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 |
||||
54 | ||||
Consolidated Financial Statements: |
||||
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 |
$ | $ | ||||||
Accrued and other current liabilities |
||||||||
Current portion of long-term debt, net of issuance costs |
||||||||
Derivative liabilities |
||||||||
Current portion of lease liabilities |
||||||||
Current Liabilities |
||||||||
Long-term debt, net of issuance costs |
||||||||
Deferred income tax |
||||||||
Long-term portion of lease liabilities |
||||||||
Total Liabilities |
||||||||
Commitments and Contingencies |
||||||||
Shareholders’(Deficit) Equity |
||||||||
Common shares - - - issued and outstanding (December 31, 2020 - - issued and outstanding) |
||||||||
Shares to be issued |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
( ) |
||||||
Total Shareholders’(Deficit) Equity |
$ |
( |
$ |
|||||
Total Liabilities and Shareholders’ Equity |
$ |
$ |
||||||
|
Year Ended December 31, |
|||||||
|
2021 |
2020 |
||||||
|
(Revised) |
|||||||
Revenues, net of discounts |
$ |
$ |
||||||
Costs and expenses applicable to revenues |
( |
( |
||||||
|
|
|
|
|||||
Gross profit |
||||||||
|
|
|
|
|||||
|
|
|
|
|
|
|
| |
Operating expenses |
||||||||
Selling, general and administrative expenses |
||||||||
Depreciation and amortization |
||||||||
Write-downs, recoveries and other charges, net |
||||||||
Impairment loss |
||||||||
|
|
|
|
|||||
Total operating expenses |
||||||||
|
|
|
|
|||||
Loss from operations |
( |
( |
||||||
|
|
|
|
|
|
|
| |
Interest income |
||||||||
Other income |
||||||||
Interest expense |
( |
( |
||||||
Accretion expense |
( |
( |
||||||
Provision for debt obligation fee |
( |
( |
||||||
Gains from change in fair value of financial instruments |
||||||||
|
|
|
|
|||||
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 |
Year Ended December 31, 2021 |
||||||||||||||||||||
Number of Common Shares |
Shares to be Issued |
Additional Paid- in-Capital |
Accumulated Deficit |
Total (Deficit) Equity |
||||||||||||||||
Balance – January 1, 2021 - (Revised) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||||||
Share-based compensation |
— | — | — | |||||||||||||||||
Net loss |
— | — | — | ( |
( |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance – December 31, 2021 |
$ |
$ |
$ |
( |
$ |
( |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Year Ended December 31, 2020 |
||||||||||||||||||||
Number of Common Shares |
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) – December 31, 2020 |
$ |
$ |
$ |
( |
$ |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
(Revised) |
||||||||
CASH FLOW FROM OPERATING ACTIVITIES |
||||||||
Net loss |
$ |
( |
) | $ |
( |
) | ||
Adjustments to reconcile net loss to cash provided by (used in) operations: |
||||||||
Interest income |
( |
( |
||||||
Interest expense |
||||||||
Accretion expense |
||||||||
Debt obligation fees |
||||||||
Impairment loss |
|
|||||||
Depreciation and amortization |
|
|||||||
Write-downs, recoveries and other charges, net |
||||||||
Inventory reserve |
||||||||
Share-based compensation |
||||||||
Gain from change in fair value of financial instruments |
( |
( |
) | |||||
Income from equity-accounted investments |
( |
|||||||
Deferred income taxes |
( |
( |
||||||
Change in operating assets and liabilities (Note 16) |
||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
$ |
$ |
( |
|||||
CASH FLOW FROM INVESTING ACTIVITIES |
||||||||
Purchase of property, plant and equipment |
( |
( |
||||||
Acquisition of intangible assets |
( |
( |
||||||
Proceeds from redemption and sale of investment |
||||||||
Proceeds from sale of property, plant and equipment |
||||||||
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 YEAR |
( |
|||||||
CASH AND RESTRICTED CASH, BEGINNING OF YEAR |
||||||||
CASH AND RESTRICTED CASH, END OF YEAR |
$ |
$ |
||||||
• | renegotiation of existing financing arrangements and other material contracts, including any amendments, waivers, extensions or similar agreements with the Lenders 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. |
Name of Entity |
Place of Incorporation |
Interest |
||||
(1) |
% | |||||
(1) |
% | |||||
(1) |
% | |||||
(1) |
% | |||||
(1) |
% | |||||
(“iA AZ”) |
% | |||||
(1) |
% | |||||
(1) |
% | |||||
(1) |
% | |||||
(1) |
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
(1) |
% | |||||
(1) |
% | |||||
(1) |
% | |||||
(1) |
% | |||||
(1) |
% | |||||
(1) |
% | |||||
(1) |
% | |||||
|
% | |||||
|
% | |||||
(1) |
% |
(1) |
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
|
% | |||||
|
% |
(1) |
Entities acquired as a part of the MPX Bioceutical Corporation (“MPX”) acquisition on February 5, 2019 (the “MPX Acquisition”). During the year ended December 31, 2020, the Company dissolved CinG-X Corporation of America. |
As of December 31, |
||||||||
2021 |
2020 |
|||||||
Cash |
$ | $ | ||||||
Restricted cash |
||||||||
|
|
|
|
|||||
Total cash and restricted cash presented in the statements of cash flows |
$ |
$ |
||||||
|
|
|
|
Buildings |
— |
| ||
Leasehold improvements |
— |
|||
Production equipment |
— |
| ||
Processing equipment |
— |
| ||
Sales equipment |
— |
|
Office equipment |
— |
| ||
Land |
— |
|
1. | Identify the contract with a customer; |
