10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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 June 30, 2021

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

For the transition period from

Commission File Number:

000-56228

IANTHUS CAPITAL HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)


British Columbia, Canada		98-1360810
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

420 Lexington Avenue, Suite 414 New York, NY		10170
(Address of principal executive offices)		(Zip Code)

(646)

518-9411

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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

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, a 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.

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 ☒

Number of common shares outstanding as of

August 9, 2021 was 171,718,192.

Table of Contents


		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and December 31, 2020	2

	Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2021 and 2020 (Unaudited)	3

	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months ended June 30, 2021 and 2020 (Unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2021 and 2020 (Unaudited)	5

	Notes to the Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	32

PART II. OTHER INFORMATION		33

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults Upon Senior Securities	35

Item 4.	Mine Safety Disclosure	35

Item 5.	Other Information	35

Item 6.	Exhibits	36

Signatures		37

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on

Form 10-Q

contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this Quarterly Report on

Form 10-Q

about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan” and “would.” For example, statements concerning financial condition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management, markets for our common shares and future management and organizational structure are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement.

Any forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout our most recent Annual Report on Form

10-K

and any updates described in our Quarterly Reports on

Form 10-Q

and Current Reports on

Form 8-K

as may be amended, supplemented or superseded from time to time by other reports we file with the U.S. Securities and Exchange Commission (the “SEC”). You should read this Quarterly Report on

Form 10-Q

and the documents that we reference herein and have filed as exhibits to the reports we file with the SEC, completely and with the understanding that our actual future results may be materially different from what we expect. You should assume that the information appearing in this Quarterly Report on

Form 10-Q

is accurate as of the date hereof. Because the risk factors in our SEC reports, could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the information presented in this Quarterly Report on

Form 10-Q,

and particularly our forward-looking statements, by these cautionary statements.

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

Table of Contents

iANTHUS CAPITAL HOLDINGS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except per share amounts)

Note 1 – Overview and Basis of Presentation

(a)

Description of Business

iAnthus Capital Holdings, Inc. (“ICH” or “iAnthus”), together with its consolidated subsidiaries (collectively, the “Company”) is a vertically-integrated multi-state owner and operator of licensed cannabis cultivation, processing and dispensary facilities, and developer, producer and distributor of innovative branded cannabis and cannabidiol (“CBD”) products in the United States. Through the Company’s subsidiaries, licenses, interests and contractual arrangements, the Company has the capacity to operate dispensaries and cultivation/processing facilities, and manufacture and distribute cannabis across the states in which the Company operates in the U.S. Additionally, the Company distributes CBD products online and to retail locations across the United States.

The Company’s business activities, and the business activities of its subsidiaries, which operate in jurisdictions where the use of marijuana has been legalized under state and local laws, currently are illegal under U.S. federal law. The U.S. Controlled Substances Act classifies marijuana as a Schedule I controlled substance. Any proceeding that may be brought against the Company could have a material adverse effect on the Company’s business plans, financial condition and results of operations.

(b)

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements (the “financial statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and, therefore, certain information, footnotes and disclosures normally included in the annual financial statements, prepared in accordance with U.S. GAAP, have been condensed or omitted in accordance with SEC rules and regulations.

The financial data presented herein should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2020 included in the Company’s Annual Report on the Form

10-K

filed with the SEC on April 1, 2021. In the opinion of management, the financial data presented includes all adjustments necessary to present fairly the financial position, results of operations and cash flows for the periods presented. These unaudited interim condensed consolidated financial statements include estimates and assumptions of management that affect the amounts reported on the unaudited condensed consolidated financial statements. Actual results could differ from these estimates.

The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the entire year ending December 31, 2021, or any other period.

Except as otherwise stated, these unaudited interim condensed consolidated financial statements are presented in U.S. dollars.

(c)

Going Concern

These unaudited interim condensed consolidated financial statements have been prepared under the assumption that the Company will be able to continue its operations and will be able to realize its assets and discharge its liabilities in the normal course of business in the foreseeable future. For the six months ended June 30, 2021, the Company reported a net loss of $34.7 million and an accumulated deficit of $758.9 million as of June 30, 2021. These material circumstances cast substantial doubt on the Company’s ability to continue as a going concern for a period of at least 12 months from the date of this report and ultimately on the appropriateness of the use of the accounting principles applicable to a going concern.

During the six months ended June 30, 2021, due to liquidity constraints, the Company did not make interest payments due to the lenders of the Company’s 13% senior secured convertible debentures (the “Secured Notes”) and the 8% convertible unsecured debentures (the “Unsecured Debentures”) (together the “Lenders”). On March 31, 2020, the Company defaulted with respect to its long-term debt and is currently in default of those obligations, which, as of June 30, 2021 consists of $97.5 million and $60.0 million of principal amount, and $22.9 million and $7.2 million in accrued interest, with respect to the Secured Notes and Unsecured Debentures, respectively. In addition, as a result of the default, the Company has accrued additional principal and interest of $14.6 million in excess of the aforementioned amounts. Refer to Note 4 and Note 13 for further discussion.

As a result of the March 31, 2020 default, the Board of Directors of the Company (the “Board”) formed a special committee comprising of five independent,

non-management

directors of the Company (the “Special Committee”) to, among other matters, explore and consider strategic alternatives available to the Company in light of the prospective liquidity requirements of the Company, the condition of the capital markets affecting companies in the cannabis industry, and the rapid change in the state of the economy and capital markets generally caused by the novel coronavirus known as

COVID-19

(“COVID-19”),

including, but not limited to:

•

renegotiation of existing financing arrangements and other material contracts, including any amendments, waivers, extensions or similar agreements with the Lenders to and/or stakeholders of the Company and/or its subsidiaries that the Special Committee determines are in the best interest of the Company and/or its subsidiaries;

Table of Contents

iANTHUS CAPITAL HOLDINGS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except per share amounts)

•

managing available sources of capital, including equity investments or debt financing or refinancing and the terms thereof;

•

implementing the operational and financial restructuring of the Company and its subsidiaries and their respective businesses, assets and licensure and other rights; and

•

implementing other potential strategic transactions.

