Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 26, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Entity Registrant Name | LOWELL FARMS INC. | ||
Entity Central Index Key | 0001838128 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | true | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2023 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Entity Ex Transition Period | false | ||
Entity Common Stock Shares Outstanding | 18,130,566 | ||
Entity Public Float | $ 3,069,255 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Fin Stmt Error Correction Flag | false | ||
Entity File Number | 000-56254 | ||
Entity Incorporation State Country Code | Z4 | ||
Entity Address Address Line 1 | 19 Quail Run Circle - Suite B | ||
Entity Address City Or Town | Salinas | ||
Entity Address State Or Province | CA | ||
Entity Address Postal Zip Code | 93907 | ||
City Area Code | 831 | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | GreenGrowth CPAs | ||
Auditor Location | Los Angeles, California | ||
Auditor Firm Id | 6580 | ||
Local Phone Number | 998-8214 | ||
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 2,311 | $ 1,098 |
Accounts Receivable - net of allowance for doubtful accounts of $1,053 and $1,139 at December 31, 2022 and December 31, 2021, respectively | 2,620 | 4,163 |
Inventory | 4,760 | 10,779 |
Prepaid expenses and other current assets | 2,397 | 1,522 |
Total current assets | 12,088 | 17,562 |
Property and equipment, net | 4,099 | 31,284 |
Right of use assets, net | 18,327 | 27,362 |
Other intangibles, net | 2,544 | 42,202 |
Other assets | 555 | 413 |
Total assets | 37,613 | 118,823 |
Current liabilities: | ||
Accounts payable | 4,314 | 2,307 |
Accrued payroll and benefits | 363 | 350 |
Notes payable, current portion | 3 | 282 |
Lease obligation, current portion | 1,990 | 2,659 |
Convertible debentures | 0 | 21,398 |
Other current liabilities | 1,943 | 3,654 |
Total current liabilities | 8,613 | 30,650 |
Notes payable | 0 | 3 |
Lease obligation | 17,522 | 31,340 |
Convertible debentures | 0 | 0 |
Mortgage obligation | 0 | 8,713 |
Total liabilities | 26,135 | 70,706 |
STOCKHOLDERS' EQUITY | ||
Share capital | 192,445 | 191,742 |
Accumulated deficit | (180,967) | (143,625) |
Total stockholders' equity | 11,478 | 48,117 |
Total liabilities and stockholders' equity | $ 37,613 | $ 118,823 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Allowance For Doubtful Accounts | $ 959 | $ 1,053 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
CONSOLIDATED STATEMENTS OF INCOME (LOSS) | ||
Net revenue | $ 28,265 | $ 43,535 |
Cost of goods sold | 35,707 | 45,376 |
Gross profit (loss) | (7,442) | (1,841) |
Operating expenses | ||
General and administrative | 7,302 | 9,553 |
Sales and marketing | 2,397 | 5,274 |
Depreciation and amortization | 421 | 448 |
Total operating expenses | 10,120 | 15,275 |
Loss from operations | (17,562) | (17,116) |
Other income/(expense) | ||
Other income (expense) | 8,541 | 2,455 |
Unrealized loss on change in fair value of investment | (28) | (109) |
Impairment Impairment expense of long-lived assets | (24,295) | (3,240) |
Interest expense | (3,837) | (6,363) |
Total other income (expense) | (19,619) | (7,257) |
Loss before provision for income taxes | (37,181) | (24,373) |
Provision for income taxes | 161 | 191 |
Net loss | $ (37,342) | $ (24,564) |
Net loss per share: | ||
Basic | $ (2.71) | $ (2.17) |
Diluted | $ (2.71) | $ (2.17) |
Weighted average shares outstanding: | ||
Basic | 13,790 | 11,318 |
Diluted | 13,790 | 11,318 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands | Total | Subordinate Voting Shares [Member] | Super Voting Shares [Member] | Shares Capital [Member] | Retained Earnings (Accumulated Deficit) |
Balance, shares at Dec. 31, 2021 | 11,181 | 20 | |||
Balance, amount at Dec. 31, 2021 | $ 70,307 | $ 189,368 | $ (119,061) | ||
Net Loss | (24,564) | 0 | (24,564) | ||
Shares issued in connection with asset acquisition, Shares | 1,000 | ||||
Shares issued in connection with asset acquisition, Amount | 1,800 | 1,800 | 0 | ||
Share re-purchase, Shares | (40) | ||||
Share re-purchase, Amount | 0 | 0 | 0 | ||
Issuance of vested RSUs, Shares | 14 | ||||
Issuance of vested RSUs, Amount | 10 | 10 | 0 | ||
Share-based compensation expense, Shares | 22 | ||||
Share-based compensation expense Amount | 564 | 564 | 0 | ||
Balance, shares at Dec. 31, 2022 | 12,177 | 20 | |||
Balance, amount at Dec. 31, 2022 | 48,117 | 191,742 | (143,625) | ||
Net Loss | (37,342) | 0 | (37,342) | ||
Issuance of vested RSUs, Shares | 4 | ||||
Issuance of vested RSUs, Amount | 0 | 0 | 0 | ||
Share-based compensation expense Amount | 231 | 231 | 0 | ||
Shares issued in connection with debenture conversion, Shares | 6,843 | ||||
Shares issued in connection with debenture conversion, Amount | 2,027 | 2,027 | 0 | ||
Warrants Cancelled with brand sale | (1,555) | (1,555) | 0 | ||
Balance, shares at Dec. 31, 2023 | 19,024 | 20 | |||
Balance, amount at Dec. 31, 2023 | $ 11,478 | $ 192,445 | $ (180,967) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
CASH FLOW FROM OPERATING ACTIVITIES | ||
Net loss | $ (37,342) | $ (24,564) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 5,117 | 7,376 |
Amortization of debt issuance costs | 712 | 937 |
Share-based compensation expense | 231 | 564 |
Provision for doubtful accounts | 616 | 517 |
Loss on sale of assets | 0 | 59 |
Gain on sale leaseback | (3,004) | 0 |
Gain on lease settlement | (880) | 0 |
Unrealized loss (gain) on change in fair value of investments | 28 | 109 |
Impairment expense | 24,295 | 3,240 |
Gain on lease termination | (5,020) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 927 | 3,542 |
Inventory | 6,019 | 2,564 |
Prepaid expenses and other current assets | 2,731 | 454 |
Other assets | (270) | (106) |
Operating lease liabilities | (443) | 0 |
Accounts payable and accrued expenses | 242 | (1,136) |
Net cash used in operating activities | (6,041) | (6,444) |
CASH FLOW FROM INVESTING ACTIVITIES | ||
Proceeds from asset sales | 0 | 60 |
Purchases of property and equipment | (135) | (4,250) |
Acquisition of business assets, net | 0 | 0 |
Net cash used in investing activities | (135) | (4,190) |
CASH FLOW FROM FINANCING ACTIVITIES | ||
Proceeds from convertible notes, net of financing costs | 0 | 6,552 |
Principal payments on finance lease obligations | (1,527) | (2,497) |
Payments on notes payable | (75) | (210) |
Proceeds from sale leaseback | 8,991 | 0 |
Issuance costs related to subordinate voting share offering | 0 | 0 |
Proceeds from exercise of warrants and options | 0 | 0 |
Net cash provided by financing activities | 7,389 | 3,845 |
Change in cash and cash equivalents | 1,213 | (6,789) |
Cash and cash equivalents-beginning of year | 1,098 | 7,887 |
Cash, cash equivalents-end of period | 2,311 | 1,098 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid during the period for interest | 3,689 | 4,215 |
Cash paid during the period for income taxes | 87 | 171 |
OTHER NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Purchase of property and equipment not yet paid for | 7 | 819 |
Issuance of subordinate voting shares to acquire purchase rights | 0 | 1,800 |
Issuance of subordinate voting shares in convertible debenture repurchase | $ 2,027 | $ 0 |
BUSINESS BASIS OF PRESENTATION
BUSINESS BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2023 | |
BUSINESS BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis Of Presentation And Summary Of Significant Accounting Policies | 1. BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Lowell Farms Inc. is governed by the laws of British Columbia, Canada. On April 26, 2019, the Company completed a reverse takeover transaction with Indus Holding Company, a Delaware corporation, incorporated in 2014. Effective March 1, 2021, the Company changed its name to Lowell Farms Inc. and is a California-based cannabis company with vertically integrated operations including large scale cultivation, extraction, processing, manufacturing, branding, packaging and wholesale distribution to retail dispensaries. The Company manufactures and distributes proprietary and third-party brands throughout the State of California, the largest cannabis market in the world. The Company also provides manufacturing, extraction and distribution services to third-party cannabis and cannabis branding companies. The Company’s corporate office and principal place of business is located at 19 Quail Run Circle, Salinas, California. Basis of Presentation The consolidated financial statements of Lowell Farms Inc. and its wholly owned subsidiaries (collectively, the “Company,” “we,” “us” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). All intercompany transactions and balances have been eliminated in consolidation. All dollar amounts in the consolidated financial statements and notes to consolidated financial statements are expressed in thousands of United States dollars ("$" or "US$"), unless otherwise indicated. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include allowance for doubtful accounts and credit losses, carrying value of inventory, revenue recognition, accounting for stock-based compensation expense, and income taxes. Actual results could differ from those estimates. The global COVID-19 pandemic has impacted the operations and purchasing decisions of companies worldwide. It also has created and may continue to create significant uncertainty in the global economy. The Company has undertaken measures to protect its employees, partners, customers, and vendors. In addition, the Company’s personnel are subject to various travel restrictions, which limit the ability of the Company to provide services to customers and affiliates. This impacts the Company's normal operations. To date, the Company has been able to provide uninterrupted access to its products and services, including certain employees that are working remotely, and its pre-existing infrastructure that supports secure access to the Company’s internal systems. If, however, the COVID-19 pandemic has a substantial impact on the productivity of the Company’s employees or its partners’ or customers’ decision to use the Company’s products and services, the results of the Company’s operations and overall financial performance may be adversely impacted. The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require updates to the Company’s estimates and judgments or revisions to the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements. Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash deposits in financial institutions, and other deposits that are readily convertible into cash. The Company considers all short-term, highly liquid investments purchased with maturities of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. As of December 31, 2023 and December 31, 2022, the Company’s cash and cash equivalents exceeded FDIC insured limits by $1,974 and $360, respectively. Accounts Receivable Accounts receivables are classified as loans and receivable financial assets. Accounts receivables are recognized initially at fair value and subsequently measured at amortized cost, less any provisions for impairment. When an accounts receivable is uncollectible, it is written off against the provision. Subsequent recoveries of amounts previously written off are credited to the consolidated statements of operations. Inventories Inventories are valued at the lower of cost and net realizable value. Costs related to raw materials and finished goods are determined on the first-in, first-out basis. Specific identification and average cost methods are also used primarily for certain packing materials and operating supplies. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventory is written-down to net realizable value. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and impairment losses, if any. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms and methods: Category Useful Life Leasehold improvements The lesser of the estimated useful life or length of the lease Office equipment 3-5 years Furniture and fixtures 3-7 years Vehicles 4-5 years Machinery and equipment 3-6 years Buildings 35 years Construction in progress Not depreciated The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively if appropriate. An item of equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the consolidated statements of operations in the year the asset is derecognized. Goodwill Goodwill represents the excess of the purchase price paid for the acquisition of an entity over the fair value of the net tangible and intangible assets acquired. Goodwill that has an indefinite useful life is not subject to amortization and is tested annually for impairment, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. Any goodwill impairment loss is recognized in the consolidated statements of operations in the period in which the impairment is identified. Impairment losses on goodwill are not subsequently reversed. Intangible Assets Intangible assets are recorded at cost, less accumulated amortization and impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Intangible assets acquired in an asset purchase are valued at their purchase price. Amortization is recorded on a straight-line basis over their estimated useful lives, which do not exceed the contractual period, if any. The estimated useful lives, residual values, and amortization methods are reviewed at each year-end, and any changes in estimates are accounted for prospectively. Branding rights are measured at fair value at the time of acquisition and are amortized on a straight-line basis over a period of 15 years. In addition, the Company has certain brand and tradenames with indefinite lives, which are evaluated for impairment on an annual basis. Impairment of Long-lived Assets Long-lived assets, including property, plant and equipment and intangible assets are reviewed for impairment at each statement of financial position date or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. The recoverable amount of an asset or an asset group is the higher of its fair value, less costs to sell, and its value in use. If the carrying amount of an asset exceeds its recoverable amount, an impairment charge is recognized immediately in profit or loss equal to the amount by which the carrying amount exceeds the recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of the revised estimate of the recoverable amount, and the carrying amount that would have been recorded had no impairment loss been recognized previously. Leased Assets The Company adopted FASB Topic 842, Leases (“Topic 842”) effective January 1, 2019, using the modified retrospective adoption method which allowed it to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit. In connection with the adoption of the lease pronouncement, the Company recorded a charge to accumulated deficit of $847. A lease of property and equipment is classified as a capital lease if it transfers substantially all the risks and rewards incidental to ownership to the Company. Lease right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make payments arising from the lease agreement. These assets and liabilities are recognized at the commencement of the lease based upon the present value of the future minimum lease payments over the lease term. The lease term reflects the noncancelable period of the lease together with periods covered by an option to extend or terminate the lease when management is reasonably certain that it will exercise such option. Changes in the lease term assumption could impact the right-of-use assets and lease liabilities recognized on the balance sheet. As our leases typically do not contain a readily determinable implicit rate, we determine the present value of the lease liability using our incremental borrowing rate at the lease commencement date based on the lease term on a collateralized basis. The Company accounts for sales leaseback transactions in accordance with ASC 842-40: Sale and Leaseback Transactions. The Company determines whether the transfer of an asset represents a sale based on requirements from Topic 606, lease classification, and nature of purchase options. If a transfer is deemed a sale and at fair value, the Company derecognizes the asset and records a gain/(loss) in the income statement. If a transfer is deemed a sale and not at fair value, the Company derecognizes the asset and does not recognize a gain/(loss) in the income statement. If a transfer of the asset is not a sale, the Company does not derecognize the asset. Income Taxes The Company is a United States C corporation for income tax purposes. Income tax expense consisting of current and deferred tax expense is recognized in the consolidated statements of operations. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end, adjusted for amendments to tax payable with regards to previous years. Deferred tax assets and liabilities and the related deferred income tax expense or recovery are recognized for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs. A deferred tax asset is recognized to the extent that it is probable that future taxable income will be available against which the asset can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. Branded Products For the Company’s branded products, revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a customer. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. Third Party Manufactured Products The Company has certain licenses to manufacture and distribute third party products to retail dispensaries and deliveries in return for paying royalty payments to the third parties. The Company is a principal in the arrangement, it assumes primary responsibility for fulfilling the customer promise to retail dispensaries and deliveries, and it holds the inventory risk. Revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a retail dispensary or retail delivery. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. Licensing The Company has entered into contracts to license the right to utilize the Company’s branding and intellectual property. For all sales utilizing the license, the Company recognizes a percentage based license fee. Revenue is recognized when performance obligations are satisfied by recognizing fees on sales utilizing the licensed property to other companies. Contracts exist that define the property that is licensed, the time period, the fees and payment terms. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. Distribution The Company distributes certain third-party brands and bulk flower. The Company is a principal in the arrangement, it assumes primary responsibility for fulfilling the customer promise to retail dispensaries and deliveries and other wholesale customers, and it holds the inventory risk. Revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a customer. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. Lowell Farms Services The Company performs various processing activities under Lowell Farms Services including drying, bucking, trimming, sorting, grading and packaging operations. Revenue is recognized when it satisfies a performance obligation by completing the agreed upon services that were negotiated with a customer. A contract, whether a verbal or written sales order, is established with customers prior to completing the agreed upon services with the type of services to be performed and with the agreed upon pricing and timing. The transaction price is based on the nature of the services to be performed and market pricing. Performance obligation satisfaction occurs upon completion of the services performed. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The Company’s contracts do not include multiple performance obligations or material variable consideration. Research and Development Research costs are expensed as incurred. For the years ended December 31, 2023 and 2022, research costs are immaterial. For the year ended December 31, 2022, the Company incurred certain development expenditures related to the Lowell 35s product line that launched during the third quarter of the year ended December 31, 2022. Development costs of approximately $78 were expensed during the year ended December 31, 2022 to validate that the product line was commercially and technically feasible and to bring the product to market. Development expenditures are capitalized only if development costs are material, can be measured reliably, future economic benefits are probable, and the Company intends to and has sufficient resources to complete the development to use or sell the asset. To date, no development costs have been capitalized. Share-Based Compensation The Company has a share-based compensation plan. The Company measures equity settled share-based payments based on their fair value at the grant date and recognizes compensation expense over the vesting period based on the Company’s estimate of equity instruments that will eventually vest. For shares granted to non-employees, the compensation expense is measured at the fair value of the goods and services received, except where the fair value cannot be estimated, in which case, it is measured at the fair value of the equity instruments granted. The fair value of share-based compensation to non-employees is periodically re-measured until counterparty performance is complete, and any change therein is recognized over the period and in the same manner as if the Company had paid cash instead of paying with or using equity instruments. Business Combinations A business combination is defined as an acquisition of assets and liabilities that constitute a business. A business consists of inputs, including non-current assets and processes, including operational processes, that when applied to those inputs have the ability to create outputs that provide a return to the Company. Business combinations are accounted for using the acquisition method of accounting. The consideration of each acquisition is measured at the aggregate of the fair values of tangible and intangible assets obtained, liabilities and contingent liabilities incurred or assumed, and equity instruments issued by the Company at the date of acquisition. Key assumptions routinely utilized in allocation of purchase price to intangible assets include projected financial information such as revenue projections for companies acquired. As of the acquisition date, goodwill is measured as the excess of consideration given, generally measured at fair value, and the net of the acquisition date fair values of the identifiable assets acquired and the liabilities assumed. Recently Adopted Accounting Standards In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance removes certain exceptions to the general principles in Topic 740 and enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. This guidance was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and did not have a material impact on our consolidated financial statements. In January 2020, the FASB issued ASU 2020-01 Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This guidance addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. We evaluated the impact of ASU 2020-01 on our Consolidated Financial Statements, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and it did not have a material impact on our consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021, which means it was effective for our fiscal year beginning January 1, 2022 and did not have a material impact on our consolidated financial statements. Accounting standards not yet adopted In October 2021, the FASB issued ASU 2021-08-Business Combinations (“Topic 805”): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in ASU 2021-08 require that an entity recognizes and measures contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers (“Topic 606”). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The amendments improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2022, which means it was effective for our fiscal year beginning January 1, 2023 and did not have a material impact on our consolidated financial statements. No other recently issued accounting pronouncements had or are expected to have a material impact on our consolidated financial statements. |
PREPAID AND OTHER CURRENT ASSET
PREPAID AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2023 | |
PREPAID AND OTHER CURRENT ASSETS | |
Prepaid And Other Current Assets | 2. PREPAID AND OTHER CURRENT ASSETS Prepaid and other current assets were comprised of the following items: December 31, December 31, (in thousands) 2023 2022 Deposits $ 1,134 $ 595 Insurance 237 235 Supplier advances 26 375 Interest and taxes 26 69 Licenses and payments 106 146 Royalty Advance 853 - Other 15 102 Total prepaid and other current assets $ 2,397 $ 1,522 |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2023 | |
INVENTORY | |
Inventory | 3. INVENTORY Inventory, net was comprised of the following items: December 31, December 31, (in thousands) 2023 2022 Raw materials $ 1,400 $ 7,431 Work in process 307 940 Finished goods 3,053 2,408 Total inventory $ 4,760 $ 10,779 As a result of the Zabala lease termination, the Company wrote off $2,607 of plant inventory that was in the facility as of the end of the year, which was recorded in cost of goods sold. The Company recorded an inventory reserve of $1,780 and $1,492 for the year ended December 31, 2023 and 2022, respectively. |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2023 | |
OTHER CURRENT LIABILITIES | |
Other Current Liabilities | 4. OTHER CURRENT LIABILITIES Other current liabilities were comprised of the following items: December 31, December 31, (in thousands) 2023 2022 Excise and cannabis tax $ 3 $ 948 Third party brand distribution accrual 558 17 Insurance and professional fee accrual 287 158 Interest and tax accrual 109 921 Employee Retention Credit financing accrual 441 441 Equipment purchase accrual - 724 Other 545 445 Total other current liabilities $ 1,943 $ 3,654 On July 26, 2022, subsidiaries of the Company entered into an agreement with an institutional investor pursuant to which the investor purchased a participation ("Transferred Interests") in all rights to payment from the United States IRS in respect of the Company’s employee retention credits for the first and second quarters of 2021 (the “ERC Claim”). The purchase price paid for the derivative payment rights was $2,446, which was paid in immediately available funds. For the year ended December 31, 2022, the Company recorded net other income of $2,014 and an accrued other liability of $441 to be paid to facilitate the sale of the ERC Claim. Included in interest expense is $864 of financing related charges. |