2. | Identify the performance obligation(s) in the contract; |
3. | Determine the transaction price; |
4. | Allocate the transaction price to the performance obligation(s) in the contract; and |
5. | Recognize revenue when or as the Company satisfies the performance obligation(s). |
Prior Year’s Line item |
Reclassified Amount |
Current Year’s Line item | ||||
Selling, general and administrative expenses |
$ | Depreciation and amortization | ||||
Amortization of intangibles |
Depreciation and amortization | |||||
Other losses |
Other income |
Prior Year’s Line item |
Reclassified Amount |
Current Year’s Line item | ||||
Change in operating assets and liabilities |
$ |
Net cash used in investing activities |
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 |
( |
) |
Year Ended December 31, 2020 |
||||||||||||
As previously reported |
Adjustment |
As adjusted |
||||||||||
Costs and expenses applicable to revenues |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
Gross margin |
( |
) | ||||||||||
Loss from operations |
( |
) | ( |
) | ( |
) | ||||||
Loss from operations before income tax |
( |
) | ( |
) | ( |
) | ||||||
Income tax expense |
( |
) | ||||||||||
Net loss |
( |
) | ( |
) | ( |
) |
December 31, 2020 |
||||||||||||
As previously reported |
Adjustment |
As adjusted |
||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Change in operating assets and liabilities |
December 31, 2020 |
||||||||||||
As previously reported |
Adjustment |
As adjusted |
||||||||||
Supplies |
$ | $ | ( |
) | $ | |||||||
Raw materials |
( |
) | ||||||||||
Work in process |
( |
) | ||||||||||
Finished goods |
||||||||||||
Total |
$ |
$ |
( |
) |
$ |
|||||||
Classification |
Statement of Operation Information |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||||
Operating lease costs (1) |
Selling, general and administrative expenses |
$ | $ | |||||||
Total lease cost |
$ |
$ |
||||||||
(1) | Includes short-term leases and variable lease costs for the year ended December 31, 2021 and 2020. |
Balance Sheet Information |
Classification |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||||
Right-of-use |
Operating leases |
$ |
$ |
|||||||
|
|
|
|
|||||||
Lease Liabilities |
||||||||||
Current portion of lease liabilities |
Operating leases |
$ |
$ |
|||||||
Long-term lease liabilities |
Operating leases |
|||||||||
|
|
|
|
|||||||
Total |
$ |
$ |
||||||||
|
|
|
|
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 |
% | |||
|
|
|
|
|
As of December 31, |
||||||||
2021 |
2020 |
|||||||
(Revised) |
||||||||
Supplies |
$ |
$ |
||||||
Raw materials |
||||||||
Work in process |
||||||||
Finished goods |
||||||||
|
|
|
|
|||||
Total |
$ |
$ |
||||||
|
|
|
|
As of December 31, 2021 |
||||||||||||
Cost |
Accumulated Depreciation |
Net Book Value |
||||||||||
Buildings |
$ |
$ |
$ |
|||||||||
Leasehold improvements |
||||||||||||
Production equipment |
||||||||||||
Processing equipment |
||||||||||||
Sales equipment |
||||||||||||
Office equipment |
||||||||||||
Land |
||||||||||||
Construction in progress |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
As of December 31, 2020 |
||||||||||||
Cost |
Accumulated Depreciation |
Net Book Value |
||||||||||
Buildings |
$ |
$ |
$ |
|||||||||
Leasehold improvements |
||||||||||||
Production equipment |
||||||||||||
Processing equipment |
||||||||||||
Sales equipment |
||||||||||||
Office equipment |
||||||||||||
Land |
||||||||||||
Construction in progress |
||||||||||||
|
|
|
|
|
|
|||||||
Total |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
As of December 31, 2021 |
||||||||||||
Cost |
Accumulated Amortization |
Net Book Value |
||||||||||
Licenses |
$ | $ |
$ |
|||||||||
Trademarks |
||||||||||||
Other |
||||||||||||
$ |
$ |
$ |
||||||||||
As of December 31, 2020 |
||||||||||||
Cost |
Accumulated Amortization |
Net Book Value |
||||||||||
Licenses |
$ | $ |
$ |
|||||||||
Trademarks |
||||||||||||
Other |
||||||||||||
$ |
$ |
$ |
||||||||||
2022 |
$ |
|||
2023 |
||||
2024 |
||||
2025 |
||||
2026 |
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 December 31, 2021 |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||
Secured Notes |
Stavola Trust Note |
May 2019 Debentures |
March 2019 Debentures |
Other |
Total |
|||||||||||||||||||
As of January 1, 2020 |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Fair value of financial liabilities issued |
— |
— |
— |
— |
||||||||||||||||||||
Accretion of balance |
— |
|||||||||||||||||||||||
Provision for debt obligation fees 1 |
— |
— |
— |
— |
||||||||||||||||||||
Repayment |
— |
( |
) |
— |
— |
( |
) |
( |
) | |||||||||||||||
As of December 31, 2020 |
$ |
$ |
— |
$ |
$ |
$ |
$ |
|||||||||||||||||
(1) | This amount includes the Company’s obligation to pay an exit fee of $ |
• |
|
For the Year Ended December 31, 2021 |
For the Year Ended December 31, 2020 |
|||||||||||||||
Units |
Weighted Average Exercise Price (C$) |
Units |
Weighted Average Exercise Price (C$) |
|||||||||||||
Warrants outstanding, beginning |
$ | $ | ||||||||||||||
Granted |
||||||||||||||||
Exercised |
||||||||||||||||
Expired |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Warrants outstanding, ending |
$ |
$ |
||||||||||||||
|
|
|
|
|
|
|
|
December 31, 2021 |
December 31, 2020 |