The Special Committee engaged Canaccord Genuity Corp. as its financial advisor to assist it in analyzing various strategic alternatives to address the Company’s capital structure and liquidity challenges.

On June 22, 2020, the Company received notice from Gotham Green Admin 1, LLC (the “Collateral Agent”), as collateral agent holding security for the benefit of the holders of the Company’s Secured Notes, with a demand for repayment (the “Demand Letter”) under the Amended and Restated Secured Debenture Purchase Agreement dated October 10, 2019 (the “Secured Notes Purchase Agreement”) of the entire principal amount of the Secured Notes, together with interest, fees, costs and other allowable charges that had accrued or might accrue in accordance with the Secured Notes Purchase Agreement and the other Transaction Agreements (as defined in the Secured Notes Purchase Agreement). The Collateral Agent also concurrently provided the Company with a Notice of Intention to Enforce Security (the “BIA Notice”) under section 244 of the Bankruptcy and Insolvency Act (Canada) (the “BIA”).

On July 10, 2020, the Company entered into the Restructuring Support Agreement (as defined below) to

ffect a proposed recapitalization transaction (the “Recapitalization Transaction”) with some of the Lenders to provide interim financing of $14.7 million (the “Tranche Four Secured Notes”). In connection with the Recapitalization Transaction, the Company and certain of its subsidiaries entered into a restructuring support agreement (the “Restructuring Support Agreement”) with all of the holders (the “Secured Lenders”) of the Secured Notes issued by iAnthus Capital Management, LLC, the Company’s U.S. wholly-owned subsidiary, and certain holders (the “Unsecured Debentureholders”) of the Unsecured Debentures issued by the Company.

Subject to compliance with the Restructuring Support Agreement, the Secured Lenders and a majority of the Unsecured Debentureholders (the “Consenting Unsecured Debentureholders”) will forbear from further exercising any rights or remedies in connection with any events of default of the Company occurring under their respective agreements and will stop any current or pending enforcement actions with respect to the same, including as set forth in the Demand Letter.

Pursuant to the

erms of the Restructuring Support Agreement, the Recapitalization Transaction will be implemented pursuant to arrangement proceedings (“Arrangement Proceedings”) commenced under the British Columbia Business Corporations Act, or, only if necessary, the Companies’ Creditors Arrangement Act (Canada) (“CCAA”). Completion of the Recapitalization Transaction through the Arrangement Proceedings is subject to, among other things, requisite stakeholder approval of the plan of arrangement (the “Plan of Arrangement”).

On September 14, 2020, the Company held meetings at which the stakeholders approved the Plan of Arrangement. Following the stakeholder vote, on September 25, 2020, the Company attended a court hearing before the Supreme Court of British Columbia (the “Court”) to receive approval of the Plan of Arrangement. On October 6, 2020, the Company received final approval from the Court for the Plan of Arrangement. The Company may be required to obtain other necessary approvals with respect to the Plan of Arrangement, including approvals by state-level regulators and the Canadian Securities Exchange (collectively, the “Requisite Approvals”). Specifically, certain of the transactions contemplated by the Recapitalization Transaction have triggered the requirement for an approval by state-level regulators in certain U.S. states with jurisdiction over the licensed cannabis operations of entities owned, in whole or in part, or controlled, directly or indirectly, by the Company in such states. On February 23, 2021, the Nevada Cannabis Compliance Board approved the proposed change of ownership and control of the Company’s wholly-owned subsidiary, GreenMart of Nevada NLV, LLC (“GMNV”), contemplated by the Recapitalization Transaction. On June 17, 2021, the Massachusetts Cannabis Control Commission also approved the proposed change of ownership and control of the current licenses held by the Company’s wholly-owned subsidiaries, Mayflower Medicinals, Inc. (“Mayflower”) and Cannatech Medicinals, Inc. (“Cannatech”), contemplated by the Recapitalization Transaction. Similar state-level approvals are being sought in Florida, Maryland, New York, New Jersey and Vermont. Pursuant to the terms of the Restructuring Support Agreement, if the Recapitalization Transaction is completed through CCAA proceedings, then the existing holders of the Company’s common shares (the “Existing Shareholders”) will not receive any recovery. On November 5, 2020, the Company received a notice of appeal with respect to the final approval for the Plan of Arrangement by the Court, and on January 29, 2021, the appeal was dismissed by the British Columbia Court of Appeal. On June 15, 2021, the Company and the Lenders agreed to amend the date by which the Recapitalization Transaction pursuant to the Plan of Arrangement is required to be implemented by from June 30, 2021 to August 31, 2021.

Table of Contents

iANTHUS CAPITAL HOLDINGS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except per share amounts)

The Company believes that the financing transactions discussed above should provide the necessary funding for the Company to continue as a going concern. However, there can be no assurance that such capital will be available in the future. As such, these material circumstances cast substantial doubt on the Company’s ability to continue as a going concern for a period of no less than 12 months from the date of this report. These unaudited interim condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

(d)

Basis of Consolidation

The unaudited interim condensed consolidated financial statements include the accounts of the Company together with its consolidated subsidiaries, except for subsidiaries which the Company has identified as variable interest entities (“VIEs”) where the Company is not the primary beneficiary.

