10-Q
--12-310001776738Q1falseUnlimitedUnlimitedUnlimitedUnlimitedUnlimited Unlimited 2028-08-312028-08-310001776738us-gaap:PrivatePlacementMembercbstf:TwentyTwentySixDebtMember2022-02-032022-02-030001776738us-gaap:EquipmentMember2023-12-310001776738cbstf:TwentyTwentyFourNotesMember2023-12-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMemberus-gaap:PrivatePlacementMember2024-03-192024-03-190001776738cbstf:TwentyTwentyFiveConvertibleNotesMembercbstf:ExchangeAgreementMember2024-02-290001776738cbstf:TwentyTwentyFourDebtMember2021-06-290001776738us-gaap:ParentMember2022-12-310001776738cbstf:ProportionateVotingSharesMember2023-01-012023-03-310001776738us-gaap:AdditionalPaidInCapitalMember2023-12-310001776738cbstf:ComputersAndSoftwareMember2023-12-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMembercbstf:ExchangeAgreementMember2024-01-220001776738cbstf:TwentyTwentySevenConvertibleNotesMemberus-gaap:PrivatePlacementMember2024-03-190001776738cbstf:TwentyTwentyFourDebtMember2021-06-292021-06-290001776738cbstf:SecondAgreementMemberus-gaap:MortgagesMemberstpr:DE2023-08-100001776738cbstf:TwentyTwentyFiveConvertibleNotesMember2024-03-310001776738us-gaap:FurnitureAndFixturesMember2023-12-310001776738cbstf:ProportionateVotingSharesMember2024-03-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMember2021-06-012021-06-290001776738cbstf:TwentyTwentyFiveConvertibleNotesMembercbstf:ExchangeAgreementMember2024-01-310001776738us-gaap:AdditionalPaidInCapitalMember2024-03-310001776738us-gaap:ParentMember2023-12-3100017767382024-05-070001776738us-gaap:MortgagesMemberstpr:NJ2022-06-300001776738us-gaap:ManufacturedProductOtherMember2024-01-012024-03-310001776738us-gaap:NoncontrollingInterestMember2024-03-310001776738stpr:MDus-gaap:PrimeRateMemberus-gaap:MortgagesMembercbstf:FirstAgreementMember2023-08-102023-08-100001776738cbstf:TwentyTwentySevenConvertibleNotesMember2023-12-310001776738cbstf:TwentyTwentyFourNotesMember2024-03-310001776738us-gaap:MortgagesMemberstpr:NY2021-12-310001776738cbstf:MoEntityMember2024-01-012024-03-3100017767382024-01-012024-03-310001776738us-gaap:NoncontrollingInterestMember2022-12-310001776738us-gaap:CustomerRelationshipsMember2024-03-310001776738us-gaap:LicensingAgreementsMember2024-03-310001776738us-gaap:CommonStockMember2022-12-310001776738us-gaap:SellingGeneralAndAdministrativeExpensesMember2024-01-012024-03-3100017767382023-03-310001776738cbstf:TermDebtMembercbstf:DebtModificationMemberus-gaap:PrivatePlacementMember2022-02-032022-02-030001776738cbstf:AcquisitionRelatedPromissoryNotesMember2023-12-310001776738cbstf:ComputersAndSoftwareMember2024-03-310001776738cbstf:DispensaryMember2024-01-012024-03-3100017767382022-12-310001776738us-gaap:RetainedEarningsMember2024-01-012024-03-310001776738cbstf:TwentyTwentySixNotesMember2023-12-310001776738us-gaap:ParentMember2023-01-012023-03-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMember2021-06-292021-06-290001776738cbstf:TwentyTwentyFiveConvertibleNotesMember2021-06-290001776738us-gaap:AdditionalPaidInCapitalMember2023-03-310001776738us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-3100017767382023-01-012023-12-310001776738us-gaap:CommonStockMember2023-12-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMembersrt:MaximumMembercbstf:ExchangeAgreementMember2024-03-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMembersrt:MinimumMembercbstf:ExchangeAgreementMember2024-01-310001776738cbstf:ClassOfWarrantOrRightExpirationDateThreeMemberus-gaap:WarrantMember2024-03-310001776738cbstf:MortgageNotesMember2024-03-310001776738us-gaap:PrimeRateMemberus-gaap:MortgagesMemberstpr:NY2021-12-012021-12-310001776738cbstf:CultivationAndWholesaleMember2023-01-012023-03-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMember2023-12-310001776738us-gaap:FurnitureAndFixturesMember2024-03-310001776738cbstf:SecondAgreementMemberus-gaap:PrimeRateMemberus-gaap:MortgagesMemberstpr:DE2023-08-102023-08-100001776738cbstf:ProportionateVotingSharesMember2023-12-310001776738cbstf:TermDebtMembercbstf:DebtModificationMemberus-gaap:PrivatePlacementMember2022-02-030001776738us-gaap:EquipmentMember2024-03-310001776738us-gaap:WarrantMember2023-12-310001776738srt:ScenarioForecastMembersrt:MinimumMembercbstf:ExchangeAgreementMember2024-06-300001776738us-gaap:WarrantMembercbstf:ClassOfWarrantOrRightExpirationDateOneMember2024-03-310001776738us-gaap:LeaseholdImprovementsMember2024-03-310001776738cbstf:ConvertibleNotesMember2021-06-012021-06-290001776738us-gaap:ConstructionInProgressMember2023-12-310001776738us-gaap:WarrantMember2024-03-310001776738cbstf:ClassOfWarrantOrRightExpirationDateThreeMemberus-gaap:WarrantMember2023-12-310001776738cbstf:SecondAgreementMemberus-gaap:MortgagesMemberstpr:DE2023-08-102023-08-100001776738us-gaap:FairValueMeasurementsRecurringMember2024-03-310001776738us-gaap:ParentMember2024-01-012024-03-310001776738cbstf:TwentyTwentySixNotesMember2024