ANNUAL 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 jurisdiction of Incorporation or organization) |
I.R.S. Employer Identification No. | |
(Address of principal executive offices) |
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Smaller reporting company |
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Emerging growth company |
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• | We can provide no assurance when or if we will obtain regulatory approvals required for us to proceed with the transactions contemplated by our pending recapitalization transaction or that such recapitalization transaction will be consummated pursuant to our plan of arrangement under the Business Corporations Act (British Columbia). |
• | We are a holding company and a majority of our assets are the capital stock of our subsidiaries. We rely on operators of our subsidiaries to execute on their business plans, produce cannabis products and otherwise conduct day to day operations. As a result, our cash flows are dependent upon the ability of our subsidiaries to operate successfully. |
• | We rely on third-party suppliers, manufacturers and contractors to provide certain products and services, and due to the uncertain regulatory landscape for regulating cannabis in the United States, such third-parties may elect, at any time, to decline or withdraw services necessary for our operations and the operations of our subsidiaries. |
• | Our business plan depends in part on our ability to continue merging with or acquiring other businesses in the cannabis industry, including cultivators, processors, manufacturers and dispensaries; however, while the restructuring support agreement is in effect, we have significant restrictions on our ability to execute our merger and acquisition strategy. |
• | We compete for market share with other companies, including businesses and persons engaging in illicit cannabis-related activities. |
• | Our U.S. tax classification could have a material adverse effect on our financial condition and results of operations. In addition, we may incur significant tax liabilities under section 280E of the U.S. Tax Code. |
• | There is substantial doubt about our ability to continue as a going concern. |
• | We will need additional capital to sustain our operations, but while the restructuring support agreement related to our pending recapitalization transaction remains in effect, we have significant restrictions on our ability to obtain further financing. |
• | We do not have sufficient cash flow from our business to pay our debt obligations and are currently in default of our existing debt obligations. |
• | Outstanding debt instruments are secured by our assets and our failure to comply with the terms of such debt instruments could result in the loss of all of our assets. |
• | We may face limitations on ownership of cannabis licenses. |
• | There is uncertainty surrounding the regulatory pathway for CBD. |
• | Our products are not approved by the FDA or any other federal governmental authority. |
• | The presence of trace amounts of THC in our hemp products may cause adverse consequences to users of such products that will expose us to the risk of liability and other consequences. |
• | We may have difficulty accessing the service of banks since cannabis and certain cannabis-related activities are illegal under U.S. federal law and certain state laws, which may make it difficult us to operate. |
• | Cannabis pricing and supply regulation may adversely affect our business. |
• | High state and local excise and other taxes on cannabis products and compliance costs may adversely affect our business. |
• | Our operations could be adversely affected by events outside of our control such as natural disasters, wars or health epidemics such as COVID-19. |
• | The resignation of Hadley Ford in 2020 as our Chief Executive Officer could have an adverse impact on our business. |
• | We may face difficulties in enforcing our contracts because our contracts involve cannabis and other activities that are not legal under federal law and in some state jurisdictions. |
• | We may be subject to product liability claims and product recalls. |
• | Third parties with whom we do business may perceive themselves as being exposed to reputational risk because of their relationship with us due to our cannabis-related business activities and may as a result, refuse to do business with us. |
• | We may become subject to liability arising from fraudulent or illegal activity by our employees, independent contractors and consultants. |
• | We may be subject to risks related to the protection and enforcement of our intellectual property rights. |
• | The cannabis industry is highly regulated. |
• | Our business activities and the business activities of our subsidiaries, while believed to be compliant with applicable U.S. state and local laws, currently are illegal under U.S. federal law. |
