | 8,938,000 | 0 |
Total liabilities | 70,348,000 | 66,260,000 |
STOCKHOLDERS' EQUITY | ||
Share capital | 170,613,000 | 125,540,000 |
Accumulated deficit | (100,372,000) | (94,384,000) |
Total stockholders' equity | 70,241,000 | 31,156,000 |
Total liabilities and stockholders' equity | $ 140,589,000 | $ 97,416,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 1,024 | $ 1,389 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) - USD ($) shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) | ||||
Net revenue | $ 15,157,000 | $ 9,894,000 | $ 26,183,000 | $ 19,336,000 |
Cost of goods sold | 9,413,000 | 11,157,000 | 21,915,000 | 22,328,000 |
Gross profit (loss) | 5,744,000 | (1,263,000) | 4,268,000 | (2,992,000) |
Operating expenses | ||||
General and administrative | 3,817,000 | 1,456,000 | 6,285,000 | 4,733,000 |
Sales and marketing | 2,233,000 | 1,184,000 | 3,667,000 | 2,410,000 |
Depreciation and amortization | 167,000 | 885,000 | 491,000 | 1,762,000 |
Total operating expenses | 6,217,000 | 3,525,000 | 10,443,000 | 8,905,000 |
Loss from operations | (473,000) | (4,788,000) | (6,175,000) | (11,897,000) |
Other income/(expense) | ||||
Other income (expense) | 1,858,000 | 0 | 1,416,000 | 25,000 |
Loss on termination of investment | 0 | (3,524,000) | 0 | (3,524,000) |
Unrealized gain on change in fair value of investment | 18,000 | 306,000 | 124,000 | 391,000 |
Interest expense | (598,000) | (726,000) | (1,215,000) | (1,576,000) |
Total other income (expense) | 1,278,000 | (3,944,000) | 325,000 | (4,684,000) |
Income (loss) before provision for income taxes | 805,000 | (8,732,000) | (5,850,000) | (16,581,000) |
Provision for income taxes | 74,000 | 25,000 | 138,000 | 50,000 |
Net income (loss) | $ 731,000 | $ (8,757,000) | $ (5,988,000) | $ (16,631,000) |
Net income (loss) per share: | ||||
Basic | $ 0.01 | $ (0.26) | $ (0.10) | $ (0.50) |
Diluted | $ 0 | $ (0.26) | $ (0.10) | $ (0.50) |
Weighted average shares outstanding: | ||||
Basic | 71,021 | 33,307 | 61,956 | 33,025 |
Diluted | 201,278 | 33,307 | 61,956 | 33,025 |
CONDENDSED CONSOLIDATED STATEME
CONDENDSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($) | Total | Subordinate Voting Shares | Super Voting Shares | Share Capital | Accumulated Deficit |
Balance, shares at Dec. 31, 2019 | 32,844,000 | 203,000 | |||
Balance, amount at Dec. 31, 2019 | $ 23,686,000 | $ 96,160,000 | $ (72,474,000) | ||
Net loss | (16,631,000) | $ 0 | $ 0 | (16,631,000) | |
Shares issued in connection with conversion of convertible debentures, shares | 250,000 | ||||
Shares issued in connection with conversion of convertible debentures, amount | 62,000 | 0 | 62,000 | ||
Issuance of warrants | 1,556,000 | $ 0 | 0 | 1,556,000 | |
Share-based compensation expense, shares | 248,000 | ||||
Share-based compensation expense, amount | 1,825,000 | $ 0 | 1,825,000 | ||
Balance, shares at Jun. 30, 2020 | 33,342,000 | 203,000 | |||
Balance, amount at Jun. 30, 2020 | 10,498,000 | $ 203 | 99,603,000 | (89,105,000) | |
Balance, shares at Mar. 31, 2020 | 32,988,000 | 203,000 | |||
Balance, amount at Mar. 31, 2020 | 17,424,000 | $ 203 | 97,772,000 | (80,348,000) | |
Net loss | (8,757,000) | $ 0 | 0 | 0 | (8,757,000) |
Shares issued in connection with conversion of convertible debentures, shares | 250,000 | ||||
Shares issued in connection with conversion of convertible debentures, amount | 62,000 | 62,000 | 0 | ||
Issuance of warrants | 1,556,000 | $ 0 | $ 0 | 1,556,000 | 0 |
Share-based compensation expense, shares | 104,000 | ||||
Share-based compensation expense, amount | 213,000 | 213,000 | 0 | ||
Balance, shares at Jun. 30, 2020 | 33,342,000 | 203,000 | |||
Balance, amount at Jun. 30, 2020 | 10,498,000 | $ 203 | 99,603,000 | (89,105,000) | |
Balance, shares at Dec. 31, 2020 | 57,617,000 | 203,000 | |||
Balance, amount at Dec. 31, 2020 | 31,156,000 | $ 203 | 125,540,000 | (94,384,000) | |
Net loss | (5,988,000) | $ 0 | 0 | 0 | (5,988,000) |
Shares issued in connection with conversion of convertible debentures, shares | 2,393,000 | ||||
Shares issued in connection with conversion of convertible debentures, amount | 478,000 | 478,000 | |||
Issuance of warrants | 0 | ||||
Share-based compensation expense, shares | 371,000 | ||||
Share-based compensation expense, amount | 625,000 | 625,000 | |||
Issuance of shares associated with acquisitions, shares | 30,641,000 | ||||
Issuance of shares associated with acquisitions, amount | 43,259,000 | 43,259,000 | |||
Exercise of warrants, shares | 1,325,000 | ||||
Exercise of warrants, amount | $ 665,000 | 665,000 | |||
Exercise of options, shares | 0 | 76,000 | |||
Exercise of options, amount | $ 46,000 | $ 0 | 46,000 | ||
Balance, shares at Jun. 30, 2021 | 92,423,000 | 203,000 | |||
Balance, amount at Jun. 30, 2021 | 70,241,000 | 170,613,000 | (100,372,000) | ||
Balance, shares at Mar. 31, 2021 | 83,221,000 | 203,000 | |||
Balance, amount at Mar. 31, 2021 | 59,903,000 | 161,006,000 | (101,103,000) | ||
Net loss | 731,000 | $ 0 | $ 0 | 0 | 731,000 |
Shares issued in connection with conversion of convertible debentures, shares | 1,003,000 | ||||
Shares issued in connection with conversion of convertible debentures, amount | 200,000 | 200,000 | 0 | ||
Share-based compensation expense, shares | 125,000 | ||||
Share-based compensation expense, amount | 338,000 | 338,000 | 0 | ||
Issuance of shares associated with acquisitions, shares | 7,998,000 | ||||
Issuance of shares associated with acquisitions, amount | 9,023,000 | 9,023,000 | 0 | ||
Exercise of options, shares | 76,000 | ||||
Exercise of options, amount | 46,000 | 46,000 | 0 | ||
Balance, shares at Jun. 30, 2021 | 92,423,000 | 203,000 | |||
Balance, amount at Jun. 30, 2021 | $ 70,241,000 | $ 170,613,000 | $ (100,372,000) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CASH FLOW FROM OPERATING ACTIVITIES | ||
Net loss | $ (5,988,000) | $ (16,631,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,858,000 | 1,762,000 |
Amortization of debt issuance costs | 420,000 | 0 |
Share-based compensation expense | 625,000 | 1,825,000 |
Provision for doubtful accounts | 173,000 | 720,000 |
Termination of branding rights agreement | 152,000 | 0 |
Unrealized gain on change in fair value of investments | (125,000) | (395,000) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,526,000) | 1,390,000 |
Inventory | (1,501,000) | 1,980,000 |
Prepaid expenses and other current assets | (553,000) | (333,000) |
Other assets | 0 | 0 |
Accounts payable and accrued expenses | (4,320,000) | 2,307,000 |
Other current and long-term liabilities | 0 | (98,000) |
Net cash used in operating activities | (10,785,000) | (7,473,000) |
CASH FLOW FROM INVESTING ACTIVITIES | ||
Proceeds from asset sales | 1,979,000 | 0 |
Purchases of property and equipment | (608,000) | (4,110,000) |
Disposition of business interest, net of cash received | 0 | 2,743,000 |
Acquisition of business assets, net | (6,642,000) | 0 |
Investment in corporate interests | 0 | 0 |
Net cash used in investing activities | (5,271,000) | (1,367,000) |
CASH FLOW FROM FINANCING ACTIVITIES | ||
Principal payments on lease obligations | (1,164,000) | (1,053,000) |
Payments on notes payable | (128,000) | (31,000) |
Proceeds from convertible notes, net of financing costs | 0 | 13,663,000 |
Issuance of warrants associated with convertible notes offering | 0 | 1,556,000 |
Proceeds from brokered private placement | 0 | 62,000 |
Proceeds from lease financing | 0 | 0 |
Proceeds from notes payable | 0 | 0 |
Proceeds from exercise of warrants and options | 710,000 | 0 |
Issuance of subordinate voting shares for acquisition | 0 | 0 |
Payment of debt issuance costs | 0 | 0 |
Net cash (used) provided by financing activities | (582,000) | 14,197,000 |
Change in cash and cash equivalents and restricted cash | (16,638,000) | 5,357,000 |
Cash and cash equivalents-beginning of year | 25,751,000 | 1,344,000 |
Cash, cash equivalents and restricted cash-end of period | 9,113,000 | 6,701,000 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid during the period for interest | 605,000 | 1,403,000 |
Cash paid during the period for income taxes | 187,000 | 0 |
OTHER NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Property and equipment acquired via capital lease | 0 | 578,000 |
Disposition of business interests | 0 | 2,743,000 |
Issuance of warrants | 0 | 1,556,000 |
Shares issued for services in connection with convertible debenture offering | 0 | 62,000 |
Issuance of subordinate voting shares in exchange for net assets acquired | 43,259,000 | 0 |
Liabilities assumed and receivable forgiveness in exchange for net assets acquired | 2,910,000 | 0 |
Debt and associated accrued interest converted to subordinate voting shares | $ 478,000 | $ 0 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The interim unaudited condensed consolidated financial statements included herein have been prepared by Lowell Farms Inc. (the “Company” or “Lowell”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including 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 of America have been condensed or omitted. The interim unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary (consisting only of normal recurring adjustments), to present a fair statement of results for the interim periods presented. The operating results for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Form 10 filed for the year ended December 31, 2020. There have been no material changes to our significant accounting policies as of and for the six months ended June 30, 2021. