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:

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 and issued 1 million subordinate voting shares with a fair market value of  $1,800 on the issuance date. The Company impaired the remaining purchase rights on the unpurchased machines in the period ending December 31, 2023.

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.