-03-310001776738us-gaap:MortgagesMemberstpr:NJ2022-06-012022-06-300001776738cbstf:ProportionateVotingSharesMember2023-03-310001776738cbstf:JanuaryTwoThousandTwentyFourOfferingMember2024-03-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMembercbstf:ExchangeAgreementMembersrt:MinimumMember2024-03-050001776738us-gaap:ParentMember2023-03-310001776738us-gaap:LandAndBuildingMember2023-12-310001776738cbstf:UtBusinessMember2023-01-012023-03-310001776738us-gaap:NoncontrollingInterestMember2023-12-3100017767382024-03-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMember2023-01-012023-09-300001776738us-gaap:WarrantMembercbstf:ClassOfWarrantOrRightExpirationDateOneMember2023-12-310001776738us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-01-012023-03-310001776738us-gaap:RetainedEarningsMember2024-03-310001776738cbstf:UtahBusinessDivestitureMember2023-10-062023-10-060001776738us-gaap:NoncontrollingInterestMember2024-01-012024-03-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMembercbstf:ExchangeAgreementMember2024-01-012024-03-310001776738us-gaap:MortgagesMemberstpr:NY2023-09-300001776738us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001776738cbstf:DispensaryMember2023-01-012023-03-310001776738us-gaap:CostOfSalesMember2023-01-012023-03-310001776738us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001776738us-gaap:PrivatePlacementMembercbstf:TwentyTwentySixDebtMember2022-02-030001776738cbstf:TwentyTwentyFiveConvertibleNotesMember2024-01-220001776738us-gaap:CostOfSalesMember2024-01-012024-03-310001776738cbstf:ClassOfWarrantOrRightExpirationDateTwoMemberus-gaap:WarrantMember2023-12-310001776738cbstf:ProportionateVotingSharesMember2024-01-012024-03-310001776738us-gaap:MortgagesMemberstpr:NJ2023-09-300001776738us-gaap:CommonStockMember2023-01-012023-03-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMembercbstf:ExchangeAgreementMember2024-03-3100017767382023-01-012023-03-310001776738cbstf:ClassOfWarrantOrRightExpirationDateTwoMemberus-gaap:WarrantMember2024-03-310001776738cbstf:UtahBusinessDivestitureMember2024-01-012024-03-310001776738us-gaap:CommonStockMember2023-03-310001776738cbstf:TwentyTwentySevenConvertibleNotesMember2024-03-310001776738us-gaap:LicensingAgreementsMember2023-12-310001776738us-gaap:ParentMember2024-03-310001776738cbstf:TwentyTwentySevenConvertibleNotesMemberus-gaap:PrivatePlacementMember2024-03-192024-03-190001776738us-gaap:MortgagesMemberstpr:NY2021-12-012021-12-3100017767382023-12-310001776738cbstf:CultivationAndWholesaleMember2024-01-012024-03-310001776738us-gaap:ManufacturedProductOtherMember2023-01-012023-03-310001776738cbstf:ThirteenNotesDueMayTwoThousandTwentyFourMember2023-10-232023-10-230001776738cbstf:AcquisitionRelatedPromissoryNotesMember2024-03-310001776738cbstf:ProportionateVotingSharesMember2022-12-310001776738us-gaap:CustomerRelationshipsMember2023-12-310001776738us-gaap:RetainedEarningsMember2023-01-012023-03-310001776738cbstf:UtahBusinessDivestitureMember2023-01-012023-03-310001776738us-gaap:LeaseholdImprovementsMember2023-12-310001776738cbstf:TermDebtMemberus-gaap:PrivatePlacementMember2022-02-030001776738cbstf:TwentyTwentyFiveConvertibleNotesMembersrt:MinimumMembercbstf:ExchangeAgreementMember2024-03-012024-03-050001776738cbstf:MortgageNotesMember2023-12-310001776738us-gaap:FairValueMeasurementsRecurringMember2023-12-310001776738us-gaap:CommonStockMember2024-01-012024-03-310001776738us-gaap:ConstructionInProgressMember2024-03-310001776738us-gaap:RetainedEarningsMember2023-12-310001776738cbstf:ThirteenNotesDueMayTwoThousandTwentyFourMember2023-10-230001776738stpr:MDus-gaap:MortgagesMembercbstf:FirstAgreementMember2023-08-100001776738cbstf:TwentyTwentyFiveConvertibleNotesMembersrt:MinimumMembercbstf:ExchangeAgreementMember2024-02-290001776738us-gaap:RetainedEarningsMember2023-03-310001776738us-gaap:CommonStockMember2024-03-310001776738us-gaap:TrademarksMember2023-12-310001776738us-gaap:RetainedEarningsMember2022-12-310001776738us-gaap:LandAndBuildingMember2024-03-310001776738cbstf:TwentyTwentyFiveConvertibleNotesMemberus-gaap:PrivatePlacementMember2024-03-190001776738cbstf:TwentyTwentyFiveConvertibleNotesMembercbstf:ExchangeAgreementMembersrt:ScenarioForecastMember2024-06-300001776738us-gaap:AdditionalPaidInCapitalMember2022-12-310001776738us-gaap:TrademarksMember2024-03-310001776738cbstf:UtBusinessMember2024-01-012024-03-310001776738cbstf:UtahBusinessDivestitureMember2023-10-060001776738cbstf:MoEntityMember2023-01-012023-03-310001776738us-gaap:NoncontrollingInterestMember2023-01-012023-03-310001776738us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001776738cbstf:TermDebtMemberus-gaap:PrivatePlacementMember2022-02-032022-02-030001776738stpr:MDus-gaap:MortgagesMembercbstf:FirstAgreementMember2023-08-102023-08-100001776738us-gaap:NoncontrollingInterestMember2023-03-31xbrli:pureiso4217:USDxbrli:sharesxbrli:sharesiso4217:CADxbrli:sharesiso4217:USD