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all intercompany balances and transactions. The condensed consolidated balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include allowance for doubtful accounts and credit losses, carrying value of inventory, revenue recognition, accounting for stock-based compensation expense, and income taxes. Actual results could differ from those estimates. The global COVID-19 pandemic has impacted the operations and purchasing decisions of companies worldwide. It also has created and may continue to create significant uncertainty in the global economy. The Company has undertaken measures to protect its employees, partners, customers, and vendors. In addition, the Company’s personnel are subject to various travel restrictions, which limit the ability of the Company to provide services to customers and affiliates. This impacts the Company's normal operations. To date, the Company has been able to provide uninterrupted access to its products and services, including certain employees that are working remotely, and its pre-existing infrastructure that supports secure access to the Company’s internal systems. If, however, the COVID-19 pandemic has a substantial impact on the productivity of the Company’s employees or its partners’ or customers’ decision to use the Company’s products and services, the results of the Company’s operations and overall financial performance may be adversely impacted. The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require updates to the Company’s estimates and judgments or revisions to the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements. Recently Adopted Accounting Standards In May 2020, the SEC adopted the final rule under SEC release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, amending Rule 1-02(w)(2) which includes amendments to certain of its rules and forms related to the disclosure of financial information regarding acquired or disposed businesses. Among other changes, the amendments impact SEC rules relating to (1) the definition of “significant” subsidiaries, (2) requirements to provide financial statements for “significant” acquisitions, and (3) revisions to the formulation and usage of pro forma financial information. The final rule became effective on January 1, 2021; however, voluntary early adoption was permitted. The Company early adopted the provisions of the final rule in 2020. The guidance did not have a material impact on the Company’s condensed consolidated financial statements and disclosures. In February 2016, FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use (ROU) asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases Topic 842 Target improvements, which provides an additional (and optional) transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements, which further clarifies the determination of fair value of the underlying asset by lessors that are not manufacturers or dealers and modifies transition disclosure requirements for changes in accounting principles and other technical updates. The Company adopted the standard effective January 1, 2019 using the modified retrospective adoption method which allowed it to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit. In connection with the adoption of the new lease pronouncement, the Company recorded a charge to accumulated deficit of $847. Refer to the Summary of Effects of Lease Accounting Standard Update Adopted in First Quarter of 2019 in the audited consolidated financial statements and notes thereto in the Company’s Form 10 filed for the year ended December 31, 2020. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and subsequent amendments to the initial guidance: ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”, ASU 2019-04 “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”, ASU 2019-05 “Financial Instruments-Credit Losses”, ASU 2019-11 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (collectively, Topic 326),ASU 2020-02 Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842) and ASU 2020-03 Codification Improvements to Financial Instruments. Topic 326 requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for the year ended December 31, 2020. The Company believes that the most notable impact of this ASU will relate to its processes around the assessment of the adequacy of its allowance for doubtful accounts on trade accounts receivable and the recognition of credit losses. We continue to monitor the economic impact of the COVID-19 pandemic, however based on current market conditions, the adoption of the ASU did not have a material impact on the condensed consolidated financial statements. In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808), Clarifying the Interaction between Topic 808 and Topic 606. This guidance amended Topic 808 and Topic 606 to clarify that transactions in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer for a distinct good or service (i.e., unit of account). The amendments preclude an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. This guidance is effective for the year ended December 31, 2020. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance removes certain exceptions to the general principles in Topic 740 and enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. This guidance was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and did not have a material impact on our condensed consolidated financial statements. In January 2020, the FASB issued ASU 2020-01 Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This guidance addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. We are currently evaluating the impact of ASU 2020-01 on our Consolidated Financial Statements, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and did not have a material impact on our condensed consolidated financial statements. Accounting standards not yet adopted In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021, which means it will be effective for our fiscal year beginning January 1, 2022. Early adoption is permitted. We are currently evaluating the impact of ASU 2020-06 on our condensed consolidated financial statements. No other recently issued accounting pronouncements had or are expected to have a material impact on our condensed consolidated financial statements. |
ACQUISITIONS
ACQUISITIONS | 6 Months Ended |
Jun. 30, 2021 | |
ACQUISITIONS | |
2. ACQUISITIONS | 2. ACQUISITIONS Completed Acquisitions (1) (2) (3) (4) The Humble The Hacienda Lowell Farm (in thousands) Kaizen Inc. Flower Co. Company, LLC Services Total CONSIDERATION Contingent Payment $ 50 $ 44 $ - $ - $ 94 Cash 4,019 - 4,019 Transaction costs 428 190 618 Note payable and other obligations 200 65 3,115 9,000 12,380 Fair value of subordinate voting shares 62 55 34,358 9,610 44,085 Total consideration $ 312 $ 164 $ 41,920 $ 18,800 $ 61,196 PURCHASE PRICE ALLOCATION Assets Acquired Inventories $ - $ 6 $ 3,300 $ - $ 3,306 Accounts receivable - net - - 1,312 - 1,312 Other tangible assets - - 739 15,750 16,489 Intangible assets - brands and tradenames 104 80 37,299 - 37,483 Intangible assets - technology and know-how and other 208 78 - 3,050 3,336 Liabilities assumed Payables and other liabilities - - (730 ) - (730 ) Fair value of net assets acquired $ 312 $ 164 $ 41,920 $ 18,800 $ 61,196 The Company completed the following asset acquisitions, and allocated the purchase price as follows: The Kaizen Inc. and The Humble Flower Co. acquisitions qualified as a business combination under ASC 805. The Hacienda Company, LLC acquisition qualified as an asset acquisition under ASU 2017.01. Consideration has been allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. No goodwill was recognized. The results of these acquisitions are included in the Company’s net earnings from the date of acquisition. The fair value of the assets acquired and the liabilities assumed for Kaizen Inc. and the Humble Flower Company were finalized in the quarter ended June 30, 2020. ● Kaizen Inc. On May 1, 2019, the Company acquired all of the assets, global rights and business interests of Kaizen Inc. for a purchase price of $556 that will be paid as and if financial performance targets are met during the period beginning on May 1, 2019 and ending on April 30, 2023. Kaizen is a premium brand offering a full spectrum of cannabis concentrates. Effective July 15, 2020 the asset purchase agreement was modified, eliminating payments associated with meeting financial performance targets in exchange for the issuance of 225 thousand options to purchase Subordinate Voting Shares and a note payable of $200, with payments over two years. Had the modifications been reflected as of the date of acquisition, net assets would have decreased $223 at December 31, 2019 and net loss in 2019 would have been reduced by $21. ● The Humble Flower Co. On April 18, 2019, the Company acquired all of the assets, global rights and business interests associated with the brand Humble Flower Co. for a purchase price of $472 that will be paid as and if financial performance targets are met during the period beginning on April 19, 2019 and ending on April 18, 2023. The acquisition marks the Company’s expansion into cannabis-infused topical creams, balms, and oils. Effective June 1, 2020 the asset purchase agreement was modified, eliminating payments associated with meeting financial performance targets in exchange for the issuance of 225 thousand options to purchase Subordinate Voting Shares and a note payable of $65, with payments commencing on January 1, 2021 for 24 months. Had the modifications been reflected as of the date of acquisition, net assets would have decreased $308 at December 31, 2019 and net loss in 2019 would have been reduced by $34. ● The Hacienda Company, LLC. On February 25, 2021, the Company acquired substantially all of the assets of the Lowell Herb Co. and Lowell Smokes trademark brands, product portfolio, and production assets from The Hacienda Company, LLC for a purchase price of $41,920. Lowell Herb Co. is a leading California cannabis brand that manufactures and distributes distinctive and highly regarded premium packaged flower, pre-roll, concentrates, and vape products. The acquisition consideration was comprised of $4.1 million in cash and the issuance of 22,643,678 subordinate voting shares and obligations assumed. In connection with this acquisition, the Company completed a change in its corporate name to Lowell Farms Inc. effective March 1, 2021. ● Lowell Farm Services On June 29, 2021, we acquired real property and related assets of a first-of-its-kind cannabis drying and midstream processing facility located in Monterey County for a purchase price of $18,800. The 10-acre, 40,000 square foot processing facility will provide drying, bucking, trimming, sorting, grading, and packaging operations for up to 250,000 lbs. of wholesale cannabis flower annually. The new facility will process nearly all the cannabis that we grow at our existing cultivation operations. Additionally, we commissioned a new business unit called Lowell Farm Services (“LFS”), which will engage in fee-based processing services for regional growers from the Salinas Valley area. The acquisition consideration was comprised primarily of a note payable of $9.0 million and the issuance of 7,997,520 subordinate voting shares and obligations assumed. LFS operations are expected to become