Form: 8-K/A

Current report filing

May 25, 2022

Documents

Exhibit 99.2

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF TERRASCEND AND GAGE

 

On March 10, 2022, TerrAscend Corp. ("TerrAscend" or the "Company") acquired all of the issued and outstanding subordinate voting shares (or equivalent) of Gage Growth Corp. ("Gage"), a cultivator and processor with operations in the Michigan market. Pursuant to the terms of the arrangement agreement (the "Arrangement"), for each Gage subordinate voting share and other equity instruments, including outstanding stock options and warrants, each holder received a 0.3001 equivalent replacement award of the Company's respective security at the time of closing based on the closing price of the Common Shares on the Canadian Stock Exchange ("CSE") on March 10, 2022. On the acquisition date, there was consideration in the form of 51,349,978 Common Shares, 13,504,500 exchangeable units, 5,221,542 replacement stock options, 282,023 replacement warrants, and 7,129,519 liability classified warrants convertible into equity. Each of the directors, officers, and 10% shareholders of Gage entered into voting support and lock-up agreement in which the shares issued to these individuals are subject to various vesting periods. As such, a restriction discount of $45,336 has been placed over the shares subject to lock-up. Total consideration was valued at $294,800.

 

The following unaudited pro forma condensed combined financial statements (the "pro forma financial statements") are presented to illustrate the estimated effects of the acquisition of Gage (the "Gage Acquisition"), which has been accounted for as a business combination. The pro forma financial statements have been prepared in accordance with Article 11 of Regulation S-X.

 

The historical financial information of the Company has been derived from the audited consolidated financial statements of the Company as of December 31, 2021, as found in Form 10-K which was filed with the Securities and Exchange Commission ("SEC") on March 17, 2022. The historical financial information of Gage has been derived from the audited financial statements of Gage for the year ended December 31, 2021, included in Exhibit 99.1 to the Company's Form 8-K/A filed with the SEC on May 24, 2022.

 

The following unaudited pro forma combined condensed balance sheets (the "pro forma balance sheet") as of December 31, 2021 is presented as if the Gage Acquisition had occurred as of December 31, 2021. The unaudited pro forma combined condensed statements of operations (the "pro forma statements of operations") for the year ended December 31, 2021 are presented as if the Gage Acquisition occurred on January 1, 2021.

 

The pro forma adjustments are based on preliminary estimates and currently available information and assumptions that the Company believes are reasonable. Included in the pro forma condensed combined financial information is an estimate of the consideration exchanged for Gage which is based on known information and preliminary estimates of fair value for certain equity instruments. While this is the Company's best estimates at this time, the valuation of these amounts is still in progress and subject to change. All estimates and assumptions included in these pro forma statements could change significantly as the Company finalizes its assessment of the allocation and fair value of the net assets acquired. The unaudited combined financial information does not include adjustments to reflect any synergies or dis-synergies, any future operating efficiencies, associated costs savings, or any possible integration costs that may occur related to the Gage Acquisition. Actual results may be materially different than the pro forma information presented herein.

 

The pro forma financial statements do not necessarily reflect what the combined company's financial condition or results of operations would have been had the Gage Acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial condition and results of operations of the combined company may differ significantly from the pro forma amounts reflected herein due to a variety of factors, including differences in accounting policies, elections, and estimates, which while accounted for to the extent known, are still in process of being determined.

 

TerrAscend Corp.

Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2021

(Amounts expressed in thousands of United States dollars, except for per share amounts)

 

 

 

TerrAscend

 

 

Gage

 

 

Adjustments

 

 

Notes

 

Pro Forma Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

79,642

 

 

$

42,901

 

 

$

-

 

 

 

 

$

122,543

 

Restricted cash

 

 

—

 

 

 

1,800

 

 

 

—

 

 

 

 

 

1,800

 

Accounts receivable, net

 

 

14,920

 

 

 

7,700

 

 

 

—

 

 

 

 

 

22,620

 

Investments

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

Inventory

 

 

42,323

 

 

 

17,639

 

 

