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    FFNT   CA35086B2075

4FRONT VENTURES CORP.

(FFNT)
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Delayed CANADIAN NATIONAL STOCK EXCHANGE  -  03:59:59 2023-01-26 pm EST
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20224Front Ventures Expands Island Cannabis Product Offerings in Massachusetts; Shares Rise
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4FRONT VENTURES CORP. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

11/14/2022 | 04:22pm EST
Investors should read the following discussion in conjunction with the unaudited
financial statements and notes thereto included under Part 1, Item 1 of this
Quarterly Report on Form 10-Q. In addition, investors should refer to our
audited consolidated financial statements and notes thereto and related
Management's Discussion and Analysis of Financial Condition and Results of
Operations appearing in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021.


Disclosure Regarding Forward-Looking Statements



This Quarterly Report on Form 10-Q contains forward-looking information about
the Company that is intended to be covered by the safe harbor for
"forward-looking statements" provided by the Private Securities Litigation
Reform Act of 1955. Forward-looking statements are statements that are not
historical facts. Words such as "guidance," "expect," "will," "may," "should,"
"expects," "plans," "anticipates," "could," "intends," "target," "projects,"
"contemplates," "believes," "estimates," "predicts," "suggests," "potential" and
similar expressions are intended to identify forward-looking statements. There
statements include information regarding our plans, strategies, and expectations
of future financial performance and prospects. Forward-looking statements are
not guarantees of performance. These statements are based upon the current
beliefs and expectations of our management and are subject to significant risk
and uncertainties that could cause actual results to differ materiality from
those expressed in, or implied or projected by, the forward-looking information
and statements. Although we believe the expectations reflected in the
forward-looking statements are reasonable, we cannot assure investors that the
expectations will prove to be correct. Among the factors that could cause actual
results to differ materially from the expectations are acts of war or terrorism
and the impact on the social and economic conditions in the United States, the
effects of the COVID pandemic, and changes in the legalization of marijuana
across the United States. More information on factors that could cause actual
results to differ materially from those anticipated is included from time to
time in our reports filed with the Securities and Exchange Commissions,
including our Annual Report on Form 10-K for the year ended December 31, 2021.
New risk factors emerge over time and it is not possible to predict all such
risk factors, or to assess the impact such risk factors have on the business. We
undertake no obligation to update publicly any forward-looking statements
whether as a result of new information, future events or otherwise, except as
required by law.


Overview


4Front Ventures Corp. has two primary operating segments: THC Cannabis and CBD
Wellness. With regard to its THC Cannabis segment, as of September 30, 2022, the
Company operates six dispensaries in Massachusetts, Illinois, and Michigan,
primarily under the "MISSION" brand name and nine production and cultivation
facilities in Massachusetts, Illinois and California.


The Company's six "MISSION" branded dispensaries are located in Brookline, MA,
Georgetown, MA, Worcester, MA, South Shore (Chicago), IL, Calumet City, IL, and
Ann Arbor, MI. The Georgetown, MA and Worcester, MA locations are co-located
with the Company's cultivation facilities in those towns.


4Front operations are structured in key geographic locations across the United
States to scale operations efficiently and position the company for future
growth opportunities as cannabis legalization efforts continue across the U.S.
and federally. Management intends to continue scaling operations in Illinois,
Massachusetts, and California to increase its market share. The Company has made
significant investments in manufacturing facilities in each of these locations.
The Company acquired a new cultivation facility in Holliston, MA in the New
England Cannabis Corporation ("NECC") acquisition (Note 5) in January 2022 which
doubled the Company's cultivation footprint in the Massachusetts market. During
2022, the Company has also ramped up production at its Commerce facility which
opened in January and is already selling into more than 200 retailers in the
state. In additions to scaling and driving

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operational effectiveness, the Company will also focus on developing trusted brand products to grow revenue, build customer loyalty and market share.



The Company's nine production and cultivation assets differ by state. In
Massachusetts, the Company operates an indoor cultivation facility in Worcester,
MA (~4k square feet of flowering canopy), an indoor cultivation and production
facility in Holliston, MA (~15k square feet of flowering canopy), and an indoor
cultivation and production facility in Georgetown, MA (~10k square feet of
flowering canopy). In Illinois, the Company operates an indoor cultivation and
production facility in Elk Grove, IL (~9k square feet of flowering canopy).
Finally, in California the Company operates a production facility in Commerce,
CA (~170k square feet of production and manufacturing space), a greenhouse
cultivation facility in Monterrey County, CA (~80k square feet), and outdoor,
hoophouse and nursery cultivation facilities in Watsonville, CA (totaling ~240k
square feet).