PROPERTY AND EQUIPMENT AND RIGH
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS | 12 Months Ended |
Dec. 31, 2023 | |
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS | |
Property And Equipment And Right Of Use Assets | 5. PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS A reconciliation of the beginning and ending balances of property and equipment, right of use assets and accumulated depreciation during the years ended December 31, 2023 and 2022, and property and equipment, net and right of use assets, net as of for the same years are as follows: Land and Leasehold Furniture and Construction Right of (in thousands) Buildings Improvements Fixtures Equipment Vehicles in Process Use Assets Total Costs Balance-December 31, 2022 $ 15,719 $ 12,437 $ 50 $ 6,499 $ 830 $ 35 $ 37,081 $ 72,651 Additions - 29 - 106 - - 17,068 17,203 Disposals (15,719 ) (202 ) - - - - - (15,921 ) Remeasurements - - - - - (4,602 ) (4,602 ) Impairments - (10,148 ) - (1,310 ) - - (28,230 ) (39,688 Balance-December 31, 2023 $ - $ 2,116 $ 50 $ 5,295 $ 830 $ 35 $ 21,317 $ 29,643 Accumulated Depreciation Balance-December 31, 2022 $ (315 ) $ (1,815 ) $ (49 ) $ (1,498 ) $ (608 ) $ - $ (9,719 ) $ (14,004 ) Depreciation (71 ) (837 ) - (925 ) (136 ) - (2,742 ) (4,711 ) Disposals 386 55 - - - - - 441 Remeasurement - - - - - - 2,661 2,661 Impairments - 1,516 - 70 - - 6,810 8,396 Balance-December 31, 2023 $ - $ (1,081 ) $ (49 ) $ (2,353 ) $ (744 ) $ - $ (2,990 ) $ (7,217 ) Net Book Value-December 31, 2023 $ - $ 1,035 $ 1 $ 2,942 $ 86 $ 35 $ 18,327 $ 22,426 Construction in process represents assets under construction related to cultivation, manufacturing, and distribution facilities not yet completed or otherwise not placed in service. Depreciation expense of $4,711, and $7,022, were recorded for the years ended December 31, 2023 and 2022 respectively, of which $4,613 and $6,292, respectively, were included in cost of goods sold. Depreciation expense of $608 was also recorded in other expense for the year ended December 31, 2022. As a result of the Zabala lease termination, the Company wrote off $8,632 of leasehold improvements and $151 of equipment resulting in an impairment expense of $8,783, which was recorded in other income and expense. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2023 | |
INTANGIBLE ASSETS | 6. INTANGIBLE ASSETS A reconciliation of the beginning and ending balances of intangible assets and accumulated amortization during the years ended December 31, 2023 and 2022 are as follows: Definite Life Intangibles Indefinite Life Technology/ Acquired Purchase Intangibles Brands & (in thousands) Know How Rights Tradenames Total Costs Balance-December 31, 2022 $ 3,258 $ 1,800 $ 37,707 $ 42,765 Sale of Brand Assets (24,053 ) (37,299 ) Impairment (258 ) (1,384 ) (13,654 ) (2,050 ) Balance-December 31, 2023 $ 3,000 $ 416 $ - $ 3,416 Accumulated Amortization Balance-December 31, 2022 $ (535 ) $ (28 ) $ - $ (563 ) Amortization (323 ) (83 ) - (406 ) Impairment 97 - 97 Balance-December 31, 2023 $ (761 ) $ (111 ) $ - $ (872 ) Net Book Value December 31, 2022 $ 2,723 $ 1,772 $ 37,707 $ 42,202 Net Book Value December 31, 2023 $ 2,239 $ 305 $ - $ 2,544 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 $406, and $354 for the years ended December 31, 2023, and 2022, respectively. During the year ended December 31, 2022, the Company acquired rights to purchase additional manufacturing equipment related to the Lowell 35s automated pre-roll line. Per the terms of the purchase agreement, the Company acquired the rights to acquire eight pre-roll machines and one packaging machine and received 15% of the issued and outstanding shares of the selling company, which have a fair market value of $nil. For the year ended December 31, 2022, one pre-roll machine and the packaging machine were received and in use and the acquired purchase rights are being amortized over the five year useful life of the machines. As consideration for the purchase of the acquisition rights, the Company paid for deposits on a portion of the machines, which are reflected as additions within Property and Equipment On October 6th, 2023 the Company repurchased all of the $22,157 aggregate principal amount of outstanding Senior Secured Convertible Debentures (“Debentures”) together with the related warrants to purchase 10,627,483 subordinate voting shares of the Company and 4,324,845 common shares of Indus which have been cancelled. Share amounts reflect the 1 for 10 reverse stock split effective August 31, 2023. A total of 6,849,572 shares of the Company were issued to holders based on the proportion of the outstanding Debentures held by such holder, of (x) membership interests in LF Brandco LLC (“Brandco”), an entity formed to hold the Company’s intellectual property relating to its “Lowell Smokes” and “Lowell Herb Co.” brands (including trademarks, logos and additional identifying marks, domain names and social media accounts). During the year ended December 31, 2023, and as result of the transaction, the Company recognized $13,245 of impairment on the intangible brand assets. In addition, the Company has entered into a license agreement with Brandco for the “Lowell” trademarks, logos, and related intellectual property on an exclusive basis in the State of California for a five-year license term, with up to three five-year extensions. The Company’s exercise of the extension terms is subject to mutual agreement on certain sales performance criteria for each extension term. In addition, the Company received a $1 million royalty advance whereby the Company does not have to pay the first $1 million of royalty expense. The transaction is considered to be a “related party transaction” because insiders of the Company hold Debentures and Warrants. As a result of the transaction, the Company derecognized Lowell brand name intangible ($24.1) million, convertible notes ($22.1) million, accrued interest ($1.49) million and warrants ($1.55) million. Issued shares and royalty advance were recorded at fair value in the amount of $2.03 million or $0.93 million, respectively. The Company estimates that amortization expense for our existing other intangible assets will average approximately $317 annually for the next seven and a half fiscal years. Actual amortization expense to be reported in future periods could differ from these estimates as a result of new intangible asset acquisitions, changes in useful lives or other relevant factors or changes. |
SHAREHOLDERS EQUITY
SHAREHOLDERS EQUITY | 12 Months Ended |
Dec. 31, 2023 | |
SHAREHOLDERS EQUITY | |
Shareholders Equity | 7. SHAREHOLDERS’ EQUITY Shares Outstanding The table below details the change in Company shares outstanding by class during year ended December 31, 2023: Subordinate Super (in thousands) Voting Shares Voting Shares Balance-December 31, 2022 12,177 20 Issuance of vested restricted stock units 4 - Issuance of shares in convertible debt conversion 6,843 - Balance-December 31, 2023 19,024 20 Warrants A reconciliation of the beginning and ending balances of warrants outstanding is as follows: (in thousands) Balance-December 31, 2022 17,343 Warrants canceled in conjunction with convertible debt conversion (15,052 ) Warrants expired (1,165 ) Balance-December 31, 2023 1,126 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2023 | |
DEBT | |
Debt | 8. DEBT Debt at December 31, 2023 and 2022, was comprised of the following: December 31, December 31, (in thousands) 2023 2022 Current portion of long-term debt Vehicle loans (1) $ 3 $ 15 Mortgage payable (2) - 257 Note payable - 10 Convertible debt (3) - 21,398 Total short-term debt 3 21,680 Long-term debt, net Vehicle loans (1) - 3 Mortgage payable (2) - 8,713 Convertible debenture (3) - - Total long-term debt - 8,716 Total Indebtedness $ 3 $ 30,396 _____________ (1) Primarily fixed term loans on transportation vehicles. Weighted average interest rate at December 31, 2023 and December 31, 2022 was 6.4% . (2) Mortgage payable associated with the acquired processing facility. Weighted average interest rate at December 31, 2022 was 12.5%. Net of deferred financing costs as December 31, 2022 of $296.As part of sale leaseback transaction, the Company sold the property, and the buyer assumed the mortgage. Refer to Note “Leases” for more information (3) Net of deferred financing costs at December 31, 2022 of $759.During the year, the Company repurchased the Convertible Notes. Refer to Note “Intangible Assets” for more information. Stated maturities of debt obligations are as follows as of December 31, 2023: December 31, (in thousands) 2023 2024 $ 3 Total debt obligations $ 3 |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2023 | |
LEASES | |
Leases | 9. LEASES A reconciliation of lease obligations for the years ended December 31, 2023 and 2022, is as follows: (in thousands) Lease obligation Operating Leases Finance Leases Total December 31, 2022 $ - 33,999 33,999 Sale leaseback addition 17,068 - 17,068 Lease principal payments (443 ) (1,527 ) (1,970 ) Lease remeasurement (2,064 ) - (2,064 Lease settlement - (1,202 ) (1,202 ) Lease termination - (26,319 ) (26,319 ) Operating lease remeasurement classification 4,841 (4,841 ) - December 31, 2023 $ 19,402 110 19,512 As a result of the Zabala lease termination, The Company derecognized the right of use asset in the amount of $21,423 and lease obligation of $26,319, which resulted in a gain on termination of $4,896, which was recorded in Other Income/(expense). During the year, the Company entered into a sale and leaseback transaction for its Spence Road facility. As part of the transaction, the Company sold the property for $19.4 million including assumption of the underlying mortgage. The Company leased back the facility for a ten-year period with 2 ten-year extension options. The Company accounted for the transaction as a sale recorded a gain of $3.04 million in Other income (expense). The lease back was classified as an operating lease. All extension options that are reasonably certain to be exercised have been included in the measurement of lease obligations. The Company reassesses the likelihood of extension option exercise if there is a significant event or change in circumstances within its control. The components of lease expense for the years ended December 31, 2023, and 2022, are as follows: Years Ended Finance Leases December 31, December 31, (in thousands) 2023 2022 Amortization of leased assets (1) $ 1,651 $ 3,755 Interest on lease liabilities (2) 1,651 2,219 Total $ 3,316 $ 5,974 ____________ (1) Included in cost of goods sold, general and administrative expenses and other expenses in the consolidated statement of operations. (2) Included in interest expense in the consolidated statement of operations. Years Ended Operating Leases December 31, December 31, (in thousands) 2023 2022 Amortization of leased assets (1) $ 1,091 $ - Interest on lease liabilities (1) 1,326 - Total $ 2,417 $ - ____________ (1) Included in cost of goods sold, general and administrative expenses and other expenses in the consolidated statement of operations. The key assumptions used in accounting for leases as of December 31, 2023, were a weighted average remaining lease term of 8.9 years and a weighted average discount rate of 10%. The key assumptions used in accounting for leases as of December 31, 2022 were a weighted average remaining lease term of 14.6 years and a weighted average discount rate of 6%. The future lease payments with initial remaining terms in excess of one year as of December 31, 2023 were as follows: December 31, (in thousands) 2023 2024 3,285 2025 3,258 2026 3,240 2027 3,324 2028 and beyond 52,341 Total lease payments $ 65,448 Less imputed interest (45,936 ) Total $ 19,512 |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2023 | |
SHARE BASED COMPENSATION | |