 

5,579

 

 

(a)

 

 

65,541

 

Prepaid Expenses and other current assets

 

 

6,336

 

 

 

2,699

 

 

 

—

 

 

 

 

 

9,035

 

 

 

 

143,221

 

 

 

72,739

 

 

 

5,579

 

 

 

 

 

221,539

 

Non-Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

140,762

 

 

 

68,473

 

 

 

1,362

 

 

(b)

 

 

210,597

 

Deposits

 

 

—

 

 

 

1,541

 

 

 

—

 

 

 

 

 

1,541

 

Operating lease right of use assets

 

 

29,561

 

 

 

2,317

 

 

 

—

 

 

 

 

 

31,878

 

Intangible assets, net

 

 

168,984

 

 

 

8,814

 

 

 

179,475

 

 

(c)

 

 

357,273

 

Goodwill

 

 

90,326

 

 

 

-

 

 

 

201,256

 

 

(d)

 

 

291,582

 

Investments

 

 

—

 

 

 

2,294

 

 

 

—

 

 

 

 

 

2,294

 

Indemnification asset

 

 

3,969

 

 

 

—

 

 

 

—

 

 

 

 

 

3,969

 

Other non-current assets

 

 

5,111

 

 

 

—

 

 

 

—

 

 

 

 

 

5,111

 

 

 

 

438,713

 

 

 

83,439

 

 

 

382,093

 

 

 

 

 

904,245

 

Total Assets

 

$

581,934

 

 

$

156,178

 

 

$

387,672

 

 

 

 

$

1,125,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

30,340

 

 

$

33,623

 

 

 

—

 

 

 

 

 

63,963

 

Deferred revenue

 

 

1,071

 

 

 

583

 

 

 

—

 

 

 

 

 

1,654

 

Loans payable, current

 

 

8,837

 

 

 

55,649

 

 

 

—

 

 

 

 

 

64,486

 

Contingent consideration payable, current

 

 

9,982

 

 

 

-

 

 

 

—

 

 

 

 

 

9,982

 

Lease liability, current

 

 

1,193

 

 

 

440

 

 

 

—

 

 

 

 

 

1,633

 

Corporate income tax payable

 

 

18,939

 

 

 

4,419

 

 

 

—

 

 

 

 

 

23,358

 

Other current liabilities

 

 

—

 

 

 

6,265

 

 

 

—

 

 

 

 

 

6,265

 

 

 

 

70,362

 

 

 

100,979

 

 

 

—

 

 

 

 

 

171,341

 

Non-Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans payable, non-current

 

 

176,306

 

 

 

5,198

 

 

 

—

 

 

 

 

 

181,504

 

Contingent consideration payable, non-current

 

 

2,553

 

 

 

—

 

 

 

—

 

 

 

 

 

2,553

 

Lease liability, non-current

 

 

30,754

 

 

 

2,037

 

 

 

—

 

 

 

 

 

32,791

 

Warrant liability

 

 

54,986

 

 

 

17,230

 

 

 

(5,845

)

 

(e)

 

 

66,371

 

Deferred income tax liability

 

 

14,269

 

 

 

—

 

 

 

50,333

 

 

(f)

 

 

64,602

 

Financing obligations

 

 

—

 

 

 

12,235

 

 

 

—

 

 

 

 

 

12,235

 

Other long term liabilities

 

 

3,750

 

 

 

3,961

 

 

 

—

 

 

 

 

 

7,711

 

 

 

 

282,618

 

 

 

40,661

 

 

 

44,488

 

 

 

 

 

367,767

 

Total Liabilities

 

 

352,980

 

 

 

141,640

 

 

 

44,488

 

 

 

 

 

539,108

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A, convertible preferred stock, no par value

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

Series B, convertible preferred stock, no par value

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

Series C, convertible preferred stock, no par value

 

 

—

 

 

 

 

 

 

 

 

 

 

 

—

 

Series D, convertible preferred stock, no par value

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

Proportionate voting shares, no par value

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

Exchangeable shares, no par value

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

Common stock, no par value

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

 