(

)

Use of Estimates

The preparation of the unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgements that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of unaudited interim condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations regarding future events that are believed to be reasonable under the circumstances. Actual results may differ significantly from these estimates.

Significant estimates made by management include, but are not limited to: economic

ives of leased assets; allowances for potential uncollectability of accounts and notes receivable, provisions for inventory obsolescence; impairment assessment of long-lived assets; depreciable lives of property, plant and equipment; useful lives of intangible assets; accruals for contingencies including tax contingencies; valuation allowances for deferred income tax assets; estimates of fair value of identifiable assets and liabilities acquired in business combinations; estimates of fair value of derivative instruments; and estimates of the fair value of stock-based payment awards.

(

)

Change in Estimates

In January 2021, the Company completed an assessment of the yield per gram that is used as an input to value the Company’s inventory. The timing of this review was based on a combination of factors accumulating over time that provided the Company with updated information to make a better estimate on the yield of its products. These factors included enhanced data gathering of crop production and yields into inventory. The assessment resulted in a revision of the Company’s production yield estimates that are used to value ending inventory. The effect of this change was an increase in costs and expenses applicable to revenues of approximately $2.9 million in the first quarter of 2021.

(

)

Coronavirus Pandemic

In March 2020, the World Health Organization declared the global emergence of the

COVID-19

pandemic. The impact of

COVID-19

on the Company’s business is currently unknown. The Company continues to monitor guidance and orders issued by federal, state, and local authorities with respect to

COVID-19.

As a result, the Company may take actions that alter its business operations as may be required by such guidance and orders or take other steps that the Company determines are in the best interest of its employees, customers, partners, suppliers, shareholders, and stakeholders.

Any such alterations or modifications could cause substantial interruption to the Company’s business and could have a material adverse effect on the Company’s business, operating results, financial condition, and the trading price of the Company’s common shares, and could include temporary closures of one or more of the Company’s facilities; temporary or long-term labor shortages; temporary or long-term adverse impacts on the Company’s supply chain and distribution channels; and the potential of increased network vulnerability and risk of data loss resulting from increased use of remote access and removal of data from the Company’s facilities. In addition,

COVID-19

could negatively impact capital expenditures and overall economic activity globally which could impact the demand for the Company’s products and services.

Table of Contents

iANTHUS CAPITAL HOLDINGS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except per share amounts)

It is unknown to what extent the Company may be impacted by the continuing

COVID-19

pandemic, including as a result of the waiver of regulatory requirements or the implementation of emergency regulations to which the Company is subject. The

COVID-19

pandemic poses a risk that the Company or its employees, contractors, suppliers, and other partners may be hindered from conducting business activities for an unknown period of time.

Although the Company has been deemed essential and/or has been permitted to continue operating its facilities in the states in which it cultivates, processes, manufactures, and sells cannabis during the pendency of the

COVID-19

pandemic, subject to the implementation of certain restrictions on

adult-use

cannabis sales in both Massachusetts and Nevada, which have since been lifted, there is no assurance that the Company’s operations will continue to be deemed essential and/or will continue to be permitted to operate. The Company may incur expenses or delays relating to such events outside of its control, which could have a material adverse impact on its business, operating results, financial condition and the trading price of its common shares.

Note 2 – Leases

The Company mainly leases office space and cannabis cultivation, processing and retail dispensary space. Leases with an initial term of less than 12 months are not recorded on the unaudited interim condensed consolidated balance sheets. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The Company assumed that it was reasonably certain that the renewal options on the majority of its cannabis cultivation, processing and retail dispensary space would be exercised based on previous history and knowledge, current understanding of future business needs and the level of investment in leasehold improvements, among other considerations. The incremental borrowing rate used in the calculation of the lease liability is based on the rate available to the parent company. None of the Company’s leases include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain subsidiaries of the Company rent or sublease certain office space to/from other subsidiaries of the Company. These intercompany subleases are eliminated on consolidation and have lease terms ranging from less than 1 year to 15 years.

Maturities of lease liabilities for operating leases as of June 30, 2021, were as follows:


	Operating Leases
2022	$	7,545
2023		7,101
2024		7,201
2025		7,354
2026		6,755
Thereafter		60,441

Total lease payments	$	96,397
Less: interest expense		(61,468	)

Present value of lease liabilities	$	34,929
Weighted-average remaining lease term (years)		11.7
Weighted-average discount rate		20	%

For the three and six months ended June 30, 2021, the Company recorded operating lease expenses of $2.0 million and $4.4 million, respectively, (June 30, 2020 - $2.1 million and $4.1 million,

respectively), which are included in selling, general and administrative expenses and depreciation and amortization lines on the unaudited interim condensed consolidated statements of operations.

The Company entered into multiple sublease agreements during the quarter ended June 30, 2021 for two of its facilities pursuant to which it serves as lessor to the sublessees. The gross rental income and underlying lease expense are presented gross in the Company’s unaudited interim condensed consolidated balance sheets. For the three and six months ended June 30, 2021, the Company recorded sublease income of less than $0.1 million and $0.1 million, respectively, which is included in the other income line on the unaudited interim condensed consolidated statements of operations. The sublease income to be earned over the remaining sublease term was determined to be less than the costs associated with the primary lease held by the Company. As a result the Company tested its

right-of-use

assets of related subleased facilities for impairment and recorded impairment expense of $1.7

million for the three and six months ended June 30, 2021 (June 30, 2020 - $Nil and $

Nil

, respectively).