Also, as part of its THC Cannabis segment, the Company leases real estate and
sells equipment, supplies and intellectual property to cannabis producers in the
state of Washington.


The Company's CBD Wellness segment is focused upon its ownership and operation
of its wholly owned subsidiary, Pure Ratios Holdings, Inc. ("Pure Ratios"), a
CBD-focused wellness company in California, that sells non-THC products
throughout the United States.


While marijuana is legal under the laws of several U.S. states (with varying
restrictions), the United States Federal Controlled Substances Act classifies
all "marijuana" as a Schedule I drug, whether for medical or recreational use.
Under U.S. federal law, a Schedule I drug or substance has a high potential for
abuse, no accepted medical use in the United States, and a lack of safety for
the use of the drug under medical supervision.


Recent Developments

Asset Acquisition of Bloom Farms

On August 19, 2022, the Company completed an asset acquisition of certain assets of Bloom Farms. Please see Note 5 of the financial statements for a full description of the asset acquisition transaction.

COVID-19 Pandemic



In March 2020, the World Health Organization ("WHO") declared COVID-19 a global
pandemic, and the United States declared a national emergency with respect to
COVID-19. Management continues to actively monitor the developments regarding
the pandemic and the impact the pandemic could have on our business, results of
operations, financial condition, and most importantly the health and safety of
our workforce. Given the continued volatility of the COVID-19 pandemic and the
global responses to curb its spread, we are not able to estimate the effects of
the COVID-19 pandemic on our results of operations, financial condition, or
liquidity for 2022. Any recovery from negative impacts to our business and
related economic impact due to the COVID-19 pandemic may also be slowed or
reversed by a number of factors, including the current widespread resurgence in
COVID-19 infections attributable to the Omicron variant, combined with the
seasonal flu. As such, we are unable to reasonably estimate the duration of the
pandemic or fully ascertain its long-term impact to our business.

War in Ukraine



In February 2022, the Russian Federation and Belarus commenced a military action
with the country of Ukraine. As a result of this action, various nations,
including the United States, have instituted economic sanctions against the
Russian Federation and Belarus. Further, the impact of this action and related
sanctions on the world economy are not determinable as of the date of these
financial statements. The specific impact on our financial condition, results of
operations, and cash flows is also not determinable as of the date of these
financial statements.
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Critical Accounting Policies and use of Estimates



Our management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which we have prepared in
accordance with U.S. generally accepted accounting principles ("U.S. GAAP").
Critical accounting policies and estimates are identified and discussed in our
Annual Report on Form 10-K for the year ended December 31, 2021, as filed with
the SEC on April 18, 2022. Although we believe our estimates and judgments are
reasonable, they are based upon information available at the time the judgment
or estimate is made. Actual results may differ significantly from estimates
under different assumptions or conditions.

Results of Operations

Three Months Ended September 30, 2022 Compared With Three Months Ended September 30, 2021



The following table sets forth our consolidated statement of operations for the
three months ended September 30, 2022 and 2021, and the change between the two
years ($ in thousands):


                                             For the Three Months Ended
                                                    September 30,                                  Change
                                              2022                 2021                  $                     %
Revenue from Sale of Goods               $     29,067          $   23,126          $    5,941                         26%
Real Estate Income                              3,407               2,815                 592                         21%
Total Revenues                                 32,474              25,941               6,533                         25%
Cost of Goods Sold                            (17,427)            (10,269)             (7,158)                        70%
Gross profit                                   15,047              15,672                (625)                         4%
Total Operating Expense                        14,530              16,596              (2,066)                      (12)%
Income (Loss) from Operations                     517                (924)              1,441                        156%
Total Other income (expense), net              (5,796)                871              (6,667)                     (765)%
Net Loss Before Income Taxes                   (5,279)                (53)             (5,226)                      9860%
Income Tax Expense                             (3,322)             (4,541)              1,219                         27%
Net Loss                                 $     (8,601)         $   (4,594)         $   (4,007)                        87%



The Company has been focused on optimizing its operations, leveraging the assets
acquired through acquisitions and realizing added synergies from expanding the
size of its overall business and further vertically integrating its operations
to achieve profitability.