—

 

Additional paid in capital

 

 

535,418

 

 

 

171,197

 

 

 

186,525

 

 

(f)(g)

 

 

893,140

 

Accumulated other comprehensive income (loss)

 

 

2,823

 

 

 

2,807

 

 

 

(2,807

)

 

(g)

 

 

2,823

 

Accumulated deficit

 

 

(314,654

)

 

 

(93,685

)

 

 

93,685

 

 

(g)

 

 

(314,654

)

Non-controlling interest

 

 

5,367

 

 

 

(65,781

)

 

 

65,781

 

 

(g)

 

 

5,367

 

Total Shareholders' Equity

 

 

228,954

 

 

 

14,538

 

 

 

343,184

 

 

 

 

 

586,676

 

Total Liabilities and Shareholders' Equity

 

$

581,934

 

 

$

156,178

 

 

$

387,672

 

 

 

 

$

1,125,784

 

 

TerrAscend Corp.

Unaudited Pro Forma Condensed Combined Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2021

(Amounts expressed in thousands of United States dollars, except for per share amounts)

 

 

 

TerrAscend

 

 

Gage

 

 

Adjustments

 

 

Notes

 

Pro Forma Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

222,067

 

 

$

91,500

 

 

$

-

 

 

 

 

$

313,567

 

Excise and cultivation tax

 

 

(11,648

)

 

 

—

 

 

 

—

 

 

 

 

 

(11,648

)

Revenue, net

 

 

210,419

 

 

 

91,500

 

 

 

—

 

 

 

 

 

301,919

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

 

98,315

 

 

 

62,101

 

 

 

5,579

 

 

(a)

 

 

165,995

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

112,104

 

 

 

29,399

 

 

 

(5,579

)

 

 

 

 

135,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

80,973

 

 

 

59,323

 

 

 

—

 

 

 

 

 

140,296

 

Amortization and depreciation

 

 

7,656

 

 

 

1,683

 

 

 

8,879

 

 

(b)(c)

 

 

18,218

 

Total operating expenses

 

 

88,629

 

 

 

61,006

 

 

 

8,879

 

 

 

 

 

158,514

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

23,475

 

 

 

(31,607

)

 

 

(14,458

)

 

 

 

 

(22,590

)

Other expense (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revaluation of contingent consideration

 

 

3,584

 

 

 

—

 

 

 

—

 

 

 

 

 

3,584

 

(Gain) loss on fair value of warrants and purchase option derivative asset

 

 

(57,904

)

 

 

(6,231

)

 

 

—

 

 

 

 

 

(64,135

)

Finance and other expenses

 

 

29,229

 

 

 

3,977

 

 

 

—

 

 

 

 

 

33,206

 

Transaction and restructuring costs

 

 

3,111

 

 

 

—

 

 

 

(2,640

)

 

(h)

 

 

471

 

Impairment of goodwill

 

 

5,007

 

 

 

—

 

 

 

—

 

 

 

 

 

5,007

 

Impairment of intangible assets

 

 

3,633

 

 

 

—

 

 

 

—

 

 

 

 

 

3,633

 

Impairment of property and equipment

 

 

470

 

 

 

2,635

 

 

 

—

 

 

 

 

 

3,105

 

Loss on lease termination

 

 

3,278

 

 

 

1,044

 

 

 

—

 

 

 

 

 

4,322

 

Unrealized and realized foreign exchange loss

 

 

4,810

 

 

 

(262

)

 

 

—

 

 

 

 

 

4,548

 

Unrealized and realized loss (gain) on investments

 

 

(6,192

)

 

 

2,720

 

 

 

—

 

 

 

 

 

(3,472

)

Income (loss) before provision from income taxes

 

 

34,449

 

 

 

(35,490

)

 

 

(11,818

)

 

 

 

 

(12,859

)

Provision for income taxes

 

 

28,314

 

 

 

8,838

 

 

 

(3,904

)

 

(i)

 

 

33,248

 

Net income (loss)

 

$

6,135

 

 