Table of Contents

iANTHUS CAPITAL HOLDINGS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except per share amounts)

Supplemental balance sheet information related to leases are as follows:


Balance Sheet Information	Classification	June 30, 2021		December 31, 2020
Right-of-use assets	Operating leases	$	30,865	$	33,083

Lease Liabilities
Current portion of lease liabilities	Operating leases	$	7,545	$	7,450
Long-term lease liabilities	Operating leases		27,384		27,670

Total		$	34,929	$	35,120

Note 3 - Inventories

Inventories is comprised of the following items:


	June 30, 2021		December 31, 2020
			(Revised)
Supplies	$	5,716	$	5,010
Raw materials		8,658		7,047
Work in process		7,029		5,710
Finished goods		6,253		7,684

Total	$	27,656	$	25,451

Inventories are written down for any obsolescence or when the net realizable value considering future events and conditions is less than the carrying value. For the three and six months ended June 30, 2021, the Company recorded

$0.2

million and

$0.5 million

respectively (June 30, 2020 - $Nil and $0.9 million, respectively), related to spoiled inventory in costs and expenses applicable to revenues on the unaudited interim condensed consolidated statements of operations.

Note 4 - Long-Term Debt


	Secured Notes (1)		May 2019 Debentures		March 2019 Debentures		Other			Total
As of January 1, 2021	$	115,350	$	23,240	$	31,665	$	920		$	171,175

Fair value of financial liabilities issued		11,570		—		—		160			11,730
Accretion of balance		6,109		390		722		295			7,516
Repayment		—		—		—		(28	)		(28	)

As of June 30, 2021	$	133,029	$	23,630	$	32,387	$	1,347		$	190,393

(1)	This amount includes the Company’s obligation to pay an exit fee of $10.0 million that accrues interest at a rate of 13% per annum (the “Exit Fee”) under the Secured Notes.

As of June 30, 2021, the total and unamortized discount costs were $30.3 million and $4.1 million, respectively (December 31, 2020 - $30.3 million and $9.5 million, respectively). As of June 30, 2021, the total and unamortized debt issuance costs were $7.7 million and $3.1 million, respectively (December 31, 2020 - $7.0 million and $3.5 million, respectively).

As of June 30, 2021, the total interest accrued on both current and long-term debt was $34.4 million (December 31, 2020 - $23.3 million).

Table of Contents

iANTHUS CAPITAL HOLDINGS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except per share amounts)

(a)

Secured Notes

Tranche One

On May 14, 2018, the Company issued $40.0 million secured notes (the “Tranche One Secured Notes”) with an original maturity date of May 14, 2021.

The principal amount of such notes will remain outstanding until the closing of the Recapitalization Transaction. Interest on the Tranche One Secured Notes will continue to accrue at the default rate of

16.0% per annum until such time. Because the conversion price of $3.08 was less than the Company’s closing stock price on the date of issuance, this gave rise to a beneficial conversion feature valued at $7.9 million. The Company recognized this beneficial conversion feature as a debt discount and additional paid in capital on the closing date. The discount to the Tranche One Secured Notes is being amortized to interest expense until maturity or its earlier repayment or conversion. For the three and six months ended June 30, 2021, the amount of amortization recorded in accretion expense was $0.3 million and $1.0 million, respectively (June 30, 2020 - $0.7 million and $1.3 million, respectively). The terms also contain a financial covenant requiring the Company’s asset value to be 1.75 times the total net debt at each quarter end and maintain a minimum cash balance of $1.0 million while the Tranche One Secured Notes remain outstanding (the “market value test”).

For the three and six months ended June 30, 2021, interest expense of $1.7 million and $3.3 million, respectively, (June 30, 2020 - $1.7 million and $3.0 million, respectively), and accretion expense of $1.1 million and $3.4 million, respectively (June 30, 2020 - $2.1 million and $4.1 million, respectively), were recorded on the unaudited interim condensed consolidated statements of operations.

As of March 31, 2020, the Company was not in compliance with the market value test and therefore in breach of a financial covenant for the Tranche One Secured Notes, Tranche Two Secured Notes (as defined herein), and Tranche Three Secured Notes (as defined herein). Furthermore, the Company was in default on its Secured Notes as of March 31, 2020, and as a result, an event of default occurred on April 4, 2020. This default was triggered on the Company’s long-term debt, which as of June 30, 2021, consisted of $97.5 million and $60.0 million of principal amount and $22.9 million and $7.2 million in accrued interest with respect to the Secured Notes and Unsecured Debentures, respectively. As a result of the default, the Company is classifying the Tranche One Secured Notes, Tranche Two Secured Notes, and Tranche Three Secured Notes as current liabilities on the unaudited interim condensed consolidated balance sheets. As of June 30, 2021, the Company is still in default on the Tranche One Secured Notes, Tranche Two Secured Notes, and Tranche Three Secured Notes. Further details on the default are disclosed in Note 13.

For the three and six months ended June 30, 2021, interest expense of $0.4 million and $0.8 million, respectively (June 30, 2020 - $0.4 million and $0.8 million, respectively), was recorded in relation to the Exit Fee on the unaudited interim condensed consolidated statements of operations. As of June 30, 2021, the Company accrued $14.6 million (June 30, 2020 - $12.9 million) related to the Exit Fee, comprised of an aggregate principal amount of $10.3 million and $4.3 million in accrued interest (June 30, 2020 – an aggregate principal amount of $10.3 million and $2.6 million in accrued interest). Furthermore, as a result of this default, the Company is classifying the Exit Fee as a current liability on the unaudited interim condensed consolidated balance sheets as of June 30, 2021.