Revenue from sale of goods for the three months ended September 30, 2022 was
$29.1 million, an increase of $5.9 million or 26% compared to the three months
ended September 30, 2021. In Q3 2022, wholesale and retail revenue was 26% and
66% of total revenue, respectively, as compared to 1% and 83% in the same period
in 2021. Real estate income was 12% and 16% for the three months ended September
30, 2022 and 2021, respectively.

Revenue from retail sales for the three months ended September 30, 2022 was
$21.5 million, which is flat as compared to the three months ended September 30,
2021. Increases in Massachusetts retail revenue were tempered by softness in
retail revenues in Illinois and Michigan as compared to the three months ended
September 30, 2021.

Revenue from sale of wholesale goods for the three months ended September 30,
2022 was $7.8 million, an increase of $6.0 million or 395% compared to the three
months ended September 30, 2021. The increase is primarily attributable to the
addition of the California wholesale business, growth in Illinois, and strong
wholesale performance in Massachusetts as our brands continue to resonate with
consumers outside our own dispensaries.
                                       27

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Finally, the addition of the new Holliston, Massachusetts cultivation facility
added in the NECC acquisition has positioned the Company to aggressively expand
further into the Massachusetts wholesale market.

Real Estate Income



Real Estate Income (Note 6) from leasing cannabis production facilities for the
three months ended September 30, 2022 was $3.4 million, an increase of $0.6
million or 21% as compared to the three months ended September 30, 2021. This
increase in real estate income is attribute to new subleases of building space
in Illinois and California.


Gross Profit


Gross profit is calculated as revenue less cost of goods sold ("COGS"). COGS
includes the direct costs attributable to the cultivation, production,
manufacturing and purchase of the products sold. These costs include the direct
cost of labor, seeds, growing material, raw materials and packaging, as well as
other indirect costs such as utilities and supplies used in the growing process,
post-harvest costs, indirect labor for individuals involved in the growing,
quality control and inventory processes as well as certain costs related to its
facilities.


In addition to market fluctuations, cannabis costs are affected by various state
regulations that limit the sourcing and procurement of cannabis products. The
change in regulatory environments may create fluctuations in gross profit over
comparative periods.


Gross profit for the three months ended September 30, 2022 was $15.0 million or
46% of revenue compared to $15.7 million or 60% of revenue for the three months
ended September 30, 2021. The decrease in gross profit percentage of 14% is
primarily due to decreased pricing across the Company's markets. The decrease in
gross profit margin has been mitigated by increases in retail sell-through of
the Company owned produced products primarily in Illinois and Massachusetts.
Improvements in flower yields and quality led to increases in revenue, market
share, and gross margin in Massachusetts for the three months ended September
30, 2022. In late Q3 2022, the Illinois has experienced similar improvements in
flower yields and quality.

Total Operating Expenses


Operating expenses consist of selling and marketing expenses, general and
administrative expenses, depreciation and amortization, transaction and
restructuring expenses, and equity based compensation expense. Total operating
expenses for the three months ended September 30, 2022 were $14.5 million, a
decrease of $2.1 million or 12%, as compared to the three months ended September
30, 2021. This decrease is primarily driven by a decrease in equity based
compensation expense of $1.7 million as a result of a number of terminations of
individuals who held stock options resulting in lower compensation expense.


Total Other Income (Expense), net



Other Income (Expense) consists primarily of interest income, interest expense,
change in fair value of derivative liability, and loss on litigation settlement.
Total Other Income (Expense) for the three months ended September 30, 2022 was
($5.8) million, as compared to $0.9 million for the three months ended September
30, 2021. This is primarily driven by a decrease in other income attributable to
an increase in interest expense of $1.6 million and a decrease in the change in
fair value liability of $2.9 million. The increase in interest expense is
attributable to the $16 million of incremental debt added to finance the NECC
acquisition (Note 5), which resulted in an increase of $0.4 million in interest
expense and increased interest incurred related to the promissory notes used to
finance the Island and NECC acquisitions. During the three months ended
September 30, 2021, the Company recorded a $3.3 million gain on the fair value
of its derivative liability.