$

(44,328

)

 

$

(7,914

)

 

 

 

$

(46,107

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

 

(6,485

)

 

 

(765

)

 

 

—

 

 

 

 

 

(7,250

)

Comprehensive income (loss)

 

$

12,620

 

 

$

(43,563

)

 

$

(7,914

)

 

 

 

$

(38,857

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common and proportionate Shareholders of the Company

 

$

3,111

 

 

$

(18,580

)

 

$

(33,662

)

 

 

 

$

(49,131

)

Non-controlling interests

 

 

3,024

 

 

$

(25,748

)

 

$

25,748

 

 

(g)

 

 

3,024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss) attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common and proportionate Shareholders of the Company

 

$

9,596

 

 

$

(17,815

)

 

$

(33,662

)

 

 

 

$

(41,881

)

Non-controlling interests

 

 

3,024

 

 

$

(25,748

)

 

$

25,748

 

 

(g)

 

 

3,024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share, basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share, basic

 

$

0.02

 

 

 

 

 

 

 

 

 

 

$

(0.20

)

Weighted average number of outstanding common and proportionate voting shares

 

 

181,056,654

 

 

 

 

 

 

 

 

 

 

 

245,586,756

 

Net income (loss) per share, diluted

 

$

0.01

 

 

 

 

 

 

 

 

 

 

$

(0.20

)

Weighted average number of outstanding common and proportionate voting shares, assuming dilution

 

 

208,708,664

 

 

 

 

 

 

 

 

 

 

 

245,586,756

 

 

1. Basis of presentation

The pro forma financial statements represent the combined company's (TerrAscend and Gage) pro forma balance sheet as of December 31, 2021, and pro forma statements of operations for the year ended December 31, 2021. The pro forma financial statements are based on the historical consolidated financial statements of TerrAscend and Gage, adjusted to give effect to the Gage Acquisition, and should be read in conjunction with the historical financial statements from which they are derived. The pro forma balance sheets give effect to the Gage Acquisition as if it had occurred on December 31, 2021. The pro forma statements of operations give effect to the Gage Acquisition as if it had occurred on January 1, 2021.

 

These pro forma financial statements were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's presentation currency is in US dollar ("USD"). All amounts are presented in USD unless otherwise specified. References to C$ are to Canadian dollars.

 

In preparing the pro forma financial statements, the following historical information was used:

•
Audited consolidated financial statements of TerrAscend as of December 31, 2021 as found in Form 10-K which was filed with the SEC on March 17, 2022; and
•
Audited financial statements of Gage for the year ended December 31, 2021, included in Exhibit 99.1 to the Company's Form 8-K/A filed with the SEC on May 24, 2022.

 

The unaudited pro forma condensed combined balance sheet and statements of operations should be read in conjunction with the historical financial statements including the notes thereto, as listed above, which are incorporated by reference.

 

The Gage Acquisition is accounted for as a business combination. The Company has estimated the fair value of Gage net assets acquired and conformed the accounting policies of Gage to its own accounting policies.

 

The pro forma financial statements have been prepared for illustrative purposes only and may not be indicative of the operating results or financial condition that would have been achieved if the Gage Acquisition had been completed on the dates or for the periods presented, nor do they purport to project the results of operations or financial position for any future period or as of any future date. The actual financial position and results of operations may differ materially from the pro forma amounts reflected herein due to a variety of factors.

 

2. Pro forma adjustments

Certain reclassifications have been made to the historical presentation of Gage to conform to the financial statement presentation of the Company, as follows:

 

 

 

As of December 31, 2021

 

Unaudited Pro Forma Combined Balance Sheet

 

Reclassification from

 

 

Reclassification to

 

Assets

 

 

 

 

 

 

Marketable securities

 

$

(565

)

 

$

-

 

Prepaid expenses and other current assets

 

 

—

 

 

 

565

 

 

 

 

—

 

 

 

—

 

Liabilities

 

 

—

 

 

 

—

 

Property purchase payable, current

 

 

(2,665

)

 

 

—

 

