Lowell Farms Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2022

19. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through March 30, 2023, the date the financial statements were available to be issued.

Effective March 15, 2023, Lowell Farms Inc. entered into the LOI which will forgive indebtedness owing under the convertible debentures and cancel the related warrants to acquire approximately 212 million subordinate voting shares. The LOI sets out the general terms of the transaction and the parties have agreed to negotiate the precise terms and conditions of the transaction in good faith, however, the Company is not subject to an exclusivity provision and may solicit, initiate, entertain, or accept other offers.

Details of the transaction are set forth below:

	·	All indebtedness outstanding under the Debentures will be forgiven and all of the related warrants to acquire an aggregate of approximately 212 million subordinate voting shares of the Company will be cancelled;

	·	The Company will sell to a newly formed company, BrandCo, all intellectual property arising out of or relating to the “Lowell Smokes” and “35s” brands and assign any existing, out-of-state license agreements (the “Assigned Contracts”) relating to the “Lowell” brand to BrandCo;

	·	BrandCo will acquire approximately 100 million shares of the Company’s subordinate voting shares representing in the aggregate shares of the Company equal to no more than 49% of the then issued and outstanding number of subordinate voting shares;

	·	The Company will receive future payments equal to 15% of net revenue received by BrandCo in connection with the assigned contracts for a period of six months following the closing date; and

	·	The Company will receive a 42-month exclusive license agreement for use of the “Lowell Smokes” and “35s” brands within the State of California.

George Allen resigned from the Board of Directors, effective March 15, 2023.

Ann Lawrence was added to the Audit Committee and appointed Chairperson of the Board of Directors, effective March 15, 2023.