| |
Page
| |
Report of Independent Registered Public Accounting Firm | | |
2 |
Audited Consolidated Financial Statements | | | |
Consolidated Statements of Financial Position as of December 31, 2020 and 2019 | | |
3 |
Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018. | | |
4 |
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2020, 2019 and 2018 | | |
5 |
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 | | |
6 |
Notes to Consolidated Financial Statements | | |
8 |
TABLE OF CONTENTS
TABLE OF CONTENTS
(in thousands)
| | |
December 31, 2020
| | |
December 31, 2019
|
ASSETS | | | | | ||
Cash and cash equivalents
| | |
$32,542
| | |
$26,505
|
Restricted cash
| | |
22,097
| | |
95
|
Inventory
| | |
23,715
| | |
18,083
|
Notes receivable, current
| | |
2,032
| | |
2,146
|
Assets held-for-sale
| | |
62,971
| | |
-
|
Other current assets
| | |
4,663
| | |
8,506
|
Total current assets
| | |
148,020
| | |
55,335
|
Long-term investments
| | |
34,126
| | |
4,499
|
Notes receivable, non-current
| | |
97,901
| | |
79,479
|
Capital assets, net
| | |
89,136
| | |
106,047
|
Operating lease right-of-use assets
| | |
17,247
| | |
51,950
|
Intangible assets, net
| | |
138,983
| | |
285,972
|
Goodwill
| | |
31,922
| | |
105,757
|
Other non-current assets
| | |
4,718
| | |
2,638
|
Total non-current assets
| | |
414,033
| | |
636,342
|
TOTAL ASSETS
| | |
$562,053
| | |
$691,677
|
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | ||
Accounts payable and accrued liabilities
| | |
$18,913
| | |
$32,459
|
Taxes payable
| | |
14,780
| | |
4,740
|
Interest payable
| | |
3,504
| | |
291
|
Operating lease liability, current
| | |
1,492
| | |
2,759
|
Debt, current
| | |
27,139
| | |
15,300
|
Non-refundable deposits on sale
| | |
750
| | |
-
|
Liabilities related to assets held for sale
| | |
18,154
| | |
-
|
Other current liabilities
| | |
13,010
| | |
1,604
|
Total current liabilities
| | |
97,742
| | |
57,153
|
Debt, non-current
| | |
153,318
| | |
28,186
|
Operating lease liability, non-current
| | |
16,609
| | |
47,522
|
Deferred tax liability
| | |
34,673
| | |
63,997
|
Other liabilities
| | |
2
| | |
25
|
Total non-current liabilities
| | |
204,602
| | |
139,730
|
TOTAL LIABILITIES
| | |
302,344
| | |
196,883
|
Commitments and contingencies | | | | | ||
Common stock, no par value - unlimited authorized, 101,250 and 90,646 issued and outstanding, respectively
| | |
-
| | |
-
|
Additional paid-in capital
| | |
737,290
| | |
615,678
|
Treasury stock, 842 common stock held in treasury
| | |
(21,054)
| | |
(21,054)
|
Accumulated deficit
| | |
(475,205)
| | |
(188,617)
|
Total Acreage Shareholders' equity
| | |
241,031
| | |
406,007
|
Non-controlling interests
| | |
18,678
| | |
88,787
|
TOTAL EQUITY
| | |
259,709
| | |
494,794
|
| | | | |||
TOTAL LIABILITIES AND EQUITY
| | |
$562,053
| | |
$691,677
|
TABLE OF CONTENTS
| |
Year Ended December 31,
| |||||||
(in thousands, except per share amounts)
| | |
2020
| | |
2019
| | |
2018
|
Retail revenue, net
| | |
$86,380
| | |
$54,401
| | |
$17,475
|
Wholesale revenue, net
| | |
27,971
| | |
18,539
| | |
2,969
|
Other revenue, net
| | |
194
| | |
1,169
| | |
680
|
Total revenues, net
| | |
114,545
| | |
74,109
| | |
21,124
|
Cost of goods sold, retail
| | |
(51,018)
| | |
(33,844)
| | |
(10,038)
|
Cost of goods sold, wholesale
| | |
(14,369)
| | |
(9,821)
| | |
(1,666)
|
Total cost of goods sold
| | |
(65,387)
| | |
(43,665)
| | |
(11,704)
|
Gross profit
| | |
49,158
| | |
30,444
| | |
9,420
|
| | | | | | ||||
OPERATING EXPENSES | | | | | | | |||
General and administrative
| | |
50,469
| | |
56,224
| | |
18,647
|
Compensation expense
| | |
41,704
| | |
42,061
| | |
15,356
|
Equity-based compensation expense
| | |
92,064
| | |
97,538
| | |
11,230
|
Marketing
| | |
1,820
| | |
5,009
| | |
1,571
|
Loss on impairments
| | |
188,023
| | |
13,463
| | |
-
|
Loss on notes receivable
| | |
8,161
| | |
-
| | |
-
|
Write down of assets held-for-sale
| | |
11,003
| | |
-
| | |
-
|
Loss on legal settlements
| | |
14,555
| | |
-
| | |
-
|
Depreciation and amortization
| | |
6,170
| | |
7,593
| | |
3,749
|
Total operating expenses
| | |
413,969
| | |
221,888
| | |
50,553
|
| | | | | | ||||
Net operating loss
| | |
$(364,811)
| | |
$(191,444)
| | |
$(41,133)
|
| | | | | | ||||
Income (loss) from investments, net
| | |
98
| | |
(480)
| | |
21,777
|
Interest income from loans receivable
| | |
6,695
| | |
3,978
| | |
1,178
|
Interest expense
| | |
(15,853)
| | |
(1,194)
| | |
(4,617)
|
Other loss, net
| | |
(3,487)
| | |
(1,033)
| | |
(7,930)
|
Total other (loss) income
| | |
(12,547)
| | |
1,271
| | |
10,408
|
| | | | | | ||||
Loss before income taxes
| | |
$(377,358)
| | |
$(190,173)
| | |
$(30,725)
|
| | | | | | ||||
Income tax benefit (expense)
| | |
17,240
| | |
(4,989)
| | |
(1,536)
|
| | | | | | ||||
Net loss
| | |
$(360,118)
| | |
$(195,162)
| | |
$(32,261)
|
| | | | | | ||||
Less: net loss attributable to non-controlling interests
| | |
(73,530)
| | |
(44,894)
| | |
(4,778)
|
| | | | | | ||||
Net loss attributable to Acreage Holdings, Inc.