SHARE BASED COMPENSATION | 10. SHARE-BASED COMPENSATION During 2019, the Company’s Board of Directors adopted the 2019 Stock and Incentive Plan (the “Plan”), which was amended in April 2020 and March 2021. The Plan permits the issuance of stock options, stock appreciation rights, stock awards, share units, performance shares, performance units and other stock-based awards, and, as of December 31, 2022, 13.2 million shares have been authorized to be issued under the Plan and 3.6 million are available for future grant. The Plan provides for the grant of options as either non-statutory stock options or incentive stock options and restricted stock units to employees, officers, directors, and consultants of the Company to attract and retain persons of ability to perform services for the Company and to reward such individuals who contribute to the achievement by the Company of its economic objectives. The awards granted generally vest in 25% increments over a four-year period and option awards expire 6 years from grant date. The Plan is administered by the Board or a committee appointed by the Board, which determines the persons to whom the awards will be granted, the type of awards to be granted, the number of awards to be granted, and the specific terms of each grant, including the vesting thereof, subject to the provisions of the Plan. During the years December 31, 2023 and 2022, the Company granted shares to certain employees as compensation for services. These shares were accounted for in accordance with ASC 718 - Compensation - Stock Compensation. The Company amortizes awards over the service period and until awards are fully vested. For the years ended December 31, 2023, and 2022 share-based compensation expense was as follows: Years Ended December 31, December 31, (in thousands) 2023 2022 Cost of goods sold $ - $ - General and administrative expense 231 564 Total share-based compensation $ 231 $ 564 The following table summarizes the status of stock option grants and unvested awards at and for the year ended December 31, 2023: Weighted- Weighted- Average Average Remaining Aggregate (in thousands except per share amounts) Stock Options Exercise Price Contractual Life Intrinsic Value Outstanding-December 31, 2022 1,007 $ 4.7 4.6 - Granted 828 0.3 - Expired (28 ) 20.4 - Cancelled (354 ) 4.6 - Outstanding-December 31, 2023 1,453 1.9 5.3 - Exercisable-December 31, 2023 988 2.09 5.2 - Vested and expected to vest-December 31, 2023 1,453 1.91 5.3 - The weighted-average fair value of options granted during the year ended December 31, 2023, estimated as of the grant date was $0.30. As of December 31, 2023, there was $191 of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a remaining weighted-average vesting period of 0.99 years. The following table summarizes the status of restricted stock unit (“RSU”) grants and unvested awards at and for the year ended December 31, 2023: Weighted-Average (in thousands except per share amounts) RSUs Fair Value Outstanding-December 31, 2022 21 $ 1.10 Granted - - Vested (4 ) - Cancelled (17 ) 1.02 Outstanding-December 31, 2023 - $ - As of December 31, 2023, there was no unrecognized compensation cost related to non-vested restricted stock units. The fair value of the stock options and RSUs granted were determined using the Black-Scholes option-pricing model with the following weighted average assumptions at the time of grant. No RSUs were granted for the years ended December 31, 2023 and 2022. Options Years Ended December 31, December 31, 2023 2022 Expected volatility 50 % 50 % Dividend yield 0 % 0 % Risk-free interest rate 4.12 % 2.48 % Expected term in years 5.58 3.9 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
Income Taxes | 11. INCOME TAXES Coronavirus Aid, Relief and Economic Security Act On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted and signed into law in response to the market volatility and instability resulting from the COVID-19 pandemic. It includes a significant number of tax provisions and lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (the “2017 Act”). The changes mainly related to: (1) the business interest expense disallowance rules for 2019 and 2020; (2) net operating loss rules; (3) charitable contribution limitations; (4) employee retention credit; and (5) the realization of corporate alternative minimum tax credits. The Company continues to assess the impact and future implication of these provisions; however, it does not anticipate any amounts that could give rise to a material impact to the overall consolidated financial statements. The provision for income tax expense for the year ended December 31, 2023, was $161, representing an effective tax rate of (0.4)%, compared to an income tax expense of 191 for the year ended December 31, 2022, representing an effective tax rate of (0.8)%. The provision for income tax expense for the years ended December 31, 2023 and 2022, consisted of the following: Years Ended (in thousands) 2023 2022 Current Federal $ - $ - State 161 191 Total Current 191 191 Deferred tax benefit Federal (1,615 ) (1,987 ) State (3,111 ) (15,293 ) Total deferred tax benefit (4,726 ) (17,280 ) Valuation allowance 4,726 17,280 Income tax expense $ 161 $ 191 As the Company operates in the cannabis industry, it is subject to the limitations of IRC Section 280E, under which the Company is only allowed to deduct expenses directly related to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed non-allowable under IRC Section 280E. Therefore, the effective tax rate can be highly variable and may not necessarily correlate with pre-tax income or loss. In December 2017, the United States (“U.S.”) Congress passed and the President signed into law what is referred to as the 2017 Tax Act, which contains many significant changes to the U.S. tax laws, including, but not limited to, reducing the U.S. federal corporate tax rate from 35% to 21% and utilization limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017 to 80% of taxable income with an indefinite carryforward period. As the Company has a full valuation allowance against its U.S. deferred tax assets, the revaluation of net deferred tax assets resulting from the reduction in the U.S. federal corporate income tax rate did not impact the Company’s effective tax rate. Additional guidance may be issued by the U.S. Treasury Department, the IRS, or other standard-setting bodies, which may result in adjustments to the amounts recorded, including the valuation allowance. The Company is being audited by the IRS for years 2019 and 2020. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2023 and 2022, are as follows: Years Ended (in thousands) 2023 2022 Deferred tax assets Net operating loss carryforwards $ 23,323 $ 17,038 Accruals and reserves - - Depreciation - - Other - - Valuation allowance (23,323 ) (17,038 ) Total deferred tax assets - - Accruals and reserves - - Share-based compensation - - Total deferred tax liabilities - - Net deferred tax liabilities $ - $ - |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2023 | |
Net loss per share: | |
Net Income (loss) Per Share | 12. NET INCOME (LOSS) PER SHARE Net loss per share represents the net earnings/loss attributable to shareholders divided by the weighted average number of shares outstanding during the period on an as converted basis. Years Ended December 31, December 31, (in thousands except per share amounts) 2023 2022 Net loss $ (37,342 ) $ (24,677 ) Net loss per share: Basic $ (2.71 ) $ (2.17 ) Diluted $ (2.71 ) $ (2.17 ) Weighted average shares outstanding: Basic 13,790 11,318 Diluted 13,790 11,318 Weighted average potentially diluted shares (1): Basic shares 13,790 11,318 Options - - Warrants - - Convertible debentures - - Restricted stock units - - Total weighted average potentially diluted shares: 13,790 11,318 ________________ (1) For the above periods, the inclusion of options, warrants, convertible debentures and restricted stock units in the calculation of diluted earnings per share would be anti-dilutive, and accordingly, were excluded from the diluted loss per share calculation. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2023 | |
FAIR VALUE MEASUREMENTS | |
Fair Value Measurements | 13. FAIR VALUE MEASUREMENTS Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. An asset’s or liability’s level is based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities carried at fair value are valued and disclosed in one of the following three levels of the valuation hierarchy: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions. At December 31, 2023 and December 31, 2022 the carrying value of cash and cash equivalents, accounts receivable, prepaid expense and other current assets, accounts payable and other current liabilities approximate fair value due to the short-term nature of such instruments. The carrying value of the Company's debt approximates fair value based on current market rates (Level 2). Nonrecurring fair value measurements The Company uses fair value measures when determining assets and liabilities acquired in an acquisition as described above in the Notes to Consolidated Financial Statements, which are considered a Level 3 measurement. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
Commitments And Contingencies Disclosure Abstract | |
Commitments And Contingencies | 14. COMMITMENTS AND CONTINGENCIES Contingencies The Company’s operations are subject to a variety of local and state regulation. Failure to comply with one or more of those regulations could result in fines, restrictions on its operations, or losses of permits that could result in the Company ceasing operations. While management of the Company believes that the Company is in compliance with applicable local and state regulation as of December 31, 2023, cannabis regulations continue to evolve and are subject to differing interpretations. As a result, the Company may be subject to regulatory fines, penalties or restrictions in the future. The Company is being audited by the IRS for years 2019 and 2020 and may be subject to additional taxes, penalties and interest. Litigation and Claims From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. On January 12, 2024, Cypress Holding Company, LLC (“Cypress”), a wholly owned subsidiary of the Company, surrendered possession of approximately 10 acres of real property at 139 Zabala Road, Salinas, California (the “Zabala Road Property”) leased by Cypress pursuant to a Lease Agreement dated April 1, 2017 (the “Zabala Road Lease”) with Tinhouse, LLC, dba Tinhouse Partners, LLC, as landlord (the “Landlord”). Prior to vacating the premises on January 12, 2024, the Company had operated a cultivation facility, which includes four greenhouses totaling approximately 255,000 square feet, on the Zabala Road Property. In January 2023, the Company’s Board of Directors formed a strategic alternatives special committee of independent directors to explore, review and evaluate strategic and financial alternatives. As part of these efforts, the Company entered into negotiations with the Landlord to restructure the terms of the Zabala Road Lease, which provided for an expiry date of December 31, 2027, subject to five 5-year extension options exercisable by Cypress. In 2023, the Company and the Landlord reached a settlement amending the terms of the Zabala Road Lease and reaching agreement on all rent-related issues. The Landlord terminated the Zabala Road Lease via a letter, which was served by its counsel on the Company in 2023. In 2023, the Company filed a lawsuit for breach of contract and specific performance against the Landlord to enforce the settlement terms. The Landlord filed counterclaims and an unlawful detainer action against the Company, claiming damages of more than $36 million, which the Landlord claims are based on an analysis of accelerated rent due through the end of the term of the Zabala Road Lease, along with attorney’s fees, improvements, and other undefined costs. The Company intends to vigorously defend itself against the claims made by the Landlord. However, no assurance can be provided as to whether or not the Company will prevail, and it may be required to pay significant monetary damages. It is difficult to evaluate the likely outcome of a trial at such an early stage and with competing claims and cross-claims. In addition, due to the early nature of the case, an estimate on a loss cannot be made. A punitive class action was filed on behalf of all California consumers who purchased products made by Lowell Farms, Inc. in California. The case alleges that Lowell failed to accurately label its products with the THC% identified by its testing laboratories, and that California consumers were thereby deceived into paying higher prices for Lowell’s products than they otherwise would have. No trial has been scheduled in this matter. The parties are presently engaged in the process by which Plaintiff will bring a motion seeking certification of a class. If class certification is denied, then Plaintiff will be relegated to his own damages, which is likely just a few hundred dollars, and the case will likely end. If class certification is granted, then the parties will engage in fact discovery and the Court will set a trial date. The class certification motion is scheduled to be heard on August 26, 2024. Plaintiff has served discovery requests limited to class certification issues, but the parties have not engaged in any merits discovery. It is difficult to evaluate any potential outcome at such an early stage of the case where there has been no merits discovery. The Company is prepared to vigorously defend itself at the trial if a class is certified and a settlement is not reached. It is difficult to evaluate the likely outcome of a trial because Plaintiff has not articulated a theory of damages. In addition, due to the early nature of the case, an estimate of a loss cannot be made. |
GENERAL AND ADMINISTRATIVE EXPE
GENERAL AND ADMINISTRATIVE EXPENSES | 12 Months Ended |
Dec. 31, 2023 | |
GENERAL AND ADMINISTRATIVE EXPENSES | |