Tranche Two

On September 30, 2019, the Company issued an additional $20.0 million of secured notes (the “Tranche Two Secured Notes”). The Tranche Two Secured Notes accrue interest at 13.0% per annum and had an original maturity date of May 14, 2021

. The principal amount of such notes will remain outstanding until the closing of the Recapitalization Transaction. Interest on the Tranche Two Secured Notes will continue to accrue at the default rate of 16.0% per annum until such time.

For the three and six months ended June 30, 2021, interest expense of $0.8 million and $1.6 million, respectively (June 30, 2020 - $0.8 million and $1.5 million, respectively), and accretion expense of $0.2 million and $0.7 million, respectively (June 30, 2020 - $0.4 million and $0.9 million, respectively), were recorded on the unaudited interim condensed consolidated statements of operations.

All terms, restrictions and financial covenants applicable to the Tranche One Secured Notes are also applicable to the Tranche Two Secured Notes.

Tranche Three

On December 20, 2019, the Company issued an additional $36.2 million of secured notes (the “Tranche Three Secured Notes”). The Tranche Three Secured Notes accrue interest at 13.0% per annum and had an original maturity date of May 14, 2021

. The principal amount of such notes will remain outstanding until the closing of the Recapitalization Transaction. Interest on the Tranche Three Secured Notes will continue to accrue at default rate of 16.0% per annum until such time.

Table of Contents

iANTHUS CAPITAL HOLDINGS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except per share amounts)

For the three and six months ended June 30, 2021, interest expense of $1.5 million and $2.9 million, respectively (June 30, 2020 - $1.5 million and $2.6 million, respectively), and accretion expense of $0.5 million and $1.6 million, respectively (June 30, 2020 - $1.0 million and $2.0 million, respectively), were recorded on the unaudited interim condensed consolidated statements of operations.

All terms, restrictions and financial covenants applicable to the Tranche One Secured Notes and Tranche Two Secured Notes are also applicable to the Tranche Three Secured Notes.

Tranche Four

On July 13, 2020, as part of the Recapitalization Transaction, the Company issued an additional $14.7 million as the Tranche Four Secured Notes. The Tranche Four Secured Notes accrue interest at 8.0% per annum and mature on July 13, 2025.

For the three and six months ended June 30, 2021, interest expense of $0.3 million and $0.6 million, respectively (June 30, 2020 - $

Nil

and $

Nil

, respectively), and accretion expense of $0.1 million and $0.2 million, respectively (June 30, 2020 - $

Nil

and $

Nil

, respectively), was recognized on the unaudited interim condensed consolidated statements of operations. As of June 30, 2021, the Company no longer had restricted cash in escrow (December 31, 2020 - $0.4 million) from the Tranche Four Secured Notes.

All terms, restrictions, and financial covenants

pplicable to the Tranche One Secured Notes, Tranche Two Secured Notes, and Tranche Three Secured Notes, are also applicable to the Tranche Four Secured Notes. The Company remains in default with respect to the Tranche One Secured Notes, Tranche Two Secured Notes and Tranche Three Secured Notes, due to failure to remit applicable interest payments between March 2020 and June 2021. Thus, all amounts owing on the Tranche One Secured Notes, Tranche Two Secured Notes and Tranche Three Secured Notes are classified as current liabilities on the unaudited interim condensed consolidated balance sheets. The Company has not defaulted on the Tranche Four Secured Notes as of June 30, 2021. Therefore, the Tranche Four Secured Notes are classified as long-term liabilities on the unaudited interim condensed consolidated balance sheets.

iAnthus New Jersey, LLC Senior Secured Bridge Notes

On February 2, 2021, iAnthus New Jersey, LLC (“INJ”) issued an aggregate of $11.0 million of senior secured bridge notes (“Senior Secured Bridge Notes”) which mature on the earlier of (i) February 2, 2023, (ii) the date on which the Company closes a Qualified Financing (as defined below) and (iii) such earlier date that the principal amount may become due and payable pursuant to the terms of such notes. The Senior Secured Bridge Notes accrue interest at a rate of 14.0% per annum (increasing to 25.0% per annum in the event of default and decreasing to 8.0% per annum upon the completion of the Company’s Recapitalization Transaction). “Qualified Financing” means a transaction or series of related transactions resulting in net proceeds to the Company of not less than $10 million from the subscription of the Company’s securities, including, but not limited to, a private placement or rights offering.

The host debt, classified as a liability, was recognized at the fair value of $10.3 million, net of issuance costs of $0.7 million.

Interest is to be paid in kind by adding the interest accrued on the principal amount on the last day of each fiscal quarter and such amount thereafter becoming part of the principal amount and will accrue interest. Interest paid in kind will be payable on the date that all of the principal amount is due and payable.

For the three and six months ended June 30, 2021, interest expense of $0.4 million and $0.6 million, respectively (June 30, 2020 - $Nil and $Nil, respectively), and accretion expense of $0.1 million and $0.1 million, respectively (June 30, 2020 - $Nil and $Nil, respectively), was recognized on the unaudited interim condensed consolidated statements of operations. As of June 30, 2021, the Company held $5.7 million (December 31, 2020 - $Nil) of restricted cash in escrow from the Senior Secured Bridge Notes. Refer to Note 12(e) for further discussion.

The Senior Secured Bridge Notes are secured by a security interest in certain assets of INJ. The Company provided a guarantee in respect of all of the obligations of INJ under the Senior Secured Bridge Notes. The Company has not defaulted on the Senior Secured Bridge Notes as of June 30, 2021. Therefore, the Senior Secured Bridge Notes are classified as long-term liabilities on the unaudited interim condensed consolidated balance sheets.