|||||||
Risk-free interest rate |
% | % | ||||||
Expected dividend yield |
% | % | ||||||
Expected volatility |
– |
% | % | |||||
Expected life |
For the Year Ended December 31, 2021 |
For the Year Ended December 31, 2020 |
|||||||||||||||
Year of expiration |
Number Outstanding |
Weighted Average Exercise Price (C$) |
Number Outstanding |
Weighted Average Exercise Price (C$) |
||||||||||||
2021 |
$ | $ | ||||||||||||||
2022 |
||||||||||||||||
2023 |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Warrants outstanding |
$ |
$ |
||||||||||||||
|
|
|
|
|
|
|
|
December 31, 2021 |
December 31, 2020 |
|||||||
Common share options |
||||||||
Warrants |
||||||||
Secured notes |
||||||||
Debentures |
||||||||
MPX dilutive instruments (1) |
||||||||
|
|
|
|
|||||
Total |
||||||||
|
|
|
|
(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. |
For The Year Ended December 31, 2021 |
For The Year Ended 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 |
|
$ |
|
|
$ |
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
December 31, 2020 |
|||||||
Risk-free interest rate |
— |
% | ||||||
Expected dividend yield |
— |
% | ||||||
Expected volatility |
— |
% | ||||||
Expected option life |
— |
Year |
||||||||
2021 |
2020 |
|||||||
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. |
As of December 31, |
||||||||
2021 |
2020 (Revised) |
|||||||
Assets |
||||||||
Eastern Region |
$ |
$ |
||||||
Western Region |
||||||||
Other |
||||||||
|
|
|
|
|||||
Total |
$ |
$ |
||||||
|
|
|
|
Year Ended December 31, |
||||||||
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). |
As of December 3 1 , 2021 |
As of December 31, 2020 |
|||||||||||||||||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||||||||||||||
Financial Assets |
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Long term investments—other 1 |
$ | $ | — | $ | — | $ |
$ | $ | — | $ | — | $ |
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|||||||||||||||||
Financial Liabilities |
||||||||||||||||||||||||||||||||
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Derivative liabilities |
$ | — | $ | — | $ | $ |
$ | — | $ | — | $ | $ |
||||||||||||||||||||
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|
|
(1) |
Long-term investments – other are included in the investments balance on the consolidated balance sheets. |
Financial Assets |
||||
Balance as of December 31, 2019 |
||||
Revaluations on Level 1 instruments |
||||
|
|
|||
Balance as of December 31, 2020 |
$ |
|||
Revaluations on Level 1 instruments |
||||
|
|
|||
Balance as of December 31, 2021 |
$ |
|||
|
|
Derivative Liabilities |
||||
Balance as of December 31, 2019 |
||||
Additions |
||||
Revaluations on Level 3 instruments |
( |
) | ||
Balance as of December 31, 2020 |
$ |
|||
Revaluations on Level 3 instruments |
( |
) | ||
Balance as of December 31, 2021 |
$ |
|||
As of December 31, 2021 |
As of December 31, 2020 |
|||||||||||||||
Carryin g Value |
Fair Value |
Carryin g Value |
Fair Value |
|||||||||||||
Unsecured Debentures |
$ | $ | $ | $ | ||||||||||||
Secured Notes |
||||||||||||||||
Other |
||||||||||||||||
Total |
$ |
$ |
$ |
$ |
||||||||||||
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 $ current liabilities line on the consolidated balance sheets; |
• | There is a claim from two former noteholders against the Company and MPX ULC , with respect to alleged payments of $million; and |
• | 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 $ |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Financial Statement Line Item |
||||||||
Accounts receivable |
$ | $ | ||||||
Other long-term assets |
||||||||
|
|
|
|
|||||
Total |
$ |
$ |
||||||
|
|
|
|
2021 |
2020 |
|||||||
Current income tax expense |
(Revised) |
|||||||
Federal |
$ |
$ |
||||||
State |
||||||||
|
|
|
|
|||||
Total current income tax expense |
||||||||
|
|
|
|
|||||
Deferred income tax |
||||||||
Federal |
( |
) | ( |
) | ||||
State |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total deferred income tax recoveries |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Tot income tax expenseal |
$ |
$ |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 |
2020 |
|||||||
(Revised) |
||||||||
Pretax loss at federal statutory rate |
$ |
( |
) |
$ |
( |
) | ||
State income tax expense, net of federal expense |
( |
) |
( |
) | ||||
Non-deductible items |
||||||||
True-up of income taxes payable |
||||||||
Foreign deferred taxes with no benefit recognized |
( |
) | ||||||
Other items |
( |
) |
( |
) | ||||
Change in valuation allowance |
||||||||
|
|
|
|
|||||
Total income ta x expense |
$ |
$ |
||||||
|
|
|
|
2021 |
2020 |
|||||||
Deferred income tax assets |
||||||||
Net operating loss carryforwards |
$ |
$ |
||||||
Interest expense carryforwards |
||||||||
Stock based compensation |
||||||||
Intangible assets |
||||||||
Property, plant and equipment |
||||||||
Inventories |
||||||||
Other items |
||||||||
|
|
|
|
|||||
|
|
|
|
|||||
Valuation allowance |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Deferred income tax assets |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities |
||||||||
Intangibles resulting from acquisitions |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Deferred income tax liabilities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
