UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class |
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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.
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).
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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
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 November 8, 2023, there were
Table of Contents
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Page |
2 |
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PART I. |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements (Unaudited) |
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3 |
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Condensed Consolidated Interim Statements of Operations and Comprehensive Loss |
4 |
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Condensed Consolidated Interim Statements of Changes in Equity |
5 |
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7 |
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Notes to Condensed Consolidated Interim Financial Statements |
8 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
Item 3. |
31 |
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Item 4. |
31 |
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PART II. |
32 |
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Item 1. |
32 |
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Item 1A. |
32 |
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Item 2. |
32 |
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Item 3. |
32 |
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Item 4. |
32 |
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Item 5. |
32 |
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Item 6. |
32 |
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34 |
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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 “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 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, 2022. 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)
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September 30, 2023 |
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December 31, 2022 |
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Assets |
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Current assets: |
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Cash |
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$ |
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$ |
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Accounts receivable, net of allowances of $ |
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Inventory |
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Prepaid expenses and other current assets |
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Assets held for sale |
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Total current assets |
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Property and equipment, net |
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Right of use assets - operating leases, net |
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Right of use assets - finance leases, net |
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Deferred taxes |
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Goodwill |
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Intangible assets, net |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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Accrued expenses and other current liabilities |
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Income tax payable |
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Current portion of lease liability - operating leases |
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Current portion of lease liability - finance leases |
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Current portion of long-term debt, net |
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Liabilities held for sale |
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Total current liabilities |
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$ |
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$ |
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Long-term debt, net |
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Deferred taxes |
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Long-term lease liability - operating leases |
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Long-term lease liability - finance leases |
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Derivative liability |
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Other long-term liabilities |
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Total liabilities |
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Stockholders' Equity: |
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Common Stock, |
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Preferred Stock, |
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Proportionate voting shares, |
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Additional paid-in-capital |
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Accumulated deficit |
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( |
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( |
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Equity attributable to The Cannabist Company Holdings Inc. |
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Non-controlling interest |
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( |
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( |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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The accompanying notes are an integral part of these Condensed Consolidated Interim Balance Sheets.
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)
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Three months ended |
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Nine months ended |
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September 30, 2023 |
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September 30, 2022 |
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September 30, 2023 |
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September 30, 2022 |
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Revenues, net of discounts |
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$ |
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$ |
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$ |
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$ |
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Cost of sales related to inventory production |
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( |
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( |
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( |
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( |
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Cost of sales related to business combination fair value adjustments to inventory |
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( |
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( |
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Gross Margin |
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$ |
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$ |
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$ |
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$ |
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Selling, general and administrative expenses |
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( |
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( |
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( |
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( |
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Loss from operations |
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( |
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( |
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( |
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( |
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Other expense: |
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Interest expense on leases |
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( |
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( |
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( |
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( |
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Interest expense |
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( |
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( |
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( |
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( |
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Other (income) expense, net |
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( |
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( |
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Total other expense |
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( |
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( |
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( |
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( |
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Loss before provision for income taxes |
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( |
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( |
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( |
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( |
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Income tax expense |
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( |
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( |
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( |
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( |
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Net loss and comprehensive loss |
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( |
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( |
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( |
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( |
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Net income (loss) attributable to non-controlling interests |
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( |
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( |
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Net loss attributable to shareholders |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted-average number of shares used in earnings per share - basic and diluted |
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Loss attributable to shares (basic and diluted) |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
) |
The accompanying notes are an integral part of these unaudited Condensed Consolidated Interim Statements of Operations and Comprehensive Loss.
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)
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Common |
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Proportionate |
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Additional |
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Accumulated |
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Total The Cannabist Company Holdings Inc. |
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Non-Controlling |
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Total |
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Balance as of December 31, 2022 |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Equity-based compensation (1) |
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— |
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— |
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— |
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Conversion between classes of shares |
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( |
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— |
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— |
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— |
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— |
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— |
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Deconsolidation of subsidiary |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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( |
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Balance as of March 31, 2023 |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Equity-based compensation (1) |
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— |
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— |
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— |
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Distributions to non-controlling interest holders |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
) |
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( |
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Balance, June 30, 2023 |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Equity-based compensation (1) |
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— |
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— |
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— |
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Issuance of shares |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
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Balance, September 30, 2023 |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
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(1)
The accompanying notes are an integral part of these unaudited Condensed Consolidated Interim Statements of Changes in Equity.
5
THE CANNABIST COMPANY HOLDINGS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
(Unaudited)
(Expressed in thousands of U.S. dollars, except for number of shares)
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Common |
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Proportionate |
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Additional |
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Accumulated |
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Total The Cannabist Company Holdings Inc. |
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Non-Controlling |
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Total |
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Balance as of December 31, 2021 |
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$ |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Equity-based compensation(1) |
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— |
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— |
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— |
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Warrants exercised |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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( |
) |
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( |
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( |
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Balance as of March 31, 2022 |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
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Equity-based compensation (1) |
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— |
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— |
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— |
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Issuance of shares in connection with acquisitions |
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— |
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— |
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— |
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Cancellation of restricted stock awards |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Conversion of convertible notes |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Conversion between classes of shares |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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Non-controlling interest buyout |
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— |
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— |
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— |
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( |
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( |
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— |
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Warrants exercised |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
) |
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( |
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Balance, June 30, 2022 |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
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Equity-based compensation (1) |
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— |
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— |
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— |
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— |
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Issuance of shares in connection with acquisitions |
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— |
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— |
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— |
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Conversion between classes of shares |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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Cancellation of restricted stock awards |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
) |
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( |
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Balance, September 30, 2022 |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
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The accompanying notes are an integral part of these unaudited Condensed Consolidated Interim Statements of Changes in Equity.
6
THE CANNABIST COMPANY HOLDINGS INC.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
(expressed in thousands of U.S. dollars)
|
|
Nine months ended |
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|||||
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September 30, 2023 |
|
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September 30, 2022 |
|
||
Cash flows from operating activities: |
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Net loss |
|
$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash (used in) operating activities: |
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Depreciation and amortization |
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Equity-based compensation |
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Debt amortization expense |
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Earnout adjustment |
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Loss on disposal group |
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Provision for obsolete inventory and other assets |
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(Gain) / loss on remeasurement of contingent consideration |
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( |
) |
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Change in fair value of derivative liability |
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( |
) |
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Loss on deconsolidation of subsidiary |
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Deferred taxes |
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( | |||||