| | |
$(286,588)
| | |
$(150,268)
| | |
$(27,483)
|
| | | | | | ||||
Net loss per share attributable to Acreage Holdings, Inc. - basic and diluted:
| | |
$(2.87)
| | |
$(1.74)
| | |
$(0.41)
|
| | | | | | ||||
Weighted average shares outstanding - basic and diluted
| | |
99,980
| | |
86,185
| | |
66,699
|
TABLE OF CONTENTS
| | | | | |
Attributable to shareholders of the parent
| | | | | ||||||||||||||
(in thousands)
| | |
LLC
Membership
Units
| | |
Pubco Shares
(as converted)
| | |
Share Capital
| | |
Treasury
Stock
| | |
Accumulated
Deficit
| | |
Shareholders'
Equity
| | |
Non-
controlling
Interests
| | |
Total Equity
|
December 31, 2017
| | |
$49,375
| | |
$-
| | |
$29,454
| | |
$-
| | |
$(10,861)
| | |
$18,593
| | |
$10,030
| | |
$28,623
|
Issuance of Class D units
| | |
17,018
| | |
-
| | |
105,514
| | |
-
| | |
-
| | |
105,514
| | |
-
| | |
105,514
|
Issuance of Class E units, net
| | |
19,352
| | |
-
| | |
116,124
| | |
-
| | |
-
| | |
116,124
| | |
-
| | |
116,124
|
Interest expense settled with PIK units
| | |
330
| | |
66
| | |
1,912
| | |
-
| | |
-
| | |
1,912
| | |
-
| | |
1,912
|
Conversion of notes to equity
| | |
6,473
| | |
-
| | |
30,759
| | |
-
| | |
-
| | |
30,759
| | |
-
| | |
30,759
|
Issuance of warrants
| | |
-
| | |
-
| | |
3,285
| | |
-
| | |
-
| | |
3,285
| | |
-
| | |
3,285
|
Issuance of Pubco shares in redemption of membership units
| | |
(66,820)
| | |
65,978
| | |
280
| | |
(21,054)
| | |
-
| | |
(20,774)
| | |
-
| | |
(20,774)
|
RTO-related issuances, net
| | |
-
| | |
12,626
| | |
298,004
| | |
-
| | |
-
| | |
298,004
| | |
-
| | |
298,004
|
Formation of NCI at RTO and adjustments for changes in ownership
| | |
(27,340)
| | |
-
| | |
(133,943)
| | |
-
| | |
-
| | |
(133,943)
| | |
133,943
| | |
-
|
Establishment of deferred tax liability due to RTO
| | |
-
| | |
-
| | |
(30,175)
| | |
-
| | |
-
| | |
(30,175)
| | |
-
| | |
(30,175)
|
Capital contributions, net
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
2,767
| | |
2,767
|
Increase in non-controlling interests from business acquisitions
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
7,241
| | |
7,241
|
Purchase of non-controlling interests
| | |
-
| | |
-
| | |
(21,798)
| | |
-
| | |
-
| | |
(21,798)
| | |
(12,305)
| | |
(34,103)
|
Other equity transactions
| | |
-
| | |
398
| | |
4,426
| | |
-
| | |
(5)
| | |
4,421
| | |
(5,976)
| | |
(1,555)
|
Equity-based compensation expense and related issuances
| | |
1,612
| | |
96
| | |
10,915
| | |
-
| | |
-
| | |
10,915
| | |
-
| | |
10,915
|
Net loss
| | |
-
| | |
-
| | |
-
| | |
-
| | |
(27,483)
| | |
(27,483)
| | |
(4,778)
| | |
(32,261)
|
December 31, 2018
| | |
$-
| | |
$79,164
| | |
$414,757
| | |
$(21,054)
| | |
$(38,349)
| | |
$355,354
| | |
$130,922
| | |
$486,276
|
Issuances for business acquisitions/purchases of intangible assets
| | |
-
| | |
5,364
| | |
104,748
| | |
-
| | |
-
| | |
104,748
| | |
4,356
| | |
109,104
|
NCI adjustments for changes in ownership
| | |
-
| | |
2,784
| | |
(2,766)
| | |
-
| | |
-
| | |
(2,766)
| | |
2,766
| | |
-
|
Capital distributions, net
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
(4,363)
| | |
(4,363)
|
Other equity transactions
| | |
-
| | |
589
| | |
11,707
| | |
-
| | |
-
| | |
11,707
| | |
-
| | |
11,707
|
Equity-based compensation expense and related issuances
| | |
-
| | |
2,745
| | |
87,232
| | |
-
| | |
-
| | |
87,232
| | |
-
| | |
87,232
|
Net loss
| | |
-
| | |
-
| | |
-
| | |
-
| | |
(150,268)
| | |
(150,268)
| | |
(44,894)
| | |
(195,162)
|
December 31, 2019
| | |
$-
| | |
$90,646
| | |
$615,678
| | |
$(21,054)
| | |
$(188,617)
| | |
$406,007
| | |
$88,787
| | |
$494,794
|
Issuances for private placement
| | |
-
| | |
6,085
| | |
27,887
| | |
-
| | |
-
| | |
27,887
| | |
-
| | |
27,887
|
Beneficial conversion feature on convertible note (See Note 10)
| | |
-
| | |
-
| | |
523
| | |
-
| | |
-
| | |
523
| | |
-
| | |
523
|
Issuances on conversion of debenture
| | |
-
| | |
327
| | |
550
| | |
-
| | |
-
| | |
550
| | |
-
| | |
550
|
Issuance of warrants
| | |
-
| | |
-
| | |
3,229
| | |
-
| | |
-
| | |
3,229
| | |
-
| | |
3,229
|
NCI adjustments for changes in ownership
| | |
3,861
| | |
583
| | |
(3,395)
| | |
-
| | |
-
| | |
(3,395)
| | |
3,395
| | |
-
|
Capital contributions, net
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
26
| | |
26
|
Other equity transactions
| | |
-
| | |
276
| | |
754
| | |
-
| | |
-
| | |
754
| | |
-
| | |
754
|
Equity-based compensation expense and related issuances
| | |
-
| | |
3,333
| | |
92,064
| | |
-
| | |
-
| | |
92,064
| | |
-
| | |
92,064
|
Net loss
| | |
-
| | |
-
| | |
-
| | |
-
| | |
(286,588)
| | |
(286,588)
| | |
(73,530)
| | |
(360,118)
|
December 31, 2020
| | |
$3,861
| | |
$101,250
| | |
$737,290
| | |
$(21,054)
| | |
$(475,205)
| | |
$241,031
| | |
$18,678
| | |
$259,709
|
TABLE OF CONTENTS
| |
Year Ended December 31,
| |||||||
(in thousands)
| | |
2020
| | |
2019
| | |
2018
|
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | |||
Net loss
| | |
$(360,118)
| | |
$(195,162)
| | |
$(32,261)
|
Adjustments for: | | | | | | | |||
Depreciation and amortization
| | |
6,170
| | |
7,593
| | |
3,749
|
Equity-settled expenses, including compensation
| | |
92,818
| | |
102,898
| | |
19,360
|
Gain on business divestiture
| | |
(217)
| | |
-
| | |
-
|
Gain on sale of investment
| | |
-
| | |
-
| | |
(1,500)
|
Loss on disposal of capital assets
| | |
2,461
| | |
363
| | |
-
|
Loss on impairment
| | |
188,023
| | |
13,463
| | |
-
|
Loss on notes receivable
| | |
8,161
| | |
-
| | |
-
|
Bad debt expense
| | |
195
| | |
-
| | |
-
|
Non-cash interest expense
| | |
7,023
| | |
67
| | |
2,838
|
Non-cash operating lease expense
| | |
122
| | |
1,684
| | |
-
|
Deferred tax (income) expense
| | |
(32,405)
| | |
(3,844)
| | |
(56)
|
Non-cash loss from investments, net
| | |
949
| | |
1,272
| | |
(19,340)
|
Other non-cash (income) expense, net
| | |
-
| | |
(2,394)
| | |
469
|
Write-down of assets held-for-sale
| | |
11,003
| | |
-
| | |
-
|
Change, net of acquisitions in: | | | | | | | |||
Inventory
| | |
(2,531)
| | |
(6,941)
| | |
(3,641)
|
Other assets
| | |
4,011
| | |
(5,053)
| | |
(3,075)
|
Interest receivable
| | |
(2,284)
| | |
(4,002)
| | |
(1,208)
|
Accounts payable and accrued liabilities
| | |
(11,572)
| | |
17,217
| | |
95
|
Taxes payable
| | |
10,233
| | |
3,778
| | |
(152)
|
Interest payable
| | |
3,213
| | |
(250)
| | |
398
|
Other liabilities
| | |
7,067
| | |
(1,568)
| | |
(1,212)
|
Net cash used in operating activities
| | |
$(67,678)
| | |
$(70,879)
| | |
$(35,536)
|
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | |||
Purchases of capital assets
| | |
$(15,477)
| | |
$(47,085)
| | |
$(22,351)
|
Investments in notes receivable
| | |
(14,809)
| | |
(39,145)
| | |
(15,483)
|
Collection of notes receivable
| | |
254
| | |
3,164
| | |
4,519
|
Cash paid for long-term investments
| | |
(35,067)
| | |
(4,158)
| | |
(2,201)
|
Proceeds from business divestiture
| | |
997
| | |
-
| | |
-
|
Proceeds from sale of investment
| | |
-
| | |
-
| | |
9,634
|
Proceeds from sale of capital assets
| | |
4,756
| | |
172
| | |
-
|
Business acquisitions, net of cash acquired
| | |
(9,983)
| | |
(21,205)
| | |
(32,147)
|
Purchases of intangible assets