operational during the third quarter of 2021. Terminated Acquisition On May 14, 2019, the Company entered into a definitive agreement to acquire the assets of W The Brand (“W Vapes”), a manufacturer and distributor in Nevada and Oregon of cannabis concentrates, cartridges and disposable pens, in a cash and stock transaction. Under the terms of the agreement, the purchase consideration to W Vapes shareholders consisted of $10 million in cash and $10 million in Subordinate Voting Shares (based on a deemed value of CDN$15.65 per share). In November 2019, the definitive agreement was amended whereby the Company advanced $2 million in non-recourse funds to the seller in exchange for release of $10 million of cash held in escrow related to the acquisition and in December 2019, the Company purchased the Las Vegas, Nevada facility for $4.1 million. On July 17, 2020, the Company announced the termination of the definitive agreement with W Vapes and the obligation to acquire the assets of W Vapes was terminated. The termination coincided with an asset acquisition announcement between W Vapes and Planet 13 Holdings Inc. (“Planet 13”). Additionally, the Company sold the Las Vegas facility to certain affiliates of Planet 13 for a cash payment of approximately $500, and an additional cash payment of approximately $2.8 million upon regulatory approval of the W Vapes and Planet 13 transaction which was received in January 2021, and in the third quarter the Company finalized a note payable of $843 to the owners of W Vapes, payable coinciding with the receipt of the $2.8 million payment from the facility sale, which was paid in January 2021. As a result, the Company reflected a $4.4 million loss in loss on termination of investments, net on its consolidated statement of operations for the year ended December 31, 2020. |
PREPAID AND OTHER CURRENT ASSET
PREPAID AND OTHER CURRENT ASSETS | 6 Months Ended |
Jun. 30, 2021 | |
PREPAID AND OTHER CURRENT ASSETS | |
3. PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3. PREPAID AND OTHER CURRENT ASSETS Prepaid and other current assets were comprised of the following items: June 30, December 31, (in thousands) 2021 2020 Deposits $ 533 $ 572 Insurance 917 593 Supplier advances 1,623 504 Nevada building sale proceeds - 2,800 Other 1,071 1,922 Total prepaid and other current assets $ 4,144 $ 6,391 |
INVENTORY
INVENTORY | 6 Months Ended |
Jun. 30, 2021 | |
INVENTORY | |
4. INVENTORY | 4. INVENTORY Inventory was comprised of the following items: June 30, December 31, (in thousands) 2021 2020 Raw materials $ 11,852 $ 7,950 Work in process 45 - Finished goods 2,839 1,983 Total inventory $ 14,736 $ 9,933 |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 6 Months Ended |
Jun. 30, 2021 | |
OTHER CURRENT LIABILITIES | |
5. OTHER CURRENT LIABILITIES | 5. OTHER CURRENT LIABILITIES Other current liabilities were comprised of the following items: June 30, December 31, (in thousands) 2021 2020 Excise and cannabis tax $ 3,912 $ 5,780 Third party brand distribution accrual 269 584 Insurance and professional fee accrual 820 746 Other 11 1,750 Total other current liabilities $ 5,012 $ 8,860 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2021 | |
PROPERTY AND EQUIPMENT | |
6. PROPERTY AND EQUIPMENT | 6. PROPERTY AND EQUIPMENT A reconciliation of the beginning and ending balances of property and equipment and accumulated depreciation during the six months ended June 30, 2021 and property and equipment, net as of December 31, 2020 are as follows: Land and Leasehold Furniture Construction Right of (in thousands) Buildings Improvements and Fixtures Equipment Vehicles in Process Use Assets Total Costs Balance—December 31, 2020 $ - $ 10,799 $ 50 $ 1,276 $ 854 $ 2,528 $ 41,530 $ 57,037 Additions - 73 - 268 - 814 - 1,155 Business Acquisitions 14,529 - - 1,413 - - - 15,942 Disposals - - - - - - - - Balance—June 30, 2021 $ 14,529 $ 10,872 $ 50 $ 2,957 $ 854 $ 3,342 $ 41,530 $ 74,134 Accumulated Depreciation Balance—December 31, 2020 $ - $ (634 ) $ (47 ) $ (427 ) $ (411 ) $ - $ (6,275 ) $ (7,794 ) Depreciation - (167 ) (1 ) (72 ) (77 ) - (1,527 ) (1,844 ) Disposals - - - - - - - - Balance—June 30, 2021 $ - $ (801 ) $ (48 ) $ (499 ) $ (488 ) $ - $ (7,802 ) $ (9,638 ) Net Book Value-June 30, 2021 $ 14,529 $ 10,071 $ 2 $ 2,458 $ 366 $ 3,342 $ 33,728 $ 64,496 Net Book Value -December 31, 2020 $ - $ 10,165 $ 3 $ 849 $ 443 $ 2,528 $ 35,255 $ 49,243 Construction in process represent assets under construction related to cultivation, manufacturing, and distribution facilities not yet completed or otherwise not placed in service. Depreciation expense of $946 and $1,044 were recorded for the three months ended June 30, 2021 and 2020, respectively, of which $584 and $769 respectively, were included in cost of goods sold. Depreciation expense of $195 was also recorded in other income (expense) for the three months ended June 30, 2021. Depreciation expense of $1,844 and $1,909 were recorded for the six months ended June 30, 2021 and 2020, respectively, of which $1,168 and $1,283 respectively, were included in cost of goods sold. Depreciation expense of $195 was also recorded in other income (expense) for the six months ended June 30, 2021. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2021 | |
GOODWILL AND INTANGIBLE ASSETS | |
7. GOODWILL AND INTANGIBLE ASSETS | 7. GOODWILL AND INTANGIBLE ASSETS Goodwill A reconciliation of the beginning and ending balances of goodwill during the six months ended June 30, 2021 is as follows: (in thousands) Costs Balance - December 31, 2020 $ 357 Additions - Business Acquisitions - Impairment - Balance - June 30, 2021 $ 357 The Company evaluates goodwill for impairment annually during the fiscal third quarter and when an event occurs, or circumstances change such that it is reasonably possible that impairment may exist. The Company accounts for goodwill and evaluates its goodwill balances and tests them for impairment in accordance with related accounting standards. The Company performed its annual impairment assessment in its third quarter of fiscal 2020, and its analysis indicated that the Company had no impairment of goodwill. Other Intangible Assets A reconciliation of the beginning and ending balances of intangible assets and accumulated amortization during the six months ended June 30, 2021 and intangible assets, net as of December 31, 2020 are as follows: Definite Life Intangibles Indefinite Life Intangibles Branding Technology/ Brands & (in thousands) Rights Know How Tradenames Total Costs Balance—December 31, 2020 $ 250 $ 208 $ 408 $ 866 Business acquisition - 3,050 37,299 40,349 Agreement termination (250 ) - - (250 ) Balance—June 30, 2021 $ - $ 3,258 $ 37,707 $ 40,965 Accumulated Amortization Balance—December 31, 2020 $ (93 ) $ (37 ) $ - $ (130 ) Agreement termination 98 - - 98 Amortization (5 ) (9 ) - (14 ) Other - - - - Balance—June 30, 2021 $ - $ (46 ) $ - $ (46 ) Net Book Value June 30, 2021 $ - $ 3,212 $ 37,707 $ 40,919 Net Book Value December 31, 2020 $ 157 $ 171 $ 408 $ 736 Intangible assets with finite lives are amortized over their estimated useful lives. Amortization periods of assets with finite lives are based on management's estimates at the date of acquisition. The Company recorded amortization expense of $14, and $44 for the six months ended June 30, 2021, and 2020, respectively. The Company estimates that amortization expense for our existing other intangible assets will be approximately $220 annually for each of the next five fiscal years. Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, changes in useful lives or other relevant factors or changes. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2021 | |
STOCKHOLDERS' EQUITY | |
8. SHAREHOLDERS' EQUITY | 8. SHAREHOLDERS’ EQUITY Shares Outstanding The table below details the change in Company shares outstanding by class during the six months ended June 30, 2021: Subordinate Super (in thousands) Voting Shares Voting Shares Balance—December 31, 2020 57,617 203 Shares issued in connection with exercise of warrants 1,325 - Shares issued in connection with conversion of convertible debentures 2,393 - Shares issued in connection with asset acquisition 30,641 - Issuance of vested restricted stock units 371 - Stock issued in connection with exercised of stock options 76 - Balance—June 30, 2021 92,423 203 (in thousands) Balance—December 31, 2020 93,898 Warrants issued in conjunction with broker option exercise (1) 163 Warrants expired (358 ) Warrants converted into subordinate voting shares (1,000 ) Balance—June 30, 2021 92,703 (1) Excluded 390 warrants issuable should underwriter options be exercised. |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2021 | |
DEBT | |
9. DEBT | 9. DEBT Debt at June 30, 2021 and December 31, 2020, was comprised of the following: June 30, December 31, (in thousands) 2021 2020 Current portion of long-term debt Vehicle loans (1) $ 186 $ 170 Note payable (3) 183 1,043 Total short-term debt 369 1,213 Long-term debt, net Vehicle loans (1) 162 233 Note payable (2) 56 65 Note payable (3) 40 5 Mortgage payable (4) 8,938 - Convertible debenture (5) 13,646 13,701 Total long-term debt 22,842 14,004 Total Indebtedness $ 23,211 $ 15,217 (1) Primarily fixed term loans on transportation vehicles. Weighted average interest rate at June 30, 2021 was 8.1%. (2) Note payable in connection with Acme acquisition to be paid as and if financial performance targets are met over the earnout period. (3) Note payable in connection with Humble Flower and Kaizen acquisitions and termination of the W Vapes acquisition. Weighted average interest rate at June 30, 2021 was 4%. (4) Net of deferred financing costs of $422. (5) Net of deferred financing costs of $1,879. Stated maturities of debt obligations are as follows as of June 30, 2021: June 30, (in thousands) 2021 2021 $ 268 2022 321 2023 15,876 2024 383 2025 421 2026 and thereafter 8,113 Total debt obligations $ 25,382 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2021 | |
LEASES | |