Net deferred inc tax liabilitiesome |
$ |
( |
) |
$ |
( |
) | ||
|
|
|
|
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Income taxes |
$ | $ | ||||||
Interest |
Year Ended December 31, |
||||||||
2021 |
2020 (Revised) |
|||||||
Decrease (increase) in: |
||||||||
Accounts receivables |
$ |
( |
$ |
|||||
Prepaid expenses |
||||||||
Inventories |
( |
) |
( |
) | ||||
Other current assets |
||||||||
Other long-term assets |
( |
) |
( |
) | ||||
Increase (decrease) in: |
||||||||
Accounts payable |
( |
) | ||||||
Accrued and other current liabilities |
||||||||
$ |
$ |
|||||||
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Property, plant and equipment |
$ | $ | ||||||
Operating lease right-of-use |
||||||||
Intangible assets |
||||||||
$ |
$ |
|||||||
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Write-downs : |
||||||||
Account receivable (recoveries) provisions, net |
$ | ( |
) | $ | ||||
Investment |
||||||||
Operating lease right-of-use |
||||||||
Property, plant and equipment |
( |
) | ||||||
$ |
$ |
|||||||
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Impairment losses : |
||||||||
Property, plant and equipment |
$ | $ | ||||||
Right-of-use |
||||||||
Intangible assets |
||||||||
Goodwill |
||||||||
$ |
$ |
|||||||
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Supplemental Cash Flow Information: |
||||||||
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 |
||||||||
Accrued capital expenditures |
||||||||
Non-cash consideration transferred from property, plant and equipment |
(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) | 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, |
ITEM 9A. |
CONTROLS AND PROCEDURES |
NAME |
AGE |
POSITION | ||
Randy Maslow |
66 | Interim Chief Executive Officer, President and Director | ||
Julius Kalcevich |
48 | Chief Financial Officer | ||
Robert Galvin |
60 | Interim Chief Operating Officer | ||
Michael P. Muldowney |
58 | Director | ||
Diane M. Ellis |
67 | Director |
• | Michael P. Muldowney, our director, served as Executive Vice President and Chief Financial Officer of Houghton Mifflin Harcourt Company from 2007 until 2011 and from March 2011 to September 2011, he served as HMHC’s Interim Chief Executive Officer. After Mr. Muldowney resigned from his executive positions with HMHC, the company filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code in May 2012 and emerged with a confirmed plan in June 2012. |
• | Diane Ellis, our director, served as Chief Executive Officer and President of The Limited from 2013 to 2016. Limited Stores, LLC filed for bankruptcy protection on January 17, 2017. |
• | overseeing the work of the external auditors in preparing or issuing the auditor’s report, including the resolution of disagreements between management and the external auditors regarding financial reporting and audit scope or procedures; |
• | determining whether adequate controls are in place over annual and interim financial reporting as well as controls over our assets, transactions and the creation of obligations, commitments and liabilities; |
• | reviewing our financial statements; |
• | reviewing transactions with related persons; |
• | reviewing all non-audit services which are proposed to be provided by the external auditors to us or any of our subsidiaries; |
• | establishing procedures for complaints received by us regarding accounting matters; and |
• | reviewing the policies and procedures in effect for considering officers’ expenses and perquisites. |
• | developing and recommending criteria for Board membership and recommending Board nominees including reviewing candidates recommended by our shareholders; |
• | recommending committee nominees; |
• | considering matters of corporate governance; |
• | reviewing and advising regarding the functions of our senior officers; and |
• | reviewing succession plans with respect to our officers. |
• | reviewing and approving our compensation and benefit programs, policies and practices; |
• | setting the compensation of our Chief Executive Officer and approving the compensation of the members of our executive leadership team; |
• | establishing and reviewing annual and long-term performance goals and objectives of our Chief Executive Officer; |
• | reviewing the goals approved by our Chief Executive Officer for the members of our executive leadership team and the performance thereof; |
• | reviewing and making recommendations to the Board regarding director compensation; and |
• | overseeing the administration of our cash-based and equity-based compensation plans. |
• | Gotham Green Partners LLC failed to report 22 transactions on time on a Form 3. |
Name and Financial Position |
Year |
Salary ($) |
Bonus ($) |
Total ($) |
||||||||||||
Randy Maslow, Interim Chief Executive Officer, President and Director (1) |
2021 | 675,000 | |
300,000 — |
|
975,000 | ||||||||||
2020 | 675,000 | 675,000 | ||||||||||||||
Julius Kalcevich, Chief Financial Officer |
2021 | 675,000 | 275,000 | 950,000 | ||||||||||||
2020 | 675,000 | — | 675,000 | |||||||||||||
Robert Galvin, Interim Chief Operations Officer (2) |
2021 | 675,000 | 250,000 | 925,000 | ||||||||||||
2020 | 675,000 | — | 675,000 |
Option Awards |
||||||||||||||||