| | |
-
| | |
(58,488)
| | |
(6,445)
|
Deferred acquisition costs and deposits
| | |
-
| | |
2,076
| | |
(22,675)
|
Distributions from investments
| | |
27
| | |
232
| | |
141
|
Proceeds from (purchase of) short-term investments
| | |
-
| | |
149,828
| | |
(148,684)
|
Net cash used in investing activities
| | |
$(69,302)
| | |
$(14,609)
| | |
$(235,692)
|
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | |||
Proceeds from related party debt
| | |
$7,100
| | |
$15,000
| | |
$-
|
Repayment of related party loan
| | |
(22,100)
| | |
-
| | |
-
|
Proceeds from financing (refer to Note 14 for related party financing)
| | |
160,587
| | |
19,052
| | |
-
|
Deferred financing costs paid
| | |
(7,864)
| | |
-
| | |
-
|
Proceeds from issuance of private placement units and warrants, net
| | |
31,117
| | |
-
| | |
-
|
Collateral received from financing agreement
| | |
22,000
| | |
-
| | |
-
|
Proceeds from issuance of membership units, net
| | |
-
| | |
-
| | |
116,890
|
TABLE OF CONTENTS
| |
Year Ended December 31,
| |||||||
(in thousands)
| | |
2020
| | |
2019
| | |
2018
|
Proceeds from issuance of subscription receipts, net
| | |
-
| | |
-
| | |
298,644
|
Settlement of taxes withheld
| | |
-
| | |
(10,306)
| | |
(21,054)
|
Purchase of non-controlling interest
| | |
-
| | |
-
| | |
(19,643)
|
Repayment of debt
| | |
(25,821)
| | |
(12,333)
| | |
(17,838)
|
Capital contributions (distributions) - non-controlling interests, net
| | |
-
| | |
(4,363)
| | |
2,767
|
Net cash provided by financing activities
| | |
$165,019
| | |
$7,050
| | |
$359,766
|
Net increase (decrease) in cash, cash equivalents and restricted cash
| | |
$28,039
| | |
$(78,438)
| | |
$88,538
|
Cash, cash equivalents and restricted cash - Beginning of period
| | |
26,600
| | |
105,038
| | |
16,500
|
Cash, cash equivalents and restricted cash - End of period
| | |
$54,639
| | |
$26,600
| | |
$105,038
|
| |
Year Ended December 31,
| |||||||
(in thousands)
| | |
2020
| | |
2019
| | |
2018
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | | |||
Interest paid - non-lease
| | |
$5,617
| | |
$685
| | |
$1,381
|
Income taxes paid
| | |
3,027
| | |
4,555
| | |
1,744
|
OTHER NON-CASH INVESTING AND FINANCING ACTIVITIES: | | | | | | | |||
Capital assets not yet paid for
| | |
$2,479
| | |
$8,188
| | |
$393
|
Exchange of intangible assets to notes receivable (Note 4)
| | |
18,800
| | |
-
| | |
-
|
Holdback of Maine HSCP notes receivable (Note 6)
| | |
917
| | |
-
| | |
-
|
Promissory note conversion (Note 6)
| | |
10,087
| | |
-
| | |
-
|
Deferred tax liability related to business acquisition (Note 3)
| | |
3,077
| | |
-
| | |
-
|
Beneficial conversion feature (Note 10)
| | |
523
| | |
-
| | |
-
|
Convertible note conversion
| | |
550
| | |
-
| | |
-
|
Unpaid debt issuance costs
| | |
3,000
| | |
-
| | |
-
|
Exchange of investments for land and building (Note 5)
| | |
4,464
| | |
-
| | |
-
|
Issuance of Class D units for land
| | |
-
| | |
-
| | |
2,600
|
Issuance of SVS for operating lease
| | |
-
| | |
3,353
| | |
-
|
TABLE OF CONTENTS
1. |
NATURE OF OPERATIONS
|
TABLE OF CONTENTS
2. |
SIGNIFICANT ACCOUNTING POLICIES
|
TABLE OF CONTENTS
TABLE OF CONTENTS
1. |
Level 1 - quoted prices (unadjusted) that are in active markets for identical assets or liabilities
|
TABLE OF CONTENTS
2. |
Level 2 - inputs that are observable for the asset or liability, either directly (prices) for similar assets or liabilities in active markets or indirectly (derived from prices) for identical assets or liabilities in markets with insufficient volume or infrequent transactions
|
3. |
Level 3 - inputs for assets or liabilities that are not based upon observable market data
|
TABLE OF CONTENTS
TABLE OF CONTENTS
1. |
Identify the contract with a customer;
|
2. |
Identify the performance obligation(s);
|
3. |
Determine the transaction price;
|
4. |
Allocate the transaction price to the performance obligation(s);
|
5. |
Recognize revenue when/as performance obligation(s) are satisfied.
|
TABLE OF CONTENTS
TABLE OF CONTENTS
3. |
ACQUISITIONS, DIVESTITURES AND ASSETS HELD FOR SALE
|
Purchase Price Allocation
| | |
CCF(1) |
Assets acquired: | | | |
Cash and cash equivalents
| | |
$17
|
Inventory
| | |
1,969
|
Other current assets
| | |
3,164
|
Capital assets, net
| | |
4,173
|
Operating lease ROU asset
| | |
4,455
|
Goodwill
| | |
5,247
|
Intangible assets - cannabis licenses
| | |
10,000
|
Other non-current assets
| | |
10
|
Liabilities assumed: | | | |
Accounts payable and accrued liabilities
| | |
(228)
|
Taxes payable
| | |
(17)
|
Other current liabilities
| | |
(4,248)
|
Operating lease liability
| | |
(4,455)
|
Fair value of net assets acquired
| | |
$20,087
|
| | ||
Consideration paid: | | | |
Cash
| | |
$10,000
|
Settlement of pre-existing relationship
| | |
10,087
|
Total consideration
| | |
$20,087
|
(1) |
On June 26, 2020, a subsidiary of the Company acquired 100% of Compassionate Care Foundation, Inc. ("CCF"), a New Jersey vertically integrated medical cannabis nonprofit corporation.
|
TABLE OF CONTENTS
Purchase Price Allocation
| | |
Thames Valley(1) | | |
NCC(2) | | |
Form Factory(3) | | |
Total
|
Assets acquired: | | | | | | | | | ||||
Cash and cash equivalents
| | |
$106
| | |
$696
| | |
$4,276
| | |
$5,078
|
Inventory
| | |
39
| | |
170
| | |
520
| | |
729
|
Other current assets
| | |
1
| | |
36
| | |
1,136
| | |
1,173
|
Capital assets, net
| | |
-
| | |
539
| | |
3,988
| | |
4,527
|
Operating lease ROU asset
| | |
-
| | |
-
| | |
10,477
| | |
10,477
|
Goodwill
| | |
3,596
| | |
4,192
| | |
65,303
| | |
73,091
|
Intangible assets - cannabis licenses
| | |
14,850
| | |
2,500
| | |
40,372
| | |
57,722
|
Intangible assets - customer relationships
| | |
-
| | |
-
| | |
4,600
| | |
4,600
|
Intangible assets - developed technology
| | |
-
| | |
-
| | |
3,100
| | |
3,100
|
Other non-current assets
| | |
-
| | |
25
| | |
403
| | |
428
|
Liabilities assumed: | | | | | | | | | ||||
Accounts payable and accrued liabilities
| | |
(121)
| | |
(24)
| | |
(1,572)
| | |
(1,717)
|
Other current liabilities
| | |
-
| | |
(621)
| | |
(74)
| | |
(695)
|
Debt
| | |
-
| | |
-
| | |
(494)
| | |
(494)
|
Operating lease liability
| | |
-
| | |
-
| | |
(10,477)
| | |
(10,477)
|
Deferred tax liability
| | |
(3,399)
| | |
(461)
| | |
(14,519)
| | |
(18,379)
|
Other liabilities
| | |
-
| | |
(175)
| | |
(23)
| | |
(198)
|
Fair value of net assets acquired
| | |
$15,072
| | |
$6,877
| | |
$107,016
| | |
$128,965
|
| | | | | | | | |||||
Consideration paid: | | | | | | | | | ||||
Cash
| | |
$15,072
| | |
$-
| | |
$3,711
| | |
$18,783
|
Deferred acquisition costs and deposits
| | |
-
| | |
100
| | |
-
| | |
100
|
Subordinate Voting Shares
| | |
-
| | |
3,948
| | |
95,266
| | |
99,214
|
Settlement of pre-existing relationship
| | |
-
| | |
830
| | |
8,039
| | |
8,869
|
Fair value of previously held interest
| | |
-
| | |
1,999
| | |
-
| | |
1,999
|
Total consideration
| | |
$15,072
| | |
$6,877
| | |
$107,016
| | |
$128,965
|
| | | | | | | | |||||
Subordinate Voting Shares issued
| | |
-
| | |
211
| | |
4,770
| | |
4,981
|
(1) |
On January 29, 2019, the Company acquired 100% of Thames Valley Apothecary, LLC ("Thames Valley"), a dispensary license holder in Connecticut.
