QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
British Columbia, |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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(Address of principal executive offices) |
(Zip Code) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
Page No. |
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PART I. FINANCIAL INFORMATION |
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Item 1. |
1 | |||||
2 | ||||||
3 | ||||||
4 | ||||||
5 | ||||||
6 | ||||||
Item 2. |
28 | |||||
Item 3. |
38 | |||||
Item 4. |
38 | |||||
39 | ||||||
Item 1. |
39 | |||||
Item 1A. |
41 | |||||
Item 2. |
41 | |||||
Item 3. |
41 | |||||
Item 4. |
41 | |||||
Item 5. |
41 | |||||
Item 6. |
42 | |||||
43 |
September 30, |
December 31, |
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2021 |
2020 |
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(Revised) |
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Assets |
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Cash |
$ | $ | ||||||
Restricted cash |
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Accounts receivable, net of allowance for doubtful accounts of $ |
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Prepaid expenses |
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Inventories |
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Other assets |
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Current Assets |
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Investments |
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Property, plant and equipment |
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Right-of-use |
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Other long-term assets |
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Intangible assets |
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Total Assets |
$ |
$ |
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Liabilities |
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Accounts payable |
$ | $ | ||||||
Accrued and other current liabilities |
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Current portion of long-term debt, net of issuance costs |
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Derivative liabilities |
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Current portion of lease liabilities |
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Current Liabilities |
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Long-term debt, net of issuance costs |
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Deferred income tax |
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Long-term portion of lease liabilities |
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Total Liabilities |
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Commitments and Contingencies |
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Shareholders’ Equity |
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Common shares — |
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Shares to be issued |
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Additional paid-in capital |
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Accumulated deficit |
( |
) | ( |
) | ||||
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Total Shareholders’ Equity |
$ |
$ |
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Total Liabilities and Shareholders’ Equity |
$ |
$ |
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|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(Revised) |
(Revised) |
|||||||||||||||
Revenues, net of discounts |
$ |
$ |
$ |
$ |
||||||||||||
Costs and expenses applicable to revenues |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
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Gross profit |
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Operating expenses |
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Selling, general and administrative expenses |
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Depreciation and amortization |
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Write-downs, recoveries and other charges, net |