General And Administrative Expenses | 15. GENERAL AND ADMINISTRATIVE EXPENSES For the years ended December 31, 2023 and 2022, general and administrative expenses were comprised of: Years Ended December 31, December 31, (in thousands) 2023 2022 Salaries and benefits $ 3,229 $ 5,286 Professional fees 527 465 Share-based compensation 231 564 Insurance 999 1,344 Administrative 2,316 1,894 Total general and administrative expenses $ 7,302 $ 9,553 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2023 | |
RELATED PARTY TRANSACTIONS | |
Related-Party Transactions | 16. RELATED-PARTY TRANSACTIONS Transactions with related parties are entered into in the normal course of business and are measured at the amount established and agreed to by the parties. In April 2015, Lowell entered into a services agreement with Olympic Management Group (“OMG”), for advisory and technology support services, including the access and use of software licensed to OMG to perform certain data processing and enterprise resource planning (ERP) operational services. OMG is owned by one of the Company’s co-founders. The agreement provides for the dollar-for-dollar reimbursement of expenses incurred by OMG in performance of its services. Amounts paid to OMG for the years ended December 31, 2023 and 2022, were $nil and $36, respectively. During October 2022, Cannaco Research Corporation, an existing customer, became a related party when Ms. Lawrence, a new member joined the Board of Directors. Total sales recognized for Cannaco Research Corporation for the years ended December 31, 2023 and 2022 were $487 and $274, respectively. For the years ended December 31, 2023 and 2022, cash collected from Cannaco Research Corporation was $476 and $223, respectively. In December, 2022, the Company entered into an agreement with Cannaco Research Corporation to lease approximately 2,000 square feet of warehouse space in Los Angeles to facilitate distribution services in the area. The lease was a 12 month storage agreement for the warehouse space. Total payments to Cannaco Research Corporation for the lease were $130 and $10 in the years ended December 31, 2023 and December 31,2022, respectively. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2023 | |
SEGMENT INFORMATION | |
Segment Information | 17. SEGMENT INFORMATION The Company's operations are comprised of a single reporting operating segment engaged in the production and sale of cannabis products in the United States. As the operations comprise a single reporting segment, amounts disclosed in the financial statements also represent a single reporting segment. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2023 | |
SUBSEQUENT EVENTS | |
Subsequent Events | 18. SUBSEQUENT EVENTS On January 12, 2024, Cypress Holding Company, LLC (“Cypress”), a wholly owned subsidiary of the Company, surrendered possession of approximately 10 acres of real property at 139 Zabala Road, Salinas, California (the “Zabala Road Property”) leased by Cypress pursuant to a Lease Agreement dated April 1, 2017 (the “Zabala Road Lease”) with Tinhouse, LLC, dba Tinhouse Partners, LLC, as landlord (the “Landlord”). Prior to vacating the premises on January 12, 2024, the Company had operated a cultivation facility, which includes four greenhouses totaling approximately 255,000 square feet, on the Zabala Road Property. As previously announced, in January 2023, the Company’s Board of Directors formed a strategic alternatives special committee of independent directors to explore, review and evaluate strategic and financial alternatives. As part of these efforts, the Company entered into negotiations with the Landlord to restructure the terms of the Zabala Road Lease, which provided for an expiry date of December 31, 2027, subject to five 5-year extension options exercisable by Cypress. In September 2023, the Company and the Landlord reached a settlement amending the terms of the Zabala Road Lease and reaching agreement on all rent-related issues. The Landlord terminated the Zabala Road Lease via a letter dated October 6, 2023, which was served by its counsel on the Company on October 10, 2023. In October 2023, the Company filed a lawsuit for breach of contract and specific performance against the Landlord to enforce the settlement terms. The Landlord filed counterclaims and an unlawful detainer action against the Company, claiming damages of more than $36 million, which the Landlord claims are based on an analysis of accelerated rent due through the end of the term of the Zabala Road Lease, along with attorney’s fees, improvements, and other undefined costs. The Company has evaluated subsequent events through March 26, 2024, the date the financial statements were available to be issued. |
BUSINESS BASIS OF PRESENTATIO_2
BUSINESS BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
BUSINESS BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business | Lowell Farms Inc. is governed by the laws of British Columbia, Canada. On April 26, 2019, the Company completed a reverse takeover transaction with Indus Holding Company, a Delaware corporation, incorporated in 2014. Effective March 1, 2021, the Company changed its name to Lowell Farms Inc. and is a California-based cannabis company with vertically integrated operations including large scale cultivation, extraction, processing, manufacturing, branding, packaging and wholesale distribution to retail dispensaries. The Company manufactures and distributes proprietary and third-party brands throughout the State of California, the largest cannabis market in the world. The Company also provides manufacturing, extraction and distribution services to third-party cannabis and cannabis branding companies. The Company’s corporate office and principal place of business is located at 19 Quail Run Circle, Salinas, California. |
Basis Of Presentation | The consolidated financial statements of Lowell Farms Inc. and its wholly owned subsidiaries (collectively, the “Company,” “we,” “us” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). All intercompany transactions and balances have been eliminated in consolidation. All dollar amounts in the consolidated financial statements and notes to consolidated financial statements are expressed in thousands of United States dollars ("$" or "US$"), unless otherwise indicated. |
Use Of Estimates | The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include allowance for doubtful accounts and credit losses, carrying value of inventory, revenue recognition, accounting for stock-based compensation expense, and income taxes. Actual results could differ from those estimates. The global COVID-19 pandemic has impacted the operations and purchasing decisions of companies worldwide. It also has created and may continue to create significant uncertainty in the global economy. The Company has undertaken measures to protect its employees, partners, customers, and vendors. In addition, the Company’s personnel are subject to various travel restrictions, which limit the ability of the Company to provide services to customers and affiliates. This impacts the Company's normal operations. To date, the Company has been able to provide uninterrupted access to its products and services, including certain employees that are working remotely, and its pre-existing infrastructure that supports secure access to the Company’s internal systems. If, however, the COVID-19 pandemic has a substantial impact on the productivity of the Company’s employees or its partners’ or customers’ decision to use the Company’s products and services, the results of the Company’s operations and overall financial performance may be adversely impacted. The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require updates to the Company’s estimates and judgments or revisions to the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the financial statements. |
Cash and Cash Equivalents | Cash and cash equivalents include cash on hand, cash deposits in financial institutions, and other deposits that are readily convertible into cash. The Company considers all short-term, highly liquid investments purchased with maturities of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. As of December 31, 2023 and December 31, 2022, the Company’s cash and cash equivalents exceeded FDIC insured limits by $1,974 and $360, respectively. |
Accounts Receivable | Accounts receivables are classified as loans and receivable financial assets. Accounts receivables are recognized initially at fair value and subsequently measured at amortized cost, less any provisions for impairment. When an accounts receivable is uncollectible, it is written off against the provision. Subsequent recoveries of amounts previously written off are credited to the consolidated statements of operations. |
Inventories | Inventories are valued at the lower of cost and net realizable value. Costs related to raw materials and finished goods are determined on the first-in, first-out basis. Specific identification and average cost methods are also used primarily for certain packing materials and operating supplies. The Company reviews inventory for obsolete, redundant and slow-moving goods and any such inventory is written-down to net realizable value. |
Property and Equipment | Property and equipment are stated at cost, net of accumulated depreciation and impairment losses, if any. Depreciation is calculated on a straight-line basis over the estimated useful life of the asset using the following terms and methods: Category Useful Life Leasehold improvements The lesser of the estimated useful life or length of the lease Office equipment 3-5 years Furniture and fixtures 3-7 years Vehicles 4-5 years Machinery and equipment 3-6 years Buildings 35 years Construction in progress Not depreciated The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively if appropriate. An item of equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the consolidated statements of operations in the year the asset is derecognized. |
Goodwill | Goodwill represents the excess of the purchase price paid for the acquisition of an entity over the fair value of the net tangible and intangible assets acquired. Goodwill that has an indefinite useful life is not subject to amortization and is tested annually for impairment, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. Any goodwill impairment loss is recognized in the consolidated statements of operations in the period in which the impairment is identified. Impairment losses on goodwill are not subsequently reversed. |
Intangible Assets | Intangible assets are recorded at cost, less accumulated amortization and impairment losses, if any. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Intangible assets acquired in an asset purchase are valued at their purchase price. Amortization is recorded on a straight-line basis over their estimated useful lives, which do not exceed the contractual period, if any. The estimated useful lives, residual values, and amortization methods are reviewed at each year-end, and any changes in estimates are accounted for prospectively. Branding rights are measured at fair value at the time of acquisition and are amortized on a straight-line basis over a period of 15 years. In addition, the Company has certain brand and tradenames with indefinite lives, which are evaluated for impairment on an annual basis. |
Impairment of Long-lived Assets | Long-lived assets, including property, plant and equipment and intangible assets are reviewed for impairment at each statement of financial position date or whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its recoverable amount. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. The recoverable amount of an asset or an asset group is the higher of its fair value, less costs to sell, and its value in use. If the carrying amount of an asset exceeds its recoverable amount, an impairment charge is recognized immediately in profit or loss equal to the amount by which the carrying amount exceeds the recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of the revised estimate of the recoverable amount, and the carrying amount that would have been recorded had no impairment loss been recognized previously. |
Leased Assets | The Company adopted FASB Topic 842, Leases (“Topic 842”) effective January 1, 2019, using the modified retrospective adoption method which allowed it to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit. In connection with the adoption of the lease pronouncement, the Company recorded a charge to accumulated deficit of $847. A lease of property and equipment is classified as a capital lease if it transfers substantially all the risks and rewards incidental to ownership to the Company. Lease right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make payments arising from the lease agreement. These assets and liabilities are recognized at the commencement of the lease based upon the present value of the future minimum lease payments over the lease term. The lease term reflects the noncancelable period of the lease together with periods covered by an option to extend or terminate the lease when management is reasonably certain that it will exercise such option. Changes in the lease term assumption could impact the right-of-use assets and lease liabilities recognized on the balance sheet. As our leases typically do not contain a readily determinable implicit rate, we determine the present value of the lease liability using our incremental borrowing rate at the lease commencement date based on the lease term on a collateralized basis. The Company accounts for sales leaseback transactions in accordance with ASC 842-40: Sale and Leaseback Transactions. The Company determines whether the transfer of an asset represents a sale based on requirements from Topic 606, lease classification, and nature of purchase options. If a transfer is deemed a sale and at fair value, the Company derecognizes the asset and records a gain/(loss) in the income statement. If a transfer is deemed a sale and not at fair value, the Company derecognizes the asset and does not recognize a gain/(loss) in the income statement. If a transfer of the asset is not a sale, the Company does not derecognize the asset. |