|
(2) |
On March 4, 2019, the Company acquired the remaining 70% ownership interest in NCC LLC ("NCC"), a dispensary license holder in Illinois. The market price used in valuing SVS issued was $18.70 per share. As a result of this acquisition, the previously held interest in NCC was re-measured, resulting in a gain of $999, which was recorded in Income from investments, net in the Consolidated Statements of Operations during the year ended December 31, 2019.
|
(3) |
On April 16, 2019, the Company acquired 100% of Form Factory Holdings, LLC ("Form Factory"), a manufacturer and distributor of cannabis-based edibles and beverages. The Company expects to benefit primarily from utilizing the intangible assets acquired, which include cannabis licenses in California and Oregon, existing customer relationships, and developed technology, which will complement Acreage's existing business and enable the Company to create and distribute proprietary brands of various types at scale. The useful life of the developed technology was determined to be 19 years, and the useful life of the customer relationships was determined to be 5 years.
|
TABLE OF CONTENTS
TABLE OF CONTENTS
| |
December 31, 2020
| ||||||||||||||||||||||
| |
Acreage
Florida,
Inc.
| | |
Kanna,
Inc.
| | |
MMRC(1) | | |
Michigan
| | |
OR -
Cannabliss
| | |
OR -
Medford
| | |
OR -
Powell
| | |
Total
| |
Inventory
| | |
$587
| | |
$-
| | |
$-
| | |
$-
| | |
$379
| | |
$100
| | |
$127
| | |
$1,193
|
Notes receivable, current
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
31
| | |
-
| | |
31
|
Other current assets
| | |
161
| | |
-
| | |
20
| | |
-
| | |
1
| | |
-
| | |
-
| | |
182
|
Total current assets classified as held-for-sale
| | |
748
| | |
-
| | |
20
| | |
-
| | |
380
| | |
131
| | |
127
| | |
1,406
|
Capital assets, net
| | |
7,137
| | |
1,156
| | |
286
| | |
7,469
| | |
83
| | |
2,252
| | |
7
| | |
18,390
|
Operating lease right-of-use assets
| | |
10,305
| | |
944
| | |
362
| | |
-
| | |
925
| | |
321
| | |
164
| | |
13,021
|
Intangible assets, net
| | |
26,190
| | |
970
| | |
802
| | |
-
| | |
-
| | |
-
| | |
-
| | |
27,962
|
Goodwill
| | |
-
| | |
-
| | |
-
| | |
-
| | |
2,192
| | |
-
| | |
-
| | |
2,192
|
Total assets classified as held for sale
| | |
$44,380
| | |
$3,070
| | |
$1,470
| | |
$7,469
| | |
$3,580
| | |
$2,704
| | |
$298
| | |
$62,971
|
Accounts payable and accrued liabilities
| | |
$(247)
| | |
$(132)
| | |
$(3)
| | |
$-
| | |
$(260)
| | |
$-
| | |
$-
| | |
$(642)
|
Taxes payable
| | |
-
| | |
1
| | |
-
| | |
-
| | |
(179)
| | |
-
| | |
-
| | |
(178)
|
Operating lease liability, current
| | |
(501)
| | |
(250)
| | |
(29)
| | |
-
| | |
(184)
| | |
(133)
| | |
(122)
| | |
(1,219)
|
Other current liabilities
| | |
(89)
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
(89)
|
Total current liabilities classified as held-for-sale
| | |
(837)
| | |
(381)
| | |
(32)
| | |
-
| | |
(623)
| | |
(133)
| | |
(122)
| | |
(2,128)
|
Operating lease liability, non-current
| | |
(14,107)
| | |
(610)
| | |
(325)
| | |
-
| | |
(688)
| | |
(278)
| | |
(22)
| | |
(16,030)
|
Deferred tax liabilities
| | |
-
| | |
-
| | |
-
| | |
-
| | |
4
| | |
-
| | |
-
| | |
4
|
Total liabilities classified as held-for-sale
| | |
$(14,944)
| | |
$(991)
| | |
$(357)
| | |
$-
| | |
$(1,307)
| | |
$(411)
| | |
$(144)
| | |
$(18,154)
|
(1) |
On August 11, 2020, a subsidiary of the Company entered into a transaction of sale for MMRC for $1,500 with a buyer. The Company's applicable subsidiary, when permitted by state law, will transfer all of the issued and outstanding membership interests of MMRC to the buyer. In the interim, and subject to regulatory approval, the buyer and MMRC will enter into a management services agreement for the management and operation of MMRC until such time as the Company can transfer the equity of MMRC to the buyer.
|
TABLE OF CONTENTS
4. |
INTANGIBLE ASSETS AND GOODWILL
|
Intangibles
| | |
December 31,
2020
| | |
December 31,
2019
|
Finite-lived intangible assets: | | | | | ||
Management contracts
| | |
$19,580
| | |
$52,438
|
Customer relationships
| | |
-
| | |
4,600
|
Developed technology
| | |
-
| | |
3,100
|
| |
19,580
| | |
60,138
| |
Accumulated amortization on finite-lived intangible assets: | | | | | ||
Management contracts
| | |
(5,262)
| | |
(5,750)
|
Customer relationships
| | |
-
| | |
(649)
|
Developed technology
| | |
-
| | |
(114)
|
| |
(5,262)
| | |
(6,513)
| |
Finite-lived intangible assets, net
| | |
14,318
| | |
53,625
|
| | | | |||
Indefinite-lived intangible assets | | | | | ||
Cannabis licenses
| | |
124,665
| | |
232,347
|
Total intangibles, net
| | |
$138,983
| | |
$285,972
|
TABLE OF CONTENTS
n
|
On January 4, 2019, the Company purchased a vertically-integrated license in Florida to operate a cultivation and processing facility and up to 40 medical cannabis dispensaries by acquiring Acreage Florida, Inc. (formerly known as Nature's Way Nursery of Miami, Inc.). Total consideration of $70,103 included: (i) $53,747 in cash, (ii) $12,000 of previously-paid deferred acquisition costs and (iii) $4,356 in HSCP units (198 units). The HSCP units issued were valued based on the market price of SVS (for which HSCP units are convertible) at the transaction date, which was $22.00 per share. In addition to the intangible asset purchased, the Company also acquired $361 of equipment, recorded in Capital assets, net and a $190 surety bond, recorded in Other non-current assets in the Consolidated Statements of Financial Position. A deferred tax liability of $16,049 was also recorded in connection with this purchase.
|
n
|
On July 2, 2019, the Company acquired Kanna, Inc. ("Kanna"), a dispensary license holder in Oakland, California, for total consideration of $7,525 which included: (i) $1,991 in cash and (ii) $5,534 in Subordinate Voting Shares (383 shares). A deferred tax liability of $2,316 was also recorded in connection with this purchase. The SVS issued were valued based on the market price at the transaction date, which was $15.81 per share. Certain SVS are subject to clawback should certain indemnity conditions arise and as such, a discount for lack of marketability was applied that correlates to the period of time these shares are subject to restriction.