10. LEASES | 10. LEASES The Company adopted ASU 2016-02 (Topic 842) effective January 1, 2019 using the modified retrospective adoption method which allowed it to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit. In connection with the adoption of the new lease pronouncement, the Company recorded a charge to accumulated deficit of $847. A reconciliation of lease obligations for the six months ended June 30, 2021, is as follows: (in thousands) Lease Liability: December 31, 2020 $ 38,834 Lease principal payments (1,164 ) June 30, 2021 $ 37,670 June 30, 2021 Lease obligation, current portion $ 2,410 Lease obligation, long-term portion 35,260 Total $ 37,670 All extension options that are reasonably certain to be exercised have been included in the measurement of lease obligations. The Company reassesses the likelihood of extension option exercise if there is a significant event or change in circumstances within its control. The components of lease expense for the three and six months ended June 30, 2021 and 2020 are as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2021 2020 2021 2020 Amortization of leased assets (1) $ 785 $ 839 $ 1,527 $ 1,631 Interest on lease liabilities (2) 634 491 1,197 964 Total $ 1,419 $ 1,330 $ 2,724 $ 2,595 ____________ (1) Included in cost of goods sold and general and administrative in the consolidated statement of operations. (2) Included in interest expense in the consolidated statement of operations. The key assumptions used in accounting for leases as of June 30, 2021 were a weighted average remaining lease term of 17.6 years and a weighted average discount rate of 6%. The key assumptions used in accounting for leases as of December 31, 2020 were a weighted average remaining lease term of 18.1 years and a weighted average discount rate of 6.0%. The future lease payments with initial remaining terms in excess of one year as of June 30, 2021 were as follows: June 30, (in thousands) 2021 Balance of 2021 $ 1,187 2022 - 2023 5,137 2024 - 2025 3,844 2026 and beyond 27,502 Total $ 37,670 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2021 | |
SHARE-BASED COMPENSATION | |
11. SHARE-BASED COMPENSATION | 11. SHARE-BASED COMPENSATION During 2019 the Company’s Board of Directors adopted the 2019 Stock and Incentive Plan (the “Plan”), which was amended in April 2020 and March 2021. The Plan permits the issuance of stock options, stock appreciation rights, stock awards, share units, performance shares, performance units and other stock-based awards, and, as of June 30, 2021, 13.2 million shares have been authorized to be issued under the Plan and 4.6 million are available for future grant. The Plan provides for the grant of options as either non-statutory stock options or incentive stock options and restricted stock units to employees, officers, directors, and consultants of the Company to attract and retain persons of ability to perform services for the Company and to reward such individuals who contribute to the achievement by the Company of its economic objectives. The awards granted generally vest in 25% increments over a four-year period and option awards expire 6 years from grant date. The Plan is administered by the Board or a committee appointed by the Board, which determines the persons to whom the awards will be granted, the type of awards to be granted, the number of awards to be granted, and the specific terms of each grant, including the vesting thereof, subject to the provisions of the Plan. During the three and six months ended June 30, 2021 and 2020, the Company granted shares to certain employees as compensation for services. These shares were accounted for in accordance with ASC 718 – Compensation – Stock Compensation. The Company amortizes awards over the service period and until awards are fully vested. For the three and six months ended June 30, 2021 and 2020, share-based compensation expense was as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2021 2020 2021 2020 Cost of goods sold $ - $ - $ - $ - General and administrative expense 338 213 625 1,825 Total share-based compensation $ 338 $ 213 $ 625 $ 1,825 The following table summarizes the status of stock option grants and unvested awards at and for the six months ended June 30, 2021: Weighted-Average Stock Weighted-Average Remaining Aggregate (in thousands except per share amounts) Options Exercise Price Contractual Life Intrinsic Value Outstanding—December 31, 2020 6,260 $ 0.97 4.7 $ 3,162 Granted 1,880 1.41 Exercised - - Cancelled (1,153 ) 1.60 Outstanding—June 30, 2021 6,987 $ 0.95 2.6 Exercisable—June 30, 2021 1,677 $ 1.02 3 $ 69 Vested and expected to vest—June 30, 2021 6,987 $ 0.95 2.6 $ 2,254 The weighted-average fair value of options granted during the three and six months ended June 30, 2021, estimated as of the grant date, were $1.18 and $1.41, respectively. As of June 30, 2021, there was $1,252 of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a remaining weighted-average vesting period of 2.0 years. The following table summarizes the status of restricted stock unit (“RSU”) grants and unvested awards at and for the six months ended June 30, 2021: Weighted-Average (in thousands except per share amounts) RSUs Fair Value Outstanding—December 31, 2020 450 $ 0.33 Granted 1,395 1.15 Vested - - Cancelled (10 ) 1.11 Outstanding—June 30, 2021 1,835 $ 0.95 As of June 30, 2021, there was $963 of total unrecognized compensation cost related to non-vested restricted stock units, which is expected to be recognized over a remaining weighted-average vesting period of 20 months. The fair value of the stock options and RSUs granted were determined using the Black-Scholes option-pricing model with the following weighted average assumptions at the time of grant. Stock Options Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Three Months Ended March 31, 2021 2020 2021 2020 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 1.1 % 2.2 % 0.9 % 2.2 % Expected term in years 4.25 4.12 4.25 4.14 RSUs Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Three Months Ended March 31, 2021 2020 2021 2020 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 0.9 % 0.9 % 0.9 % 0.9 % Expected term in years 0.74 0.60 0.74 0.60 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2021 | |
INCOME TAXES | |
12. INCOME TAXES | 12. INCOME TAXES Coronavirus Aid, Relief and Economic Security Act On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and signed into law in response to the market volatility and instability resulting from the COVID-19 pandemic. It includes a significant number of tax provisions and lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the “2017 Act”). The changes are mainly related to: (1) the business interest expense disallowance rules for 2019 and 2020; (2) net operating loss rules; (3) charitable contribution limitations; (4) employee retention credit; and (5) the realization of corporate alternative minimum tax credits. The Company continues to assess the impact and future implication of these provisions; however, it does not anticipate any amounts that could give rise to a material impact to the overall consolidated financial statements. The provision for income tax expense for the three months ended June 30, 2021, was $74, representing an effective tax rate of 9.20%, compared to an income tax expense of $25 for the three months ended June 30, 2020, representing an effective tax rate of 0.29%. The provision for income tax expense for the six months ended June 30, 2021, was $138, representing a effective tax rate of 2.36% compared to an income tax expense of $50 for the six months ended June 30, 2020, representing an effective tax rate of 0.30%. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 6 Months Ended |
Jun. 30, 2021 | |
Net income (loss) per share: | |
13. NET INCOME (LOSS) PER SHARE | 13. NET INCOME (LOSS) PER SHARE Net income (loss) per share represents the net earnings/loss attributable to shareholders divided by the weighted average number of shares outstanding during the period on an as converted basis. Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands except per share amounts) 2021 2020 2021 2020 Net income (loss) $ 731 $ (8,757 ) $ (5,988 ) $ (16,631 ) Net income (loss) per share: Basic $ 0.01 $ (0.26 ) $ (0.10 ) $ (0.50 ) Diluted $ 0.00 $ (0.26 ) $ (0.10 ) $ (0.50 ) Weighted average shares outstanding: Basic 71,021 33,307 61,956 33,025 Diluted 201,278 33,307 61,956 33,025 Weighted average potentially diluted shares (1): Basic shares 71,021 33,307 61,956 33,025 Options 2,908 - - - Warrants 60,767 - - - Convertible debentures 64,796 - - - Restricted stock units 1,786 - - - Total weighted average potentially diluted shares: 201,278 33,307 61,956 33,025 (1) For the above net loss periods, the inclusion of options, warrants, convertible debentures and restricted stock units in the calculation of diluted earnings per share would be anti-dilutive, and accordingly, were excluded from the diluted loss per share calculation. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2021 | |
FAIR VALUE MEASUREMENTS | |
14. FAIR VALUE MEASUREMENTS | 14. FAIR VALUE MEASUREMENTS Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. An asset’s or liability’s level is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are valued and disclosed in one of the following three levels of the valuation hierarchy: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions. At June 30, 2021 and 2020, and December 31, 2020 the carrying value of cash and cash equivalents, accounts receivable, prepaid expense and other current assets, accounts payable and other current liabilities approximate fair value due to the short-term nature of such instruments. The carrying value of the Company's debt approximates fair value based on current market rates (Level 2). Nonrecurring fair value measurements The Company uses fair value measures when determining assets and liabilities acquired in an acquisition as described above in the Notes to Condensed Consolidated Financial Statements, which are considered a Level 3 measurement. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