Number of Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Option Exercise Price ($) |
Option Expiration Date |
|||||||||||||
Randy Maslow, Interim Chief Executive Officer, President and Director |
120,000 | (1) |
— | C$ | 1.60 | 5/11/26 | ||||||||||
150,000 | (3) |
— | C$ | 2.25 | 11/21/27 | |||||||||||
150,000 | (5) |
— | C$ | 3.56 | 3/2/28 | |||||||||||
1,546,168 | (6) |
125,543 | C$ | 7.50 | 8/6/29 | |||||||||||
Julius Kalcevich, Chief Financial Officer |
200,000 | (2) |
— | C$ | 1.61 | 5/17/26 | ||||||||||
257,750 | (4) |
— | C$ | 2.25 | 11/21/27 | |||||||||||
150,000 | (5) |
— | C$ | 3.56 | 3/2/28 | |||||||||||
921,741 | (7) |
72,531 | C$ | 7.50 | 8/6/29 | |||||||||||
Robert Galvin, Interim Chief Operations Officer |
41,825 | (8) |
— | C$ | 2.42 | 10/30/22 | ||||||||||
83,650 | (8) |
— | C$ | 5.14 | 1/15/23 | |||||||||||
366,666 | (9) |
33,334 | C$ | 5.35 | 6/6/29 | |||||||||||
280,075 | (10) |
14,197 | C$ | 7.50 | 6/8/29 |
(1) | Stock options granted to Randy Maslow in May 2016 vested quarterly in equal installments over a one year period on June 30, 2016, September 30, 2016, December 31, 2016 and March 31, 2017. |
(2) | Stock options granted to Julius Kalcevich in May 2016 vested quarterly in equal installments over a two year period on June 30, 2016, September 30, 2016, December 31, 2016, March 31, 2017, June 30, 2017, September 30, 2017, December 31, 2017 and March 31, 2018. |
(3) | Stock options granted to Randy Maslow in November 2017 vested immediately upon grant. |
(4) | 150,000 stock options granted to Julius Kalcevich in November 2017 vested quarterly in equal installments over a one year period on December 31, 2017, March 31, 2018, June 30, 2018 and September 30, 2018. 107,750 stock options granted to Julius Kalcevich in November 2017 vested quarterly in equal installments over a two year period on December 31, 2017, March 31, 2018, June 30, 2018, September 30, 2018, December 31, 2018, March 31, 2019, June 30, 2019 and September 30, 2019. |
(5) | Stock options granted to Randy Maslow and Julius Kalcevich in March 2018 vested quarterly in equal installments over a one year period on March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018. |
(6) | Assuming all milestones were met as of each quarter end date, stock options granted to Randy Maslow in August 2019 would vest in accordance with the following schedule: 251,084 stock options on September 30, 2019, 125,542 stock options on December 31, 2019, 290,747 stock options on March 31, 2020, 125,542 stock options on June 30, 2020, 125,543 stock options on September 30, 2020, 125,542 stock options on December 31, 2020, 125,541 stock options on March 31, 2021, 129,543 stock options on June 30, 2021, 125,542 stock options on September 30, 2021, 125,543 stock options on December 31, 2021, 125,543 stock options on March 31, 2022. |
(7) | Assuming all milestones were met as of each quarter end date, stock options granted to Julius Kalcevich in August 2019 would vest in accordance with the following schedule: 145,061 stock options on September 30, 2019, 72,531 stock options on December 31, 2019, 196,434 stock options on March 31, 2020, 72,351 stock options on June 30, 2020, 72,351 stock options on September 30, 2020, 72,350 stock options on December 31, 2020, 72,351 stock options on March 31, 2021, 72,351 stock options on June 30, 2021, 72,350 stock options on September 30, 2021, 72,351 stock options on December 31, 2021, 72,351 stock options on March 31, 2022. |
(8) | Stock options granted to Robert Galvin on October 30, 2018 and January 15, 2018 by MPX became immediately vested on the date of the MPX Acquisition, February 5, 2019. |
(9) | Stock options granted to Robert Galvin on June 6, 2019 vest over a 30-month period in accordance with the following schedule: 66,666 stock options on September 30, 2019, 33,334 stock options on December 31, 2019, 33,333 stock options on March 31, 2020, 33,334 stock options on June 30, 2020, 33,334 stock options on September 30, 2020, 33,333 stock options on December 31, 2020, 33,333 stock options on March 31, 2021, 33,334 stock options on June 30, 2021, 33,333 stock options on September 30, 2021, 33,333 stock options on December 31, 2021, and 33,333 stock options on March 31, 2022. |
(10) | Assuming all milestones were met as of each quarter end date, stock options granted to Robert Galvin in August 2019 would vest in accordance with the following schedule: 28,395 stock options on September 30, 2019, 14,197 stock options on December 31, 2019, 138,101 stock options on March 31, 2020, 14,198 stock options on June 30, 2020, 14,197 stock options on September 30, 2020, 14,197 stock options on December 31, 2020, 14,198 stock options on March 31, 2021, 14,197 stock options on June 30, 2021, 14,197 stock options on September 30, 2021, 14,198 stock options on December 31, 2021, 14,197 stock options on March 31, 2022. |
Name |
Fees earned or paid in cash ($) |
Total ($) |
||||||
Robert M. Whelan Jr. (1) (2) |
$ | 147,500 | $ | 147,500 | ||||
Michael P. Muldowney (1) |
$ | 147,500 | $ | 147,500 | ||||
Diane M. Ellis (1) |
$ | 147,500 | $ | 147,500 |