Table of Contents

iANTHUS CAPITAL HOLDINGS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except per share amounts)

(b)

March 2019 Debentures

On March 18, 2019, the Company completed a private placement of $35.0 million of unsecured convertible debentures (the “March 2019 Debentures”) and corresponding warrants to purchase 2,177,291 common shares of the Company at an exercise price of $6.43 per share which expire on

March 15, 2022

. The March 2019 Debentures accrue interest at a rate of 8.0% per annum, payable quarterly on the last business day of each fiscal quarter, beginning on March 31, 2019. Interest is paid in cash, shares, or a combination of cash and shares, up to 50%, at the Company’s election. The March 2019 Debentures mature on March 15, 2023.

For the three and six months ended June 30, 2021, interest expense of $0.7 million and $1.4 million, respectively (June 30, 2020 - $0.7 million and $1.4 million, respectively), and accretion expense of $0.4 million and $0.7 million, respectively (June 30, 2020 - $0.3 million and $0.7 million, respectively), were recorded on the unaudited interim condensed consolidated statements of operations.

As of June 30, 2021, the Company is in default on its interest obligations to the holders of the Secured Notes. This default triggered a cross-default on its interest obligations to the holders of the March 2019 Debentures. Further, as a result of this default, the Company is classifying the debt as a current liability as the March 2019 Debentures are due on demand. The event of default is applicable to all amounts outstanding under the March 2019 Debentures.

(c)

May 2019 Debentures

On May 2, 2019, the Company completed a private placement of $25.0 million of unsecured convertible debentures (the “May 2019 Debentures”) and corresponding warrants to purchase 1,555,207 common shares of the Company at an exercise price of $6.43 per common share which expire on March 15, 2022. The May 2019 Debentures accrue interest at a rate of 8.0%, per annum, payable quarterly on the last business day of each fiscal quarter, beginning on June 30, 2019. Interest is paid in cash, shares, or a combination of cash and shares, up to 50%, at the Company’s election. The May 2019 Debentures mature on March 15, 2023.

For the three and six months ended June 30, 2021, interest expense of $0.5 million and $1.0 million, respectively (June 30, 2020 - $0.5 million and $1.0 million, respectively), and accretion expense of $0.2 million and $0.4 million, respectively (June 30, 2020 - $0.2 million and $0.4 million, respectively), were recorded on the unaudited interim condensed consolidated statements of operations.

The terms of the May 2019 Debentures impose certain restrictions on the Company’s operating and financing activities, including certain restrictions on the Company’s ability to incur certain additional indebtedness at the subsidiary level. As of June 30, 2021, the Company is in default on its interest obligations to the holders of the Secured Notes. This default triggered a cross-default on its interest obligations to the holders of the May 2019 Debentures. Further, as a result of this default, the Company is classifying the debt as a current liability as the May 2019 Debentures are due on demand. The event of default is applicable to all amounts outstanding under the May 2019 Debentures.

(d)

Stavola Trust Note

As part of the acquisition of MPX Bioceutical Corporation (“MPX”) on February 5, 2019 (the “MPX Acquisition”) (Note 5(b)), the Company assumed a long-term note (the “Stavola Trust Note”) of $10.8 million, payable to the Elizabeth Stavola 2016 NV Irrevocable Trust. This trust is for the benefit of a former director and officer of the Company, Elizabeth Stavola, and is therefore a related party balance. The note had a maturity date of January 19, 2020, and an interest rate of 8.0% per annum. Repayment of the note was secured by the assets of certain subsidiaries of the Company. On January 10, 2020, the Stavola Trust Note was paid in full.

Note 5 - Share Capital

(a)

Share Capital

Authorized: Unlimited common shares. The shares have no par value.

The Company’s common shares are voting and dividend-paying. There were no

common share issuances for the three and six months ended June 30, 2021.

The following is a summary of the common share issuances for the three and six months ended June 30, 2020:

•

75 common shares of the Company were issued to settle outstanding obligations, with share issuance costs of $0.2 million.

Table of Contents

iANTHUS CAPITAL HOLDINGS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except per share amounts)

(b)

Warrants

The following table summarizes certain information in respect of the Company’s warrants:


	June 30, 2021
	Units			Weighted Average Exercise Price (C$)
Warrants outstanding as of December 31, 2020		49,236		$	4.06
Granted		—			—
Exercised		—			—
Expired		(26,577	)		4.21

Warrants outstanding as of June 30, 2021		22,659		$	3.49

As of June 30, 2021 and December 31, 2020, warrants classified as derivative liabilities on the unaudited interim condensed consolidated balance sheets were revalued with the following inputs:


	June 30, 2021			December 31, 2020
Risk-free interest rate		0.4	%		0.2	%
Expected dividend yield		0.0	%		0.0	%
Expected volatility		88.9 - 203.0	%		148.0 - 251.1	%

The revaluation of the warrants classified as derivative liabilities resulted in a fair value of $0.1 million for these instruments as of June 30, 2021 (December 31, 2020 - $0.2 million). As a result of the revaluation, the Company recognized a gain of $0.1 million and $0.1 million for the three and six months ended June 30, 2021, respectively (June 30, 2020 - $0.1 million and $4.8 million, respectively), on the unaudited interim condensed consolidated statements of operations.