|
TABLE OF CONTENTS
Amortization of Intangibles
| | |
2021
| | |
2022
| | |
2023
| | |
2024
| | |
2025
|
Amortization expense
| | |
$2,164
| | |
$2,164
| | |
$2,164
| | |
$2,164
| | |
$2,164
|
Goodwill
| | |
Total
|
December 31, 2018
| | |
$32,116
|
Acquisitions
| | |
73,091
|
Adjustment to purchase price allocation
| | |
550
|
December 31, 2019
| | |
$105,757
|
Acquisitions
| | |
5,247
|
Impairment
| | |
(76,890)
|
Transferred to held-for-sale
| | |
(2,192)
|
December 31, 2020
| | |
$31,922
|
5. |
INVESTMENTS
|
Investments
| | |
December 31, 2020
| | |
December 31, 2019
|
Investments held at FV-NI
| | |
34,126
| | |
4,376
|
Equity method investments
| | |
-
| | |
123
|
Total long-term investments
| | |
$34,126
| | |
$4,499
|
TABLE OF CONTENTS
Investment income
| | |
Year Ended December 31,
| ||||||
| |
2020
| | |
2019
| | |
2018
| |
Short-term investments
| | |
$-
| | |
$738
| | |
$406
|
Investments held at FV-NI
| | |
1,158
| | |
(2,218)
| | |
6,570
|
Equity method investments
| | |
(1,060)
| | |
1,000
| | |
13,301
|
Gain from investments held for sale
| | |
-
| | |
-
| | |
1,500
|
Income from investments, net
| | |
$98
| | |
$(480)
| | |
$21,777
|
TABLE OF CONTENTS
6. |
NOTES RECEIVABLE
|
| |
December 31,
2020
| | |
December 31,
2019
| |
Notes receivable
| | |
$94,171
| | |
$75,851
|
Interest receivable
| | |
5,762
| | |
5,774
|
Total notes receivable
| | |
$99,933
| | |
$81,625
|
Less: Notes receivable, current
| | |
2,032
| | |
2,146
|
Notes receivable, non-current
| | |
$97,901
| | |
$79,479
|
TABLE OF CONTENTS
Lines of Credit
| | | | | | |
Balance as of
| |||||
Counterparty
| | |
Maximum
Obligation
| | |
Interest
Rate
| | |
December 31,
2020
| | |
December 31,
2019
|
Greenleaf (1) | | |
$31,200
| | |
3.25% - 4.75%
| | |
$29,422
| | |
$22,569
|
CWG Botanicals, Inc. ("CWG")(2) | | |
12,000
| | |
8%
| | |
9,767
| | |
9,152
|
Compassionate Care Foundation, Inc. ("CCF")(3) | | |
12,500
| | |
18%
| | |
-
| | |
7,152
|
TABLE OF CONTENTS
Lines of Credit
| | | | | | |
Balance as of
| |||||
Counterparty
| | |
Maximum
Obligation
| | |
Interest
Rate
| | |
December 31,
2020
| | |
December 31,
2019
|
Prime Alternative Treatment Center, Inc. ("PATC")(4) | | |
4,650
| | |
15%
| | |
4,650
| | |
4,650
|
Patient Centric of Martha's Vineyard, Ltd. ("PCMV")(5) | | |
9,000
| | |
15%
| | |
6,873
| | |
5,758
|
Health Circle, Inc. (6) | | |
8,000
| | |
15%
| | |
4,331
| | |
3,988
|
Total
| | |
$77,350
| | | | |
$55,043
| | |
$53,269
|
(1) |
During the year ended December 31, 2018, the Company extended lines of credit to Greenleaf Apothecaries, LLC, Greenleaf Therapeutics, LLC and Greenleaf Gardens, LLC (together "Greenleaf"), which mature in June 2023.
|
(2) |
The revolving line of credit due from CWG, the license holder managed by NorCal, matures in December 2021.
|
(3) |
In September 2018, a subsidiary of the Company entered into a management agreement to provide certain advisory and consulting services to CCF for a monthly fee based on product sales.
|
(4) |
PATC is a non-profit license holder in New Hampshire to which the Company's consolidated subsidiary PATCC provides management or other consulting services. The line of credit matures in August 2022.
|
(5) |
In November 2018, a subsidiary of the Company entered into a services agreement with PCMV. The line of credit matures in November 2023. The services agreement was terminated in February 2020.
|
(6) |
Health Circle, Inc. is a non-profit license holder in Massachusetts that formerly had a services agreement with the Company's consolidated subsidiary MA RMDS SVCS, LCC. The line of credit matures in November 2032. The services agreement was terminated in February 2020.
|
7. |
CAPITAL ASSETS, net
|
| |
December 31,
2020
| | |
December 31,
2019
| |
Land(1) | | |
$3,811
| | |
$9,839
|
Building
| | |
34,114
| | |
34,522
|
Right-of-use asset, finance leases
| | |
5,077
| | |
5,954
|
Construction in progress
| | |
13,697
| | |
17,288
|
Furniture, fixtures and equipment
| | |
18,062
| | |
21,019
|
Leasehold improvements
| | |
23,681
| | |
22,682
|
Capital assets, gross
| | |
$98,442
| | |
$111,304
|
Less: accumulated depreciation
| | |
(9,306)
| | |
(5,257)
|
Capital assets, net
| | |
$89,136
| | |
$106,047
|
(1) |
During the year ended December 31, 2020, the Company sold parcels of land for an aggregate sale price of $2,166. In connection with these transactions, the Company recorded a loss on sale of $981 in Other loss, net on the Consolidated Statements of Operations.
|
TABLE OF CONTENTS
8. |
LEASES
|
Balance Sheet Information
| | |
Classification
| | |
December 31,
2020
| | |
December 31,
2019
|
Right-of-use assets | | | | | | | |||
Operating
| | |
Operating lease right-of-use assets
| | |
$17,247
| | |
$51,950
|
Finance
| | |
Capital assets, net
| | |
4,776
| | |
5,832
|
Total right-of-use assets
| | | | |
$22,023
| | |
$57,782
| |
| | | | | | ||||
Lease liabilities | | | | | | | |||
Current | | | | | | | |||
Operating
| | |
Operating lease liability, current
| | |
$1,492
| | |
$2,759
|
Financing
| | |
Debt, current
| | |
-
| | |
49
|
Non-current | | | | | | | |||
Operating
| | |
Operating lease liability, non-current
| | |
16,609
| | |
47,522
|
Financing
| | |
Debt, non-current
| | |
5,174
| | |
6,083
|
Total lease liabilities
| | | | |
$23,275
| | |
$56,413
|
Statement of Operations
Information
| | |
Classification
| | |
Year Ended
December 31,
2020
| | |
Year Ended
December 31,
2019
|
Short-term lease expense
| | |
General and administrative
| | |
$1,258
| | |
$1,262
|
Operating lease expense
| | |
General and administrative
| | |
6,252
| | |
5,351
|
Finance lease expense: | | | | | | | |||
Amortization of right of use asset
| | |
Depreciation and amortization
| | |
161
| | |
122
|
Interest expense on lease liabilities
| | |
Interest expense
| | |
820
| | |
290
|
Sublease income
| | |
Other loss, net
| | |
(37)
| | |
(110)
|
Net lease cost
| | | | |
$7,196
| | |
$5,653
|
TABLE OF CONTENTS
Statement of Cash Flows
Information
| | |
Classification
| | |
Year Ended
December 31, 2020
| | |
Year Ended
December 31, 2019
|
| | | | | | ||||
Cash paid for operating leases
| | |
Net cash used in operating activities
| | |
$6,130
| | |
$3,667
|
Cash paid for finance leases - interest
| | |
Net cash used in operating activities
| | |
$1,316
| | |
$223
|
Maturity of lease liabilities
| | |
Operating
Leases
| | |
Finance
Leases
|
2021 (1) | | |
$4,733
| | |
$680
|
2022
| | |
3,254
| | |
701
|
2023
| | |
2,954
| | |
722
|
2024
| | |
2,916
| | |
743
|
2025
| | |
2,965
| | |
766
|
Thereafter
| | |
14,113
| | |
13,275
|
Total lease payments
| | |
$30,935
| | |
$16,887
|
Less: interest
| | |
11,852
| | |
11,713
|
Present value of lease liabilities
| | |
$19,083
| | |
$5,174
|
| | | | |||
Weighted average remaining lease term (years)
| | |
8
| | |
14
|
Weighted average discount rate
| | |
11%
| | |
15%
|
(1) |
Includes minimum payments under existing operating leases currently classified as held-for-sale (refer to Note 3 for further discussion).