(1) | Each independent director is paid an annual cash fee of $40,000 and a retainer of $100,000, which is prorated for the number of days in which the director has served on the Board, assuming 365 days in a calendar year. Directors who also chair one of the three committees receive an additional $7,500 per year in committee chair fees, which is prorated for the number of days in which the director has chaired a committee, assuming 365 days in a calendar year. |
(2) | Robert M. Whelan Jr. resigned as a member of our Board of Directors on January 18, 2022. |
Beneficial Owner (1) |
Common Shares Beneficially Owned Prior to the Recapitalization Transaction |
Percentage of Common Shares Beneficially Owned Prior to the Recapitalization Transaction (2) |
Common Shares Beneficially Owned After the Recapitalization Transaction (3) |
Percentage of Common Shares Beneficially Owned After the Recapitalization Transaction (3) |
||||||||||||
Directors and Named Executive Officers: |
||||||||||||||||
Julius Kalcevich |
2,037,304 | (4) |
|
1.2 |
% |
435,282 | (21) |
* | ||||||||
Randy Maslow |
4,824,211 | (5) |
2.8 | % | 2,732,500 | (22) |
* | |||||||||
Robert Galvin |
1,146,145 | (6) |
* | 226,018 | (23) |
* | ||||||||||
Michael P. Muldowney |
93,645 | (7) |
* | 6,000 | (24) |
* | ||||||||||
Diane M. Ellis |
87,645 | (8) |
* | * | * | |||||||||||
All Named Executive Officers and Directors as a Group (6 persons) |
8,276,028 | 4.7 | % | 3,449,800 | * | |||||||||||
5% or Greater Shareholders: |
||||||||||||||||
Hi-Med, LLC (9) |
14,892,809 | (10) |
8.6 | % | 267,072,369 | (25) |
4.3 | % | ||||||||
Parallax Master Fund, LP (11) |
13,792,914 | (12) |
7.4 | % | 369,665,259 | (26) |
5.9 | % | ||||||||
Jason Adler (13) |
48,971,678 | 22.6 | % | 2,572,163,239 | (27) |
41.2 | % | |||||||||
Hadron Healthcare and Consumer Special Opportunities Master Fund (15) |
1,955,724 | (16) |
1.1 | % | 455,443,477 | (28) |
7.3 | % | ||||||||
Senvest Management, LLC (17) |
4,275,855 | (18) |
2.4 | % | 1,062,701,447 | (29) |
17.0 | % | ||||||||
Oasis Investments II Master Fund Ltd. (19) |
5,778,181 | (20) |
3.3 | % | 1,265,120,771 | (30) |
20.3 | % |
* | Represents beneficial ownership of less than 1%. |
(1) | The address of each person is c/o iAnthus Capital Holdings, Inc., 420 Lexington Avenue, Suite 414, New York, NY 10170. |
(2) | The calculation in this column is based upon 171,718,192 common shares outstanding on February 28, 2022. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to the subject securities. Common shares that are currently exercisable or convertible within 60 days of February 28, 2022 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage beneficial ownership of such person, but are not treated as outstanding for the purpose of computing the percentage beneficial ownership of any other person. |
(3) | On July 10, 2020, we entered into the Restructuring Support Agreement with the Secured Lenders and the Consenting Unsecured Lenders to effectuate the Recapitalization Transaction to be implemented by way of the Plan of Arrangement under the BCBCA following approval by the Secured Lenders, Unsecured Lenders and our existing shareholders. Upon the closing of the Recapitalization Transaction, the Secured Lenders, the Unsecured Lenders and our shareholders are to be allocated and issued, approximately, such amounts of Restructured Senior Debt, Interim Financing, 8% Senior Unsecured Convertible Debentures and percentage of our pro forma common shares as further described in “Business – Financial Restructuring.” These columns give effect to the Recapitalization Transaction and are based upon 6,244,297,891 common shares outstanding upon the consummation of the Recapitalization Transaction. The consummation of the Recapitalization Transaction, through the Plan of Arrangement, is subject to certain conditions, including obtaining Requisite Approvals. |
(4) | Represents (i) 124,586 common shares and (ii) 1,602,022 common shares issuable upon exercise of options. |
(5) | Represents (i) 2,732,500 common shares and (ii) 2,090,711 common shares issuable upon exercise of options. |
(6) | Represents (i) 313,096 common shares (ii) 819,747 common shares issuable upon exercise of options and (iii) 100,380 common shares issuable upon exercise warrants. |
(7) | Represents (i) 6,000 common shares and (ii) 87,645 common shares issuable upon exercise of options. Excludes 29,215common shares issuable upon exercise of unvested options. |
(8) | Represents 87,645 common shares issuable upon exercise of options. Excludes 29,215 common shares issuable upon exercise of unvested options. |
(9) | Dr. Krishna Singh is the Manager of Hi-Med, LLC and in such capacity has the right to vote and dispose of the securities held by such entity. The address of Hi-Med, LLC is 1001 N. US Highway 1, Suite 800, Jupiter, FL 33477. |
(10) | Represents (i) 14,048,215 common shares and (ii) 844,594 common shares issuable upon conversion of Unsecured Convertible Debentures. |
(11) | William Bartlett is the Managing Member of Parallax Master Fund, LP and in such capacity has the right to vote and dispose of the securities held by such entity. The address of Parallax Master Fund, LP is 88 Kearny Street, 20th Floor, San Francisco, CA 94108. |
(12) | Represents (i) 4,478,219 common shares issuable upon exercise of warrants and (ii) 9,314,695 common shares issuable upon conversion of Secured Convertible Notes. |