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __to __

Commission File Number: 000-56294

 

 

https://cdn.kscope.io/c4fb71919258a0490fbfd9c095484853-img101835048_0.jpg 

THE CANNABIST COMPANY HOLDINGS INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

British Columbia

98-1488978

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

 

680 Fifth Ave., 24th Floor

New York, New York

10019

 

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (212) 634-7100

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

 

 

 

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No

As of May 7, 2024, there were 448,544,488 shares of common stock, no par value per share (the “Common Shares”), outstanding.

 

 


 

Table of Contents

 

 

 

Page

FORWARD-LOOKING STATEMENTS

2

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

 

Condensed Consolidated Interim Balance Sheets

3

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss

4

 

Condensed Consolidated Interim Statements of Changes in Equity

5

Condensed Consolidated Interim Statements of Cash Flows

6

Notes to Condensed Consolidated Interim Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

24

PART II.

OTHER INFORMATION

25

Item 1.

Legal Proceedings

25

Item 1A.

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

25

Item 3.

Defaults Upon Senior Securities

25

Item 4.

Mine Safety Disclosures

25

Item 5.

Other Information

25

Item 6.

Exhibits

25

Signatures

28

 

 

 

 

 

i


 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” regarding The Cannabist Company Holdings Inc. and its subsidiaries (collectively referred to as “The Cannabist Company,” “we,” “us,” “our,” or the “Company”). We make forward-looking statements related to future expectations, estimates, and projections that are uncertain and often contain words such as, but not limited to, “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or other similar words or phrases. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and assumptions that are difficult to predict. Particular risks and uncertainties that could cause our actual results to be materially different from those expressed in our forward-looking statements include those listed below:

the impact of the termination of the Cresco Labs Inc. transaction on the Company’s current and future operations, financial condition and prospects;
the impact of the Company's corporate restructuring plan;
the fact that marijuana remains illegal under federal law;
the application of anti-money laundering laws and regulations to the Company;
legal, regulatory, or political change to the cannabis industry;
access to public and private capital;
unfavorable publicity or consumer perception of the cannabis industry;
expansion to the adult-use markets;
the impact of laws, regulations, and guidelines;
the impact of Section 280E of the Internal Revenue Code;
the impact of state laws pertaining to the cannabis industry;
the Company’s reliance on key inputs, suppliers and skilled labor;
the difficulty of forecasting the Company’s sales;
constraints on marketing products;
potential cyber-attacks and security breaches;
net operating loss and other tax attribute limitations;
the impact of changes in tax laws;
the volatility of the market price of the Common Shares;
reliance on management;
litigation;
future results and financial projections; and
the impact of global financial conditions.

 

The list of factors above is illustrative and by no means exhaustive. Additional information regarding these risks and other risks and uncertainties we face is contained in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, or intended.

We urge readers to consider these risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

 

2


 

THE CANNABIST COMPANY HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS

(Unaudited)

(Expressed in thousands of U.S. dollars, except share data)

 

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$

44,473

 

 

$

35,764

 

Accounts receivable, net of allowances of $6,993 and, $6,512, respectively

 

 

10,217

 

 

 

15,601

 

Inventory

 

 

111,498

 

 

 

111,633

 

Prepaid expenses and other current assets

 

 

23,599

 

 

 

22,777

 

Assets held for sale

 

 

100

 

 

 

1,752

 

Total current assets

 

 

189,887

 

 

 

187,527

 

 

 

 

 

 

 

Property and equipment, net

 

 

291,125

 

 

 

298,498

 

Right of use assets - operating leases, net

 

 

179,581

 

 

 

181,823

 

Right of use assets - finance leases, net

 

 

34,087

 

 

 

36,450

 

Intangible assets, net

 

 

73,177

 

 

 

76,767

 

Deferred taxes

 

 

23,804

 

 

 

22,970

 

Notes Receivable

 

 

6,071

 

 

 

3,960

 

Other non-current assets

 

 

15,099

 

 

 

15,116

 

Total assets

 

$

812,831

 

 

$

823,111

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

36,575

 

 

$

29,797

 

Accrued expenses and other current liabilities

 

 

51,289

 

 

 

58,659

 

Income tax payable

 

 

56,255

 

 

 

47,358

 

Current portion of lease liability - operating leases

 

 

9,616

 

 

 

9,711

 

Current portion of lease liability - finance leases

 

 

7,362

 

 

 

7,339

 

Current portion of long-term debt, net

 

 

4,882

 

 

 

5,905

 

Liabilities held for sale

 

 

 

 

 

1,275

 

Total current liabilities

 

$

165,979

 

 

$

160,044

 

 

 

 

 

 

 

Long-term debt, net

 

 

304,637

 

 

 

297,478

 

Long-term lease liability - operating leases

 

 

180,351

 

 

 

182,001

 

Long-term lease liability - finance leases

 

 

42,105

 

 

 

43,890

 

Derivative liability

 

 

2,466

 

 

 

119

 

Other long-term liabilities

 

 

74,385

 

 

 

74,227

 

Total liabilities

 

 

769,923

 

 

 

757,759

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Common Stock, no par value, unlimited shares authorized as of March 31, 2024 and
   December 31, 2023, respectively,
448,216,620 and 420,265,306 shares issued and outstanding
   as of March 31, 2024 and December 31, 2023, respectively

 

 

 

 

 

 

Preferred Stock, no par value, unlimited shares authorized as of March 31, 2024 and
   December 31, 2023, respectively,
none issued and outstanding as of March 31, 2024 and
   December 31, 2023

 

 

 

 

 

 

Proportionate voting shares, no par value, unlimited shares authorized as of March 31, 2024
   and December 31, 2023, respectively;
7,701,826 and 9,807,881 shares issued and outstanding
   as of March 31, 2024 and December 31, 2023, respectively

 

 

 

 

 

 

Additional paid-in-capital

 

 

1,159,336

 

 

 

1,146,154

 

Accumulated deficit

 

 

(1,115,413

)

 

 

(1,079,282

)

Equity attributable to The Cannabist Company Holdings Inc.

 

 

43,923

 

 

 

66,872

 

Non-controlling interest

 

 

(1,015

)

 

 

(1,520

)

Total equity

 

 

42,908

 

 

 

65,352

 

Total liabilities and equity

 

$

812,831

 

 

$

823,111

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements.