Debentures payable

 

 

(2,804

)

 

 

—

 

Financing liability

 

 

(689

)

 

 

—

 

Other current liabilities

 

 

—

 

 

 

6,158

 

Property purchase payable, non-current

 

 

(3,823

)

 

 

—

 

Other long term liabilities

 

 

—

 

 

 

3,823

 

Total

 

$

(10,546

)

 

$

10,546

 

 

 

 

Year Ended December 31, 2021

 

Unaudited Pro Forma Combined Statement of Operations

 

Reclassification from

 

 

Reclassification to

 

Sales and marketing

 

$

(7,089

)

 

$

-

 

Litigation expense

 

 

(2,700

)

 

 

—

 

Operating lease expense

 

 

(509

)

 

 

—

 

General and administrative expenses

 

 

—

 

 

 

10,298

 

Loss on disposal of finance lease

 

 

(1,044

)

 

 

—

 

Loss on lease termination

 

 

—

 

 

 

1,044

 

Change in fair value of marketable securities

 

 

(467

)

 

 

—

 

Finance and other expenses

 

 

—

 

 

 

467

 

Change in fair value of investments

 

 

(2,720

)

 

 

—

 

Unrealized and realized loss (gain) on investments

 

 

—

 

 

 

2,720

 

(Gain) loss on financial instruments

 

 

6,231

 

 

 

—

 

(Gain) loss on fair value of warrants and purchase option derivative asset

 

 

—

 

 

 

(6,231

)

Total

 

$

(8,298

)

 

$

8,298

 

 

The following adjustments have been made to the pro forma financial statements. These adjustments reflect only preliminary purchase accounting estimates as of December 31, 2021. Fair value assessment and valuations have not yet been completed and alignment of accounting policies is still in progress and therefore not reflected herein.

a)
Reflects adjustment to record the fair value of the inventory acquired. The calculation of inventory value was estimated based on the expected selling price of the inventory, less the remaining selling costs. The pro forma statement of operations and comprehensive income (loss) for the year ended December 31, 2021 is also adjusted to increase cost of sales by the same amount since the acquired inventory is expected to be sold within one year of the acquisition date. This adjustment is not expected to have an impact on the Company's statement of operations and comprehensive income (loss) beyond twelve months after the acquisition date.
b)
Reflects adjustments to record the fair value of property and equipment acquired. The estimated fair value was estimated using a market participant approach. Additional depreciation expense of $178 was calculated as a result of the change in the value of the property and equipment. Estimated useful life to calculate depreciation expense over a straight-line basis ranged from 4 to 39 years.
c)
Reflects adjustments to record the fair value of indefinite-lived and amortizable intangible assets acquired. The acquired intangible assets include cultivation and processing licenses, as well as retail licenses, which are treated as definite-lived intangible assets and are to be amortized over a 15 year period. The fair value of the cultivation and processing and the retail licenses are $77,198 and $53,321, respectively. Amortization for the year ended December 31, 2021 was estimated to be $8,701. In addition, the intangible assets include brand intangibles which are treated as indefinite lived intangible assets with a fair value of $57,435.
d)
Reflects the preliminary estimate of goodwill, which represents the excess of the consideration transferred over the preliminary fair value of the net assets acquired.
e)
Reflects the remeasurement of the warrant liability to fair value using the Black Scholes simulation model using TerrAscend specific inputs and assumptions. Key inputs and assumptions used in the Black Scholes simulation valuation model are summarized below.

Common Stock Price of TerrAscend Corp.