                                       28
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Nine Months Ended September 30, 2022 Compared With Nine Months Ended September 30, 2021



The following table sets forth our consolidated statement of operations for the
nine months ended September 30, 2022 and 2021, and the change between the two
years ($ in thousands):


                                         For the Nine Months Ended September
                                                         30,                                      Change
                                              2022                 2021                  $                     %
Revenue from Sale of Goods               $     77,638          $   67,658          $     9,980                    15  %
Real Estate Income                              9,323               8,374                  949                    11  %
Total Revenues                                 86,961              76,032               10,929                    14  %
Cost of Goods Sold                            (46,144)            (30,210)             (15,934)                   53  %
Gross profit                                   40,817              45,822               (5,005)                   11  %
Total Operating Expense                        45,640              45,725                  (85)                    -  %
Income (Loss) from Operations                  (4,823)                 97               (4,920)                 5072  %
Total Other income (expense), net              (6,416)            (11,448)               5,032                    44  %
Net Loss Before Income Taxes                  (11,239)            (11,351)                 112                     1  %
Income Tax Expense                             (9,802)            (10,545)                 743                     7  %
Net Loss                                 $    (21,041)         $  (21,896)         $       855                     4  %



Revenue from sale of goods for the nine months ended September 30, 2022 was
$77.6 million, an increase of $10.0 million or 15% compared to the nine months
ended September 30, 2021. Wholesale revenue was 18 % and 5% for the nine months
ended September 30, 2022 and 2021, respectively. Retail revenue was 71% and 84%
for the nine months ended September 30, 2022 and 2021, respectively. Real estate
income was 11% for the nine months ended September 30, 2022 and 2021.


Revenue from retail sales for the nine months ended September 30, 2022 was $61.8
million, an decrease of $1.8 million or 3% compared to the same period in 2021.
Increases in Massachusetts retail revenue were offset by softness in retail
revenues in Illinois and Michigan.

Revenue from sale of wholesale goods for the nine months ended September 30,
2022 was $15.9 million, an increase of $11.8 million or 238% compared to the
same period in 2021. The increase is primarily attributable to the addition of
the CA wholesale business in January 2022, coupled with Illinois and
Massachusetts strong wholesale performance as our brands continue to resonate
with consumers outside our own dispensaries. Finally, the addition of the new
cultivation facility added in Massachusetts from the NECC acquisition has
positioned the Company to aggressively expand further into the Massachusetts
wholesale market.


Real Estate Income


Real Estate Income from leasing cannabis production facilities for the nine
months ended September 30, 2022 was $9.3 million, an increase of $0.9 million or
11% compared to the $8.4 million recognized for the nine months ended September
30, 2021. In 2022, the increase in real estate income is attribute to new
subleases of building space in Illinois and California.


Gross Profit



Gross profit for the for the nine months ended September 30, 2022 was $40.8
million or 47% of revenue compared to $45.8 million or 60% of revenue for the
nine months ended September 30, 2021. The decrease in gross profit percentage of
13% is primarily due to decreased pricing across the Company's wholesale and
retail markets. The

                                       29
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decrease has also been mitigated by increases in retail sell-through of the
Company owned produced products primarily in Illinois and Massachusetts.
Additionally, improvements in flower yields and quality led to an increases in
revenue, market share and gross margin in Massachusetts for the nine months
ended September 30, 2022. Late in Q3 2022, the Illinois cultivation facility
experienced similar improvements in yields and quality.


Total Operating Expenses



Operating expenses consist of selling and marketing expenses, general and
administrative expenses, depreciation and amortization, transaction and
restructuring expenses, and equity based compensation expense. Total operating
expenses for the nine months ended September 30, 2022 were flat at $45.6 million
as compared to the same period in 2021.


Total Other Income (Expense), net



Other Income (Expense) consists primarily of interest income, interest expense,
change in fair value of derivative liability, amortization of loan discount, and
loss on litigation settlement. Total Other Income (Expense) for the nine months
ended September 30, 2022 was ($6.4) million, as compared to ($11.4) million for
the nine months ended September 30, 2021. As part of the 2022, contingent
consideration from the OM acquisition, the Company determined it was no longer
probable the milestones would be reached. This resulted in a $2.4 million gain
on the contingent consideration to be recognized. During the nine months ended
September 30, 2021, there was a loss on a lease termination of $1.2 million and
a debt to equity conversion that resulted in a loss of $2.9 million. There were
no similar losses recorded in the comparable 2022 period.