 

3


 

THE CANNABIST COMPANY HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(Expressed in thousands of U.S. dollars, except for number of shares and per share amounts)

 

 

 

Three months ended

 

 

 

March 31, 2024

 

 

March 31, 2023

 

Revenues, net of discounts

 

$

122,611

 

 

$

124,535

 

Cost of sales related to inventory production

 

 

(80,074

)

 

 

(77,454

)

Gross Margin

 

$

42,537

 

 

$

47,081

 

Selling, general and administrative expenses

 

 

(53,273

)

 

 

(55,350

)

Loss from operations

 

 

(10,736

)

 

 

(8,269

)

Other expense:

 

 

 

 

 

 

Interest expense on leases

 

 

(940

)

 

 

(1,098

)

Interest expense

 

 

(9,034

)

 

 

(12,573

)

Other (income), net

 

 

(4,990

)

 

 

(3,943

)

Total other expense

 

 

(14,964

)

 

 

(17,614

)

Loss before provision for income taxes

 

 

(25,700

)

 

 

(25,883

)

Income tax expense

 

 

(8,868

)

 

 

(10,689

)

Net loss and comprehensive loss

 

 

(34,568

)

 

 

(36,572

)

Net loss attributable to non-controlling interests

 

 

505

 

 

 

768

 

Net loss attributable to shareholders

 

$

(35,073

)

 

$

(37,340

)

 

 

 

 

 

 

Weighted-average number of shares used in earnings per share - basic and diluted

 

 

445,633,865

 

 

 

401,438,546

 

Loss attributable to shares (basic and diluted)

 

$

(0.08

)

 

$

(0.09

)

The accompanying notes are an integral part of these unaudited Condensed Consolidated Interim Financial Statements.

4


 

THE CANNABIST COMPANY HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(Expressed in thousands of U.S. dollars, except for number of shares)

 

 

 

 

Common
Shares

 

 

Proportionate
Voting Shares

 

 

Additional
Paid-in Capital

 

 

Accumulated
Deficit

 

 

Total The Cannabist Company Holdings Inc.
Shareholders' Equity

 

 

Non-Controlling
Interest

 

 

Total
Equity

 

Balance as of December 31, 2022

 

391,238,484

 

 

 

10,009,819

 

 

$

1,117,287

 

 

$

(904,003

)

 

$

213,284

 

 

$

(6,381

)

 

$

206,903

 

Equity-based compensation (1)

 

2,116,944

 

 

 

 

 

 

6,611

 

 

 

 

 

 

6,611

 

 

 

 

 

 

6,611

 

Conversion between classes of shares

 

54,158

 

 

 

(54,158

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deconsolidation of subsidiary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,383

 

 

 

4,383

 

Net loss

 

 

 

 

 

 

 

 

 

 

(37,340

)

 

 

(37,340

)

 

 

768

 

 

 

(36,572

)

Balance as of March 31, 2023

 

393,409,586

 

 

 

9,955,661

 

 

$

1,123,898

 

 

$

(941,343

)

 

$

182,555

 

 

$

(1,230

)

 

$

181,325

 

 

 

 

 

Common
Shares

 

 

Proportionate
Voting Shares

 

 

Additional
Paid-in Capital

 

 

Accumulated
Deficit

 

 

Total The Cannabist Company Holdings Inc.
Shareholders' Equity

 

 

Non-Controlling
Interest

 

 

Total
Equity

 

Balance as of December 31, 2023

 

420,265,306

 

 

 

9,807,881

 

 

$

1,146,154

 

 

$

(1,079,282

)

 

$

66,872

 

 

$

(1,520

)

 

$

65,352

 

Equity-based compensation (1)

 

 

 

 

 

 

 

3,182

 

 

 

 

 

 

3,182

 

 

 

 

 

 

3,182

 

Conversion of convertible notes

 

25,845,259

 

 

 

 

 

 

10,000

 

 

 

 

 

 

10,000

 

 

 

 

 

 

10,000

 

Conversion between classes of shares

 

2,106,055

 

 

 

(2,106,055

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deconsolidation of subsidiary

 

 

 

 

 

 

 

 

 

 

(1,058

)

 

 

(1,058

)

 

 

 

 

 

(1,058

)

Net loss

 

 

 

 

 

 

 

 

 

 

(35,073

)

 

 

(35,073

)

 

 

505

 

 

 

(34,568

)

Balance as of March 31, 2024

 

448,216,620

 

 

 

7,701,826

 

 

$

1,159,336

 

 

$

(1,115,413

)

 

$

43,923

 

 

$

(1,015

)

 

$

42,908

 

 

 

(1) The amounts shown are net of any shares withheld by the Company to satisfy certain tax withholdings in connection with vesting of equity-based awards.

 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Interim Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5


 

THE CANNABIST COMPANY HOLDINGS INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited)

(expressed in thousands of U.S. dollars)

 

 

 

 

Three months ended

 

 

 

March 31, 2024

 

 

March 31, 2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(34,568

)

 

$

(36,572

)

Adjustments to reconcile net loss to net cash (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

13,964

 

 

 

15,063

 

Equity-based compensation

 

 

3,182

 

 

 

6,515

 

Debt amortization expense

 

 

1,857

 

 

 

2,291

 

Loss on deconsolidation of subsidiary

 

 

211

 

 

 

2,473

 

Provision for obsolete inventory and other assets

 

 

5,430

 

 

 

615

 

Change in fair value of derivative liability

 

 

2,347

 

 

 

30

 

Deferred taxes

 

 

(834

)

 

 

766

 

Other

 

 

(92

)

 

 

134

 

Changes in operating assets and liabilities, net of acquisitions

 

 

 

 

 

 

Accounts receivable

 

 

1,012

 

 

 

(2,322

)

Inventory

 

 

(5,297

)

 

 

(6,315

)

Prepaid expenses and other current assets

 

 

(823

)

 

 

(2,442

)

Other assets

 

 

129

 

 

 

6,126

 

Accounts payable

 

 

7,351

 

 

 

8,134

 

Accrued expenses and other current liabilities

 

 

(7,391

)

 

 

(4,874

)

Income taxes payable

 

 

8,898

 

 

 

9,194

 

Other long-term liabilities

 

 

(1,587

)

 

 

(2,221

)

Net cash used in operating activities

 

 

(6,211

)

 