Full share equivalent warrants outstanding and exercisable are as follows:


	June 30, 2021				December 31, 2020
Year of expiration	Number Outstanding		Weighted Average Exercise Price (C$)		Number Outstanding		Weighted Average Exercise Price (C$)
2021		19	$	6.87		26,596	$	4.37
2022		20,855		3.40		20,855		3.62
2023		1,785		4.57		1,785		4.57

Warrants outstanding		22,659	$	3.49		49,236	$	4.06

(c)

Potentially Dilutive Securities

The following table summarizes potentially dilutive securities, and the resulting common share equivalents outstanding as of June 30, 2021:


	June 30, 2021		December 31, 2020
Common share options		10,578		11,510
Warrants		22,659		49,236
Secured notes		46,458		46,458
Debentures		10,135		10,135
MPX dilutive instruments (1)		408		408

Total		90,238		117,747

Table of Contents

iANTHUS CAPITAL HOLDINGS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands except per share amounts)

(1)	Prior to the MPX Acquisition, MPX had instruments outstanding that were potentially dilutive and as a result of the MPX Acquisition, the Company assumed certain of these instruments.

Total potentially dilutive securities does not include the shares that would potentially be issued upon conversion of the accrued interest on the Company’s long-term debt. As of June 30, 2021, this would amount to 12.1 million common shares (December 31, 2020 – 8.0 million common shares).

(d)

Stock Options

The following table summarizes certain information in respect of option activity under the Company’s stock option plan:


	June 30, 2021							December 31, 2020
	Units			Weighted Average Exercise Price (C$)		Weighted Average Contractual Life		Units			Weighted Average Exercise Price (C$)		Weighted Average Contractual Life
Options outstanding, beginning		11,510		$	4.86		—		19,578		$	4.80		—
Granted		—			—		—		135			0.82		—
Exercised		—			—		—		—			—		—
Forfeited/Expired		(932	)		4.02		—		(8,203	)		4.99		—

Options outstanding, ending		10,578		$	4.93		6.46		11,510		$	4.86		7.34

The related share-based compensation expense for the three and six months ended June 30, 2021 was $1.6 million and $3.3 million, respectively (June 30, 2020, —$2.5 million and $7.7 million, respectively), and is presented in the selling, general and administrative expenses line on the unaudited interim condensed consolidated statements of operations.

As of June 30, 2021, the weighted average period over which compensation cost on

non-vested

stock options is expected to be recognized is 0.8 years and the unrecognized expense is $5.2 million.

Note 6 - Income Taxes

The following table summarizes the Company’s income tax expense and effective tax rates for the three and six months ended June 30, 2021, and 2020:


	Three Months Ended						Six Months Ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Loss before income taxes	$	(7,372	)	$	(19,568	)	$	(19,533	)	$	(254,503	)
Income tax expense		7,884			5,257			15,175			6,663

Effective tax rate		(106.9	)%		(26.9	)%		(77.7	)%		(2.6	)%

The effective tax rate may vary significantly from period to period and can be influenced by many factors. These factors include, but are not limited to, changes to the statutory rates in the jurisdictions where the Company has operations and changes in the valuation of deferred tax assets and liabilities. The difference between the

ffective tax rate and the federal statutory rate of 21% primarily relates to certain

non-deductible

items, state and local income taxes and the valuation allowance for deferred tax assets of

non-cultivator

entities.

Table of Contents


	June 30,			December 31,
	2021			2020
				(Revised)
Assets
Cash	$	18,171		$	11,015
Restricted cash		5,710			495
Accounts receivable, net of allowance for doubtful accounts of $194 (December 31, 2020 - $401)		3,714			3,351
Prepaid expenses		3,878			3,611
Inventories		27,656			25,451
Other assets		3,045			1,700

Current Assets		62,174			45,623

Investments		713			512
Property, plant and equipment		110,627			106,997
Right-of-use assets		30,865			33,083
Other long-term assets		8,150			8,137
Intangible assets		150,994			158,781

Total Assets	$	363,523		$	353,133


Liabilities

Accounts payable	$	11,186		$	12,089
Accrued and other current liabilities		78,833			55,053
Current portion of long-term debt, net of issuance costs		163,918			157,042
Derivative liabilities		136			245
Current portion of lease liabilities		7,545			7,450

Current Liabilities		261,618			231,879

Long-term debt, net of issuance costs		26,475			14,133
Deferred income tax		32,130			32,122
Long-term portion of lease liabilities		27,384			27,670

Total Liabilities		347,607			305,804


Commitments and Contingencies

Shareholders’ Equity
Common shares — no par value. Authorized — unlimited number. 171,718 — issued and outstanding (December 31, 2020 — 171,718 — issued and outstanding)		—			—
Shares to be issued		1,531			1,531
Additional paid-in capital		773,235			769,940
Accumulated deficit		(758,850	)		(724,142	)

Total Shareholders’ Equity	$	15,916		$	47,329

Total Liabilities and Shareholders’ Equity	$	363,523		$	353,133


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenues, net of discounts	$	54,228		$	34,646		$	106,033		$	65,072
Costs and expenses applicable to revenues		(22,917	)		(15,756	)		(45,001	)		(30,730	)

Gross profit		31,311			18,890			61,032			34,342


Operating expenses
Selling, general and administrative expenses		20,996			22,607			44,682			50,348
Depreciation and amortization		7,759			6,765			15,133			13,179
Write-downs, recoveries and other charges, net		(73	)		8			186			687
Impairment loss		1,696			—			1,696			199,364

Income (loss) from operations		933			(10,490	)		(665	)		(229,236	)

Interest income		109			168			233			180
Other income		220			214			494			295
Interest expense		(5,879	)		(5,165	)		(11,557	)		(9,632	)
Accretion expense		(2,664	)		(4,113	)		(7,516	)		(8,117	)
Provision for debt obligation fee		(418	)		(416	)		(832	)		(12,919	)
Gains from change in fair value of financial instruments		327			234			310			4,926

Loss before income taxes		(7,372	)		(19,568	)		(19,533	)		(254,503	)

Income tax expense		7,884			5,257			15,175			6,663

Net loss	$	(15,256	)	$	(24,825	)	$	(34,708	)	$	(261,166	)