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Impairment loss |
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Loss from operations |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Interest income |
||||||||||||||||
Other income |
||||||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Accretion expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Provision for debt obligation fee |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
( Loss) gains from change in fair value of financial instruments |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
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Loss before income taxes |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Income tax expense |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
|
|
|
|
|
|
|
|
|||||||||
Net loss per share - basic and diluted |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
Weighted average number of common shares outstanding - basic and diluted |
Three Months Ended September 30, 2021 |
||||||||||||||||||||
Number of Common Shares (‘000) |
Shares to be Issued |
Additional Paid-in-Capital |
Accumulated Deficit |
Total Shareholders’ Equity |
||||||||||||||||
Balance – June 30, 2021 |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
Share-based compensation |
— | — | — | |||||||||||||||||
Net loss |
— | — | — | ( |
) | ( |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance – September 30, 2021 |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 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 |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
Share-based compensation |
— | — | — | |||||||||||||||||
Net loss |
— | — | — | ( |
) | ( |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance – September 30, 2021 |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020 |
||||||||||||||||||||
Number of Common Shares (‘000) |
Shares to be Issued |
Additional Paid-in-Capital |
Accumulated Deficit |
Total Shareholders’ Equity |
||||||||||||||||
Balance – June 30, 2020 |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
Share-based compensation |
— | — | — | |||||||||||||||||
Net loss (Revised) |
— | — | — | ( |
) | ( |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance (Revised) – September 30, 2020 |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020 |
||||||||||||||||||||
Number of Common Shares (‘000) |
Shares to be Issued |
Additional Paid-in-Capital |
Accumulated Deficit |
Total Shareholders’ Equity |
||||||||||||||||
Balance – January 1, 2020 |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
Share issuance – Settlement of outstanding obligations |
— | — | ||||||||||||||||||
Share-based compensation |
— | — | — | |||||||||||||||||
Other - Warrant issuance |
— | — | ( |
) | — | ( |
) | |||||||||||||
Net loss (Revised) |
— | — | — | ( |
) | ( |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance (Revised) – September 30, 2020 |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
||||||||
2021 |
2020 |
|||||||
(Revised) |
||||||||
CASH FLOW FROM OPERATING ACTIVITIES |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to cashflow from (used in) operations: |
||||||||
Interest income |
( |
) | ( |
) | ||||
Interest expense |
||||||||
Accretion expense |
||||||||
Debt obligation fees |
||||||||
Impairment loss |
||||||||
Depreciation and amortization |
||||||||
Write-downs, recoveries and other charges, net |
||||||||
Share-based compensation |
||||||||
Gain from change in fair value of financial instruments |
( |
) | ( |
) | ||||
Income from equity-accounted investments |
— | ( |
) | |||||
Deferred income taxes |
( |
) | ||||||
Change in non-cash working capital items (Note 12) |
||||||||
|
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|
|||||
NET CASH FLOW PROVIDED BY (USED IN) OPERATING ACTIVITIES |
$ |
$ |
( |
) | ||||
|
|
|
|
|||||
CASH FLOW FROM INVESTING ACTIVITIES |
||||||||
Purchase of property, plant and equipment |
( |
) | ( |
) | ||||
Acquisition of other intangible assets |
( |
) | ( |
) | ||||
Proceeds from redemption and sale of investment |
— | |||||||
Issuance of related party promissory note |
( |
) | ( |
) | ||||
|
|
|
|
|||||
NET CASH USED IN INVESTING ACTIVITIES |
$ |