15. COMMITMENTS AND CONTINGENCIES | 15. COMMITMENTS AND CONTINGENCIES Commitments In January 2021, the Company signed a letter of intent to expand its cultivation footprint. The agreement contemplates a land-lease from a developer that has prepared the property for cannabis cultivation. Lowell would be responsible for construction costs of greenhouses using cash raised in the equity offering in December 2020 and cash generated from operations. The transaction is subject to final site due-diligence and negotiation of construction contracts. In the event the transaction contemplated in the letter of intent is pursued, the Company anticipates the site will be ready for operation in 2023. Contingencies The Company’s operations are subject to a variety of local and state regulation. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance with applicable local and state regulation as of June 30, 2021, cannabis regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties or restrictions in the future. In 2020, the Company entered into a payment plan offered by California regulatory authorities to pay certain excise and cultivation taxes over a 12 month period. If such taxes are not paid in accordance with the agreed payment plan the Company could be subject to certain late payment penalties. Litigation and Claims From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of June 30, 2021, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s operations. There are also no proceedings in which any of the Company’s directors, officers or affiliates are an adverse party or have a material interest adverse to the Company’s interest. Insurance Claims In September 2020 the Company experienced a small fire at its manufacturing facility which resulted in suspending certain operations until the facility was repaired. As a result, the company filed a business interruption claim which resulted in a payment of $1.4 million from the insurance carrier in March 2021. The proceeds from the claim were reflected in other income on the consolidated statement of operations for the year ended December 31, 2020. In August 2020 the Company experienced adverse air quality conditions that resulted in the Company closing the air vents in its greenhouse facilities at a time when extreme temperatures existed. As a result, plant health suffered due to the situation. The Company filed a business interruption claim which resulted in a payment of $2.65 million from the insurance carrier in July 2021, and is included in other income (expense) in the accompanying condensed consolidated statements of income (loss). |
GENERAL AND ADMINISTRATIVE EXPE
GENERAL AND ADMINISTRATIVE EXPENSES | 6 Months Ended |
Jun. 30, 2021 | |
GENERAL AND ADMINISTRATIVE EXPENSES | |
16. GENERAL AND ADMINISTRATIVE EXPENSES | 16. GENERAL AND ADMINISTRATIVE EXPENSES For the three and six months ended June 30, 2021 and 2020, general and administrative expenses were comprised of: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2021 2020 2021 2020 Salaries and benefits $ 1,561 $ 980 $ 2,398 $ 1,976 Professional fees 777 251 1,259 850 Share-based compensation 336 213 625 1,825 Administrative 1,143 12 2,004 82 Total general and administrative expenses $ 3,817 $ 1,456 $ 6,286 $ 4,733 |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2021 | |
RELATED-PARTY TRANSACTIONS | |
17. RELATED-PARTY TRANSACTIONS | 17. RELATED-PARTY TRANSACTIONS Transactions with related parties are entered into in the normal course of business and are measured at the amount established and agreed to by the parties. Lowell received certain administrative, operational and consulting services through a Management Services Agreement with Edible Management, LLC (“EM”). EM is a limited liability company owned by the co-founders of Lowell and was formed to provide Lowell with certain administrative functions comprising: cultivation, distribution, and production operations support; general administration; corporate development; human resources; finance and accounting; marketing; sales; legal and compliance. The agreement provided for the dollar-for-dollar reimbursement of expenses incurred by EM in performance of its services. Amounts paid to EM for the three and six months ended June 30, 2020 was $2,201 and $5,041, respectively. The Management Services Agreement with EM was terminated as of December 31, 2020. In April 2015, Lowell entered into a services agreement with Olympic Management Group (“OMG”), for advisory and technology support services, including the access and use of software licensed to OMG to perform certain data processing and enterprise resource planning (ERP) operational services. OMG is owned by one of the Company’s co-founders. The agreement provides for the dollar-for-dollar reimbursement of expenses incurred by OMG in performance of its services. There were no amounts paid to OMG for the quarters ended June 30, 2021 and 2020. Amounts paid to OMG for the six months ended June 30, 2021 and 2020, were $nil and $5, respectively. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2021 | |
SEGMENT INFORMATION | |
18. SEGMENT INFORMATION | 18. SEGMENT INFORMATION The Company's operations are comprised of a single reporting operating segment engaged in the production and sale of cannabis products in the United States. As the operations comprise a single reporting segment, amounts disclosed in the financial statements also represent a single reporting segment. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2021 | |
SUBSEQUENT EVENTS | |
19. SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS The Company has evaluated subsequent events through August 16, 2021, the date the financial statements were available to be issued. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | The interim unaudited condensed consolidated financial statements included herein have been prepared by Lowell Farms Inc. (the “Company” or “Lowell”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), including 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 of America have been condensed or omitted. The interim unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments necessary (consisting only of normal recurring adjustments), to present a fair statement of results for the interim periods presented. The operating results for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Form 10 filed for the year ended December 31, 2020. There have been no material changes to our significant accounting policies as of and for the six months ended June 30, 2021. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after the elimination of all intercompany balances and transactions. The condensed consolidated balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. |
Use of Estimates | The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include allowance for doubtful accounts and credit losses, carrying value of inventory, revenue recognition, accounting for stock-based compensation expense, and income taxes. Actual results could differ from those estimates. The global COVID-19 pandemic has impacted the operations and purchasing decisions of companies worldwide. It also has created and may continue to create significant uncertainty in the global economy. The Company has undertaken measures to protect its employees, partners, customers, and vendors. In addition, the Company’s personnel are subject to various travel restrictions, which limit the ability of the Company to provide services to customers and affiliates. This impacts the Company's normal operations. To date, the Company has been able to provide uninterrupted access to its products and services, including certain employees that are working remotely, and its pre-existing infrastructure that supports secure access to the Company’s internal systems. If, however, the COVID-19 pandemic has a substantial impact on the productivity of the Company’s employees or its partners’ or customers’ decision to use the Company’s products and services, the results of the Company’s operations and overall financial performance may be adversely impacted. The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require updates to the Company’s estimates and judgments or revisions to the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements. |
Recent Accounting Standards | In May 2020, the SEC adopted the final rule under SEC release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, amending Rule 1-02(w)(2) which includes amendments to certain of its rules and forms related to the disclosure of financial information regarding acquired or disposed businesses. Among other changes, the amendments impact SEC rules relating to (1) the definition of “significant” subsidiaries, (2) requirements to provide financial statements for “significant” acquisitions, and (3) revisions to the formulation and usage of pro forma financial information. The final rule became effective on January 1, 2021; however, voluntary early adoption was permitted. The Company early adopted the provisions of the final rule in 2020. The guidance did not have a material impact on the Company’s condensed consolidated financial statements and disclosures. In February 2016, FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use (ROU) asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases Topic 842 Target improvements, which provides an additional (and optional) transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements, which further clarifies the determination of fair value of the underlying asset by lessors that are not manufacturers or dealers and modifies transition disclosure requirements for changes in accounting principles and other technical updates. The Company adopted the standard effective January 1, 2019 using the modified retrospective adoption method which allowed it to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit. In connection with the adoption of the new lease pronouncement, the Company recorded a charge to accumulated deficit of $847. Refer to the Summary of Effects of Lease Accounting Standard Update Adopted in First Quarter of 2019 in the audited consolidated financial statements and notes thereto in the Company’s Form 10 filed for the year ended December 31, 2020. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” and subsequent amendments to the initial guidance: ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”, ASU 2019-04 “Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”, ASU 2019-05 “Financial Instruments-Credit Losses”, ASU 2019-11 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (collectively, Topic 326),ASU 2020-02 Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842) and ASU 2020-03 Codification Improvements to Financial Instruments. Topic 326 requires measurement and recognition of expected credit losses for financial assets held. This guidance is effective for the year ended December 31, 2020. The Company believes that the most notable impact of this ASU will relate to its processes around the assessment of the adequacy of its allowance for doubtful accounts on trade accounts receivable and the recognition of credit losses. We continue to monitor the economic impact of the COVID-19 pandemic, however based on current market conditions, the adoption of the ASU did not have a material impact on the condensed consolidated financial statements. In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808), Clarifying the Interaction between Topic 808 and Topic 606. This guidance amended Topic 808 and Topic 606 to clarify that transactions in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer for a distinct good or service (i.e., unit of account). The amendments preclude an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. This guidance is effective for the year ended December 31, 2020. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance removes certain exceptions to the general principles in Topic 740 and enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. This guidance was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and did not have a material impact on our condensed consolidated financial statements. In January 2020, the FASB issued ASU 2020-01 Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This guidance addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. We are currently evaluating the impact of ASU 2020-01 on our Consolidated Financial Statements, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and did not have a material impact on our condensed consolidated financial statements. |