 

(3,405

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(965

)

 

 

(5,724

)

Proceeds from sale of license

 

 

329

 

 

 

 

Proceeds from deconsolidation of MO entity

 

 

 

 

 

3,040

 

Net proceeds from sale of UT business

 

 

2,999

 

 

 

 

Cash paid on deposits, net

 

 

40

 

 

 

132

 

Net cash provided by (used in) investing activities

 

 

2,403

 

 

 

(2,552

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of convertible debt

 

 

15,600

 

 

 

 

Payment of debt issuance costs

 

 

(802

)

 

 

 

Payment of lease liabilities

 

 

(1,762

)

 

 

(1,588

)

Repayment of sellers note

 

 

(375

)

 

 

(375

)

Repayment of debt

 

 

 

 

 

(170

)

Repayment of mortgage notes

 

 

(144

)

 

 

 

Taxes paid on equity based compensation

 

 

 

 

 

96

 

Net cash provided by (used in) financing activities

 

 

12,517

 

 

 

(2,037

)

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

8,709

 

 

 

(7,994

)

Cash and restricted cash at beginning of the period

 

 

39,337

 

 

 

49,488

 

Cash and restricted cash at end of period

 

$

48,046

 

 

$

41,494

 

Reconciliation of cash and cash equivalents and restricted cash:

 

 

 

 

 

 

Cash

 

$

44,473

 

 

$

40,159

 

Restricted cash

 

$

3,573

 

 

$

1,335

 

Cash and restricted cash, end of period

 

$

48,046

 

 

$

41,494

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

6,776

 

 

$

5,716

 

Operating cash flows from finance leases

 

$

940

 

 

$

1,081

 

Financing cash flows from finance leases

 

$

1,762

 

 

$

1,588

 

Cash paid for interest on other obligations

 

$

13,414

 

 

$

12,607

 

Cash paid for income taxes

 

$

50

 

 

$

729

 

Lease liabilities arising from the recognition of finance right-of-use assets

 

$

 

 

$

24

 

Lease liabilities arising from the recognition of operating right-of-use assets

 

$

1,678

 

 

$

3,264

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Non-cash fixed asset additions within accounts payable and accrued expenses

 

$

572

 

 

$

478

 

Discount on issuance of convertible debt

 

$

(5,150

)

 

$

 

Reduction in debt from debt to equity conversion

 

$

(10,000

)

 

$

 

Increase in equity from debt to equity conversion

 

$

10,000

 

 

$

 

Assets held for sale

 

$

(1,652

)

 

$

 

Liabilities held for sale

 

$

1,274

 

 

$

 

The accompanying notes are an integral part of these unaudited Condensed Consolidated Interim Financial Statements.

6


 

THE CANNABIST COMPANY HOLDINGS INC.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE three months ended MARCH 31, 2024, and 2023

(Expressed in thousands of U.S. dollars, except for share and per share amounts)

(Unaudited)

 

 

1.
OPERATIONS OF THE COMPANY

The Cannabist Company Holdings Inc. (“the Company”, “the Parent”, or "The Cannabist Company"), formerly known as Columbia Care Inc., was incorporated under the laws of the Province of Ontario on August 13, 2018. The Company's principal mission is to improve lives by providing cannabis-based health and wellness solutions and derivative products to qualified patients and consumers. The Company’s head office and principal address is 680 Fifth Ave. 24th Floor, New York, New York 10019. The Company’s registered and records office address is 666 Burrard St #1700, Vancouver, British Columbia V6C 2X8.

On April 26, 2019, the Company completed a reverse takeover (“RTO”) transaction and private placement. Following the RTO, the Company’s Common Shares were listed on Cboe Canada (formerly known as the NEO Exchange), trading under the symbol “CCHW”. Effective September 19, 2023, the Company changed its name from “Columbia Care Inc.” to “The Cannabist Company Holdings Inc.” (the “Name Change”). In connection with the Name Change, on September 21, 2023, the Company’s Common Shares and warrants began trading under the ticker symbols “CBST” and “CBST.WT”, respectively, on Cboe Canada. On September 26, 2023, the Company’s Common Shares began trading on the OTCQX Best Market under the ticker symbol “CBSTF”. The Company’s Common Shares are also listed on the Frankfurt Stock Exchange under the symbol “3LP”.
 

 

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”).

The accompanying unaudited condensed consolidated interim financial statements contain all normal and recurring adjustments necessary to state fairly the consolidated financial condition, results of operations, comprehensive income, statement of shareholders’ equity, and cash flows of the Company for the interim periods presented. Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the current year ending December 31, 2024. The financial data presented herein should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the years ended December 31, 2023, and 2022 included in the Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).

The preparation of these unaudited condensed consolidated interim financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC and the instructions to Form 10-Q.

The unaudited condensed consolidated interim financial statements are presented in United States dollars except as otherwise indicated. All references to C$, CAD$ and CDN$ are to Canadian dollars.

Significant Accounting Judgments, Estimates and Assumptions

The Company’s significant accounting policies are described in Note 2 to the Company’s 2023 Form 10-K, filed with the SEC, on March 13, 2024. There have been no material changes to the Company’s significant accounting policies.

7


 

Revenue

The Company’s revenues are disaggregated as follows:

 

 

 

 

Three months ended

 

 

 

 

 

March 31, 2024

 

 

March 31, 2023

 

 

 

Dispensary

 

$

107,238

 

 

$

109,156

 

 

 

Cultivation and wholesale

 

 

15,373

 

 

 

15,362

 

 

 

Other

 

 

 

 

 

17

 

 

 

 

 

$

122,611

 

 

$

124,535

 

 

During the three months ended March 31, 2024, and March 31, 2023 the Company netted discounts of $36,379 and $33,225 respectively, against the revenues. Discounts are provided by the Company during promotional days or weekends. Discounts are also provided to employees, seniors and other categories of customers and may include price reductions and coupons.