( |
) |
$ |
( |
) | ||
|
|
|
|
|||||
CASH FLOW FROM FINANCING ACTIVITIES |
||||||||
Proceeds from issuance of debt |
||||||||
Debt issuance costs |
( |
) | ( |
) | ||||
Repayment of debt |
( |
) | ( |
) | ||||
|
|
|
|
|||||
NET CASH PROVIDED BY FINANCING ACTIVITIES |
$ |
$ |
||||||
|
|
|
|
|||||
CASH AND RESTRICTED CASH: |
||||||||
NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH DURING THE PERIOD |
( |
) | ||||||
|
|
|
|
|||||
CASH AND RESTRICTED CASH, BEGINNING OF PERIOD |
||||||||
|
|
|
|
|||||
CASH AND RESTRICTED CASH, END OF PERIOD |
$ |
$ |
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|
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(a) |
Description of Business |
(b) |
Basis of Presentation |
(c) |
Going Concern |
• | 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; |
• | 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. |
(d) |
Basis of Consolidation |
(e) |
Use of Estimates |
(f) |
Change in Estimates |
(g) |
Coronavirus Pandemic |
Operating Leases |
||||
2022 |
$ | |||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
Total lease payments |
$ | |||
Less: interest expense |
( |
) | ||
Present value of lease liabilities |
$ | |||
Weighted-average remaining lease term (years) |
||||
Weighted-average discount rate |
% | |||
Balance Sheet Information |
Classification |
September 30, 2021 |
December 31, 2020 |
|||||||||
Right-of-use |
Operating leases | $ | $ | |||||||||
Lease Liabilities |
||||||||||||
Current portion of lease liabilities |
Operating leases | $ | $ | |||||||||
Long-term lease liabilities |
Operating leases | |||||||||||
Total |
$ |
$ |
||||||||||
September 30, 2021 |
December 31, 2020 |
|||||||
(Revised) |
||||||||
Supplies |
$ | $ | ||||||
Raw materials |
||||||||
Work in process |
||||||||
Finished goods |
||||||||
Total |
$ |
$ |
||||||
Secured Notes (1) |
May 2019 Debentures |
March 2019 Debentures |
Other |
Total |
||||||||||||||||
As of January 1, 2021 |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Fair value of financial liabilities issued |
— | — | ||||||||||||||||||
Accretion of balance |
||||||||||||||||||||
Repayment |
— | — | — | ( |
) | ( |
) | |||||||||||||
As of September 30, 2021 |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
(1) | This amount includes the Company’s obligation to pay an exit fee of $ |
(a) |
Secured Notes |
(b) |
March 2019 Debentures |
(c) |
May 2019 Debentures |
(d) |
Stavola Trust Note |
(a) |
Share Capital |
• | |
(b) |
Warrants |
September 30, 2021 |
||||||||
Units |
Weighted Average Exercise Price (C$) |
|||||||
Warrants outstanding as of December 31, 2020 |
$ | |||||||
Granted |
||||||||
Exercised |
||||||||
Expired |
( |
) | ||||||
|
|
|
|
|||||
Warrants outstanding as of September 30, 2021 |
$ |
|||||||
|
|
|
|
September 30, 2021 |
December 31, 2020 |
|||||||
Risk-free interest rate |
% | % | ||||||
Expected dividend yield |
% | % | ||||||
Expected volatility |
% | % |
September 30, 2021 |
December 31, 2020 |
|||||||||||||||
Year of expiration |
Number Outstanding |
Weighted Average Exercise Price (C$) |
Number Outstanding |
Weighted Average Exercise Price (C$) |
||||||||||||
2021 |
$ | $ | ||||||||||||||
2022 |
||||||||||||||||
2023 |
||||||||||||||||
|
|
|
|
|
|
|
|
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Warrants outstanding |
$ |
$ |
||||||||||||||
|
|
|
|
|
|
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|
(c) |
Potentially Dilutive Securities |
September 30, 2021 |
December 31, 2020 |
|||||||
Common share options |
||||||||
Warrants |
||||||||
Secured notes |
||||||||
Debentures |
||||||||
MPX dilutive instruments (1) |
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|
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|
|
|||||
Total |
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|
|
(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. |
(d) |
Stock Options |
September 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 |
$ | — | $ | — | ||||||||||||||||||||
Granted |
— | — | ||||||||||||||||||||||
Exercised |
— | — | ||||||||||||||||||||||
Forfeited/Expired |
( |
) | — | ( |
) | — | ||||||||||||||||||
Options outstanding, ending |
$ |
$ |
||||||||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 (Revised) |