(13) | Jason Adler is the Managing Member of Gotham Green Credit Partners GP I, LLC, Gotham Green GP 1, LLC, Gotham Green GP II, LLC and Gotham Green Partners SPV V GP, LLC. Gotham Green Credit Partners GP I, LLC is the General Partner of Gotham Green Credit Partners SPV 1, LP. Gotham Green GP 1, LLC is the General Partner of Gotham Green Fund 1, LP and Gotham Green Fund 1 (Q), LP. Gotham Green GP II, LLC is the General Partner of Gotham Green Fund II (Q), LP and Gotham Green Fund II, LP. Gotham Green Partners SPV V GP, LLC is the General Partner of Gotham Green Partners SPV V, LP. |
(14) | Represents (i) the following securities held by Gotham Green Credit Partners SPV 1, LP: (A) 2,762,646 common shares, and (B) 9,533,773 common shares issuable upon conversion of Secured Convertible Notes; (ii) the following securities held by Gotham Green Fund 1, LP: (A) 270,646 common shares, (B) 507,551 common shares issuable upon exercise of warrants and (C) 1,836,786 common shares issuable upon conversion of Secured Convertible Notes; (iii) the following securities held by Gotham Green Fund 1 (Q), LP: (A) 1,082,759 common shares, (B) 2,030,520 common shares issuable upon exercise of warrants and (C) 7,348,296 common shares issuable upon conversion of Secured Convertible Notes; (iv) the following securities held by Gotham Green Fund II (Q), LP: (A) 2,165,914 common shares issuable upon exercise of warrants and (B) 4,515,185 common shares issuable upon conversion of Secured Convertible Note; (v) the following securities held by Gotham Green Partners SPV V, LP: (A) 5,120,097 common shares issuable upon exercise of warrants and (B) 10,649,528 common shares issuable upon conversion of Secured Convertible Notes; and (vi) the following securities held by Gotham Green Fund II, LP: (A) 372,157 common shares issuable upon exercise of warrants and (B) 775,820 common shares issuable upon conversion of Secured Convertible Notes. Excludes (i) a Senior Secured Bridge Note in the original principal amount of $4,692,600 held by Gotham Green Fund II (Q), LP and (ii) a Senior Secured Bridge Note in the original principal amount of $807,400 held by Gotham Green Fund II, LP. We and the holder of the Senior Secured Bridge Notes may mutually agree that all or part of the repayment of the Obligations (as defined in the Senior Secured Bridge Notes) be applied to the subscription price for our securities issued in connection with a Qualified Financing or otherwise, subject to approval by our board of directors and compliance with applicable laws; provided that such subscription for securities may occur only after the effective date of the Recapitalization Transaction. |
(15) | Marco D’Attanasio is the Managing Member of Hadron Healthcare and Consumer Special Opportunities Master Fund and in such capacity has the right to vote and dispose of the securities held by such entity. The address of Hadron Healthcare and Consumer Special Opportunities Master Fund is P.O. Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands. |
(16) | Represents (i) 435,457 common shares issuable upon exercise of warrants and (ii) 1,520,267 common shares issuable upon conversion of Unsecured Debentures. |
(17) | Senvest Management, LLC manages and makes decisions on behalf of Senvest Master Fund, LP and Senvest Global (KY), LP. Richard Mashaal and Brian Gonick are members of Senvest Management, LLC, and in such capacity have the right to vote and dispose of the securities held by Senvest Master Fund, LP and Senvest Global (KY) LP. |
(18) | Represents (i) the following securities held by Senvest Master Fund, LP: (A) 1,150,855 common shares issuable upon exercise of warrants and (B) 3,125,000 common shares issuable upon conversion of Unsecured Debentures; and (ii) the following securities held by Senvest Global (KY), LP: (A) 155,520 common shares issuable upon exercise of warrants and (B) 422,297 common shares issuable upon conversion of Unsecured Debentures. |
(19) | Seth Fisher is responsible for the supervision and conduct of all investment activities of Oasis Investments II Master Fund Ltd., including all investment decisions with respect to the assets of Oasis Investments II Master Fund Ltd., and in such capacity, has the right to vote and dispose of the securities held by such entity. The address of Oasis Investments II Master Fund Ltd. is 21/F, Man Yee Building, 68 Des Voeux Road Central, Central, Hong Kong. |
(20) | Represents (i) 1,555,209 common shares issuable upon exercise of warrants and (ii) 4,222,972 common shares issuable upon conversion of Unsecured Debentures. |
(21) | Represents 435,282 common shares. |
(22) | Represents 2,732,500 common shares. |
(23) | Represents 226,018 common shares. |
(24) | Represents 6,000 common shares. |
(25) | Represents 267,072,369 common shares. |
(26) | Represents 369,665,259 common shares. |