Non-GAAP Financial and Performance Measures



In addition to providing financial measurements based on GAAP, we provide
additional financial metrics that are not prepared in accordance with GAAP.
Management uses non-GAAP financial measure, in addition to GAAP financial
measures, to understand and compare operating results across accounting periods,
for financial and operational decision making, for planning and forecasting
purposes and to evaluate the Company's financial performance. Management uses
the non-GAAP measurement of adjusted EBITDA, which we believe reflects our
ongoing business in a manner that allows for meaningful comparisons and analysis
of trends in the business, as it facilitates comparing financial results across
accounting periods. We also believe that this non-GAAP financial measure enables
investors to evaluate the Company's operating results and future prospects in
the same manner as management. This non-GAAP financial measures may also exclude
expenses and gains that may be unusual in nature, infrequent or not reflective
of the Company's ongoing operating results. As there are no standardized methods
of calculating non-GAAP measures, our methods may differ from those used by
others, and accordingly, the use of these measures may not be directly
comparable to similarly titled measures used by others. Accordingly, non-GAAP
measures are intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with GAAP.


Adjusted EBITDA


Adjusted EBITDA is a financial measure that is not calculated in accordance with
U.S. GAAP. Management believes that because adjusted EBITDA excludes (a) certain
non-cash expenses (such as depreciation, amortization and stock-based
compensation) and (b) expenses that are not reflective of the Company's core
operating results over time (such as restructuring costs, litigation or dispute
settlement charges or gains, and transaction-related costs), this measure
provides investors with additional useful information to measure the Company's
financial performance, particularly with respect to changes in performance from
period to period. The Company's management uses adjusted EBITDA (a) as a measure
of operating performance, (b) for planning and forecasting in future periods,
and (c) in communications with the Company's board of directors concerning the
Company's financial performance. The Company's presentation of adjusted EBITDA
is not necessarily comparable to other similarly titled captions of

                                       30

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other companies due to different methods of calculation and should not be used
by investors as a substitute or alternative to net loss or any measure of
financial performance calculated and presented in accordance with U.S. GAAP.
Instead, management believes adjusted EBITDA should be used to supplement the
Company's financial measures derived in accordance with U.S. GAAP to provide a
more complete understanding of the trends affecting the business.


Although adjusted EBITDA is frequently used by investors and securities analysts
in their evaluations of companies, adjusted EBITDA has limitations as an
analytical tool, and investors should not consider it in isolation or as a
substitute for, or more meaningful than, amounts determined in accordance with
U.S. GAAP. Some of the limitations to using non-GAAP measures as an analytical
tool are (a) they do not reflect the Company's interest income and expense, or
the requirements necessary to service interest or principal payments on the
Company's debt, (b) they do not reflect future requirements for capital
expenditures or contractual commitments, and (c) although depreciation and
amortization charges are non-cash charges, the assets being depreciated and
amortized will often have to be replaced in the future, and non-GAAP measures do
not reflect any cash requirements for such replacements.


Adjusted EBITDA is defined by the Company as earnings before interest, taxes,
depreciation and amortization, accretion, share-based compensation expense,
legal settlement, change in value of derivative liability, foreign exchange gain
(loss), loss on lease termination, loss on litigation, other non-cash expenses,
and one-time charges related to acquisition costs, financing-related costs,
extraordinary pre-opening expenses and non-recurring expenses.


We consider these measures to be an important indicator of the financial strength and performance of our business. The following table reconciles adjusted EBITDA to its closest GAAP measure. For comparative purposes, certain prior year amounts have been reclassified to conform to the current year presentation.

For the nine months ended September 30, 2022 and 2021, adjusted EBITDA consisted of the following:



Nine months ended September 30,                                          2022               2021
Net loss (GAAP)                                                      $ (21,041)         $  (21,896)
Interest income                                                             (8)                (13)
Interest expense                                                        15,072               7,894

Amortization of loan discount upon conversion of debt to equity

                                                                       -               2,915
Income tax expense                                                       9,802              10,545
Depreciation and amortization                                            6,844               3,668
Accretion of lease liability                                            11,440                   -
Equity based compensation                                                2,290               7,978
Change in contingent consideration payable                              (2,393)                  -
Change in value of derivative liability                                 (3,494)               (502)
Acquisition, transaction, and other one-time costs                       3,876               4,854
Non-cash inventory adjustment                                            1,600                   -
Non-cash lease amortization                                              3,258               2,203
Loss on litigation settlement                                              250                   -
Loss on lease termination                                                    -               1,210
Adjusted EBITDA (Non-GAAP)                                           $  27,496          $   20,891





                                       31
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For the three months ended September 30, 2022 and 2021, adjusted EBITDA consisted of the following:



Three months ended September 30,                                        2022          2021
Net loss (GAAP)                                                      $ (8,601)     $ (4,594)
Interest income                                                            (6)           (2)
Interest expense                                                        5,798         2,532
Amortization of loan discount upon conversion of debt to equity             -             -
Income tax expense                                                      3,322         4,541
Depreciation and amortization                                           2,155         1,502
Accretion of lease liability                                            4,040             -
Equity based compensation                                                 862         2,603
Change in contingent consideration payable                                  -             -
Change in value of derivative liability                                  (420)       (3,345)
Commerce facility pre-opening expense                                       -         2,035
Acquisition, transaction, and other one-time costs                        866         1,800
Non-cash lease amortization                                             1,045           438
Loss on litigation settlement                                             250             -
Adjusted EBITDA (Non-GAAP)                                           $  9,311      $  7,510



Adjusted EBITDA should not be considered in isolation from, or as a substitute
for, net loss. There are a number of limitations related to the use of adjusted
EBITDA as compared to net loss, the closest comparable GAAP measure. Adjusted
EBITDA excludes:


•Interest income and expense

•Current income tax expense

•Depreciation and amortization expense

•Accretion expense related to a periodic update of the present value of a liability


•Equity based compensation expense, which has been, and will continue to be for
the foreseeable future, a significant recurring expense in our business and an
important part of our compensation strategy

•Legal settlements

•Non-cash change in fair value of derivative liability

•Acquisition, transaction, and other expenses (income), which vary significantly by transaction and are excluded to evaluate ongoing operating results

Liquidity and Capital Resources



As of September 30, 2022 and December 31, 2021, we had total current liabilities
of $69.1 million and $48.8 million, respectively, and current assets of $51.1
million and $50.9 million, respectively, to meet our current obligations. As of
September 30, 2022, we had a working deficit of $18.0 million, compared to
working capital of $2.0 million, as of December 31, 2021. The decrease of
$20.0 million is driven primarily by a decrease in cash and increases in
accounts payable and taxes payable, partially offset by increases in accounts
receivable, other receivables, and inventory, and decreases in accrued expenses
and other current liabilities, derivative liability, and current portion of
convertible notes.


The Company is an early-stage growth company. It is generating cash from sales
and is deploying its capital reserves to acquire and develop assets capable of
producing additional revenues and earnings over both the immediate and near
term. Capital reserves are being utilized for capital expenditures and
improvements in existing facilities, product development and marketing, as well
as customer, supplier and investor and industry relations.

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Historically, the Company has raised capital as needed however there is no guarantee the Company will be able to continue to raise funds in the same manor it has historically.



Cash Flows


Net Cash (Used in) Provided by Operations



Net cash used in operating activities was $2.0 million for the nine months ended
September 30, 2022, a decrease of $5.9 million as compared to $4.0 million of
net cash provided by operating activities for the nine months ended September
30, 2021. The decrease is primarily attributable to increases in working capital
and the overall scaling of the Company's California operation.


Net Cash Used in Investing Activities



Net cash used in investing activities was $27.0 million for the nine months
ended September 30, 2022, an increase of $14.2 million as compared to $12.7
million of cash used in investing activities for the nine months ended September
30, 2021. The increase can be attributed to the $24.5 million in cash used to
complete the NECC acquisition, partially offset by a reduction in purchases of
property and equipment to $2.5 million for the nine months ended September 30,
2022 as compared to $14.0 million spent on property and equipment during the
nine months ended September 30, 2021.


Net Cash Provided by (Used in) Financing Activities



Net cash provided by financing activities was $11.7 million for the nine months
ended September 30, 2022, an increase of $13.3 million as compared to $1.7
million of cash used in financing activities for the nine months ended September
30, 2021. The increase is attributed to proceeds from the construction finance
liability of $16.0 million associated with the NECC acquisition and a $3 million
promissory note purchase during the nine months ended September 30, 2022. This
was partially offset by repayments of notes payable during the nine months ended
September 30, 2022 of $5.9 million and compared to $3.5 million paid in the
comparable 2021 period. Refer to Note 7 for additional discussion.


Off-Balance Sheet Arrangements



We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources.


Critical Accounting Policies



We review new accounting standards as issued. Although some of these accounting
standards issued or effective after the end of our previous fiscal year may be
applicable to the Company, we have not identified any standards that we believe
merit further discussion. We do not expect the adoption of any recently issued
accounting pronouncements to have a significant impact on our financial
position, results of operations, or cash flows.

© Edgar Online, source Glimpses

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