2021 |
2020 (Revised) |
|||||||||||||
Loss before income taxes |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Income tax expense |
||||||||||||||||
Effective tax rate |
( |
)% | ( |
)% | ( |
)% | ( |
)% | ||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 (Revised) |
2021 |
2020 (Revised) |
|||||||||||||
Revenues |
||||||||||||||||
Eastern Region |
$ | $ | $ | $ | ||||||||||||
Western Region |
||||||||||||||||
Other (1) |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
Gross profit |
||||||||||||||||
Eastern Region |
$ | $ | $ | $ | ||||||||||||
Western Region |
||||||||||||||||
Other |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
Depreciation and amortization |
||||||||||||||||
Eastern Region |
$ | $ | $ | $ | ||||||||||||
Western Region |
||||||||||||||||
Other |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
Asset impairments and write-downs |
||||||||||||||||
Eastern Region |
$ | $ | $ | $ | ||||||||||||
Western Region |
— | — | ||||||||||||||
Other |
— | |||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
Net loss |
||||||||||||||||
Eastern Region |
$ | $ | ( |
) | $ | $ | ( |
) | ||||||||
Western Region |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Total |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
Purchase of property, plant and equipment |
||||||||||||||||
Eastern Region |
$ | $ | $ | $ | ||||||||||||
Western Region |
||||||||||||||||
Other |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
Purchase of intangibles |
||||||||||||||||
Eastern Region |
$ | — | $ | $ | $ | |||||||||||
Western Region |
— | — | — | |||||||||||||
Other |
— | |||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
(1) | Revenues from segments below the quantitative thresholds are attributable to an operating segment of the Company that includes revenue from the sale of CBD products throughout the United States. This segment has never met any of the quantitative thresholds for determining reportable segments nor does it meet the qualitative criteria for aggregation with the Company’s reportable segments. |
September 30, 2021 |
December 31, 2020 |
|||||||
(Revised) |
||||||||
Assets |
||||||||
Eastern Region |
$ | $ | ||||||
Western Region |
||||||||
Other |
||||||||
Total |
$ |
$ |
||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Revenue |
||||||||||||||||
iAnthus branded products |
$ | $ | $ | $ | ||||||||||||
Third party branded products |
||||||||||||||||
Wholesale/bulk/other products |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
• | Level 1 – fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; |
• | Level 2 – fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and |
• | Level 3 – fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
September 30, 2021 |
December 31, 2020 |
|||||||||||||||||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||||||||||||||
Financial Assets |
||||||||||||||||||||||||||||||||
Long term investments - other 1 |
$ | $ | — | $ | — | $ |
$ | $ | — | $ | — | $ |
||||||||||||||||||||
Financial Liabilities |
||||||||||||||||||||||||||||||||
Derivative liabilities |
$ | — | $ | — | $ | $ |
$ | — | $ | — | $ | $ |
||||||||||||||||||||
(1) | Long-term investments – other are included in the investments balance on the unaudited interim condensed consolidated balance sheets. |
Financial Assets |
||||
Balance as of December 31, 2020 |
$ | |||
Revaluations on Level 1 instruments |
||||
Balance as of September 30, 2021 |
$ |
|||
Derivative Liabilities |
||||
Balance as of December 31, 2020 |
$ |
|||
Revaluations on Level 3 instruments |
||||
Balance as of September 30, 2021 |
$ |
|||
September 30, 2021 |
December 31, 2020 |
|||||||||||||||
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
|||||||||||||
Unsecured Debentures |
$ | $ | $ | $ | ||||||||||||
Secured Notes |
||||||||||||||||
Other |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
For the 12 months ended September 30, |
2022 |
2023 |
2024 |
2025 |
2026 |
|||||||||||||||
Operating leases |
$ | $ | $ | $ | $ | |
||||||||||||||
Service contracts |
||||||||||||||||||||