• | If we are not able to comply with all safety, security, health and environmental regulations applicable to our operations and industry, we may be held liable for any breaches thereof. |
• | U.S. border officers could deny entry into the United States to non-U.S. citizens who are employees of or investors in companies with cannabis operations in the United States or Canada. |
• | There is a limited market for our common shares, and the market price of our common shares is volatile and may not accurately reflect the long-term value of our Company. There is no assurance that an investment in our common shares will earn any positive return. |
• | We have never paid dividends in the past and do not expect to declare or pay dividends in the foreseeable future. |
• | Outstanding and future issuances of debt securities, which would rank senior to our common shares upon bankruptcy or liquidation, may adversely affect the level of return holders of common shares may be able to receive. |
• | We are an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common shares less attractive to investors. |
State |
Licensed Entity |
Type of Investment |
Permitted Number of Facilities | |||
Arizona | ABACA, Inc. (“ABACA”) The Healing Center Wellness Center, Inc. (“THCWC”) Health for Life, Inc. (“HFL”) Soothing Options, Inc. (“Soothing Options”) |
See Note 1 | 4 dispensaries 2 12 cultivation/processing 2 4 processing/packaging 2 | |||
Colorado | See Note 3 | See Note 3 | See Note 3 | |||
Florida | McCrory’s Sunny Hill Nursery, LLC (“McCrory’s”) |
Ownership (100%) 4 |
No dispensary cap 5 1 cultivation 6 1 processing 6 | |||
Illinois | Island Thyme, LLC (“Island Thyme”) | Ownership (18.8%) 7 |
2 adult-use dispensaries8 | |||
Maryland | LMS Wellness, Benefit LLC (“LMS”) GreenMart of Maryland, LLC (“GMMD”) Rosebud Organics, Inc. (“Rosebud”) Budding Rose, Inc. (“Budding Rose”) |
See Note 9 | 3 dispensaries 1 processing | |||
Massachusetts | Mayflower Medicinals, Inc. (“Mayflower”) Cannatech Medicinals, Inc. (“Cannatech”) |
Ownership (100%) 10 |
3 medical dispensaries 11 3 adult-use dispensaries11 3 medical cultivation/processing 12 3 adult-use cultivation12 3 adult-use processing12 | |||
Nevada | GreenMart of Nevada NLV, LLC (“GMNV”) |
See Note 13 | 3 dispensaries 13 1 cultivation 14 1 processing 14 | |||
New Jersey | MPX New Jersey, LLC (“MPX NJ”) | Ownership (100%) 15 |
3 dispensaries 16 1 cultivation 17 1 processing 17 | |||
New York | Citiva Medical, LLC (“Citiva”) | Ownership (100%) | 4 dispensaries 18 1 cultivation 18 1 processing 18 |
Vermont | FWR Inc. d/b/a Grassroots Vermont (“GRVT”) | Ownership (100%) 19 |
2 dispensaries 20 1 cultivation 20 1 processing 20 | |||
United States | iA CBD, LLC (“iA CBD”) | Ownership (100%) | See Note 21 |
(1) | ABACA, HFL, Soothing Options and THCWC are non-profit entities. Our wholly owned subsidiary, iAnthus Arizona, LLC (“iA AZ”), has entered into management agreements with ABACA, HFL, Soothing Options and THCWC, each of which holds an Arizona Medical Marijuana Dispensary Registration Certificate and a Marijuana Establishment License. |
(2) | A holder of an Arizona Medical Marijuana Dispensary Registration Certificate and Marijuana Establishment License, also referred to as a dual license holder, permits its holder to operate one co-located medical and adult-use retail cannabis dispensary, which can be co-located with one medical or adult-use cannabis cultivation and manufacturing facility, two separately located cultivation and manufacturing facilities, and one separately located manufacturing, packaging, and storage facility. The Dispensary Registration Certificates and Marijuana Establish Licenses each held by ABACA, HFL, Soothing Options and THCWC, collectively allow for the operation of: (i) up to four co-located medical and adult-use cannabis retail dispensaries, (ii) up to four on-site cultivation facilities to cultivate and manufacturing cannabis and cannabis products; (iii) up to eight off-site cultivation facilities to cultivate and manufacture cannabis and cannabis products, and (iv) up to four off-site locations to manufacture, package, and store cannabis and cannabis products, all subject to regulatory approval. Through ABACA, HFL, Soothing Options and THCWC, we currently operate four medical cannabis dispensaries and three facilities for medical cannabis cultivation and processing, two of which are co-located with their affiliated dispensaries. Adult-use retail sales began in April 2021. In addition, Soothing Options has entered into a Cultivation Services Agreement with an unaffiliated, third-party, pursuant to which Soothing Options will license its off-site cultivation and processing license to the third-party for a monthly fee and an option to purchase a set amount of biomass per month. |