|
9. |
INVENTORY
|
| |
December 31, 2020
| | |
December 31, 2019
| |
Retail inventory
| | |
$1,803
| | |
$1,784
|
Wholesale inventory
| | |
18,055
| | |
11,993
|
Cultivation inventory
| | |
2,317
| | |
3,021
|
Supplies & other
| | |
1,540
| | |
1,285
|
Total
| | |
$23,715
| | |
$18,083
|
TABLE OF CONTENTS
10. |
DEBT
|
Debt balances
| | |
December 31, 2020
| | |
December 31, 2019
|
NCCRE loan
| | |
$470
| | |
$492
|
Seller's notes
| | |
2,581
| | |
2,810
|
Related party debt
| | |
-
| | |
15,000
|
Financing liability (related party)
| | |
15,253
| | |
19,052
|
Finance lease liabilities
| | |
5,174
| | |
6,132
|
3.55% Credit facility due 2022
| | |
20,043
| | |
-
|
3.55% Credit facility collateral (related party)
| | |
22,169
| | |
-
|
Convertible debenture
| | |
-
| | |
-
|
Bridge loan
| | |
-
| | |
-
|
7.5% Loan due 2023 (related party)
| | |
32,124
| | |
-
|
6.1% Secured debenture due 2030 (related party)
| | |
46,085
| | |
-
|
Hempco Foros promissory note
| | |
2,000
| | |
-
|
Senior secured term loan facility
| | |
22,870
| | |
-
|
Construction financing loan
| | |
4,438
| | |
-
|
Canwell settlement promissory note
| | |
7,250
| | |
-
|
Total debt
| | |
$180,457
| | |
$43,486
|
Less: current portion of debt
| | |
27,139
| | |
15,300
|
Total long-term debt
| | |
$153,318
| | |
$28,186
|
Interest expense
| | |
Year Ended December 31,
| ||||||
| |
2020
| | |
2019
| | |
2018
| |
Convertible notes: | | | | | | | |||
Cash interest
| | |
$-
| | |
$-
| | |
$869
|
PIK interest
| | |
-
| | |
-
| | |
1,912
|
Accretion
| | | | |
-
| | |
926
| |
Convertible note interest
| | |
$-
| | |
$-
| | |
$3,707
|
NCCRE loan
| | |
18
| | |
19
| | |
22
|
Seller's notes
| | |
297
| | |
416
| | |
888
|
Related party debt
| | |
18
| | |
-
| | |
-
|
Interest expense on financing liability (related party)
| | |
1,700
| | |
469
| | |
-
|
Interest expense on finance lease liabilities
| | |
820
| | |
290
| | |
-
|
3.55% Credit facility due 2022
| | |
1,257
| | |
-
| | |
-
|
3.55% Credit facility collateral (related party)
| | |
2,212
| | |
-
| | |
-
|
Convertible debenture
| | |
2,872
| | |
-
| | |
-
|
Bridge loan
| | |
3,993
| | |
-
| | |
-
|
TABLE OF CONTENTS
Interest expense
| | |
Year Ended December 31,
| ||||||
| |
2020
| | |
2019
| | |
2018
| |
7.5% Loan due 2023 (related party)
| | |
727
| | |
-
| | |
-
|
6.1% Secured debenture due 2030 (related party)
| | |
940
| | |
-
| | |
-
|
Hempco Foros promissory note
| | |
43
| | |
-
| | |
-
|
Senior secured term loan facility
| | |
956
| | |
-
| | |
-
|
Total interest expense
| | |
$15,853
| | |
$1,194
| | |
$4,617
|
TABLE OF CONTENTS
TABLE OF CONTENTS
TABLE OF CONTENTS
11. |
SHAREHOLDERS' EQUITY AND NON-CONTROLLING INTERESTS
|
Shareholders' Equity
| | |
Subordinate
Voting Shares
| | |
Subordinate
Voting Shares
Held in Treasury
| | |
Proportionate
Voting Shares
(as converted)
| | |
Multiple
Voting Shares
| | |
Total Shares
Outstanding
|
December 31, 2018
| | |
21,943
| | |
(842)
| | |
57,895
| | |
168
| | |
79,164
|
Issuances
| | |
8,698
| | |
-
| | |
-
| | |
-
| | |
8,698
|
NCI conversions
| | |
2,784
| | |
-
| | |
-
| | |
-
| | |
2,784
|
PVS conversions
| | |
34,752
| | |
-
| | |
(34,752)
| | |
-
| | |
-
|
December 31, 2019
| | |
68,177
| | |
(842)
| | |
23,143
| | |
168
| | |
90,646
|
Issuances
| | |
9,518
| | |
-
| | |
-
| | |
-
| | |
9,518
|
TABLE OF CONTENTS
Shareholders' Equity
| | |
Subordinate
Voting Shares
| | |
Subordinate
Voting Shares
Held in Treasury
| | |
Proportionate
Voting Shares
(as converted)
| | |
Multiple
Voting Shares
| | |
Total Shares
Outstanding
|
NCI conversions
| | |
583
| | |
-
| | |
-
| | |
-
| | |
583
|
PVS conversions
| | |
1,231
| | |
-
| | |
(1,231)
| | |
-
| | |
-
|
Exchange pursuant to Amended Agreement
| | |
(79,509)
| | |
842
| | |
(21,912)
| | |
(168)
| | |
(100,747)
|
September 22, 2020
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
|
Shareholders' Equity
| | |
Fixed Shares
| | |
Floating
Shares
| | |
Fixed Shares
Held in
Treasury
| | |
Floating
Shares Held
in Treasury
| | |
Fixed
Multiple
Shares
| | |
Total Shares
Outstanding
|
September 23, 2020
| | |
70,994
| | |
30,476
| | |
(589)
| | |
(253)
| | |
118
| | |
100,746
|
Issuances
| | |
352
| | |
152
| | |
-
| | |
-
| | |
-
| | |
504
|
December 31, 2020
| | |
71,346
| | |
30,628
| | |
(589)
| | |
(253)
| | |
118
| | |
101,250
|
Warrants
| | |
January 1, 2020 to
September 22, 2020
| | |
September 23, 2020 to December 31, 2020
| |||
| |
SVS
| | |
Fixed Shares
| | |
Floating Shares
| |
Beginning balance
| | |
2,040
| | |
5,684
| | |
2,436
|
Granted
| | |
6,085
| | |
1,557
| | |
698
|
Expired
| | |
(4)
| | |
(110)
| | |
(47)
|
Modification pursuant to Amended Arrangement
| | |
(8,121)
| | |
-
| | |
-
|
Ending balance
| | |
-
| | |
7,131
| | |
3,087
|
TABLE OF CONTENTS
Warrants
| | |
Year ended December 31, 2019
|
| |
SVS
| |
Beginning balance
| | |
2,259
|
Granted
| | |
4
|
Expired
| | |
(223)
|
Ending balance
| | |
2,040
|
TABLE OF CONTENTS
HSCP net asset reconciliation
| | |
December 31, 2020
| | |
December 31, 2019
|
Current assets
| | |
$144,938
| | |
$55,296
|
Non-current assets
| | |
410,269
| | |
584,812
|
Current liabilities
| | |
(80,649)
| | |
(46,434)
|
Non-current liabilities
| | |
(171,485)
| | |
(75,219)
|
Other NCI balances
| | |
(742)
| | |
(1,041)
|
Accumulated equity-settled expenses
| | |
(206,315)
| | |
(111,934)
|
Net assets
| | |
$96,016
| | |
$405,480
|
HSCP/USCo2 ownership % of HSCP
| | |
18.68%
| | |
21.64%
|
Net assets allocated to USCo2/HSCP
| | |
$17,936
| | |
$87,746
|
Net assets attributable to other NCIs
| | |
742
| | |
1,041
|
Total NCI
| | |
$18,678
| | |
$88,787
|
| |
Year Ended December 31,
| ||||
HSCP Summarized Statement of Operations
| | |
2020
| | |
2019
|
Net loss allocable to HSCP/USCo2
| | |
$(372,386)
| | |
$(191,511)
|
HSCP/USCo2 weighted average ownership % of HSCP
| | |
19.66%
| | |
23.44%
|
Net loss allocated to HSCP/USCo2
| | |
$(73,211)
| | |
$(44,890)
|
Net loss allocated to other NCIs
| | |
(319)
| | |
(4)
|
Net loss attributable to NCIs
| | |
$(73,530)
| | |
$(44,894)
|
TABLE OF CONTENTS
| |
Year Ended December 31,
| ||||
Convertible Units
| | |
2020
| | |
2019
|
Beginning balance
| | |
25,035
| | |
27,340
|
Issuance of NCI units
| | |
-
| | |
198
|
Vested LLC C-1s canceled
| | |
(1,310)
| | |
(416)
|
LLC C-1s vested
| | |
1,000
| | |
755
|
NCI units settled in cash
| | |
-
| | |
(58)
|
NCI units converted to Pubco
| | |
(583)
| | |
(2,784)
|
Ending balance
| | |
24,142
| | |
25,035
|
12. |
EQUITY-BASED COMPENSATION EXPENSE
|
Equity-based compensation expense
| | |
Year Ended December 31,
| ||||||
| |
2020
| | |
2019
| | |
2018
| |
Equity-based compensation - Plan
| | |
$57,624
| | |
$62,946
| | |
$9,862
|
Equity-based compensation - Plan (Plan of Arrangement Awards) (1) | | |
17,139
| | |
23,056
| | |
-
|
Equity-based compensation - other
| | |
17,301
| | |
11,536
| | |
1,368
|
Total equity-based compensation expense
| | |
$92,064
| | |
$97,538
| | |
$11,230
|
(1) |
In accordance with the Prior Plan of Arrangement (as defined in Note 13) with Canopy Growth, awards were granted in July 2019, and amortized based on the vesting schedule set forth herein.