Long-term debt, principal (1) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | The payment schedule above shows amounts payable if the conversion options are not exercised by the lender of the Company’s convertible debt instruments. |
• | There is a claim from a former consultant against the Company, with respect to alleged consulting fees owed by MPX to the consultant, claiming the right to receive approximately $ |
• | There is a claim from two former noteholders against the Company and MPX Bioceutical ULC (“MPX ULC”), with respect to alleged payments of $ |
• | There is a claim against the Company, MPX ULC and MPX, with respect to a prior acquisition made by MPX in relation to a subsidiary that was not acquired by the Company as part of the MPX Acquisition, claiming $ |
September 30, 2021 |
December 31, 2020 |
|||||||
Financial Statement Line Item |
||||||||
Accounts receivable |
$ | $ | ||||||
Other long-term assets |
||||||||
|
|
|
|
|||||
Total |
$ |
$ |
||||||
|
|
|
|
For the Nine Months Ended September 30, |
||||||||
2021 |
2020 |
|||||||
Income taxes |
$ | |
$ | |
||||
Interest |
For the Nine Months Ended September 30, |
||||||||
2021 |
2020 |
|||||||
Decrease (increase) in: |
||||||||
Accounts receivables |
$ | ( |
) | $ | ||||
Prepaid expenses |
||||||||
Inventories |
( |
) | ( |
) | ||||
Other assets |
( |
) | ||||||
Increase (decrease) in: |
||||||||
Accounts payable |
( |
) | ( |
) | ||||
Accrued and other current liabilities |
||||||||
|
|
|
|
|||||
$ |
$ |
|||||||
|
|
|
|
For the Nine Months Ended September 30, |
||||||||
2021 |
2020 |
|||||||
Property, plant and equipment |
$ | $ | ||||||
Operating lease right-of-use |
||||||||
Intangible assets |
||||||||
$ |
$ |
|||||||
For the Nine Months Ended September 30, |
||||||||
2021 |
2020 |
|||||||
Write-downs : |
||||||||
Account receivable (recoveries) provisions, net |
$ | ( |
) | $ | ||||
Fixed asset |
||||||||
$ |
$ |
|||||||
For the Nine Months Ended September 30, |
||||||||
2021 |
2020 |
|||||||
Supplemental Cash Flow Information: |
||||||||
Share issuance - settlement of outstanding obligations |
$ | $ | ||||||
Cashless exercise of MPX warrants recorded as derivatives |
||||||||
Non-cash consideration transferred from the Tranche Four Secured Notes |
||||||||
Non-cash consideration transferred from the Senior Secured Bridge Notes |
September 30, 2021 |
December 31, 2020 |
|||||||
Cash |
$ | $ | ||||||
Restricted cash |
||||||||
Total cash and restricted cash presented in the statements of cash flows |
$ |
$ |
||||||
(in ’000s of U.S. dollars) |
Restructured Senior Debt 1 |
Interim Financing 2 |
8% Senior Unsecured Debentures 3 |
Pro Forma Common Equity 4 |
||||||||||||
Secured Lenders |
$ | $ | $ | % | ||||||||||||
Unsecured Debentureholders |
— | — | % | |||||||||||||
Existing Shareholders |
— | — | — | % | ||||||||||||
Total |
$ |
$ |
$ |
% |
(1) | The principal balance of the Secured Notes will be reduced to $ non-convertible and non-callable for three years and includes payment in kind at an interest rate of |
(2) | The Secured Lenders provided $ |
(3) | The non-callable for three years and are subordinate to the Restructured Senior Debt but senior to the Company’s common shares. |
(4) | Following consummation of the Recapitalization Transaction, a to-be-determined |
December 31, 2020 |
||||||||||||
As previously reported |
Adjustment |
As adjusted |
||||||||||
Inventories |
$ | $ | ( |
) | $ | |||||||
Current assets |
( |
) | ||||||||||
Total assets |
( |
) | ||||||||||
Accrued and other current liabilities |
( |
) | ||||||||||
Current liabilities |
( |
) | ||||||||||
Total liabilities |
( |
) | ||||||||||
Accumulated deficit |
( |
) | ( |
) | ( |
) | ||||||
Total shareholders’ equity |
( |
) | ||||||||||
Total liabilities and shareholders’ equity |
( |
) |
For the Nine Months Ended September 30, 2020 |
||||||||||||
As previously reported |
Adjustment |
As adjusted |
||||||||||
Costs and expenses applicable to revenues |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Gross margin |
( |
) | ||||||||||
Loss from operations |
( |
) | ( |
) | ( |
) | ||||||
Loss from operations before income tax 1 |
( |
) | ( |
) | ( |
) | ||||||
Income tax expense |
( |
) | ||||||||||
Net loss |
( |
) | ( |
) | ( |
) |
(1) | The revised balance includes income of $ |