Income Taxes | The Company is a United States C corporation for income tax purposes. Income tax expense consisting of current and deferred tax expense is recognized in the consolidated statements of operations. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year-end, adjusted for amendments to tax payable with regards to previous years. Deferred tax assets and liabilities and the related deferred income tax expense or recovery are recognized for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs. A deferred tax asset is recognized to the extent that it is probable that future taxable income will be available against which the asset can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. |
Revenue Recognition | Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. |
Branded Products | For the Company’s branded products, revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a customer. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. |
Third Party Manufactured Products | The Company has certain licenses to manufacture and distribute third party products to retail dispensaries and deliveries in return for paying royalty payments to the third parties. The Company is a principal in the arrangement, it assumes primary responsibility for fulfilling the customer promise to retail dispensaries and deliveries, and it holds the inventory risk. Revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a retail dispensary or retail delivery. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. |
Licensing | The Company has entered into contracts to license the right to utilize the Company’s branding and intellectual property. For all sales utilizing the license, the Company recognizes a percentage based license fee. Revenue is recognized when performance obligations are satisfied by recognizing fees on sales utilizing the licensed property to other companies. Contracts exist that define the property that is licensed, the time period, the fees and payment terms. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. |
Distribution | The Company distributes certain third-party brands and bulk flower. The Company is a principal in the arrangement, it assumes primary responsibility for fulfilling the customer promise to retail dispensaries and deliveries and other wholesale customers, and it holds the inventory risk. Revenue is recognized when it satisfies a performance obligation by transferring a promised cannabis good to a customer. A contract, whether a verbal or written sales order, is established with customers prior to order fulfillment with agreement upon unit prices, delivery dates, and payment terms. The transaction price is based on market pricing while considering the value of the Company’s brand and quality. Transaction price is allocated to each product sold based upon the negotiated unit sales price associated with each product line scheduled for delivery within the order. Performance obligation satisfaction occurs upon delivery to customer premises. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The sales prices, including discounts, are fixed at the point of sale and all consideration from contracts is included in the transaction price. The Company’s contracts do not include multiple performance obligations or material variable consideration. |
Lowell Farms Services | The Company performs various processing activities under Lowell Farms Services including drying, bucking, trimming, sorting, grading and packaging operations. Revenue is recognized when it satisfies a performance obligation by completing the agreed upon services that were negotiated with a customer. A contract, whether a verbal or written sales order, is established with customers prior to completing the agreed upon services with the type of services to be performed and with the agreed upon pricing and timing. The transaction price is based on the nature of the services to be performed and market pricing. Performance obligation satisfaction occurs upon completion of the services performed. These types of revenues accounted for under ASC Topic 606, generally, do not require significant estimates or judgments based on the nature of the Company’s revenue stream. The Company’s contracts do not include multiple performance obligations or material variable consideration. |
Research and Development | Research costs are expensed as incurred. For the years ended December 31, 2023 and 2022, research costs are immaterial. For the year ended December 31, 2022, the Company incurred certain development expenditures related to the Lowell 35s product line that launched during the third quarter of the year ended December 31, 2022. Development costs of approximately $78 were expensed during the year ended December 31, 2022 to validate that the product line was commercially and technically feasible and to bring the product to market. Development expenditures are capitalized only if development costs are material, can be measured reliably, future economic benefits are probable, and the Company intends to and has sufficient resources to complete the development to use or sell the asset. To date, no development costs have been capitalized. |
Share-Based Compensation | The Company has a share-based compensation plan. The Company measures equity settled share-based payments based on their fair value at the grant date and recognizes compensation expense over the vesting period based on the Company’s estimate of equity instruments that will eventually vest. For shares granted to non-employees, the compensation expense is measured at the fair value of the goods and services received, except where the fair value cannot be estimated, in which case, it is measured at the fair value of the equity instruments granted. The fair value of share-based compensation to non-employees is periodically re-measured until counterparty performance is complete, and any change therein is recognized over the period and in the same manner as if the Company had paid cash instead of paying with or using equity instruments. |
Business Combinations | A business combination is defined as an acquisition of assets and liabilities that constitute a business. A business consists of inputs, including non-current assets and processes, including operational processes, that when applied to those inputs have the ability to create outputs that provide a return to the Company. Business combinations are accounted for using the acquisition method of accounting. The consideration of each acquisition is measured at the aggregate of the fair values of tangible and intangible assets obtained, liabilities and contingent liabilities incurred or assumed, and equity instruments issued by the Company at the date of acquisition. Key assumptions routinely utilized in allocation of purchase price to intangible assets include projected financial information such as revenue projections for companies acquired. As of the acquisition date, goodwill is measured as the excess of consideration given, generally measured at fair value, and the net of the acquisition date fair values of the identifiable assets acquired and the liabilities assumed. |
Recently Adopted Accounting Standards | In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance removes certain exceptions to the general principles in Topic 740 and enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. This guidance was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and did not have a material impact on our consolidated financial statements. In January 2020, the FASB issued ASU 2020-01 Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This guidance addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020. We evaluated the impact of ASU 2020-01 on our Consolidated Financial Statements, which was effective for the Company in our fiscal year and interim periods beginning on January 1, 2021 and it did not have a material impact on our consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021, which means it was effective for our fiscal year beginning January 1, 2022 and did not have a material impact on our consolidated financial statements. |
Accounting standards not yet adopted | In October 2021, the FASB issued ASU 2021-08-Business Combinations (“Topic 805”): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in ASU 2021-08 require that an entity recognizes and measures contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers (“Topic 606”). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The amendments improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2022, which means it was effective for our fiscal year beginning January 1, 2023 and did not have a material impact on our consolidated financial statements. No other recently issued accounting pronouncements had or are expected to have a material impact on our consolidated financial statements. |
BUSINESS BASIS OF PRESENTATIO_3
BUSINESS BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
BUSINESS BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule Of Property and equipment estimated useful life | Category Useful LifeLeasehold improvements The lesser of the estimated useful life or length of the lease Office equipment 3-5 yearsFurniture and fixtures 3-7 yearsVehicles 4-5 yearsMachinery and equipment 3-6 yearsBuildings 35 yearsConstruction in progress Not depreciated |
PREPAID AND OTHER CURRENT ASS_2
PREPAID AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
PREPAID AND OTHER CURRENT ASSETS | |
Summary Of Prepaid Expenses And Other Current Assets | December 31, December 31, (in thousands) 2023 2022 Deposits $ 1,134 $ 595 Insurance 237 235 Supplier advances 26 375 Interest and taxes 26 69 Licenses and payments 106 146 Royalty Advance 853 - Other 15 102 Total prepaid and other current assets $ 2,397 $ 1,522 |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INVENTORY | |
Summary Of Inventory | December 31, December 31, (in thousands) 2023 2022 Raw materials $ 1,400 $ 7,431 Work in process 307 940 Finished goods 3,053 2,408 Total inventory $ 4,760 $ 10,779 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
OTHER CURRENT LIABILITIES | |
Schedule Of Other Current Liabilities | December 31, December 31, (in thousands) 2023 2022 Excise and cannabis tax $ 3 $ 948 Third party brand distribution accrual 558 17 Insurance and professional fee accrual 287 158 Interest and tax accrual 109 921 Employee Retention Credit financing accrual 441 441 Equipment purchase accrual - 724 Other 545 445 Total other current liabilities $ 1,943 $ 3,654 |
PROPERTY AND EQUIPMENT AND RI_2
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS | |
Schedule Of Property And Equipment And Right Of Use Assets | Land and Leasehold Furniture and Construction Right of (in thousands) Buildings Improvements Fixtures Equipment Vehicles in Process Use Assets Total Costs Balance-December 31, 2022 $ 15,719 $ 12,437 $ 50 $ 6,499 $ 830 $ 35 $ 37,081 $ 72,651 Additions - 29 - 106 - - 17,068 17,203 Disposals (15,719 ) (202 ) - - - - - (15,921 ) Remeasurements - - - - - (4,602 ) (4,602 ) Impairments - (10,148 ) - (1,310 ) - - (28,230 ) (39,688 Balance-December 31, 2023 $ - $ 2,116 $ 50 $ 5,295 $ 830 $ 35 $ 21,317 $ 29,643 Accumulated Depreciation Balance-December 31, 2022 $ (315 ) $ (1,815 ) $ (49 ) $ (1,498 ) $ (608 ) $ - $ (9,719 ) $ (14,004 ) Depreciation (71 ) (837 ) - (925 ) (136 ) - (2,742 ) (4,711 ) Disposals 386 55 - - - - - 441 Remeasurement - - - - - - 2,661 2,661 Impairments - 1,516 - 70 - - 6,810 8,396 Balance-December 31, 2023 $ - $ (1,081 ) $ (49 ) $ (2,353 ) $ (744 ) $ - $ (2,990 ) $ (7,217 ) Net Book Value-December 31, 2023 $ - $ 1,035 $ 1 $ 2,942 $ 86 $ 35 $ 18,327 $ 22,426 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INTANGIBLE ASSETS (Tables) | |
Schedule Of Intangible Assets | Definite Life Intangibles Indefinite Life Technology/ Acquired Purchase Intangibles Brands & (in thousands) Know How Rights Tradenames Total Costs Balance-December 31, 2022 $ 3,258 $ 1,800 $ 37,707 $ 42,765 Sale of Brand Assets (24,053 ) (37,299 ) Impairment (258 ) (1,384 ) (13,654 ) (2,050 ) Balance-December 31, 2023 $ 3,000 $ 416 $ - $ 3,416 Accumulated Amortization Balance-December 31, 2022 $ (535 ) $ (28 ) $ - $ (563 ) Amortization (323 ) (83 ) - (406 ) Impairment 97 - 97 Balance-December 31, 2023 $ (761 ) $ (111 ) $ - $ (872 ) Net Book Value December 31, 2022 $ 2,723 $ 1,772 $ 37,707 $ 42,202 Net Book Value December 31, 2023 $ 2,239 $ 305 $ - $ 2,544 |