(3) | We do not currently have a license to operate a cannabis business in Colorado; however, on December 5, 2016, in related transactions, we, through our wholly-owned subsidiaries, Scarlet Globemallow, LLC (“Scarlet”) and Bergamot Properties, LLC (“Bergamot”) acquired certain non-cannabis assets of Organix, LLC (“Organix”) and the real estate holdings of Organix’s affiliate, DB Land Holdings, Inc., consisting of a 12,000 square foot cultivation facility in Denver, Colorado. Bergamot also purchased a dispensary located in Breckenridge, Colorado from a third-party. |
(4) | We own 100% of GHHIA Management, Inc. (“GHHIA”), which holds an exclusive 40-year management agreement to operate the medical cannabis business associated with the Florida Medical Marijuana Treatment Center (“MMTC”) license issued to McCrory’s and held an option to acquire 100% of McCrory’s for a nominal consideration, which was subject to the approval of the Florida Department of Health. On August 14, 2019, the Florida Department of Health approved GHHIA’s option to acquire McCrory’s and GHHIA subsequently exercised the option. Accordingly, we, through our wholly-owned subsidiary GHHIA, now own 100% of McCrory’s. |
(5) | Until April 1, 2020, Florida imposed a progressive limit on the number of medical cannabis dispensaries that could be operated by each vertically licensed MMTC based on the number of registered qualified medical cannabis patients in the state. This statutory cap, which permitted 25 dispensaries per MMTC, increasing by 5 dispensaries for each additional 100,000 patients registered in Florida’s Medical Marijuana Use Registry, expired on April 1, 2020. As of April 1, 2020, the MMTC license held by McCrory’s is no longer subject to the statutory cap. Through its vertically integrated MMTC license, McCrory’s currently operates 18 medical dispensaries in Florida. |
(6) | Through its vertically integrated MMTC license, McCrory’s currently operates one co-located cultivation and processing facility located in Lake Wales, Florida. |
(7) | Our wholly-owned subsidiary, IA IT, LLC (“IA IT”) holds an 18.8% ownership interest in Island Thyme with the remaining 81.2% of Island Thyme being held by five third-party individuals. On August 5, 2021 and August 19, 2021, Island Thyme won two lotteries (the “IL Lotteries”) conducted by the Illinois Department of Financial and Professional Regulation (“IFPR”) as a result of which, Island Thyme is qualified to be awarded two conditional adult-use dispensary licenses (the “IL Conditional Licenses”). On July 28, 2021, the Circuit Court of Cook County, Illinois entered an order, staying IFPR’s award of any conditional adult-use dispensary licenses, including the IL Conditional Licenses (the “IL Stay Order”). |
(8) | If and when the IL Stay Order is lifted and Island Thyme is awarded its IL Conditional Licenses, Island Thyme will be permitted to open two adult-use dispensary retail locations in the Greater Chicago area. Subject to regulatory approval, Island Thyme anticipates opening its two dispensary retail locations in Blue Island, Illinois and Oak Forest, Illinois. |
(9) | Our wholly-owned subsidiary, S8 Management, LLC (“S8 Management”), has entered into management agreements with three medical cannabis dispensaries, LMS, Budding Rose, GMMD and one medical cannabis processor facility, Rosebud. Our wholly-owned subsidiary, CGX Life Sciences, Inc. (“CGX”), holds options to acquire the medical cannabis dispensary licenses and the medical cannabis processor license, subject to regulatory approval. As of November 22, 2021, CGX exercised all of its options to acquire LMS, Budding Rose, CMMD and Rosebud. CGX’s acquisition of these license holders remain subject to regulatory approval. |
(10) | We, through our wholly-owned subsidiary, iAnthus Capital Management, LLC (“ICM”), own 100% of Mayflower, which holds several medical and adult-use cannabis licenses. In addition, we, through our wholly-owned subsidiary CGX, own 100% of two separate management entities with service and consulting agreements with a second vertically integrated medical cannabis license holder, Cannatech. On October 8, 2020, we obtained approval from the Massachusetts Cannabis Control Commission to convert Cannatech from a non-profit corporation to a for-profit corporation. On November 16, 2020, Cannatech was converted from a non-profit corporation to a for-profit corporation. As a result of the conversion, Cannatech is now owned 100% by the Company, through its wholly-owned subsidiary, CGX. In Massachusetts, an entity is permitted to control and operate up to three vertically-integrated medical Marijuana Treatment Center licenses, which include medical cultivation, product manufacturing and retail dispensing functions, up to three adult-use Marijuana Establishment cultivation licenses, up to three adult-use Marijuana Establishment product manufacturing licenses and up to three adult-use Marijuana Establishment retail licenses, with a maximum total cultivation “canopy” of up to 100,000 square feet. We, through Mayflower, currently hold one final vertically integrated medical license, one provisional vertically integrated medical license, one final adult-use cultivation license, one final adult-use product manufacturing license, two final adult-use retail licenses and one provisional adult-use retail license. In addition, Cannatech currently holds one provisional vertically integrated medical license, one provisional adult-use product manufacturing license, and one final adult-use Marijuana Establishment cultivation license, which became operational on November 22, 2021. |