 

$

6.12

 

Warrant Exercise Price

 

$

8.65

 

Annual Volatility

 

 

64.43

%

Annual Risk-Free Rate

 

 

0.73

%

Expected Term

 

2 years

 
f)
Reflects the consideration if the acquisition took place on December 31, 2021, in the form of 42,022,602 Common Shares valued at $256,968, 22,507,500 exchangeable units valued at $137,633, 4,714,132 replacement stock options and 47,727 replacement warrants with a total fair value of $16,843. Each of the directors, officers, and 10% shareholders of Gage entered into voting support and lock-up agreements in which the shares issued to these individuals are subject to various vesting periods. As such, a restriction discount of $55,941 has been placed over the shares subject to lock-up.
g)
Reflects adjustments to eliminate the historical book value of Gage's net assets, as a result of the application of purchase accounting.
h)
Reflects direct, incremental costs of the Gage Acquisition which are reflected in the historical financial statements of TerrAscend.
i)
Reflects adjustment to record the impact of the above adjustments on deferred tax liability and income tax expense. An estimated federal and state statutory tax rate of 27% was assumed for the pro forma adjustments. The blended tax rate is not necessarily indicative of the effective tax rate of the combined company. The effective tax rate of the Company could vary significantly.

 

 

 

3. Preliminary purchase price allocation

The following table summarizes the calculation of the estimated consideration (in thousands, except share and per share data):

Gage Common shares outstanding as of December 31, 2021

 

 

140,028,663

 

Gage Exchangeable Non-Voting shares outstanding as of December 31, 2021

 

 

75,000,000

 

Total Gage Shares outstanding as of December 31, 2021

 

 

215,028,663

 

Exchange Ratio

 

 

0.3001

 

TerrAscend shares issued based on Exchange Ratio1

 

 

64,530,102

 

TerrAscend share price at closing date

 

$

6.12

 

Share Consideration

 

$

394,602

 

Less: Restricted share consideration discount

 

$

(55,941

)

Fair value of share consideration

 

$

338,661

 

Fair value of other equity instruments

 

$

16,843

 

Fair value of warrants classified as liabilities

 

$

11,385

 

Total consideration

 

$

366,890

 

The following table presents the preliminary purchase price allocation of the net assets acquired as if the Gage Acquisition occurred on December 31, 2021:

 

 

$

 

Cash and cash equivalents

 

 

42,901

 

Restricted cash

 

 

1,800

 

Accounts receivable

 

 

7,700

 

Investments

 

 

2,294

 

Inventory

 

 

23,218

 

Prepaid expenses and other current assets

 

 

2,699

 

Property and equipment

 

 

69,835

 

Operating lease right of use asset

 

 

2,317

 

Deposits

 

 

1,541

 

Intangible assets

 

 

188,289

 

Goodwill

 

 

201,256

 

Accounts payable and accrued liabilities

 

 

(33,623

)

Corporate income tax payable

 

 

(4,419

)

Lease liability

 

 

(2,477

)

Deferred revenue

 

 

(583

)

Loans payable

 

 

(60,847

)

Deferred income tax liability

 

 

(50,333

)

Financing obligations

 

 

(12,235

)

Other liabilities

 

 

(10,226

)

Net assets acquired

 

 

369,107

 

 

 

 

 

Common shares of TerrAscend

 

 

340,878

 

Fair value of other equity instruments

 

 

16,843

 

Fair value of warrants classified as liabilities

 

 

11,385

 

Total consideration

 

 

369,107

 

The Company prepared the allocation of the purchase price as if the Gage Acquisition occurred on December 31, 2021 based on estimates of the fair value of the acquired assets and assumed liabilities on a basis consistent with the purchase price allocation initially recorded at the closing the Gage Acquisition. As the Company continues to obtain additional information supporting the final valuation of inventories, property, plant and equipment and intangible assets, it will refine the estimates of fair value and revise its allocation of the purchase price. The Company expects to finalize the valuation of the assets and liabilities, as well as post-closing adjustments as soon as practicable, but in any event no later than one year from the closing date of the Gage Acquisition.

The accounting for this acquisition has been provisionally determined. The fair value of net assets acquired, specifically with respect to inventory, intangible assets, deferred revenue, property and equipment, operating right of use assets, lease liabilities, investments, corporate income taxes payable, deferred tax liability, and goodwill have been determined provisionally and are subject to adjustment. Upon completion of a comprehensive valuation and finalization of the purchase price allocation, the amounts above may be adjusted

retrospectively to the acquisition date in future reporting periods.