Accounting standards not yet adopted | In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021, which means it will be effective for our fiscal year beginning January 1, 2022. Early adoption is permitted. We are currently evaluating the impact of ASU 2020-06 on our condensed consolidated financial statements. No other recently issued accounting pronouncements had or are expected to have a material impact on our condensed consolidated financial statements. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
ACQUISITIONS | |
Schedule of Acquisitions | Completed Acquisitions (1) (2) (3) (4) The Humble The Hacienda Lowell Farm (in thousands) Kaizen Inc. Flower Co. Company, LLC Services Total CONSIDERATION Contingent Payment $ 50 $ 44 $ - $ - $ 94 Cash 4,019 - 4,019 Transaction costs 428 190 618 Note payable and other obligations 200 65 3,115 9,000 12,380 Fair value of subordinate voting shares 62 55 34,358 9,610 44,085 Total consideration $ 312 $ 164 $ 41,920 $ 18,800 $ 61,196 PURCHASE PRICE ALLOCATION Assets Acquired Inventories $ - $ 6 $ 3,300 $ - $ 3,306 Accounts receivable - net - - 1,312 - 1,312 Other tangible assets - - 739 15,750 16,489 Intangible assets - brands and tradenames 104 80 37,299 - 37,483 Intangible assets - technology and know-how and other 208 78 - 3,050 3,336 Liabilities assumed Payables and other liabilities - - (730 ) - (730 ) Fair value of net assets acquired $ 312 $ 164 $ 41,920 $ 18,800 $ 61,196 |
PREPAID AND OTHER CURRENT ASS_2
PREPAID AND OTHER CURRENT ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
PREPAID AND OTHER CURRENT ASSETS | |
Summary of Prepaid expenses and other current assets | June 30, December 31, (in thousands) 2021 2020 Deposits $ 533 $ 572 Insurance 917 593 Supplier advances 1,623 504 Nevada building sale proceeds - 2,800 Other 1,071 1,922 Total prepaid and other current assets $ 4,144 $ 6,391 |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
INVENTORY | |
Summary of Inventory | June 30, December 31, (in thousands) 2021 2020 Raw materials $ 11,852 $ 7,950 Work in process 45 - Finished goods 2,839 1,983 Total inventory $ 14,736 $ 9,933 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
OTHER CURRENT LIABILITIES | |
Schedule of Other current liabilities | June 30, December 31, (in thousands) 2021 2020 Excise and cannabis tax $ 3,912 $ 5,780 Third party brand distribution accrual 269 584 Insurance and professional fee accrual 820 746 Other 11 1,750 Total other current liabilities $ 5,012 $ 8,860 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and equipment | Land and Leasehold Furniture Construction Right of (in thousands) Buildings Improvements and Fixtures Equipment Vehicles in Process Use Assets Total Costs Balance—December 31, 2020 $ - $ 10,799 $ 50 $ 1,276 $ 854 $ 2,528 $ 41,530 $ 57,037 Additions - 73 - 268 - 814 - 1,155 Business Acquisitions 14,529 - - 1,413 - - - 15,942 Disposals - - - - - - - - Balance—June 30, 2021 $ 14,529 $ 10,872 $ 50 $ 2,957 $ 854 $ 3,342 $ 41,530 $ 74,134 Accumulated Depreciation Balance—December 31, 2020 $ - $ (634 ) $ (47 ) $ (427 ) $ (411 ) $ - $ (6,275 ) $ (7,794 ) Depreciation - (167 ) (1 ) (72 ) (77 ) - (1,527 ) (1,844 ) Disposals - - - - - - - - Balance—June 30, 2021 $ - $ (801 ) $ (48 ) $ (499 ) $ (488 ) $ - $ (7,802 ) $ (9,638 ) Net Book Value-June 30, 2021 $ 14,529 $ 10,071 $ 2 $ 2,458 $ 366 $ 3,342 $ 33,728 $ 64,496 Net Book Value -December 31, 2020 $ - $ 10,165 $ 3 $ 849 $ 443 $ 2,528 $ 35,255 $ 49,243 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of Goodwill | (in thousands) Costs Balance - December 31, 2020 $ 357 Additions - Business Acquisitions - Impairment - Balance - June 30, 2021 $ 357 |
Schedule of Intangible assets | Definite Life Intangibles Indefinite Life Intangibles Branding Technology/ Brands & (in thousands) Rights Know How Tradenames Total Costs Balance—December 31, 2020 $ 250 $ 208 $ 408 $ 866 Business acquisition - 3,050 37,299 40,349 Agreement termination (250 ) - - (250 ) Balance—June 30, 2021 $ - $ 3,258 $ 37,707 $ 40,965 Accumulated Amortization Balance—December 31, 2020 $ (93 ) $ (37 ) $ - $ (130 ) Agreement termination 98 - - 98 Amortization (5 ) (9 ) - (14 ) Other - - - - Balance—June 30, 2021 $ - $ (46 ) $ - $ (46 ) Net Book Value June 30, 2021 $ - $ 3,212 $ 37,707 $ 40,919 Net Book Value December 31, 2020 $ 157 $ 171 $ 408 $ 736 |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
STOCKHOLDERS' EQUITY | |
Schedule of Shares outstanding | Subordinate Super (in thousands) Voting Shares Voting Shares Balance—December 31, 2020 57,617 203 Shares issued in connection with exercise of warrants 1,325 - Shares issued in connection with conversion of convertible debentures 2,393 - Shares issued in connection with asset acquisition 30,641 - Issuance of vested restricted stock units 371 - Stock issued in connection with exercised of stock options 76 - Balance—June 30, 2021 92,423 203 (in thousands) Balance—December 31, 2020 93,898 Warrants issued in conjunction with broker option exercise (1) 163 Warrants expired (358 ) Warrants converted into subordinate voting shares (1,000 ) Balance—June 30, 2021 92,703 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
DEBT | |
Schedule of Debt | June 30, December 31, (in thousands) 2021 2020 Current portion of long-term debt Vehicle loans (1) $ 186 $ 170 Note payable (3) 183 1,043 Total short-term debt 369 1,213 Long-term debt, net Vehicle loans (1) 162 233 Note payable (2) 56 65 Note payable (3) 40 5 Mortgage payable (4) 8,938 - Convertible debenture (5) 13,646 13,701 Total long-term debt 22,842 14,004 Total Indebtedness $ 23,211 $ 15,217 |
Schedule of Maturities of debt obligations | June 30, (in thousands) 2021 2021 $ 268 2022 321 2023 15,876 2024 383 2025 421 2026 and thereafter 8,113 Total debt obligations $ 25,382 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
LEASES | |
Schedule of Lease obligations | (in thousands) Lease Liability: December 31, 2020 $ 38,834 Lease principal payments (1,164 ) June 30, 2021 $ 37,670 June 30, 2021 Lease obligation, current portion $ 2,410 Lease obligation, long-term portion 35,260 Total $ 37,670 |
Schedule of Lease expense | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2021 2020 2021 2020 Amortization of leased assets (1) $ 785 $ 839 $ 1,527 $ 1,631 Interest on lease liabilities (2) 634 491 1,197 964 Total $ 1,419 $ 1,330 $ 2,724 $ 2,595 |
Schedule of Future lease payments | June 30, (in thousands) 2021 Balance of 2021 $ 1,187 2022 - 2023 5,137 2024 - 2025 3,844 2026 and beyond 27,502 Total $ 37,670 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
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) 2021 2020 2021 2020 Cost of goods sold $ - $ - $ - $ - General and administrative expense 338 213 625 1,825 Total share-based compensation $ 338 $ 213 $ 625 $ 1,825 |
Schedule of Stock option activity | Weighted-Average Stock Weighted-Average Remaining Aggregate (in thousands except per share amounts) Options Exercise Price Contractual Life Intrinsic Value Outstanding—December 31, 2020 6,260 $ 0.97 4.7 $ 3,162 Granted 1,880 1.41 Exercised - - Cancelled (1,153 ) 1.60 Outstanding—June 30, 2021 6,987 $ 0.95 2.6 Exercisable—June 30, 2021 1,677 $ 1.02 3 $ 69 Vested and expected to vest—June 30, 2021 6,987 $ 0.95 2.6 $ 2,254 |
Schedule of Restricted stock unit activity | Weighted-Average (in thousands except per share amounts) RSUs Fair Value Outstanding—December 31, 2020 450 $ 0.33 Granted 1,395 1.15 Vested - - Cancelled (10 ) 1.11 Outstanding—June 30, 2021 1,835 $ 0.95 |
Schedule of Weighted average assumptions | Stock Options Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Three Months Ended March 31, 2021 2020 2021 2020 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 1.1 % 2.2 % 0.9 % 2.2 % Expected term in years 4.25 4.12 4.25 4.14 RSUs Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, Three Months Ended March 31, 2021 2020 2021 2020 Expected volatility 50 % 50 % 50 % 50 % Dividend yield 0 % 0 % 0 % 0 % Risk-free interest rate 0.9 % 0.9 % 0.9 % 0.9 % Expected term in years 0.74 0.60 0.74 0.60 |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Net income (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) 2021 2020 2021 2020 Net income (loss) $ 731 $ (8,757 ) $ (5,988 ) $ (16,631 ) Net income (loss) per share: Basic $ 0.01 $ (0.26 ) $ (0.10 ) $ (0.50 ) Diluted $ 0.00 $ (0.26 ) $ (0.10 ) $ (0.50 ) Weighted average shares outstanding: Basic 71,021 33,307 61,956 33,025 Diluted 201,278 33,307 61,956 33,025 Weighted average potentially diluted shares (1): Basic shares 71,021 33,307 61,956 33,025 Options 2,908 - - - Warrants 60,767 - - - Convertible debentures 64,796 - - - Restricted stock units 1,786 - - - Total weighted average potentially diluted shares: 201,278 33,307 61,956 33,025 |
GENERAL AND ADMINISTRATIVE EX_2
GENERAL AND ADMINISTRATIVE EXPENSES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
GENERAL AND ADMINISTRATIVE EXPENSES | |
Schedule of General and administrative expense | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, (in thousands) 2021 2020 2021 2020 Salaries and benefits $ 1,561 $ 980 $ 2,398 $ 1,976 Professional fees 777 251 1,259 850 Share-based compensation 336 213 625 1,825 Administrative 1,143 12 2,004 82 Total general and administrative expenses $ 3,817 $ 1,456 $ 6,286 $ 4,733 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Assets Acquired | |