(11) | We currently operate one Marijuana Treatment Center retail location, or medical dispensary, in Boston, Massachusetts and one Marijuana Establishment retail location, or adult-use dispensary, in Worcester, Massachusetts. We anticipate operating a total of three medical Marijuana Treatment Center retail locations in Boston, Lowell and Fall River, Massachusetts, subject to applicable regulatory approvals. In addition, we anticipate operating a total of three Marijuana Establishment retail locations, or adult-use dispensaries, in Worcester, Boston and Lowell, Massachusetts, two of which we expect will be co-located with our Marijuana Treatment Center retail locations in Boston and Lowell, Massachusetts subject to applicable regulatory approvals. |
(12) | Our Holliston, Massachusetts facility currently includes the cultivation and product manufacturing operations of its final vertically integrated medical Marijuana Treatment Center license as well as the operations of its final adult-use Marijuana Establishment cultivation license and product manufacturing license. Subject to regulatory approval, we expect that our Holliston, Massachusetts facility will also include the cultivation and product manufacturing operations of Mayflower’s additional provisional vertically-integrated medical Marijuana Treatment Center license. Subject to regulatory approval, we expect that our Fall River, Massachusetts facility will include the cultivation and product manufacturing operations of the provisional vertically integrated medical Marijuana Treatment Center license held by Cannatech as well as the operations of Cannatech’s final adult-use Marijuana Establishment cultivation license and provisional adult-use product manufacturing license granted to Cannatech on October 8, 2020. Subject to applicable regulatory approval, we expect to operate cultivation and product manufacturing functions for three vertically integrated medical licenses, two adult-use cultivation licenses and two adult-use product manufacturing licenses out of two facilities in Holliston and Fall River, Massachusetts. We may also seek an additional adult-use cultivation license and an additional product manufacturing license within the Massachusetts statutory and regulatory limitations. |
(13) | As a result of the acquisition of MPX Bioceutical Corporation on February 5, 2019 (the “MPX Acquisition”), we, through our wholly-owned subsidiary CGX, have acquired 99% of the ownership interests of GMNV, a licensed cultivation and production facility located in North Las Vegas, Nevada (the “NLV Facility”) that also holds three conditional dispensary licenses to be located in Henderson, Las Vegas and Reno, Nevada. On February 23, 2021, the Nevada Cannabis Compliance Board approved the change in control of GMNV resulting from the MPX Acquisition, including the acquisition of the remaining 1% ownership interest in GMNV. |
(14) | GMNV currently has two Nevada medical cannabis establishment registration certificates, one for cultivation and one for production, each of which occurs at the NLV Facility. GMNV also currently has two Nevada adult-use licenses, one for cultivation and one for production, each of which also occurs at the same NLV Facility. |
(15) | On August 27, 2019, iAnthus New Jersey, LLC (“INJ”), our wholly-owned subsidiary, entered into a financing, leasing, licensing and services agreement (the “Services Agreement”) with MPX NJ, which remains subject to regulatory approval by the New Jersey Cannabis Regulatory Commission (“CRC”). On October 24, 2019, INJ and MPX NJ entered into a loan agreement pursuant to which on October 16, 2019, MPX NJ issued INJ a convertible promissory note in the principal amount of $10,000,000 (the “INJ Note”). On February 3, 2021, INJ sent a notice of conversion to MPX NJ, notifying MPX NJ of INJ’s election to convert the entire principal amount outstanding of such note, plus all accrued and unpaid interest thereon, into such number of Class A units of MPX NJ representing 99% of the equity interest in MPX NJ. The conversion of INJ’s debt to equity is subject to approval by the CRC. On October 24, 2019, INJ, MPX NJ and the then-equityholders of MPX NJ entered into an option agreement, pursuant to which INJ |