(in ’000s of U.S. dollars) |
Restructured Senior Debt (1) |
Interim Financing (2) |
8% Senior Unsecured Debentures (3) |
Pro Forma Common Equity (4) |
||||||||||||
Secured Lenders |
$ | 85,000 | $ | 14,737 | $ | 5,000 | 48.625 | % | ||||||||
Unsecured Lenders |
— | — | 15,000 | 48.625 | % | |||||||||||
Existing Shareholders |
— | — | — | 2.75 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ |
85,000 |
$ |
14,737 |
$ |
20,000 |
100 |
% | ||||||||
|
|
|
|
|
|
|
|
(1) | The principal balance of the Secured Notes will be reduced to $85.0 million, which will be increased by the amount of the Interim Financing, which has a first lien, senior secured position over all of the Company’s assets, is non-convertible and non-callable for three years and includes payment in kind at an interest rate of 8% per year and a maturity date which will be five years after the consummation of the Recapitalization Transaction (the “Restructured Senior Debt”). |
(2) | The Secured Lenders provided $14.7 million of interim financing (“Interim Financing”) to ICM on substantially the same terms as the Restructured Senior Debt, net of a 5% original issue discount. The amounts of the Interim Financing along with any accrued interest thereon is expected to be converted into, and the original principal balance will be added to, the Restructured Senior Debt upon consummation of the Recapitalization Transaction. |
(3) | The 8% Senior Unsecured Debentures include payment in kind at an interest rate of 8% per annum, a maturity date which will be five years after the consummation of the Recapitalization Transaction, are non-callable for three years and are subordinate to the Restructured Senior Debt but senior to the Company’s common shares. |
(4) | Following consummation of the Recapitalization Transaction, a to-be-determined |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
(in ’000s of U.S. dollars) |
2021 |
2020 (Revised) |
2021 |
2020 (Revised) |
||||||||||||
Revenues |
||||||||||||||||
Eastern Region |
$ | 31,518 | $ | 23,759 | $ | 99,298 | $ | 61,397 | ||||||||
Western Region |
17,361 | 16,216 | 54,767 | 41,945 | ||||||||||||
Other |
384 | 641 | 1,231 | 2,346 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenues |
$ |
49,263 |
$ |
40,616 |
$ |
155,296 |
$ |
105,688 |
||||||||
|
|
|
|
|
|
|
|
|||||||||
Cost of sales applicable to revenues |
||||||||||||||||
Eastern Region |
$ | (12,058 | ) | $ | (7,042 | ) | $ | (34,273 | ) | $ | (21,721 | ) | ||||
Western Region |
(11,130 | ) | (8,272 | ) | (32,953 | ) | (22,949 | ) | ||||||||
Other |
(18 | ) | (199 | ) | (981 | ) | (1,573 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total cost of sales applicable to revenues |
$ |
(23,206 |
) |
$ |
(15,513 |
) |
$ |
(68,207 |
) |
$ |
(46,243 |
) | ||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
||||||||||||||||
Eastern Region |
$ | 19,460 | $ | 16,716 | $ | 65,025 | $ | 39,676 | ||||||||
Western Region |
6,231 | 7,944 | 21,814 | 18,996 | ||||||||||||
Other |
366 | 443 | 250 | 773 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total gross profit |
$ |
26,057 |
$ |
25,103 |
$ |
87,089 |
$ |
59,445 |
||||||||
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Total operating expenses |
$ | 30,841 | $ | 35,513 | $ | 92,538 | $ | 299,091 | ||||||||
Total other expense |
6,961 | 9,452 | 25,829 | 34,719 | ||||||||||||
Income tax expense |
4,090 | 5,609 | 19,265 | 12,272 |
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
ITEM 4. |
CONTROLS AND PROCEDURES. |
ITEM 6. |
EXHIBITS. |
Exhibit No. |
Description | |
31.1* | ||
31.2* | ||
32.1* | ||
32.2* | ||
101.INS* | Inline XBRL Instance Document | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104* | Cover Page Interactive Data File - the cover page from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 is formatted in Inline XBRL |
* | Filed herewith. |
IANTHUS CAPITAL HOLDINGS, INC. |
||||||
Date: November 8, 2021 |
By: |
/s/ Randy Maslow | ||||
Randy Maslow Interim Chief Executive Officer, President and Director (Principal Executive Officer) | ||||||
Date: November 8, 2021 |
By: |
/s/ Julius Kalcevich | ||||
Julius Kalcevich Chief Financial Officer (Principal Financial and Accounting Officer) |