 

3.
INVENTORY

Details of the Company’s inventory are shown in the table below:

 

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

Accessories and supplies

 

$

1,429

 

 

$

1,158

 

 

Work-in-process - cannabis in cures and final vault

 

 

89,177

 

 

 

86,396

 

 

Finished goods - dried cannabis, concentrate and edible products

 

 

20,892

 

 

 

24,079

 

 

Total inventory

 

$

111,498

 

 

$

111,633

 

 

The inventory values are net of inventory write-downs as a result of obsolescence or unmarketability charged to cost of sales. As a result of certain restructuring efforts there was a $5,430 and $601 write-down during the three months ended March 31, 2024 and March 31, 2023 respectively.

 

4.
CURRENT AND LONG-TERM DEBT

Current and long-term obligations, net, are shown in the table below:

 

 

 

March 31, 2024

 

 

December 31, 2023

 

2026 Notes

 

$

185,000

 

 

$

185,000

 

2024 Notes

 

 

13,228

 

 

 

13,228

 

2027 Convertible Notes

 

 

25,750

 

 

 

 

2025 Convertible Notes

 

 

59,500

 

 

 

74,500

 

Mortgage Note

 

 

43,356

 

 

 

43,500

 

Acquisition related promissory notes

 

 

1,125

 

 

 

1,500

 

 

 

327,959

 

 

 

317,728

 

Unamortized debt discount

 

 

(10,743

)

 

 

(6,598

)

Unamortized deferred financing costs

 

 

(7,697

)

 

 

(7,747

)

Total debt, net

 

 

309,519

 

 

 

303,383

 

Less current portion, net*

 

 

(4,882

)

 

 

(5,905

)

Long-term portion

 

$

304,637

 

 

$

297,478

 

 

*The current portion of the debt includes scheduled payments on the mortgage notes, acquisition related promissory notes and acquisition related notes payable, net of corresponding portions of the unamortized debt discount and unamortized deferred financing costs.

 

The Company was in compliance with all financial covenants and was not in default of any provisions under any of its debt arrangements as of March 31, 2024.

 

2026 Notes

 

On February 3, 2022, the Company closed a private placement (the “February 2022 Private Placement”) of $185,000 aggregate principal amount of 9.50% senior-secured first-lien notes due 2026 (the “2026 Notes”) and received aggregate gross proceeds of $153,250. The 2026 Notes are senior secured obligations of the Company and were issued at 100.0% of face value. The 2026 Notes accrue interest in arrears which is payable semi-annually and mature on February 3, 2026, unless earlier redeemed or repurchased. The Company may redeem the 2026 Notes at par, in whole or in part, on or after February 3, 2024, as more particularly described

8


 

in the fourth supplemental trust indenture governing the 2026 Notes. In connection with the offering of the 2026 Notes, the Company exchanged $31,750 of the Company’s existing 13.0% senior secured first-lien notes (the “13.0% Term Debt”), pursuant to private agreements in accordance with the trust indenture, for an equivalent amount of 2026 Notes plus accrued but unpaid interest and any negotiated premium thereon.

 

The premium and paid interest were paid out of funds raised from the February 2022 Private Placement. The total unamortized debt and debt issuance costs of $2,153, related to the modified portion of the 13.0% Term Debt, will be amortized over the term of the 2026 Notes using the effective interest method. The Company incurred $7,189 in creditor fees in connection with the modified 13.0% Term Debt and 2026 Notes and $301 in third-party legal fees related to 2026 Notes which were capitalized and will be amortized over the term of the 2026 Notes using the effective interest rate method.

 

2024 Notes

 

As further described in Note 4 under the sub-heading “Term debt” of the Financial Statements incorporated by reference in the Company’s Form 10-K for the year ended December 31, 2023, on October 23, 2023, the Company retired $25 million of its 13% Notes due May 2024 (the “2024 Notes”) through a proportional redemption process.

 

The 2024 Notes require interest-only payments through May 14, 2024, at a rate of 13.0% per annum, payable semi-annually on May 31 and November 30, which commenced on November 30, 2020. The 2024 Notes are due in full on May 14, 2024. The Company incurred financing costs of $3,373 in connection with the issuance of these 2024 Notes. The 2024 Notes contain customary terms and conditions, representations and warranties, and events of default.

 

2027 Convertible Notes

 

On March 19, 2024, the Company closed a private placement (the “March 2024 Private Placement”) of $25,750 aggregate principal amount of 9.0% senior-secured first-lien notes due 2027 (the “2027 Notes”) and received aggregate gross proceeds of $15,600. The 2027 Notes are senior secured obligations of the Company and were issued at 80.0% of face value. The 2027 Notes accrue interest in arrears which is payable semi-annually and mature on March 19, 2027. In connection with the offering of the 2027 Notes, the Company exchanged $5,000 of the Company’s existing 6.0% 2025 Convertible Notes.

 

The principal amount of the 2027 Convertible Notes and the conversion price are denominated in U.S. dollars. As the functional currency of the Company is Canadian dollars, the amount of the liability to be settled depends on the applicable foreign exchange rate on the date of settlement. The 2027 Convertible Notes therefore represent an obligation to issue a fixed number of shares for a variable amount of liability. Due to this conversion feature within the 2027 Convertible Notes, the Company is unable to obtain an exception from derivative accounting. Accordingly, this conversion feature was accounted for as an embedded derivative liability and measured at fair value of $2,632 on the date of issuance of debt with a corresponding debt discount and debt issuance costs of $5,952, reflected as a reduction to the carrying value of the 2027 Notes. The Company fair values the derivative liability at each balance sheet date. Changes in fair value of the embedded derivative are recognized in the condensed consolidated statements of operations and comprehensive loss. The debt premium and debt issuance costs is amortized over the term of the 2027 Notes.