was granted the option to acquire the remaining 1% of MPX NJ for nominal consideration, subject to approval of the CRC, which option INJ exercised on February 25, 2021. On January 7, 2022, the CRC approved the conversion of INJ’s debt into a 99% equity interest in MPX NJ and INJ’s acquisition of the remaining 1% of MPX NJ. On February 1, 2022, INJ closed the acquisition of MPX NJ, resulting in INJ owning 100% of the equity interests of MPX NJ. |
(16) | One medical dispensary is permitted under the current rules in New Jersey, with the possibility of operating two more satellite dispensaries subject to regulatory approval. On December 31, 2020, MPX NJ submitted two applications for two dispensary satellite locations. The satellite dispensary applications are currently pending and remain subject to approval by the CRC. |
(17) | MPX NJ cultivates medical cannabis at its Pleasantville, New Jersey facility, which is also expected to include processing capabilities. |
(18) | We, through our wholly-owned subsidiary ICM, own 100% of Citiva, which holds a vertically integrated medical cannabis license allowing Citiva to operate one medical manufacturing facility, including cultivation and processing capabilities and up to four medical dispensaries. Citiva currently operates three medical dispensaries in Brooklyn, Wappingers Falls and Staten Island, New York. We anticipate operating one additional medical dispensary in Ithaca, New York and one manufacturing facility in Warwick, New York, subject to applicable regulatory approvals. |
(19) | We own 100% of Grassroots Vermont Management Services, LLC (“GVMS”), the sole shareholder of GRVT, which has entered into a management services agreement with GRVT. Accordingly, we, through our wholly-owned subsidiary GVMS, own 100% of GRVT. |
(20) | GRVT is a Vermont Registered Marijuana Dispensary, which permits GRVT to operate one vertically integrated location to cultivate, process and dispense medical cannabis and one additional dispensing location. GRVT currently operates one vertically integrated location where it cultivates, processes and dispenses medical cannabis in Brandon, Vermont. |
(21) | On June 27, 2019, we, through our wholly-owned subsidiary, iA CBD, acquired substantially all of the property and assets of CBD For Life, LLC (“CBD For Life”). As a result of the acquisition of CBD For Life, iA CBD is engaged in the formulation, manufacture, creation and sale of products infused with CBD. The CBD used to manufacture these products is exclusively derived from hemp. We intend for all our hemp-derived products to be produced and sold in accordance with the 2014 Farm Bill and the 2018 Farm Bill, as applicable, at the time and location of operation and for such products to constitute hemp under the 2018 Farm Bill. |
(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 Convertible Notes will be reduced to $85.0 million, which will be increased by the amount of the Interim Financing (as defined below), which has a first lien, senior secured position over all of our 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 (the “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 year, 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 our common shares. |
(4) | On January 6, 2022, our Board of Directors approved the terms of a Long-Term Incentive Program recommended by our compensation committee, pursuant to which we will allocate to certain of our employees (including our executive officers) restricted stock units and option awards up to, in the aggregate, 5.75% of our fully diluted equity under our Amended and Restated Omnibus Incentive Plan dated October 15, 2018 (“LTIP Awards”) in order to attract and retain such employees. The allocations of the LTIP Awards are contingent upon, and will occur within ten days following, the closing of the Recapitalization Transaction contemplated by the Restructuring Support Agreement. All of our existing warrants and options will be cancelled, and our common shares may be consolidated pursuant to a consolidation ratio which has yet to be determined. |
• | Preventing the distribution of marijuana to minors; |
• | Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels; |
• | Preventing the diversion of marijuana from states where it is legal under state law in some form to other states; |
• | Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; |
• | Preventing violence and the use of firearms in the cultivation and distribution of marijuana; |
• | Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use; |
• | Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and |
• | Preventing marijuana possession or use on U.S. federal property. |
• | a decline in the price of our common shares to the extent that the current market price reflects a market assumption that these transactions will be completed; |
• | the payment of certain costs related to each transaction, such as legal, accounting and consulting fees, even if a transaction is not completed; and |
• | an absence of assurance that such opportunities will be available to us in the future, or at all. |