|
TABLE OF CONTENTS
| |
January 1, 2020 to
September 22, 2020
| | |
Year Ended
December 31, 2019
| |||||||
Restricted Share Units
(Fair value information expressed in whole dollars)
| | |
RSUs
| | |
Weighted
Average
Fair Value
| | |
RSUs
| | |
Weighted
Average
Grant Date
Fair Value
|
Unvested, beginning of period
| | |
7,843
| | |
$15.10
| | |
2,032
| | |
$24.53
|
Granted(1) | | |
4,970
| | |
3.60
| | |
7,986
| | |
14.28
|
Forfeited
| | |
(2,654)
| | |
11.29
| | |
(117)
| | |
17.85
|
Vested
| | |
(2,998)
| | |
11.60
| | |
(2,058)
| | |
21.06
|
Unvested, end of period
| | |
7,161
| | |
$9.99
| | |
7,843
| | |
$15.10
|
Vested and unreleased
| | |
136
| | |
$16.33
| | | | | ||
Exchanged pursuant to Amended Agreement
| | |
(7,297)
| | |
N/A
| | | | | ||
Outstanding, September 22, 2020
| | |
-
| | |
$-
| | | | |
| |
September 23, 2020 to December 31, 2020
| ||||||||||
| |
Fixed Shares
| | |
Floating Shares
| |||||||
Restricted Share Units
(Fair value information expressed in whole dollars)
| | |
RSUs
| | |
Weighted
Average Grand
Date Fair Value
| | |
RSUs
| | |
Weighted
Average Grand
Date Fair Value
|
Unvested, September 23, 2020(1) | | |
5,012
| | |
$9.99
| | |
2,148
| | |
$9.99
|
Granted
| | |
623
| | |
$3.21
| | |
1,193
| | |
$2.07
|
Forfeited
| | |
(94)
| | |
$4.66
| | |
(40)
| | |
$4.66
|
Vested
| | |
(422)
| | |
$10.32
| | |
(613)
| | |
$4.41
|
Unvested, end of period
| | |
5,119
| | |
$9.24
| | |
2,688
| | |
$7.83
|
Vested and unreleased
| | |
211
| | |
$8.99
| | |
522
| | |
$3.16
|
Outstanding, end of the period
| | |
5,330
| | |
$9.23
| | |
3,210
| | |
$7.07
|
TABLE OF CONTENTS
(1) |
Equity-based compensation - Plan (Plan of Arrangement Awards)
|
| |
January 1, 2020 to
September 22, 2020
| | |
Year Ended
December 31, 2019
| |||||||
Stock Options
(Exercise price expressed in whole dollars)
| | |
Options
| | |
Weighted
Average
Exercise
Price
| | |
Options
| | |
Weighted
Average
Exercise
Price
|
Options outstanding, beginning of period
| | |
5,608
| | |
$21.56
| | |
4,605
| | |
$25.00
|
Granted
| | |
191
| | |
5.75
| | |
1,785
| | |
14.04
|
Forfeited
| | |
(1,301)
| | |
15.59
| | |
(782)
| | |
24.68
|
Exercised
| | |
-
| | |
-
| | |
-
| | |
-
|
Modification pursuant to Amended Arrangement
| | |
(4,498)
| | |
N/A
| | |
-
| | |
-
|
Options outstanding, September 22, 2020
| | |
-
| | |
$-
| | |
5,608
| | |
$21.56
|
| |
September 23, 2020 to December 31, 2020
| ||||||||||
| |
Fixed Shares
| | |
Floating Shares
| |||||||
Stock Options
(Exercise price expressed in whole dollars)
| | |
Options
| | |
Weighted
Average
Exercise Price
| | |
Options
| | |
Weighted
Average
Exercise Price
|
Options outstanding, September 23, 2020
| | |
3,148
| | |
$15.83
| | |
1,349
| | |
$6.78
|
Granted
| | |
367
| | |
$3.15
| | |
1,308
| | |
$2.05
|
Forfeited
| | |
(33)
| | |
$10.37
| | |
(14)
| | |
$4.44
|
Exercised
| | |
-
| | |
$-
| | |
-
| | |
$-
|
Cancelled
| | |
(1,926)
| | |
$17.26
| | |
(825)
| | |
$7.40
|
Options outstanding, end of period
| | |
1,556
| | |
$11.18
| | |
1,818
| | |
$3.12
|
| | | | | | | | |||||
Options exercisable, end of period
| | |
810
| | |
$15.42
| | |
1,316
| | |
$3.25
|
TABLE OF CONTENTS
| |
January 1, 2020 to
September 22, 2020
| | |
Year Ended
December 31, 2019
| |
Weighted average grant date fair value range
| | |
$3.79
| | |
$4.76 - $16.72
|
Assumption ranges: | | | | | ||
Risk-free rate
| | |
1.60%
| | |
1.50% - 2.60%
|
Expected dividend yield
| | |
-%
| | |
-%
|
Expected term (in years)
| | |
6
| | |
6
|
Expected volatility
| | |
75%
| | |
75% - 85%
|
| |
September 23, 2020 to December 31, 2020
| ||||
| |
Fixed Shares
| | |
Floating Shares
| |
Weighted average grant date fair value range
| | |
$1.06 - $1.63
| | |
$0.92 - $1.06
|
Assumption ranges: | | | | | ||
Risk-free rate
| | |
0.20%
| | |
0.20%
|
Expected dividend yield
| | |
-%
| | |
-%
|
Expected term (in years)
| | |
3.25 - 3.5
| | |
2.5 - 3.5
|
Expected volatility
| | |
75%
| | |
75%
|
TABLE OF CONTENTS
| |
Year Ended
December 31, 2020
| | |
Year Ended
December 31, 2019
| | |
Year Ended
December 31, 2018
| ||||||||||
Profits Interests
(Fair value information expressed in whole dollars)
| | |
Number
of Units
| | |
Weighted
Average Grant
Date Fair
Value
| | |
Number
of Units
| | |
Weighted
Average Grant
Date Fair
Value
| | |
Number
of Units
| | |
Weighted
Average Grant
Date Fair
Value
|
Unvested, beginning of period
| | |
1,000
| | |
$0.43
| | |
1,825
| | |
$0.43
| | |
-
| | |
$-
|
Class C-1 units granted
| | |
-
| | |
-
| | |
-
| | |
-
| | |
4,284
| | |
0.48
|
Class C-1 units canceled
| | |
-
| | |
-
| | |
(70)
| | |
0.43
| | |
(847)
| | |
0.64
|
Class C-1 vested
| | |
(1,000)
| | |
0.43
| | |
(755)
| | |
0.43
| | |
(1,612)
| | |
0.43
|
Unvested, end of period
| | |
-
| | | | |
1,000
| | |
$0.43
| | |
1,825
| | |
$0.43
|
TABLE OF CONTENTS
13. |
COMMITMENTS AND CONTINGENCIES
|
TABLE OF CONTENTS
TABLE OF CONTENTS
TABLE OF CONTENTS
TABLE OF CONTENTS
TABLE OF CONTENTS
i. |
CanWell's petition filed in Rhode Island Superior Court (C.A. KM-2019-0948) to compel arbitration of claims arising out of WPMC withdrawal as a member of the CanWell entities as well as other disputes, including issues relating to termination of the Alternative Dosage Agreement ("ADA") (relating to the Maine dispensary).