SHAREHOLDERS EQUITY (Tables)
SHAREHOLDERS EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SHAREHOLDERS EQUITY | |
Schedule Of Shares Outstanding | Subordinate Super (in thousands) Voting Shares Voting Shares Balance-December 31, 2022 12,177 20 Issuance of vested restricted stock units 4 - Issuance of shares in convertible debt conversion 6,843 - Balance-December 31, 2023 19,024 20 |
Schedule Of Warrants Outstanding | (in thousands) Balance-December 31, 2022 17,343 Warrants canceled in conjunction with convertible debt conversion (15,052 ) Warrants expired (1,165 ) Balance-December 31, 2023 1,126 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
DEBT | |
Schedule Of Debt | December 31, December 31, (in thousands) 2023 2022 Current portion of long-term debt Vehicle loans (1) $ 3 $ 15 Mortgage payable (2) - 257 Note payable - 10 Convertible debt (3) - 21,398 Total short-term debt 3 21,680 Long-term debt, net Vehicle loans (1) - 3 Mortgage payable (2) - 8,713 Convertible debenture (3) - - Total long-term debt - 8,716 Total Indebtedness $ 3 $ 30,396 |
Schedule Of Maturities Of Debt Obligations | December 31, (in thousands) 2023 2024 $ 3 Total debt obligations $ 3 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
LEASES | |
Schedule Of Lease Obligations | (in thousands) Lease obligation Operating Leases Finance Leases Total December 31, 2022 $ - 33,999 33,999 Sale leaseback addition 17,068 - 17,068 Lease principal payments (443 ) (1,527 ) (1,970 ) Lease remeasurement (2,064 ) - (2,064 Lease settlement - (1,202 ) (1,202 ) Lease termination - (26,319 ) (26,319 ) Operating lease remeasurement classification 4,841 (4,841 ) - December 31, 2023 $ 19,402 110 19,512 |
Schedule Of Lease Expense | Years Ended Finance Leases December 31, December 31, (in thousands) 2023 2022 Amortization of leased assets (1) $ 1,651 $ 3,755 Interest on lease liabilities (2) 1,651 2,219 Total $ 3,316 $ 5,974 Years Ended Operating Leases December 31, December 31, (in thousands) 2023 2022 Amortization of leased assets (1) $ 1,091 $ - Interest on lease liabilities (1) 1,326 - Total $ 2,417 $ - ____________ |
Schedule of future lease payments | December 31, (in thousands) 2023 2024 3,285 2025 3,258 2026 3,240 2027 3,324 2028 and beyond 52,341 Total lease payments $ 65,448 Less imputed interest (45,936 ) Total $ 19,512 |
SHARE BASED COMPENSATION (Table
SHARE BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SHARE BASED COMPENSATION | |
Schedule Of Share-based Compensation Expense | Years Ended December 31, December 31, (in thousands) 2023 2022 Cost of goods sold $ - $ - General and administrative expense 231 564 Total share-based compensation $ 231 $ 564 |
Schedule Of Stock Option Activity | Weighted- Weighted- Average Average Remaining Aggregate (in thousands except per share amounts) Stock Options Exercise Price Contractual Life Intrinsic Value Outstanding-December 31, 2022 1,007 $ 4.7 4.6 - Granted 828 0.3 - Expired (28 ) 20.4 - Cancelled (354 ) 4.6 - Outstanding-December 31, 2023 1,453 1.9 5.3 - Exercisable-December 31, 2023 988 2.09 5.2 - Vested and expected to vest-December 31, 2023 1,453 1.91 5.3 - |
Schedule Of Restricted Stock Unit Activity | Weighted-Average (in thousands except per share amounts) RSUs Fair Value Outstanding-December 31, 2022 21 $ 1.10 Granted - - Vested (4 ) - Cancelled (17 ) 1.02 Outstanding-December 31, 2023 - $ - |
Schedule Of Weighted Average Assumptions | Options Years Ended December 31, December 31, 2023 2022 Expected volatility 50 % 50 % Dividend yield 0 % 0 % Risk-free interest rate 4.12 % 2.48 % Expected term in years 5.58 3.9 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
Schedule Of income tax expense | Years Ended (in thousands) 2023 2022 Current Federal $ - $ - State 161 191 Total Current 191 191 Deferred tax benefit Federal (1,615 ) (1,987 ) State (3,111 ) (15,293 ) Total deferred tax benefit (4,726 ) (17,280 ) Valuation allowance 4,726 17,280 Income tax expense $ 161 $ 191 |
Schedule Of deferred tax assets and liabilities | Years Ended (in thousands) 2023 2022 Deferred tax assets Net operating loss carryforwards $ 23,323 $ 17,038 Accruals and reserves - - Depreciation - - Other - - Valuation allowance (23,323 ) (17,038 ) Total deferred tax assets - - Accruals and reserves - - Share-based compensation - - Total deferred tax liabilities - - Net deferred tax liabilities $ - $ - |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Net loss per share: | |
Schedule Of Net Earnings/(loss) Per Share | Years Ended December 31, December 31, (in thousands except per share amounts) 2023 2022 Net loss $ (37,342 ) $ (24,677 ) Net loss per share: Basic $ (2.71 ) $ (2.17 ) Diluted $ (2.71 ) $ (2.17 ) Weighted average shares outstanding: Basic 13,790 11,318 Diluted 13,790 11,318 Weighted average potentially diluted shares (1): Basic shares 13,790 11,318 Options - - Warrants - - Convertible debentures - - Restricted stock units - - Total weighted average potentially diluted shares: 13,790 11,318 |
GENERAL AND ADMINISTRATIVE EX_2
GENERAL AND ADMINISTRATIVE EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
GENERAL AND ADMINISTRATIVE EXPENSES | |
Schedule Of General And Administrative Expense | Years Ended December 31, December 31, (in thousands) 2023 2022 Salaries and benefits $ 3,229 $ 5,286 Professional fees 527 465 Share-based compensation 231 564 Insurance 999 1,344 Administrative 2,316 1,894 Total general and administrative expenses $ 7,302 $ 9,553 |
BUSINESS, BASIS OF PRESENTATION
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2023 | |
Buildings [Member] | |
Estimated useful life | 35 years |
Office equipment [Member] | Minimum [Member] | |
Estimated useful life | 3 years |
Office equipment [Member] | Maximum [Member] | |
Estimated useful life | 5 years |
Furniture and fixtures [Member] | Minimum [Member] | |
Estimated useful life | 3 years |
Furniture and fixtures [Member] | Maximum [Member] | |
Estimated useful life | 7 years |
Vehicles [Member] | Minimum [Member] | |
Estimated useful life | 4 years |
Vehicles [Member] | Maximum [Member] | |
Estimated useful life | 5 years |
Machinery and equipment [Member] | Minimum [Member] | |
Estimated useful life | 3 years |
Machinery and equipment [Member] | Maximum [Member] | |
Estimated useful life | 6 years |
Leasehold improvements [Member] | |
Description of useful life | The lesser of the estimated useful life or length of the lease |
Construction in Process | |
Description of useful life | Not depreciated |
BUSINESS, BASIS OF PRESENTATI_2
BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Feb. 28, 2016 | |
BUSINESS BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Changes in adoption accumulated deficit | $ 847,000 | $ 847,000 | |
Development costs | $ 78,000 | ||
Cash FDIC Insured Amount | $ 1,974,000 | $ 360,000 | |
Straight line basis | 15 years |
PREPAID AND OTHER CURRENT ASS_3
PREPAID AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
PREPAID AND OTHER CURRENT ASSETS | ||
Deposits | $ 1,134 | $ 595 |
Insurance | 237 | 235 |
Supplier Advances | 26 | 375 |
Interest And Taxes | 26 | 69 |
Licenses and payments | 106 | 146 |
Royalty Advance | 853 | 0 |
Other | 15 | 102 |
Prepaid Expenses And Other Current Assets | $ 2,397 | $ 1,522 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
INVENTORY | ||
Raw Materials | $ 1,400 | $ 7,431 |
Work In Process | 307 | 940 |
Finished Goods | 3,053 | 2,408 |
Inventory | $ 4,760 | $ 10,779 |
INVENTORY (Details Narrative)
INVENTORY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
INVENTORY | ||
Inventory reserve | $ 1,780 | $ 1,492 |
Inventory write off | $ 2,607 |
Other current liabilities (Deta
Other current liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
OTHER CURRENT LIABILITIES | ||
Excise And Cannabis Tax | $ 3 | $ 948 |
Third Party Brand Distribution Accrual | 558 | 17 |
Insurance And Professional Accrual | 287 | 158 |
Interest and tax accrual | 109 | 921 |
Employee Retention Credit financing accrual | 441 | 441 |
Equipment purchase accrual | 0 | 724 |
Other | 545 | 445 |
Total Other Current Liabilities | $ 1,943 | $ 3,654 |
Other current liabilities (De_2
Other current liabilities (Details Narrative) - E R C Claim [Member] - On Twenty Six July Two Thousand Twenty Two [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Purchase of derivative payment rights | $ 2,446,000 | |
Other income | $ 2,014 | |
Accrued other liability | 441 | |
Interest Expense | $ 864 |
PROPERTY AND EQUIPMENT AND RI_3
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Additions | $ 17,203 | |
Disposal | (15,921) | |
Remeasurements | (4,602) | |
Impairments | (39,688) | |
Property And Equipment Cost, Ending | 29,643 | $ 72,651 |
Accumulated Depreciation, Beginning | (14,004) | |
Depreciation | (4,711) | (7,022) |
Accumulated amortization disposals | 441 | |
Accumulated amortization remeasurement | 2,661 | |
Accumulated amortization impairments | 8,396 | |
Accumulated Depreciation, Ending | (7,217) | |
Net Book Value | 22,426 | |
Property And Equipment Cost, Beginning | 72,651 | |
Net Book Value | 4,099 | 31,284 |
Remeasurements | 8,632 | |
Construction in Process | ||
Additions | 0 | |
Disposal | 0 | |
Impairments | 0 | |
Property And Equipment Cost, Ending | 35 | 35 |
Accumulated Depreciation, Beginning | 0 | |
Depreciation | 0 | |
Accumulated amortization disposals | 0 | |
Accumulated amortization remeasurement | 0 | |
Accumulated amortization impairments | 0 | |
Accumulated Depreciation, Ending | 0 | |
Property And Equipment Cost, Beginning | 35 | |
Remeasurements | 0 | |
Net Book Value | 35 | |
Remeasurements | 0 | |
Leasehold Improvements | ||
Additions | 29 | |
Disposal | (202) | |
Impairments | (10,148) | |
Property And Equipment Cost, Ending | 2,116 | 12,437 |
Accumulated Depreciation, Beginning | 1,815 | |
Depreciation | (837) | |
Accumulated amortization disposals | 55 | |
Accumulated amortization remeasurement | 0 | |
Accumulated amortization impairments | 1,516 | |
Accumulated Depreciation, Ending | 1,081 | |
Property And Equipment Cost, Beginning | 12,437 | |
Remeasurements | 0 | |
Net Book Value | 1,035 | |
Remeasurements | 0 | |
Land And Buildings [Member] | ||
Additions | 0 | |
Disposal | (15,719) | |
Impairments | 0 | |
Property And Equipment Cost, Ending | 0 | 15,719 |
Accumulated Depreciation, Beginning | (315) | |
Depreciation | (71) | |
Accumulated amortization disposals | 386 | |
Accumulated amortization remeasurement | 0 | |
Accumulated amortization impairments | 0 | |
Accumulated Depreciation, Ending | 0 | |
Property And Equipment Cost, Beginning | 15,719 | |
Remeasurements | 0 | |
Net Book Value | 0 | |
Remeasurements | 0 | |
Furniture and fixtures [Member] | ||
Additions | 0 | |
Disposal | 0 | |
Impairments | 0 | |
Property And Equipment Cost, Ending | 50 | 50 |
Accumulated Depreciation, Beginning | (49) | |
Depreciation | 0 | |
Accumulated amortization disposals | 0 | |
Accumulated amortization remeasurement | 0 | |
Accumulated amortization impairments | 0 | |
Accumulated Depreciation, Ending | 49 | |
Property And Equipment Cost, Beginning | 50 | |
Net Book Value | 1 | |
Equipment [Member] | ||
Additions | 106 | |
Disposal | 0 | |
Impairments | (1,310) | |
Property And Equipment Cost, Ending | 5,295 | 6,499 |
Accumulated Depreciation, Beginning | 1,498 | |
Depreciation | (925) | |
Accumulated amortization disposals | 0 | |
Accumulated amortization remeasurement | 0 | |
Accumulated amortization impairments | (70) | |
Accumulated Depreciation, Ending | 2,353 | |
Property And Equipment Cost, Beginning | 6,499 | |
Remeasurements | 0 | |
Net Book Value | 2,942 | |
Remeasurements | 0 | |
Vehicles [Member] | ||
Additions | 0 | |
Disposal | 0 | |
Impairments | 0 | |
Property And Equipment Cost, Ending | 830 | 830 |
Accumulated Depreciation, Beginning | (608) | |
Depreciation | (136) | |
Accumulated amortization disposals | 0 | |
Accumulated amortization remeasurement | 0 | |
Accumulated amortization impairments | 0 | |
Accumulated Depreciation, Ending | 744 | |
Property And Equipment Cost, Beginning | 830 | |
Net Book Value | 86 | |
Remeasurements | 0 | |
Right of Use Assets | ||
Additions | 17,068 | |
Disposal | 0 | |
Impairments | (28,230) | |
Property And Equipment Cost, Ending | 21,317 | $ 37,081 |
Accumulated Depreciation, Beginning | 9,719 | |
Depreciation | (2,742) | |
Accumulated amortization disposals | 0 | |
Accumulated amortization remeasurement | 2,661 | |
Accumulated amortization impairments | 6,810 | |
Accumulated Depreciation, Ending | 2,990 | |
Property And Equipment Cost, Beginning | 37,081 | |
Remeasurements | 4,602 | |
Net Book Value | 18,327 | |
Remeasurements | $ (4,602) |
PROPERTY AND EQUIPMENT AND RI_4
PROPERTY AND EQUIPMENT AND RIGHT OF USE ASSETS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Depreciation | $ 4,711 | $ 7,022 |
Leasehold improvements | 8,632 | |
Impairment expense | 8,783 | |
Cost of Goods Sold [Member] | ||
Depreciation | $ 4,613 | 6,292 |
Other Income Expense [Member] | ||
Depreciation | $ 608 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Sale of Brand Assets | $ (37,299,000) |