 

2025 Convertible Notes

 

On June 29, 2021, the Company completed an offering of 6.0% Secured Convertible Notes Due 2025 (“2025 Convertible Notes”) for an aggregate principal amount of $74,500. The 2025 Convertible Notes are senior secured obligations of the Company and will accrue interest payable semiannually in arrears and mature on June 29, 2025, unless earlier converted, redeemed or repurchased. The 2025 Convertible Notes shall be convertible, at the option of the holder, from the date of issuance until the date that is 10 days prior to their maturity date into Common Shares of the Company at a conversion price equal to $6.49 payable on the business day prior to the date of conversion, adjusted downwards for any cash dividends paid to holders of Common Shares and other customary adjustments. The Company may redeem the 2025 Convertible Notes at par, in whole or in part, on or after June 29, 2023, if the volume weighted average price of the Common Shares trading on the Canadian Stock Exchange or Cboe Canada for 15 of the 30 trading days immediately preceding the day on which the Company exercises its redemption right, exceeds 120.0% of the conversion price of the 2025 Convertible Notes at a Redemption Price equal to 100.0% of the principal amount of the 2025 Convertible Notes redeemed, plus accrued but unpaid interest, if any, up to but excluding the Redemption Date.

 

The 2025 Convertible Notes require interest-only payments until June 29, 2025, at a rate of 6.0% per annum, payable semi-annually in June and December and commencing in December 2021. The 2025 Convertible Notes are due in full on June 29, 2025. The Company incurred financing costs of $3,190 in connection with the 2025 Convertible Notes. The principal amount of the 2025 Convertible Notes and the conversion price are denominated in U.S. dollars. As the functional currency of the Company is Canadian dollars, the amount of the liability to be settled depends on the applicable foreign exchange rate on the date of settlement. The 2025 Convertible Notes therefore represent an obligation to issue a fixed number of shares for a variable amount of liability. Due to this

9


 

conversion feature within the 2025 Convertible Notes, the Company is unable to obtain an exception from derivative accounting. Accordingly, this conversion feature was accounted for as an embedded derivative liability and measured at fair value of $15,099 on the date of issuance of debt with a corresponding debt discount, reflected as a reduction to the carrying value of the 2025 Convertible Notes. The Company fair values the derivative liability at each balance sheet date. Changes in fair value of the embedded derivative are recognized in the consolidated statements of operations and comprehensive loss. The debt discount is amortized over the term of the 2025 Convertible Notes.

 

 

January 2024 Debt Exchange

On January 22, 2024, the Company entered into the Exchange Agreement with certain Holders of the Company’s 6.0% senior secured 2025 Convertible Notes, pursuant to which the Company agreed to the Repurchase of up to $25 million principal amount of the 2025 Convertible Notes in exchange for Common Shares (the “January 2024 Debt Exchange”).

Pursuant to the terms of the Exchange Agreement, the Holders shall:

 

by January 31, 2024, transfer $5 million principal amount of Notes in consideration of Common Shares issued at a price per Common Share equal to the greater of C$0.41 per Common Share and the 12.5% discount to the 5-day volume weighted average price of the Common Shares on Cboe prior to receipt of a Transfer notice;
provided that the five-day volume weighted average price of the Common Shares on the Exchange is greater than C$0.47 as of the close of trading at 4:01pm on January 31, 2024, transfer $5 million principal amount of 2025 Convertible Notes in consideration of Common Shares issued at the Initial Exchange Price on or prior to February 29, 2024; and
provided that the February Exchange is completed and the daily volume weighted average price of the Common Shares on Cboe is greater than C$0.87 for 5 consecutive trading days, provided that, the trading volume of the Common Shares on Cboe was equal to or greater than 600,000 Common Shares on the applicable trading dates, from the period commencing on January 1, 2024 and ending on June 30, 2024, transfer in three separate equal tranches, an aggregate of $15 million principal amount of 2025 Convertible Notes in consideration of Common Shares issued at a price per Common Share equal to the greater of C$0.57 per Common Share and the 12.5% discount to the 5-day volume weighted average price of the Common Shares on Cboe prior to receipt of a Transfer notice, in each case, subject to adjustment in certain instances, on or prior to June 30, 2024.

In the event the conditions are fulfilled and the Holders fail to Transfer their 2025 Convertible Notes in accordance with the terms of the Exchange Agreement, the Company has the right, but not the obligation, to require the Holders to Transfer some or all of the portion of the $25 million principal amount of 2025 Convertible Notes still held by the Holders. Assuming all of the conditions are fulfilled, and the entire $25 million principal amount of 2025 Convertible Notes are Transferred for Common Shares issued at the minimum prices set out in the Exchange Agreement, a maximum of 68,564,698 Common Shares would be issued in connection with the Repurchase. Through March 31, 2024, $10 million of the potential $25 million exchange has been completed.

 

Mortgages

 

In December 2021, the Company entered into a term loan and security agreement with a bank. The agreement provides for $20,000 mortgage on real property in New York and carries interest at a variable rate per annum equal to the Wall Street Prime Rate (“Index”) plus 2.25%. The debt is repayable in 59 monthly installments and a final balloon payment due on January 1, 2027, which is estimated at $18,133 as of September 30, 2023. In connection with this mortgage, the Company incurred financing costs of $655.

 

In June 2022, the Company entered into a term loan and security agreement with a bank. The agreement provides for $16,500 mortgage on real property in New Jersey and carries interest at a variable rate per annum equal to the Index plus 2.25%. The debt is repayable in 59 monthly installments and a final balloon payment due on July 15, 2027, which is estimated at $15,734 as of September 30, 2023. In connection with this mortgage, the Company incurred financing costs of $209.

 

On August 10, 2023, the Company entered into two term loans and security agreements with a bank as follows:

The first agreement provides for a $6,250 mortgage on real property in Maryland and carries interest at a variable rate per annum equal to the Index plus 2.25%. The debt is repayable in 59 monthly installments and matures in August 2028. In connection with this mortgage, the Company incurred financing costs of $195 and netted $2,903 after the repayment of a prior outstanding mortgage on the property.

10


 

The second agreement provides for $1,800 mortgage on real property in Delaware and carries interest at a variable rate per annum equal to the Index plus 2.25%. The debt is repayable in 59 monthly installments and matures in August 2028. In connection with this mortgage, the Company incurred financing costs of $77 and netted $1,723.