Net loss per share - basic and diluted	$	(0.09	)	$	(0.14	)	$	(0.20	)	$	(1.52	)
Weighted average number of common shares outstanding - basic and diluted		171,718			171,643			171,718			171,655


	Three Months Ended June 30, 2021
	Number of Common Shares (‘000)		Shares to be Issued		Additional Paid-in-Capital			Accumulated Deficit			Total Shareholders’ Equity
Balance – March 31, 2021		171,718	$	1,531	$	771,574		$	(743,594	)	$	29,511
Share-based compensation		—		—		1,661			—			1,661
Net loss		—		—		—			(15,256	)		(15,256	)

Balance – June 30, 2021		171,718	$	1,531	$	773,235		$	(758,850	)	$	15,916


	Six Months Ended June 30, 2021
	Number of Common Shares (‘000)		Shares to be Issued		Additional Paid-in-Capital			Accumulated Deficit			Total Shareholders’ Equity
Balance – January 1, 2021– Revised		171,718	$	1,531	$	769,940		$	(724,142	)	$	47,329
Share-based compensation		—		—		3,295			—			3,295
Net loss		—		—		—			(34,708	)		(34,708	)

Balance – June 30, 202 1		171,718	$	1,531	$	773,235		$	(758,850	)	$	15,916



	Three Months Ended June 30, 2020
	Number of Common Shares (‘000)		Shares to be Issued		Additional Paid-in-Capital			Accumulated Deficit			Total Shareholders’ Equity
Balance – March 31, 2020		171,718	$	1,531	$	763,765		$	(647,121	)	$	118,175
Share-based compensation		—		—		2,492			—			2,492
Net loss		—		—		—			(24,825	)		(24,825	)

Balance – June 30, 202 0		171,718	$	1,531	$	766,257		$	(671,946	)	$	95,842


	Six Months Ended June 30, 2020
	Number of Common Shares (‘000)		Shares to be Issued		Additional Paid-in-Capital			Accumulated Deficit			Total Shareholders’ Equity
Balance – January 1, 2020		171,643	$	1,531	$	761,722		$	(410,780	)	$	352,473
Share issuance – Settlement of outstanding obligations		75		—		193			—			193
Share-based compensation		—		—		7,667			—			7,667
Other - Warrant issuance		—		—		(3,325	)		—			(3,325	)
Net loss		—		—		—			(261,166	)		(261,166	)

Balance – June 30, 2020		171,718	$	1,531	$	766,257		$	(671,946	)	$	95,842


	Six Months Ended June 30,
	2021			2020
CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$	(34,708	)	$	(261,166	)
Adjustments to reconcile net loss to cashflow from (used in) operations:
Interest income		(233	)		(180	)
Interest expense		11,557			9,632
Accretion expense		7,516			8,117
Debt obligation fees		832			12,919
Impairment loss		1,696			199,364
Depreciation and amortization		15,133			13,179
Write-downs and other charges		186			687
Share-based compensation		3,295			7,860
Gain from change in fair value of financial instruments		(310	)		(4,926	)
Income from equity-accounted investments		—			(29	)
Deferred income taxes		—			(4,244	)
Change in non-cash working capital items (Note 12)		7,409			17,079

NET CASH FLOW PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	12,373		$	(1,708	)

CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(9,611	)		(11,475	)
Acquisition of other intangible assets		(31	)		(378	)
Proceeds from redemption and sale of investment		—			110
Issuance of related party promissory note		(638	)		(2,022	)

NET CASH USED IN INVESTING ACTIVITIES	$	(10,280	)	$	(13,765	)

CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of debt		11,000			—
Debt issuance costs		(694	)		—
Repayment of debt		(28	)		(11,228	)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	$	10,278		$	(11,228	)


CASH AND RESTRICTED CASH:
NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH DURING THE PERIOD		12,371			(26,701	)

CASH AND RESTRICTED CASH, BEGINNING OF PERIOD		11,510			34,821

CASH AND RESTRICTED CASH, END OF PERIOD	$	23,881		$	8,120


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020

Revenues
Eastern Region	$	34,724		$	19,589		$	67,780		$	37,638
Western Region		19,103			14,004			37,406			25,729
Other (1)		401			1,053			847			1,705

Total	$	54,228		$	34,646		$	106,033		$	65,072


Gross profit
Eastern Region	$	24,402		$	12,199		$	45,565		$	22,960
Western Region		7,004			6,290			15,583			11,051
Other		(95	)		401			(116	)		331

Total	$	31,311		$	18,890		$	61,032		$	34,342


Depreciation and amortization
Eastern Region	$	6,687		$	5,797		$	12,865		$	11,317
Western Region		698			647			1,536			1,237
Other		374			321			732			625

Total	$	7,759		$	6,765		$	15,133		$	13,179


Asset impairments and write-downs
Eastern Region	$	—		$	7		$	259		$	196,851
Western Region		—			1			—			253
Other		1,624			—			1,623			2,947

Total	$	1,624		$	8		$	1,882		$	200,051


Net los s
Eastern Region	$	2,746		$	(4,082	)	$	3,482		$	(208,917	)
Western Region		668			705			3,167			617
Other		(18,670	)		(21,448	)		(41,357	)		(52,866	)
Total	$	(15,256	)	$	(24,825	)	$	(34,708	)	$	(261,166	)


Purchase of property, plant and equipment
Eastern Region	$	4,992		$	1,237		$	9,523		$	10,858
Western Region		64			80			68			468
Other		16			128			20			149

Total	$	5,072		$	1,445		$	9,611		$	11,475


Purchase of intangibles
Eastern Region	$	31		$	86		$	31