Impairment | 2,050,000 |
Definite life intangibles cost, ending | 3,416,000 |
Accumulated amortization, beginning | (563,000) |
Accumulated amortization impairment | 97,000 |
Amortization | (406,000) |
Accumulated amortization, ending | (872,000) |
Net book value, beginning balance | 42,202,000 |
Net book value, ending balance | 2,544,000 |
Amortization | 406,000 |
Definite life intangibles cost, beginning | 42,765,000 |
Impairment | (2,050,000) |
Definite life intangibles cost, ending | (3,416,000) |
Brands & Tradenames [Member] | |
Sale of Brand Assets | (24,053,000) |
Impairment | 13,654,000 |
Definite life intangibles cost, ending | 0 |
Accumulated amortization, beginning | 0 |
Amortization | 0 |
Accumulated amortization, ending | 0 |
Net book value, beginning balance | 37,707,000 |
Net book value, ending balance | 0 |
Amortization | 0 |
Definite life intangibles cost, beginning | 37,707,000 |
Impairment | (13,654,000) |
Definite life intangibles cost, ending | 0 |
Technology/KnowHow | |
Impairment | 258,000 |
Definite life intangibles cost, ending | (3,000,000) |
Accumulated amortization, beginning | (535,000) |
Accumulated amortization impairment | 97,000 |
Amortization | 323,000 |
Accumulated amortization, ending | (761,000) |
Net book value, beginning balance | 2,723,000 |
Net book value, ending balance | 2,239,000 |
Amortization | (323,000) |
Definite life intangibles cost, beginning | 3,258,000 |
Impairment | (258,000) |
Definite life intangibles cost, ending | 3,000,000 |
Acquired Purchase Rights [Member] | |
Impairment | 1,384,000 |
Definite life intangibles cost, ending | (416,000) |
Accumulated amortization, beginning | (28,000) |
Accumulated amortization impairment | 0 |
Amortization | 83,000 |
Accumulated amortization, ending | (111,000) |
Net book value, beginning balance | 1,772,000 |
Net book value, ending balance | 305,000 |
Amortization | (83,000) |
Definite life intangibles cost, beginning | 1,800,000 |
Impairment | (1,384,000) |
Definite life intangibles cost, ending | $ 416,000 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) shares in Millions | 9 Months Ended | 12 Months Ended | ||
Oct. 06, 2023 | Sep. 30, 2021 | Dec. 31, 2023 | Dec. 31, 2022 | |
Purchase of warrants | $ 10,627,483,000 | |||
Descriptions of royalty | the Company received a $1 million royalty advance whereby the Company does not have to pay the first $1 million of royalty expense | |||
Amortization | $ 406,000 | $ 354,000 | ||
Aggregate principal amount | $ 22,157,000 | |||
Cancelled common shares | 4,324,845,000 | |||
Impairment of intangible assets | $ 13,245,000 | $ 2,544,000 | $ 42,202,000 | |
Impairment of goodwill | $ 357,000 | |||
Percentage of issued and outstanding shares | 15% | |||
Subordinate voting shares issued | 1 | |||
Fair market value of shares | $ 1,800,000 | |||
Lowell Brand [Member] | ||||
Descriptions of royalty | Issued shares and royalty advance were recorded at fair value in the amount of $2.03 million or $0.93 million, respectively | |||
Warrants issued | $ 1,550,000 | |||
Accrued interest | 1,490,000 | |||
Intangible assets | 24,100,000 | |||
Convertible notes | 22,100,000 | |||
Other Intangible Assets [Member] | ||||
Amortization | $ 317,000 |
SHAREHOLDERS EQUITY (Details)
SHAREHOLDERS EQUITY (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2023 shares | |
Subordinate Voting Share [Member] | |
Beginning Balance, Shares | 12,177 |
Issuance Of Vested Restricted Stock Units | 4 |
Issuance of shares in convertible debt conversion | 6,843 |
Ending Balance, Shares | 19,024 |
Super Voting Share [Member] | |
Beginning Balance, Shares | 20 |
Ending Balance, Shares | 20 |
SHAREHOLDERS EQUITY (Details 1)
SHAREHOLDERS EQUITY (Details 1) shares in Thousands, $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) shares | |
SHAREHOLDERS EQUITY | |
Warrants, Beginning Balance | shares | 17,343 |
Warrants issued in conjunction with convertible debenture offering | $ | $ (15,052) |
Warrants expired | $ | $ (1,165) |
Warrants, Ending Balance | shares | 1,126 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Total short-term debt | $ 3 | $ 21,680 |
Total long-term debt | 0 | 8,716 |
Total Indebtedness | 3 | 30,396 |
Convertible Debenture | ||
Total short-term debt | 0 | 21,398 |
Total long-term debt | 0 | 0 |
Vehicle Loans | ||
Total short-term debt | 3 | 15 |
Total long-term debt | 0 | 3 |
Mortgage Payable [Member] | ||
Total short-term debt | 0 | 257 |
Total long-term debt | 0 | 8,713 |
Note Payable | ||
Total short-term debt | $ 0 | $ 10 |
DEBT (Details 1)
DEBT (Details 1) $ in Thousands | Dec. 31, 2023 USD ($) |
DEBT | |
2024 | $ 3 |
Total Debt Obligations | $ 3 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Net Of Deferred Financing Costs | $ 759,000 | ||
Vehicle Loans | |||
Weighted average interest rate | 6.40% | 6% | |
Mortgage Payable [Member] | |||
Weighted average interest rate | 12.50% | ||
Net Of Deferred Financing Costs | $ 296,000 | $ 296,000 |
LEASES (Details)
LEASES (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Lease Liability, Beginning | $ 33,999 |
Sale leaseback addition | 17,068 |
Lease Principal Payments | (1,970) |
Lease remeasurement | (2,064) |
Lease Settlement | (1,202) |
Lease termination | (26,319) |
Operating lease remeasurement classification | 0 |
Lease Liability, ending | 19,512 |
Operating Leases [Member] | |
Lease Liability, Beginning | 0 |
Sale leaseback addition | 17,068 |
Lease Principal Payments | (443) |
Lease remeasurement | (2,064) |
Lease Settlement | 0 |
Lease termination | 0 |
Operating lease remeasurement classification | 4,841 |
Lease Liability, ending | 19,402 |
Finance Leases [Member] | |
Lease Liability, Beginning | 33,999 |
Sale leaseback addition | 0 |
Lease Principal Payments | (1,527) |
Lease remeasurement | 0 |
Lease Settlement | (1,202) |
Lease termination | (26,319) |
Operating lease remeasurement classification | (4,841) |
Lease Liability, ending | $ 110 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
LEASES | ||
Amortization Of Leased Assets - Finance Leases | $ 1,651,000 | $ 3,755,000 |
Interest On Lease Liabilities - Finance Leases | 1,651,000 | 2,219,000 |
Total - Finance Leases | 3,316,000 | 5,974,000 |
Amortization Of Leased Assets - Operating Leases | 1,091 | 0 |
Interest On Lease Liabilities - Operating Leases | 1,326 | 0 |
Total Operating Lease Amortization | $ 2,417 | $ 0 |
LEASES (Details 2)
LEASES (Details 2) $ in Thousands | Dec. 31, 2023 USD ($) |
LEASES | |
2024 | $ 3,285 |
2025 | 3,258 |
2026 | 3,240 |
2027 | 3,324 |
2028 - And Beyond | 52,341 |
Total lease payments | 65,448 |
Less Imputed Interest | (45,936) |
Total | $ 19,512 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
LEASES | |||
Lease right of use assets | $ 21,423 | ||
Lease obligation | 26,319 | ||
Sale of property | 19,400,000 | ||
Other Income (expenses) | $ 4,896 | $ 3,040,000 | |
Weighted Average Remaining Lease Term | 8 years 10 months 24 days | 14 years 7 months 6 days | |
Weighted Average Discount Rate | 10% | 6% |
SHARE BASED COMPENSATION (Detai
SHARE BASED COMPENSATION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-based compensation expense | $ 231 | $ 564 |
General And Administrative Expense [Member] | ||
Share-based compensation expense | 231 | 564 |
Cost of Goods Sold [Member] | ||
Share-based compensation expense | $ 0 | $ 0 |
SHARE BASED COMPENSATION (Det_2
SHARE BASED COMPENSATION (Details 1) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) $ / shares shares | |
SHARE BASED COMPENSATION | |
Stock Options Outstanding, Beginning | shares | 1,007 |
Stock Options, Granted | shares | 828 |
Stock Options, Exercised | shares | (28) |
Stock Options, Cancelled | shares | (354) |
Stock Options Outstanding, Ending | shares | 1,453 |
Stock Options Exercisable | shares | 988 |
Stock Options Vested and expected | shares | 1,453 |
Weighted-average Exercise Price Outstanding, Beginning | $ / shares | $ 4.7 |
Weighted-average Exercise Price, Granted | $ / shares | 0.3 |
Weighted-average Exercise Price, Exercised | $ / shares | 20.4 |
Weighted-average Exercise Price, Cancelled | $ / shares | 4.6 |
Weighted-average Exercise Price Outstanding, Ending | $ / shares | 1.9 |
Weighted-average Exercise Price Exercisable | $ / shares | 2.09 |
Weighted-average Exercise Price Vested and expected | $ / shares | $ 1.91 |
Weighted-average Remaining Contactual Life Outstanding, Beginning Balance | 4 years 7 months 6 days |
Weighted-average Remaining Contactual Life Outstanding, Ending Balance | 5 years 3 months 18 days |
Weighted-average Remaining Contactual Life, Exercisable | 5 years 2 months 12 days |
Weighted-average Remaining Contactual Life, Vested And Expected To Vest | 5 years 3 months 18 days |
Aggregate Intrinsic Value Outstanding, Beginning | $ | $ 0 |
Aggregate Intrinsic Value Outstanding, Ending | $ | 0 |
Aggregate Intrinsic Value, Granted | $ | 0 |
Aggregate Intrinsic Value, Exercised | $ | 0 |
Aggregate Intrinsic Value, Expired | $ | 0 |
Aggregate Intrinsic Value, Cancelled | $ | 0 |
Aggregate Intrinsic Value vested and expected | $ | $ 0 |
SHARE BASED COMPENSATION (Det_3
SHARE BASED COMPENSATION (Details 2) shares in Thousands | 12 Months Ended |
Dec. 31, 2023 $ / shares shares | |
SHARE BASED COMPENSATION | |
RSUs Outstanding, Beginning Balance | shares | 21 |
RSUs Vested | shares | (4) |
RSUs Cancelled | shares | (17) |
Weighted-average Fair Value Outstanding, Beginning Balance | $ 1.10 |
Weighted-average Fair Value Granted | 0 |
Weighted-average Fair Value Vested | 0 |
Weighted-average Fair Value Cancelled | 1.02 |
Weighted-average Fair Value Outstanding, Ending Balance | $ 0 |
SHARE BASED COMPENSATION (Det_4
SHARE BASED COMPENSATION (Details 3) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Restricted Stock Units (RSUs) [Member] | ||
Expected Volatility | 0% | 0% |
Dividend Yield | 0% | 0% |
Risk-free Interest Rate | 0% | 0% |
Expected Term In Years | 0 years | |
Stock Option [Member] | ||
Expected Volatility | 50% | 50% |
Dividend Yield | 0% | 0% |
Risk-free Interest Rate | 4.12% | 2.48% |
Expected Term In Years | 5 months 17 days | 3 months 27 days |
SHARE BASED COMPENSATION (Det_5
SHARE BASED COMPENSATION (Details Narrative) $ / shares in Units, $ in Thousands, shares in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) $ / shares shares | |
SHARE BASED COMPENSATION | |
Proceeds From Issuance Of Stock Options | 13.2 |
Stock Option For Future Grant | 3.6 |
Vesting Period Descriptions | The awards granted generally vest in 25% increments over a four-year period and option awards expire 6 years from grant date |
Weighted-average Exercise Price Granted | $ / shares | $ 0.30 |
Unrecognized Compensation Cost Related To Nonvested Restricted Stock Units | $ | $ 191 |
Vesting Period | 11 months 26 days |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Current | |||
Federal | $ 0 | $ 0 | |
State | 161 | 191 | |
Total Current | 191 | 191 | |
Deferred tax benefit | |||
Federal | (1,615) | (1,987) | |
State | (3,111) | (15,293) | |
Total deferred tax benefit | (4,726) | (17,280) | |
Valuation allowance | 4,726 | 17,280 | |
Income tax expense | $ 161 | $ 191 | $ 191 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
INCOME TAXES | ||
Net operating loss carryforwards | $ 23,323 | $ 17,038 |
Accruals and reserves | 0 | 0 |
Depreciation | 0 | 0 |
Other | 0 | 0 |
Valuation allowance | (23,323) | (17,038) |
Total deferred tax assets | 0 | 0 |
Accruals and reserves | 0 | 0 |
Share-based compensation | 0 | 0 |
Total deferred tax liabilities | 0 | 0 |
Net deferred tax liabilities | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | |||
Provision For Income Taxes | $ 161 | $ 191 | $ 191 |
Effective Tax Rate | 0.40% | 0.80% |
NET INCOME (LOSS) PER SHARE (De
NET INCOME (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Net loss per share: | ||
Net income (loss) | $ 37,342 | $ (24,677) |
Net Loss Per Share: | ||
Basic | $ (2.71) | $ (2.17) |
Diluted | $ (2.71) | $ (2.17) |
Weighted Average Shares Outstanding: | ||
Basic | 13,790 | 11,318 |
Diluted | 13,790 | 11,318 |
Weighted average potentially diluted shares: | ||
Basic Shares | 13,790 | 11,318 |
Total Weighted Average Potentially Diluted Shares | 13,790 | 11,318 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 12 Months Ended |
Dec. 31, 2022 | |
Due date of commitment | 2023 |
August 2020 [Member] | |
Insurance maturity date | June 30, 2021 |
GENERAL AND ADMINISTRATIVE EX_3
GENERAL AND ADMINISTRATIVE EXPENSES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
General and administrative | $ 7,302 | $ 9,553 |
Salaries And Benefits Member | ||
General and administrative | 3,229 | 5,286 |
Professional Fees Member | ||
General and administrative | 527 | 465 |
Sharebased Compensation Member | ||
General and administrative | 231 | 564 |
Insurance Member | ||
General and administrative | 999 | 1,344 |
Administrative Member | ||
General and administrative | $ 2,316 | $ 1,894 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Related Party Transactions | $ 476,000 | $ 223,000 |
Total sales | 487,000 | 274,000 |
Total payment | $ 130,000 | 10,000 |
Lease term | 12 months | |
OMG | ||
Related Party Transactions | $ 0 | $ 36 |