 

Total interest and amortization expense on the Company’s debt obligations during the three months ended March 31, 2024 and 2023 are as follows:

 

 

 

Three months ended

 

 

 

 

March 31, 2024

 

 

March 31, 2023

 

 

Interest expense on debt

 

$

7,315

 

 

$

10,395

 

 

Amortization of debt discount

 

 

1,214

 

 

 

1,376

 

 

Amortization of debt premium

 

 

 

 

 

(26

)

 

Amortization of debt issuance costs

 

 

643

 

 

 

941

 

 

Other interest (expense) income, net

 

 

(138

)

 

 

(113

)

 

Total interest expense, net

 

$

9,034

 

 

$

12,573

 

 

The weighted average interest rate on the Company’s indebtedness was 9.06%.

 

 

 

5. PROPERTY AND EQUIPMENT

Details of the Company’s property and equipment and related depreciation expense are summarized in the tables below:

 

 

March 31, 2024

 

 

December 31, 2023

 

Land and buildings

 

$

115,277

 

 

$

115,277

 

Furniture and fixtures

 

 

10,981

 

 

 

10,981

 

Equipment

 

 

43,429

 

 

 

43,123

 

Computers and software

 

 

3,985

 

 

 

4,033

 

Leasehold improvements

 

 

236,976

 

 

 

207,846

 

Construction in process

 

 

5,006

 

 

 

33,429

 

Total property and equipment, gross

 

 

415,654

 

 

 

414,689

 

Less: Accumulated depreciation

 

 

(124,529

)

 

 

(116,191

)

Total property and equipment, net

 

$

291,125

 

 

$

298,498

 

 

 

 

Three months ended

 

 

 

 

March 31, 2024

 

 

March 31, 2023

 

 

Total depreciation expense for three months ended

 

$

8,338

 

 

$

7,853

 

 

Included in:

 

 

 

 

 

 

Costs of sales related to inventory production

 

$

5,201

 

 

$

4,726

 

 

Selling, general and administrative expenses

 

$

3,137

 

 

$

3,127

 

 

 

 

6. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Details of the Company’s prepaid expenses and other current assets are summarized in the table below:

 

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

Prepaid expenses

 

$

9,899

 

 

 

8,486

 

 

Short term deposits

 

 

1,438

 

 

 

1,148

 

 

Other current assets

 

 

11,937

 

 

 

12,023

 

 

Excise and sales tax receivable

 

 

325

 

 

 

367

 

 

Prepaid taxes

 

 

 

 

 

753

 

 

Prepaid expenses and other current assets

 

$

23,599

 

 

$

22,777

 

 

 

11


 

7. OTHER NON-CURRENT ASSETS

Details of the Company’s other non-current assets are summarized in the table below:

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

Long term deposits

 

$

8,686

 

 

$

8,686

 

 

Investment in affiliates

 

 

775

 

 

 

775

 

 

Restricted cash

 

 

3,573

 

 

 

3,573

 

 

Notes receivable

 

 

2,065

 

 

 

2,082

 

 

Other non-current assets

 

$

15,099

 

 

$

15,116

 

 

8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Details of the Company’s accrued expenses and other current liabilities are summarized in the table below:

 

 

March 31, 2024

 

 

December 31, 2023

 

Taxes - property and other

 

$

9,359

 

 

$

12,067

 

Other accrued expenses

 

 

22,587

 

 

 

26,323

 

Payroll liabilities

 

 

10,994

 

 

 

13,260

 

Other current liabilities

 

 

8,349

 

 

 

7,009

 

Accrued expenses and other current liabilities

 

$

51,289

 

 

$

58,659

 

 

As of March 31, 2024, other accrued expenses include approximately $14,529 relating to a combination of indemnification claims, notices and demand letters received by the Company, including, without limitation, potential disputes arising out of the Green Leaf Transaction, together with a general accrual for estimated fees anticipated to close these matters. The outcome of any of these matters cannot yet be determined with any certainty and the Company will continue to rigorously defend any claims made against it.

 

9. SHAREHOLDERS’ EQUITY

The Company had the following activity during the three months ended March 31, 2024:

 

Issued 25,845,259 Common Shares in connection with the January 2024 Debt Exchange (as defined below and further detailed in Note 4).

 

 

10. WARRANTS

As of March 31, 2024 and December 31, 2023, outstanding equity-classified warrants to purchase Common Shares consisted of the following:

 

 

March 31, 2024

 

 

December 31, 2023

 

Expiration

 

Number of Shares
Issued and Exercisable

 

 

Exercise Price
(Canadian Dollars)

 

 

Number of Shares
Issued and Exercisable

 

 

Exercise Price
(Canadian Dollars)

 

September 21,2026

 

 

11,122,105

 

 

1.96

 

 

 

11,122,105

 

 

1.96

 

October 1, 2025

 

 

648,783

 

 

 

8.12

 

 

 

648,783

 

 

 

8.12

 

April 26, 2024

 

 

5,394,945

 

 

 

10.35

 

 

 

5,394,945

 

 

 

10.35

 

 

 

 

17,165,833

 

 

$

4.83

 

 

 

17,165,833

 

 

$

4.83

 

 

12


 

Warrant activity for the three months ended March 31, 2024 and 2023 are summarized in the table below:

 

 

 

 

 

 

Weighted average

 

 

 

Number of

 

 

exercise price

 

 

 

Warrants

 

 

(Canadian Dollars)

 

Balance as of December 31, 2022

 

 

11,482,766

 

 

$

7.22

 

Exercised

 

 

 

 

 

 

Expired

 

 

(1,723,250

)

 

 

3.10

 

Balance as of March 31, 2023

 

 

9,759,516

 

 

 

7.95

 

 

 

 

 

 

 

 

Balance as of December 31, 2023

 

 

17,165,833

 

 

 

4.83

 

Exercised

 

 

 

 

 

 

Expired

 

 

 

 

 

 

Balance as of March 31, 2024

 

 

17,165,833

 

 

 

4.83

 

 

 

 

 

 

 

 

 

11. LOSS PER SHARE

Basic and diluted net loss per share attributable to the Company was calculated as follows:

 

 

 

Three months ended

 

 

 

 

March 31, 2024

 

 

March 31, 2023

 

 

Numerator:

 

 

 

 

 

 

 

Net loss

 

$

(34,568

)

 

$

(36,572

)

 

Less: Net loss attributable to non-controlling interests

 

 

505