• | have business interests or targets that are inconsistent with ours; |
• | take action contrary to our policies or objectives; |
• | be unable or unwilling to fulfill their obligations under their agreements with us; or |
• | experience financial, operational or other difficulties, including insolvency, which could limit or suspend their ability to perform their obligations. |
• | our reputation and our ability to conduct business; |
• | our ability to obtain and/or maintain cannabis licenses, whether directly or indirectly, in the United States; |
• | the listing of our securities on various stock exchanges |
• | our financial position, operating results, profitability, or liquidity; and |
• | the market price of our securities. |
Location |
Facility Type |
Approximate Square Footage of Operational Facilities |
Lease Expiration Dates | |||
Arizona | Dispensary/Processing/Cultivation Administrative |
87,465 3,976 |
April 2022 – March 2033 | |||
California | Administrative | 2,133 | October 2025 | |||
Canada | Administrative | 2,864 | June 2022 | |||
Colorado | Dispensary/Processing/Cultivation | 22,343 | January 2022 – June 2023 | |||
Florida | Dispensary/Processing/Cultivation Administrative |
349,163 3,718 |
February 2023 – June 2030 | |||
Maryland | Dispensary/Processing | 15,139 | April 2022 – September 2027 | |||
Massachusetts | Dispensary/Processing/Cultivation Administrative |
78,333 2,200 |
February 2022 – March 2027 | |||
Nevada | Dispensary/Processing/Cultivation | 32,407 | November 2023 – August 2026 | |||
New Jersey | Dispensary/Processing/Cultivation Administrative |
4,500 3,000 |
May 2022 – September 2034 | |||
New York | Dispensary/Processing/Cultivation Administrative |
11,790 16,956 |
March 2021 – January 2030 | |||
Vermont | Dispensary/Processing/Cultivation | 16,960 | April 2021 |
(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 Convertible 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 our 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. |
(2) | The Secured Lenders provided $14.7 million of 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 our common shares. |
(4) | On January 6, 2022, our Board of Directors approved the terms of a Long-Term Incentive Program recommended by the Board of Director’s compensation committee and, pursuant to which, we will allocate to certain of our employees (including executive officers) restricted stock units and option awards up to, in the aggregate, 5.75% of our fully diluted equity under our Amended and Restated Omnibus Incentive Plan dated October 15, 2018 in order to attract and retain such employees. The allocations of the LTIP Awards are contingent upon, and will occur within ten days following, the closing of the Recapitalization Transaction contemplated by the Restructuring Support Agreement. All of our existing warrants and options will be cancelled, and our common shares may be consolidated pursuant to a consolidation ratio which has yet to be determined. |
Years Ended December 31, |
||||||||
(in ’000s of U.S. dollars) |
2021 |
2020 (Revised) |
||||||
Revenues |
||||||||
Eastern Region |
$ | 128,979 | $ | 91,149 | ||||
Western Region |
72,424 | 57,613 | ||||||
Other |
1,615 | 2,907 | ||||||
|
|
|
|
|||||
Total revenues |
$ |
203,018 |
$ |
151,669 |
||||
|
|
|
|
|||||
Cost of sales applicable to revenues |
||||||||
Eastern Region |
$ | (44,116 | ) | $ | (33,601 | ) | ||
Western Region |
(44,547 | ) | (33,374 | ) | ||||
Other |
(3,072 | ) | (2,854 | ) | ||||
|
|
|
|
|||||
Total cost of sales applicable to revenues |
$ |
(91,735 |
) |
$ |
(69,829 |
) | ||
|
|
|
|
|||||
Gross profit |
||||||||
Eastern Region |
$ | 84,863 | $ | 57,548 | ||||
Western Region |
27,877 | 24,239 | ||||||
Other |
(1,457 | ) | 53 | |||||
|
|
|
|
|||||
Total gross profit |
$ |
111,283 |
$ |
81,840 |
||||
|
|
|
|
Years Ended December 31, |
||||||||
(in ’000s of U.S. dollars) |
2021 |
2020 (Revised) |
||||||
Total operating expenses |
$ | 133,308 | $ | 331,731 | ||||
Total other income and expenses |
31,974 | 44,838 | ||||||
Income tax expense |
22,249 | 18,633 |
Page |
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54 | ||||
Consolidated Financial Statements: |
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Report of the Independent Registered Public Accounting Firm (PCAOB ID |
55 | |||
56 | ||||
57 | ||||
58 | ||||
59 | ||||
60 |
As of December 31, |
||||||||
2021 |
2020 |
|||||||
(Revised) |
||||||||
Assets |
||||||||
Cash |
$ | $ | ||||||
Restricted cash |
||||||||
Accounts receivable, net of allowance for doubtful accounts of $ $ |
||||||||
Prepaid expenses |
||||||||
Inventories, net |
||||||||
Other current assets |
||||||||
Current Assets |
||||||||
Investments |
||||||||
Property, plant and equipment, net |
||||||||
Right-of-use |
||||||||
Other long-term assets |
||||||||
Intangible assets, net |
||||||||
Total Assets |
$ |
$ |
||||||
Liabilities and Shareholders’ (Deficit) Equity |
||||||||
Accounts payable |
$ |