Contingent payment | $ 94,000 |
Cash | 4,019,000 |
Transaction costs | 618,000 |
Note payable and other obligations | 12,380,000 |
Fair value of subordinate voting shares | 44,085,000 |
Total consideration | 61,196,000 |
Inventories | 3,306,000 |
Accounts receivable - net | 1,312,000 |
Other tangible assets | 16,489,000 |
Intangible assets - brands and tradenames | 37,483,000 |
Intangible assets - technology and know-how | 3,336,000 |
Liabilities Assumed | |
Payables and other liabilities | (730,000) |
Total identifiable net assets | 61,196,000 |
LowellFarmService [Member] | |
Assets Acquired | |
Contingent payment | 0 |
Cash | 0 |
Transaction costs | 190,000 |
Note payable and other obligations | 9,000,000 |
Fair value of subordinate voting shares | 9,610,000 |
Total consideration | 18,800,000 |
Inventories | 0 |
Accounts receivable - net | 0 |
Other tangible assets | 15,750,000 |
Intangible assets - brands and tradenames | 0 |
Intangible assets - technology and know-how | 3,050,000 |
Liabilities Assumed | |
Payables and other liabilities | 0 |
Total identifiable net assets | 18,800,000 |
Kaizen Inc, | |
Assets Acquired | |
Contingent payment | 50,000 |
Note payable and other obligations | 200,000 |
Fair value of subordinate voting shares | 62,000 |
Total consideration | 312,000 |
Inventories | 0 |
Accounts receivable - net | 0 |
Other tangible assets | 0 |
Intangible assets - brands and tradenames | 104,000 |
Intangible assets - technology and know-how | 208,000 |
Liabilities Assumed | |
Payables and other liabilities | 0 |
Total identifiable net assets | 312,000 |
The Humble Flower Co. | |
Assets Acquired | |
Contingent payment | 44,000 |
Note payable and other obligations | 65,000 |
Fair value of subordinate voting shares | 55,000 |
Total consideration | 164,000 |
Inventories | 6,000 |
Accounts receivable - net | 0 |
Other tangible assets | 0 |
Intangible assets - brands and tradenames | 80,000 |
Intangible assets - technology and know-how | 78,000 |
Liabilities Assumed | |
Payables and other liabilities | 0 |
Total identifiable net assets | 164,000 |
The Hacienda Company, LLC | |
Assets Acquired | |
Contingent payment | 0 |
Cash | 4,019,000 |
Transaction costs | 428,000 |
Note payable and other obligations | 3,115,000 |
Fair value of subordinate voting shares | 34,358,000 |
Total consideration | 41,920,000 |
Inventories | 3,300,000 |
Accounts receivable - net | 1,312,000 |
Other tangible assets | 739,000 |
Intangible assets - brands and tradenames | 37,299,000 |
Intangible assets - technology and know-how | 0 |
Liabilities Assumed | |
Payables and other liabilities | (730,000) |
Total identifiable net assets | $ 41,920,000 |
ACQUISITIONS (Details Narrative
ACQUISITIONS (Details Narrative) - USD ($) | Jul. 15, 2020 | May 14, 2019 | Jun. 29, 2021 | Feb. 25, 2021 | Jul. 17, 2020 | Nov. 30, 2019 | Apr. 18, 2019 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 30, 2020 | Dec. 31, 2019 | Jan. 31, 2021 |
Loss on termination of investment | $ 0 | $ 3,524,000 | $ 0 | $ 3,524,000 | ||||||||||
LowellFarmService [Member] | ||||||||||||||
Maturity date of assets | Apr. 30, 2023 | |||||||||||||
Purchase price of assets | $ 18,800 | |||||||||||||
Notes payable | $ 9,000,000 | |||||||||||||
Issuance of subordinate voting shares | 7,997,520,000 | |||||||||||||
Real property area descriptions | The 10-acre, 40,000 square foot processing facility will provide drying, bucking, trimming, sorting, grading, and packaging operations for up to 250,000 lbs. of wholesale cannabis flower annually. | |||||||||||||
The Hacienda Company, LLC | ||||||||||||||
Purchase price of assets | $ 41,920 | |||||||||||||
Issuance of subordinate voting shares | 22,643,678 | |||||||||||||
Cash Consideration | $ 4,100,000 | |||||||||||||
The Humble Flower Co | Asset Purchase Agreement [Member] | ||||||||||||||
Maturity date of assets | Apr. 18, 2023 | |||||||||||||
Purchase price of assets | $ 472 | |||||||||||||
Net loss | $ 34 | |||||||||||||
Net assets | 308 | |||||||||||||
Notes payable | $ 65 | |||||||||||||
Issuance of subordinate voting shares | 225,000 | |||||||||||||
W Vapes | Purchase Agreement [Member] | ||||||||||||||
Cash purchase consideration | $ 10,000,000 | |||||||||||||
Subordinated voting shares, consideration | $ 10,000,000 | |||||||||||||
Advance received from non recourse fund | $ 2,000,000 | |||||||||||||
Cash held in Escrow | $ 10,000,000 | |||||||||||||
Las Vegas | Purchase Agreement [Member] | ||||||||||||||
Notes payable | $ 843 | |||||||||||||
Cash payment for acquire asset | $ 500 | |||||||||||||
Additional cash payment | $ 2,800,000 | |||||||||||||
Loss on termination of investment | $ 4,400,000 | |||||||||||||
Kaizen Inc, | Asset Purchase Agreement [Member] | May 1, 2019 | ||||||||||||||
Purchase price of assets | $ 556 | |||||||||||||
Net loss | 21 | |||||||||||||
Net assets | $ 223 | |||||||||||||
Notes payable | $ 200 | |||||||||||||
Issuance of subordinate voting shares | 225,000 |
PREPAID AND OTHER CURRENT ASS_3
PREPAID AND OTHER CURRENT ASSETS (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
PREPAID AND OTHER CURRENT ASSETS | ||
Deposits | $ 533,000 | $ 572,000 |
Insurance | 917,000 | 593,000 |
Supplier advances | 1,623,000 | 504,000 |
Nevada building sale proceeds | 0 | 2,800,000 |
Other | 1,071,000 | 1,922,000 |
Total prepaid expenses and other current assets | $ 4,144,000 | $ 6,391,000 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
INVENTORY | ||
Raw materials | $ 11,852,000 | $ 7,950,000 |
Work in process | 45,000 | 0 |
Finished goods | 2,839,000 | 1,983,000 |
Total inventory | $ 14,736,000 | $ 9,933,000 |
OTHER CURRENT LIABILITIES (Deta
OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
OTHER CURRENT LIABILITIES | ||
Excise and cannabis tax | $ 3,912 | $ 5,780 |
Third party brand distribution accrual | 269 | 584 |
Insurance and professional accrual | 820 | 746 |
Other | 11 | 1,750 |
Total accrued liabilities | $ 5,012 | $ 8,860 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Property and equipment cost, beginning | $ 57,037,000 | ||||
Additions | 1,155,000 | ||||
Business acquisitions | 15,942,000 | ||||
Disposals | 0 | ||||
Accumulated depreciation, beginning | (7,794,000) | ||||
Property and equipment cost, ending | $ 74,134,000 | 74,134,000 | |||
Depreciation | (946,000) | $ (1,044,000) | (1,844,000) | $ (1,909,000) | |
Accumulated depreciation, ending | (9,638,000) | ||||
Disposals | 0 | ||||
Net book value | 64,496,000 | 64,496,000 | $ 49,243,000 | ||
Land and Buildings | |||||
Property and equipment cost, beginning | 0 | ||||
Additions | 0 | ||||
Business acquisitions | 14,529,000 | ||||
Disposals | 0 | ||||
Accumulated depreciation, beginning | 0 | ||||
Property and equipment cost, ending | 14,529,000 | 14,529,000 | |||
Depreciation | 0 | ||||
Accumulated depreciation, ending | 0 | ||||
Net book value | 14,529,000 | 14,529,000 | 0 | ||
Leasehold Improvements | |||||
Property and equipment cost, beginning | 10,799,000 | ||||
Additions | 73,000 | ||||
Business acquisitions | 0 | ||||
Disposals | 0 | ||||
Accumulated depreciation, beginning | (634,000) | ||||
Property and equipment cost, ending | 10,872,000 | 10,872,000 | |||
Depreciation | (167,000) | ||||
Accumulated depreciation, ending | (801,000) | ||||
Net book value | 10,071,000 | 10,071,000 | 10,165,000 | ||
Furniture and Fixtures | |||||
Property and equipment cost, beginning | 50,000 | ||||
Additions | 0 | ||||
Business acquisitions | 0 | ||||
Disposals | 0 | ||||
Accumulated depreciation, beginning | (47,000) | ||||
Property and equipment cost, ending | 50,000 | 50,000 | |||
Depreciation | (1,000) | ||||
Accumulated depreciation, ending | (48,000) | ||||
Net book value | 2,000 | 2,000 | 3,000 | ||
Equipment [Member] | |||||
Property and equipment cost, beginning | 1,276,000 | ||||
Additions | 268,000 | ||||
Business acquisitions | 1,413,000 | ||||
Disposals | 0 | ||||
Accumulated depreciation, beginning | (427,000) | ||||
Property and equipment cost, ending | 2,957,000 | 2,957,000 | |||
Depreciation | (72,000) | ||||
Accumulated depreciation, ending | (499,000) | ||||
Net book value | 2,458,000 | 2,458,000 | 849,000 | ||
Vehicles | |||||
Property and equipment cost, beginning | 854,000 | ||||
Additions | 0 | ||||
Business acquisitions | 0 | ||||
Disposals | 0 | ||||
Accumulated depreciation, beginning | (411,000) | ||||
Property and equipment cost, ending | 854,000 | 854,000 | |||
Depreciation | (77,000) | ||||
Accumulated depreciation, ending | (488,000) | ||||
Net book value | 366,000 | 366,000 | 443,000 | ||
Construction in Process | |||||
Property and equipment cost, beginning | 2,528,000 | ||||
Additions | 814,000 | ||||
Business acquisitions | 0 | ||||
Disposals | 0 | ||||
Accumulated depreciation, beginning | 0 | ||||
Property and equipment cost, ending | 3,342,000 | 3,342,000 | |||
Depreciation | 0 | ||||
Accumulated depreciation, ending | 0 | ||||
Net book value | 3,342,000 | 3,342,000 | 2,528,000 | ||
Right of Use Assets | |||||
Property and equipment cost, beginning | 41,530,000 | ||||
Additions | 0 | ||||
Business acquisitions | 0 | ||||
Disposals | 0 | ||||
Accumulated depreciation, beginning | (6,275,000) | ||||
Property and equipment cost, ending | 41,530,000 | 41,530,000 | |||
Depreciation | (1,527,000) | ||||
Accumulated depreciation, ending | (7,802,000) | ||||
Net book value | $ 33,728,000 | $ 33,728,000 | $ 35,255,000 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Depreciation | $ 946,000 | $ 1,044,000 | $ 1,844,000 | $ 1,909,000 |
Other income | 1,858,000 | 0 | 1,416,000 | 25,000 |
Cost of Goods Sold | ||||
Depreciation | $ 584,000 | $ 769,000 | $ 1,168,000 | $ 1,283,000 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS (Details) | 6 Months Ended |
Jun. 30, 2021USD ($) | |
GOODWILL AND INTANGIBLE ASSETS | |
Goodwill, beginning | $ 357,000 |
Additions | 0 |
Business acquisitions | 0 |
Impairment | 0 |
Goodwill, ending | $ 357,000 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS (Details 1) - USD ($) | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Definite life intangibles cost, beginning | $ 866,000 | ||
Business acquisition | 40,349,000 | ||
Agreement termination | (250,000) | ||
Accumulated amortization, beginning | (130,000) | ||
Agreement termination, amortization | 98,000 | ||