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ii. |
CanWell's petition filed in Rhode Island Superior Court (C.A. No. KM-2019-1047) to compel arbitration of WPMC's redemption of the CanWell entity's interest in WPMC, including issues relating to termination of the ADA.
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iii. |
An arbitration proceeding relating to WPMC's withdrawal from the CanWell entities. A procedural meeting with the arbitrator took place on November 5, 2019.
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iv. |
An arbitration that will soon be underway with the American Arbitration Association on the issue of whether WPMC had the right to redeem CanWell's interest in WPMC.
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v. |
A civil action pending in Maine (Docket No. CUMSC-CV-19-0357) which was filed by Northeast Patients Group d/b/a Wellness Connection of Maine against CanWell, LLC and CanWell Processing (Maine), LLC, relating to the termination of the ADA. While no Acreage affiliate is currently a party to this action, the issue being litigated relates to the termination of the ADA, which is one of the issues that CanWell is attempting to arbitrate in Rhode Island.
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vi. |
A declaratory judgment action pending in Delaware, High Street Capital Partners, LLC v. CanWell, LLC, CanWell Processing (Maine), LLC, and CanWell Processing (Rhode Island), LLC (Court of Chancery, No. 2019-0957-MTZ) seeking a declaratory judgment that, as a matter of law, High Street is not subject to any non-compete provision with regard to the agreements detailed above. This case remains in the preliminary stages of litigation.
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TABLE OF CONTENTS
14. |
RELATED PARTY TRANSACTIONS
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TABLE OF CONTENTS
15. |
INCOME TAXES
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Year Ended December 31,
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2020
| | |
2019
| | |
2018
| |
Domestic
| | |
$(376,905)
| | |
$(190,173)
| | |
$(30,725)
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Foreign
| | |
(453)
| | |
-
| | |
-
|
Loss before income taxes
| | |
$(377,358)
| | |
$(190,173)
| | |
$(30,725)
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Income tax provision
| | |
Year Ended December 31,
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2020
| | |
2019
| | |
2018
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Current taxes: | | | | | | | |||
Federal
| | |
$10,375
| | |
$6,351
| | |
$1,117
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State
| | |
4,790
| | |
2,482
| | |
475
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Total current
| | |
15,165
| | |
8,833
| | |
1,592
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Deferred taxes: | | | | | | | |||
Federal
| | |
(21,173)
| | |
(2,625)
| | |
(38)
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State
| | |
(11,232)
| | |
(1,219)
| | |
(18)
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Total deferred
| | |
(32,405)
| | |
(3,844)
| | |
(56)
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Total income tax provision (benefit)
| | |
$(17,240)
| | |
$4,989
| | |
$1,536
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Tax provision reconciliation
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Year Ended
December 31, 2020
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Year Ended
December 31, 2019
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Year Ended
December 31, 2018
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$
| | |
%
| | |
$
| | |
%
| | |
$
| | |
%
| |
Computed expected federal income tax benefit
| | |
$(79,245)
| | |
21.0%
| | |
$(39,936)
| | |
21.0%
| | |
$(6,452)
| | |
21.0%
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Increase (decrease) in income taxes resulting from: | | | | | | | | | | | | | ||||||
State taxes
| | |
(35,715)
| | |
9.5
| | |
(20,151)
| | |
10.6
| | |
(3,022)
| | |
9.8
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Nondeductible permanent items
| | |
76,128
| | |
(20.2)
| | |
49,231
| | |
(25.9)
| | |
4,483
| | |
(14.6)
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Pass-through entities & non-controlling interests
| | |
20,001
| | |
(5.3)
| | |
13,465
| | |
(7.1)
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6,375
| | |
(20.7)
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Increase in valuation allowance
| | |
1,518
| | |
(0.4)
| | |
1,816
| | |
(1.0)
| | |
149
| | |
(0.5)
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Other
| | |
73
| | |
-
| | |
564
| | |
(0.2)
| | |
3
| | |
-
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Actual income tax provision (benefit)
| | |
$(17,240)
| | |
4.6%
| | |
$4,989
| | |
(2.6)%
| | |
$1,536
| | |
(5.0)%
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Unrecognized tax benefits
| | |
Year Ended December 31,
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| |
2020
| | |
2019
| | |
2018
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Balance at beginning of period
| | |
$1,867
| | |
$1,394
| | |
$1,391
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Increase based on tax positions related to current period
| | |
-
| | |
-
| | |
-
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Increase based on tax positions related to prior period
| | |
6,565
| | |
500
| | |
3
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Decrease based on tax positions related to prior period
| | |
(574)
| | |
-
| | |
-
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Decrease related to settlements with taxing authorities
| | |
(139)
| | |
(27)
| | |
-
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Balance at end of period
| | |
$7,719
| | |
$1,867
| | |
$1,394
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Deferred taxes
| | |
December 31,
2020
| | |
December 31,
2019
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Deferred tax assets: | | | | | ||
Net operating losses
| | |
$2,786
| | |
$1,295
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Other
| | |
697
| | |
670
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Total deferred tax assets
| | |
3,483
| | |
1,965
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Valuation allowance
| | |
(3,483)
| | |
(1,965)
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Net deferred tax asset
| | |
-
| | |
-
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Deferred tax liabilities: | | | | | ||
Partnership basis difference
| | |
(34,673)
| | |
(63,997)
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Net deferred tax liability
| | |
(34,673)
| | |
(63,997)
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Net deferred tax liabilities
| | |
$(34,673)
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$(63,997)
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TABLE OF CONTENTS
16. |
REPORTABLE SEGMENTS
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17. |
SUBSEQUENT EVENTS
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TABLE OF CONTENTS
18. |
QUARTERLY FINANCIAL DATA (unaudited)
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Quarter Ended
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March 31,
| | |
June 30,
| | |
September 30,
| | |
December 31,
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2020 | | | | | | | | | ||||
Total revenues, net
| | |
$24,225
| | |
$27,072
| | |
$31,742
| | |
$31,506
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Gross profit
| | |
9,954
| | |
11,211
| | |
13,475
| | |
14,518
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Net loss
| | |
(222,229)
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(44,370)
| | |
(48,036)
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(45,484)
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Net loss attributable to Acreage
| | |
(171,954)
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(37,192)
| | |
(40,548)
| | |
(36,895)
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Net loss attributable to Acreage, basic and diluted
| | |
$(1.85)
| | |
$(0.38)
| | |
$(0.39)
| | |
$(0.35)
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2019 | | | | | | | | | ||||
Total revenues, net
| | |
$12,897
| | |
$17,745
| | |
$22,402
| | |
$21,065
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Gross profit
| | |
5,320
| | |
7,613
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9,694
| | |
7,817
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Net loss
| | |
(30,804)
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(49,265)
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(49,502)
| | |
(65,591)
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Net loss attributable to Acreage
| | |
(23,377)
| | |
(37,541)
| | |
(38,716)
| | |
(50,634)
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Net loss attributable to Acreage, basic and diluted
| | |
$(0.29)
| | |
$(0.44)
| | |
$(0.43)
| | |
$(0.56)
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AFC Gamma Inc. published this content on 03 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 January 2022 21:08:09 UTC.