(27) | Represents (i) 125,855,967 common shares held by Gotham Green Fund 1, LP; (ii) 503,502,502 common shares held Gotham Green Fund 1(Q1), LP; (iii) 57,324,290 common shares held by Gotham Green Fund II, LP; (iv) 333,453,539 common shares held by Gotham Green Fund II (Q), LP; (v) 936,930,574 common shares held by Gotham Green Credit Partners SPV 1, LP; and (vi) 615,096,377 common shares held by Gotham Green Credit Partners SPV V, LP. Excludes (i) a Senior Secured Bridge Note in the principal amount of $4,692,600 held by Gotham Green Fund II (Q), LP and (ii) a Senior Secured Bridge Note in the principal amount of $807,400 held by Gotham Green Fund II, LP. We and the holder of the Senior Secured Bridge Notes may mutually agree that all or part of the repayment of the Obligations (as defined in the Senior Secured Bridge Notes) be applied to the subscription price for our securities issued in connection with a Qualified Financing or otherwise, subject to approval by our board of directors and compliance with applicable laws; provided that such subscription for securities may occur only after the Effective Date. |
(28) | Represents 455,443,477 common shares. |
(29) | Represents 936,189,370 common shares held by Senvest Master Fund, LP and 126,512,077 common shares held by Senvest Global (KY), LP. |
(30) | Represents 1,265,120,771 common shares. |
Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |
Weighted average exercise price of outstanding options, warrants and rights |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|||||||||
Equity compensation plans approved by security holder |
33,143,342 | $ | 3.15 | 6,668,197 | ||||||||
Equity compensation plans not approved by security holder |
— | — | — | |||||||||
|
|
|
|
|||||||||
Total |
33,143,342 |
6,668,197 |
||||||||||
|
|
|
|
• | On February 5, 2019, related party receivable of $0.7 million was due from companies owned by Elizabeth Stavola, our former Chief Strategy Officer and member of our Board. The related party receivable was converted into a loan facility of up to $10.0 million, which accrues interest at the rate of 16.0%, compounded annually. Interest is due upon maturity of the loan on December 31, 2021. The balance was $4.6 million as of December 31, 2021 (December 31, 2020—$3.2 million), which included accrued interest of $0.9 million as of December 31, 2021 (December 31, 2020—$0.3 million). |
• | We assumed the Stavola Trust Note in the principal amount of $10.8 million, payable to the Elizabeth Stavola 2016 NV Irrevocable Trust. This trust is for the benefit of Elizabeth Stavola, our former Chief Strategy Officer and a former member of our Board. The note matured on January 19, 2020 and accrued interest at a rate of 8.0% |
per annum. Repayment of the note was secured by the assets of certain of our subsidiaries. For the years ended December 31, 2021 and 2020, interest expense of less than $Nil million and $0.1 million, respectively, was recognized. As of December 31, 2021 and 2020, there was no amount owed with respect to the note. |
• | $0.1 million in cash was paid and 118,850 common shares (with a fair value of $0.4 million) were issued to an individual related through a familial relationship to Elizabeth Stavola; |
• | $1.5 million in cash was paid and 9,500 common shares were issuable to the Elizabeth Stavola 2016 NV Irrevocable Trust whose beneficiary is Elizabeth Stavola; however, such shares are the subject of an indemnification claim made by us. |
• | 6,469 common shares (with a fair value of less than $0.1 million) were issued to two individuals that are related through a familial relationship to Elizabeth Stavola; |
• | 36,969 common shares (with a fair value of $0.1 million) were issued to Robert Galvin, our former director and current Interim Chief Operating Officer; |
• | We acquired a related party receivable of $0.8 million and related party payable of $0.5 million with CBD For Life. The balances for the receivable and payable were $nil and $nil, respectively, as of December 31, 2019; and |
• | Elizabeth Stavola, our former Chief Strategy Officer and former member of our Board of Directors, was also the Chief Executive Officer of CBD For Life. As part of the acquisition of CBD, Elizabeth Stavola received 1,967,686 common shares of iAnthus through a trust that she controlled. |
2021 |
2020 |
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Audit and audit related fees |
$ | 1,569,954 | $ | 1,871,813 | ||||
Tax fees |
— | — | ||||||
All other fees |
— | — | ||||||
|
|
|
|
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Total |
$ | 1,569,954 | $ | 1,871,813 | ||||
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Page |
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54 | ||||
Consolidated Financial Statements: |
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56 | ||||
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58 | ||||
59 | ||||
60 |
IANTHUS CAPITAL HOLDINGS, INC. |
/s/ Randy Maslow |
Randy Maslow |
Interim Chief Executive Officer, President and Director |
Signature |
Title |
Date | ||
/s/ Randy Maslow | Interim Chief Executive Officer, President and Director |
March 17, 2022 | ||
Randy Maslow | (Principal Executive Officer) |
|||
/s/ Julius Kalcevich | Chief Financial Officer |
March 17, 2022 | ||
Julius Kalcevich | (Principal Financial and Accounting Officer) |
|||
/s/ Robert Galvin | Interim Chief Operating Officer |
March 17, 2022 | ||
Robert Galvin | ||||
/s/ Michael P. Muldowney | Director |
March 17, 2022 | ||
Michael P. Muldowney | ||||
/s/ Diane M. Ellis | Director |
March 17, 2022 | ||
Diane M. Ellis |