Amortization | (14,000) | $ (44,000) | |
Other Accumulated Amortization | 0 | ||
Accumulated amortization, ending | (46,000) | ||
Net book value | 40,919,000 | $ 736,000 | |
Brands & Tradenames | |||
Definite life intangibles cost, beginning | 408,000 | ||
Accumulated amortization, beginning | 0 | ||
Agreement termination, amortization | 0 | ||
Amortization | 0 | ||
Other Accumulated Amortization | 0 | ||
Accumulated amortization, ending | 0 | ||
Net book value | 37,707,000 | 408,000 | |
Business acquisition | 37,299,000 | ||
Agreement termination | 0 | ||
Branding Rights | |||
Definite life intangibles cost, beginning | 250,000 | ||
Accumulated amortization, beginning | (93,000) | ||
Agreement termination, amortization | 98,000 | ||
Amortization | (5,000) | ||
Other Accumulated Amortization | 0 | ||
Accumulated amortization, ending | 0 | ||
Net book value | 0 | 157,000 | |
Business acquisition | 0 | ||
Agreement termination | (250,000) | ||
Technology/KnowHow | |||
Definite life intangibles cost, beginning | 208,000 | ||
Accumulated amortization, beginning | (37,000) | ||
Agreement termination, amortization | 0 | ||
Amortization | (9,000) | ||
Other Accumulated Amortization | 0 | ||
Accumulated amortization, ending | (46,000) | ||
Net book value | 3,212,000 | $ 171,000 | |
Business acquisition | 3,050,000 | ||
Agreement termination | $ 0 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
GOODWILL AND INTANGIBLE ASSETS | ||
Amortization | $ 14 | $ 44 |
SHAREHOLDERS EQUITY (Details)
SHAREHOLDERS EQUITY (Details) shares in Thousands | 6 Months Ended |
Jun. 30, 2021shares | |
Subordinate Voting Shares [Member] | |
Beginning balance, shares | 57,617 |
Shares issued in connection with exercise of warrants | 1,325 |
Shares issued in connection with conversion of convertible debentures | 2,393 |
Shares issued in connection with asset acquisition | 30,641 |
Issuance of vested restricted stock units | 371 |
Stock issued in connection with exercised of stock options | 76 |
Ending balance, shares | 92,423 |
Super Voting Shares [Member] | |
Beginning balance, shares | 203 |
Ending balance, shares | 203 |
SHAREHOLDERS EQUITY (Details 1)
SHAREHOLDERS EQUITY (Details 1) shares in Thousands | 6 Months Ended |
Jun. 30, 2021shares | |
STOCKHOLDERS' EQUITY | |
Warrants, beginning balance | 93,898 |
Warrants issued in conjunction with broker option exercise | 163 |
Warrants expired | (358) |
Warrants converted into subordinate voting shares | (1,000) |
Warrants, ending balance | 92,703 |
DEBT (Details)
DEBT (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Short-term debt | $ 369,000 | $ 1,213,000 |
Long-term debt | 22,842,000 | 14,004,000 |
Total indebtness | 23,211,000 | 15,217,000 |
Convertible Debenture | ||
Long-term debt | 13,646,000 | 13,701,000 |
Vehicle Loans | ||
Short-term debt | 186,000 | 170,000 |
Long-term debt | 162,000 | 233,000 |
Note Payable | ||
Short-term debt | 183,000 | 1,043,000 |
Long-term debt | 56,000 | 65,000 |
Note Payable 1 | ||
Long-term debt | 40,000 | 5,000 |
Note Payable 2 | ||
Long-term debt | $ 8,938,000 | $ 0 |
DEBT (Details 1)
DEBT (Details 1) $ in Thousands | Jun. 30, 2021USD ($) |
DEBT | |
2021 | $ 268 |
2022 | 321 |
2023 | 15,876 |
2024 | 383 |
2025 | 421 |
2026 and thereafter | 8,113 |
Total debt obligations | $ 25,382 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
LEASES | ||
Lease liability, beginning | $ 38,834 | |
Lease principal payments | (1,164) | |
Lease liability, ending | 37,670 | |
Lease obligation, current portion | 2,410 | $ 2,301 |
Lease obligation, long-term portion | 35,260 | $ 36,533 |
Total | $ 37,670 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
LEASES | ||||
Amortization of leased assets | $ 785 | $ 839 | $ 1,527 | $ 1,631 |
Interest on lease liabilities | 634 | 491 | 1,197 | 964 |
Total | $ 1,419 | $ 1,330 | $ 2,724 | $ 2,595 |
LEASES (Details 2)
LEASES (Details 2) $ in Thousands | Jun. 30, 2021USD ($) |
LEASES | |
Balance of 2021 | $ 1,187 |
2022 - 2023 | 5,137 |
2024 - 2025 | 3,844 |
2026 - and beyond | 27,502 |
Total | $ 37,670 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Dec. 30, 2020 | Dec. 31, 2020 | |
LEASES | |||
Weighted average remaining lease term | 17 years 7 months 6 days | 18 years 1 month 6 days | |
Weighted average discount rate | 6.00% | 6.00% |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share-based compensation expense | $ 338,000 | $ 213,000 | $ 625,000 | $ 1,825,000 |
Cost of Goods Sold | ||||
Share-based compensation expense | 625 | 0 | 0 | 0 |
General and Administrative Expense | ||||
Share-based compensation expense | $ 338,000 | $ 213,000 | $ 625,000 | $ 1,825,000 |
SHARE-BASED COMPENSATION (Det_2
SHARE-BASED COMPENSATION (Details 1) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021USD ($)$ / sharesshares | Jun. 30, 2021USD ($)$ / sharesshares | |
SHARE-BASED COMPENSATION | ||
Stock options outstanding, beginning | shares | 6,260,000 | |
Stock options granted | shares | 1,880,000 | |
Stock options exercised | shares | 0 | |
Stock options cancelled | shares | (1,153,000) | |
Stock options outstanding, ending | shares | 6,987,000 | 6,987,000 |
Stock options exercisable | shares | 1,677,000 | 1,677,000 |
Stock options vested and expected to vest | shares | 6,987,000 | 6,987,000 |
Weighted-average exercise price outstanding, beginning | $ / shares | $ 0.97 | |
Weighted-average exercise price granted | $ / shares | $ 1.18 | 1.41 |
Weighted-average exercise price exercised | $ / shares | 0 | |
Weighted-average exercise price cancelled | $ / shares | 1.60 | |
Weighted-average exercise price outstanding, ending | $ / shares | 0.95 | 0.95 |
Weighted-average exercise price exercisable | $ / shares | 1.02 | 1.02 |
Weighted-average exercise price vested and expected to vest | $ / shares | $ 0.95 | $ 0.95 |
Weighted-average remaining contactual life outstanding, beginning balance | 4 years 8 months 12 days | |
Weighted-average remaining contactual life outstanding, ending balance | 2 years 7 months 6 days | |
Weighted-average remaining contactual life exercisable | 3 years | |
Weighted-average remaining contactual life vested and expected to vest | 2 years 7 months 6 days | |
Aggregate intrinsic value outstanding | $ | $ 3,162 | $ 3,162 |
Aggregate intrinsic value exercisable | $ | 69 | 69 |
Aggregate intrinsic value vested and expected to vest | $ | $ 2,254 | $ 2,254 |
SHARE-BASED COMPENSATION (Det_3
SHARE-BASED COMPENSATION (Details 2) shares in Thousands | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
SHARE-BASED COMPENSATION | |
RSUs outstanding, beginning balance | shares | 450 |
RSUs granted | shares | 1,395 |
RSUs cancelled | shares | (10) |
RSUs outstanding, ending balance | shares | 1,835 |
Weighted-average fair value outstanding, beginning balance | $ 0.33 |
Weighted-average fair value granted | 1.15 |
Weighted-average fair value vested | 0 |
Weighted-average fair value cancelled | 1.11 |
Weighted-average fair value outstanding, ending balance | $ 0.95 |
SHARE-BASED COMPENSATION (Det_4
SHARE-BASED COMPENSATION (Details 3) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Expected volatility | 50.00% | 50.00% | 50.00% | 50.00% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 0.90% | 0.90% | 0.90% | 0.90% |
Expected term in years | 8 months 26 days | 7 months 6 days | 8 months 26 days | 7 months 6 days |
Stock Option [Member] | ||||
Expected volatility | 50.00% | 50.00% | 50.00% | 50.00% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 1.10% | 2.20% | 0.90% | 2.20% |
Expected term in years | 4 years 3 months | 4 years 1 month 13 days | 4 years 3 months | 4 years 1 month 20 days |
SHARE-BASED COMPENSATION (Det_5
SHARE-BASED COMPENSATION (Details Narrative) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021USD ($)$ / sharesshares | Jun. 30, 2021USD ($)$ / sharesshares | |
SHARE-BASED COMPENSATION | ||
Weighted-average exercise price granted | $ / shares | $ 1.18 | $ 1.41 |
Unrecognized compensation cost related to nonvested options | $ | $ 1,252 | $ 1,252 |
Proceeds from issuance of stock options | shares | 13.2 | 13.2 |
Stock option for future grant | shares | 4.6 | 4.6 |
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. | |
Vesting year | 2 years | |
Unrecognized compensation cost related to nonvested restricted stock units | $ | $ 963 | $ 963 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
INCOME TAXES | ||||
Provision for income taxes | $ 74 | $ 25 | $ 138 | $ 50 |
Effective tax rate | 9.20% | 0.29% | 2.36% | 0.30% |
NET INCOME (LOSS) PER SHARE (De
NET INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Net income (loss) per share: | ||||
Net loss | $ 731 | $ (8,757) | $ (5,988) | $ (16,631) |
Net income loss per share | ||||
Basic | $ 0.01 | $ (0.26) | $ (0.10) | $ (0.50) |
Diluted | $ 0 | $ (0.26) | $ (0.10) | $ (0.50) |
Weighted average shares outstanding: | ||||
Weighted average subordinate voting shares - basic | 71,021,000 | 33,307,000 | 61,956,000 | 33,025,000 |
Weighted average subordinate voting shares - diluted | 201,278,000 | 33,307,000 | 61,956,000 | 33,025,000 |
Effects of Potential Dilutive Shares | ||||
Basic shares | 71,021,000 | 33,307,000 | 61,956,000 | 33,025,000 |
Options | 2,908,000 | 0 | 0 | 0 |
Warrants | 60,767,000 | 0 | 0 | 0 |
Convertible debentures | 64,796,000 | 0 | 0 | 0 |
Restricted stock units | 1,786,000 | 0 | 0 | 0 |
Total weighted average potentially diluted shares | 201,278,000 | 33,307,000 | 61,956,000 | 33,025,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2021USD ($) | |
August 2020 | |
Insurance maturity date | July |
Payment for insurance claim | $ 2,650 |
September 2020 | |
Insurance maturity date | March 2021 |
Payment for insurance claim | $ 1,400 |
GENERAL AND ADMINISTRATIVE EX_3
GENERAL AND ADMINISTRATIVE EXPENSES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Total general and administrative expenses | $ 3,817 | $ 1,456 | $ 6,285 | $ 4,733 |
Salaries and Benefits | ||||
Total general and administrative expenses | 1,561 | 980 | 2,398 | 1,976 |
Professional Fees | ||||
Total general and administrative expenses | 777 | 251 | 1,259 | 850 |
Share-based Compensation | ||||
Total general and administrative expenses | 336 | 213 | 625 | 1,825 |
Administrative | ||||
Total general and administrative expenses | $ 1,143 | $ 12 | $ 2,004 | $ 82 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
EM | |||
Related party transactions | $ 2,201,000 | $ 5,041,000 | |
OMG | |||
Related party transactions | $ 0 | $ 5,000 |