10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on May 9, 2024
ROC
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
None |
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N/A |
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N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 8, 2024, the registrant had
Table of Contents
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Page |
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PART I. |
1 |
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Item 1. |
1 |
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Unaudited Interim Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 |
1 |
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2 |
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4 |
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Notes to Unaudited Interim Condensed Consolidated Financial Statements |
5 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 |
Item 3. |
33 |
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Item 4. |
33 |
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PART II. |
34 |
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Item 1. |
34 |
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Item 1A. |
34 |
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Item 2. |
34 |
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Item 3. |
34 |
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Item 4. |
34 |
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Item 5. |
34 |
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Item 6. |
34 |
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36 |
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Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains statements that TerrAscend Corp. (the "Issuer") believes are, or may be considered to be, “forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q regarding the prospects of the industry in which the Issuer, its subsidiaries, TerrAscend Growth Corp. ("TerrAscend") and its subsidiaries (collectively, the "Company") operate or the Company's prospects, plans, financial position or business strategy may constitute forward-looking statements. Such statements can be identified by the use of forward-looking terminology such as "can", “expect”, “likely”, “may”, “will”, “should”, “intend”, “anticipate”, “potential”, “proposed”, “estimate” and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussions of strategy. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance, or other statements that are not statements of fact. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements with respect to:
Certain of the forward-looking statements contained herein concerning the cannabis industry and the general expectations of the Company concerning the cannabis industry are based on estimates prepared by the Company using data from publicly-available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of the cannabis industry. Such data is inherently imprecise. The cannabis industry involves risks and uncertainties that are subject to change based on various factors, which factors are described further below.
With respect to the forward-looking statements contained in this Quarterly Report on Form 10-Q, the Company has made assumptions regarding, among other things: (i) its ability to generate cash flows from operations and obtain necessary financing on acceptable terms; (ii) general economic, financial market, regulatory and political conditions in jurisdictions in which the Company operates; (iii) the output from the Company’s operations; (iv) consumer interest in the Company’s products; (v) competition in the cannabis industry; (vi) anticipated and unanticipated costs; (vii) government regulation of the Company’s activities and products; (viii) government regulation of licensing, taxation and environmental protection; (ix) the timely receipt of any required regulatory approvals; (x) the Company’s ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; (xi) the Company’s ability to conduct operations in a safe, efficient and effective manner; and (xii) the Company’s construction plans and timeframe for completion of such plans.
Readers are cautioned that the above list of cautionary statements is not exhaustive. Known and unknown risks, many of which are beyond the control of the Company, could cause actual results to differ materially from the forward-looking statements in this Quarterly Report on Form 10-Q. Such risks and uncertainties include, but are not limited to, current and future market conditions; risks related to federal, state, provincial, territorial, local and foreign government laws, rules and regulations, including federal and state laws in the United States relating to cannabis operations in the United States; and those discussed under Item 1A – “Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2024 and this Quarterly Report on Form 10-Q. The purpose of forward-looking statements is to provide the reader with a description of management’s expectations, and such forward-looking statements may not be appropriate for any other purpose. You should not place undue reliance on forward-looking statements contained in this Quarterly Report on Form 10-Q. The Company can give no assurance that such expectations will prove to have been correct. Forward-looking statements contained herein are made as of the date of this Quarterly Report on Form 10-Q and are based on the beliefs, estimates, expectations and opinions of management on the date such forward-looking statements are made. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, estimates or opinions, future events or results or otherwise or to explain any material difference between subsequent actual events and such forward-looking statements, except as required by applicable law.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
TerrAscend Corp.
Unaudited Interim Condensed Consolidated Balance Sheets
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
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At |
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At |
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March 31, 2024 |
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December 31, 2023 |
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Assets |
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Current Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable, net |
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Investments |
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Inventory |
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Prepaid expenses and other current assets |
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Non-Current Assets |
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Property and equipment, net |
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Deposits |
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Operating lease right of use assets |
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Intangible assets, net |
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Goodwill |
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Other non-current assets |
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Total Assets |
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$ |
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$ |
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Liabilities and Shareholders' Equity |
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Current Liabilities |
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Accounts payable and accrued liabilities |
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$ |
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$ |
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Deferred revenue |
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Loans payable, current |
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Contingent consideration payable, current |
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Operating lease liability, current |
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Lease obligations under finance leases, current |
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Corporate income tax payable |
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Other current liabilities |
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Non-Current Liabilities |
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Loans payable, non-current |
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Operating lease liability, non-current |
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Lease obligations under finance leases, non-current |
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Derivative liability |
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Convertible debt |
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Deferred income tax liability |
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Contingent consideration payable, non-current |
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— |
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Liability on uncertain tax position and other long term liabilities |
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Total Liabilities |
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Shareholders' Equity |
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Share Capital |
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Series A, convertible preferred stock, par value, shares authorized; |
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Series B, convertible preferred stock, par value, shares authorized; |
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Series C, convertible preferred stock, par value, shares authorized; and shares outstanding as of March 31, 2024 and December 31, 2023, respectively |
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Series D, convertible preferred stock, par value, shares authorized; and shares outstanding as of March 31, 2024 and December 31, 2023, respectively |
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Proportionate voting shares, par value, shares authorized; and shares outstanding as of March 31, 2024 and December 31, 2023, respectively |
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Exchangeable shares, par value, shares authorized; |
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Common shares, par value, shares authorized; |
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Additional paid in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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( |
) |
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( |
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Non-controlling interest |
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( |
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Total Shareholders' Equity |
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Total Liabilities and Shareholders' Equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
1
TerrAscend Corp.
Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
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For the Three Months Ended |
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March 31, 2024 |
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March 31, 2023 |
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Revenue, net |
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Cost of Sales |
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Gross profit |
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Operating expenses: |
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General and administrative |
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Amortization and depreciation |
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Impairment of property and equipment and right of use assets |
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Total operating expenses |
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Income from operations |
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Other (income) expense |
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Loss from revaluation of contingent consideration |
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— |
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Loss (gain) on fair value of warrants and purchase option derivative assets |
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( |
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Finance and other expenses |
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Transaction and restructuring costs |
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— |
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Unrealized and realized foreign exchange loss (gain) |
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( |
) |
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Unrealized and realized loss on investments |
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— |
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Loss from continuing operations before provision for income taxes |
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( |
) |
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( |
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Provision for income taxes |
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Net loss from continuing operations |
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$ |
( |
) |
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$ |
( |
) |
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Discontinued operations: |
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Loss from discontinued operations, net of tax |
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$ |
— |
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$ |
( |
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Net loss |
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$ |
( |
) |
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$ |
( |
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Foreign currency translation adjustment |
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( |
) |
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Comprehensive loss |
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$ |
( |
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$ |
( |
) |
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Net loss from continuing operations attributable to: |
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Common and proportionate Shareholders of the Company |
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$ |
( |
) |
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$ |
( |
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Non-controlling interests |
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$ |
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$ |
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Comprehensive loss attributable to: |
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Common and proportionate Shareholders of the Company |
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$ |
( |
) |
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$ |
( |
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Non-controlling interests |
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$ |
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$ |
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Net loss per share |
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Net loss per share - basic: |
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Continuing operations |
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$ |
( |
) |
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$ |
( |
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Discontinued operations |
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$ |
— |
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$ |
( |
) |
Net loss per share - basic |
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$ |
( |
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$ |
( |
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Weighted average number of outstanding common shares |
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Net loss per share - diluted: |
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Continuing operations |
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$ |
( |
) |
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$ |
( |
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Discontinued operations |
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$ |
— |
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$ |
( |
) |
Net loss per share - diluted |
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$ |
( |
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$ |
( |
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Weighted average number of outstanding common shares, assuming dilution |
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The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
2
TerrAscend Corp.
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
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Number of Shares |
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Convertible Preferred Stock |
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Common Shares |
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Exchangeable Shares |
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Series A |
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Series B |
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Common Shares Equivalent |
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Additional paid in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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Non-controlling interest |
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Total |
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Balance at December 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Shares issued - stock options, warrant and RSU exercises |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Options and warrants expired/forfeited |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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— |
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Capital distributions |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Acquisition of non-controlling interest |
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— |
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— |
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— |
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— |
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— |
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Net loss for the period |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Number of Shares |
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Convertible Preferred Stock |
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Common Shares |
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Exchangeable Shares |
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Series A |
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Series B |
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Common Shares Equivalent |
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Additional paid in capital |
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Accumulated other comprehensive income (loss) |
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Accumulated deficit |
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Non-controlling interest |
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Total |
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Balance at December 31, 2022 |
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$ |
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$ |
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( |
) |
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$ |
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Shares issued - stock options, warrant and RSU exercises |
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— |
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— |
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— |
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— |
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— |
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— |
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Shares, options and warrants issued - acquisitions |
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— |
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— |
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— |
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— |
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— |
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— |
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Shares, options and warrants issued - legal settlement |
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— |
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— |
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— |
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— |
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— |
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— |
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Shares issued- conversion |
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( |
) |
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( |
) |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|
||
Options and warrants expired/forfeited |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
Capital contribution |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Net loss for the period |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Balance at March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
3
TerrAscend Corp.
Unaudited Interim Condensed Consolidated Statements of Cash Flows
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
|
For the Three Months Ended |
|
|||||
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Operating activities |
|
|
|
|
|
||
Net loss from continuing operations |
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash provided by operating activities |
|
|
|
|
|
||
Non-cash adjustments of inventory |
|
|
|
|
|
||
Accretion expense |
|
|
|
|
|
||
Depreciation of property and equipment and amortization of intangible assets |
|
|
|
|
|
||
Amortization of operating right-of-use assets |
|
|
|
|
|
||
Share-based compensation |
|
|
|
|
|
||
Deferred income tax expense |
|
( |
) |
|
|
|
|
Loss (gain) on fair value of warrants and purchase option derivative |
|
|
|
|
( |
) |
|
Gain on disposal of fixed assets |
|
|
|
|
|
||
Loss from revaluation of contingent consideration |
|
|
|
|
|
||
Impairment of property and equipment and right of use assets |
|
|
|
|
— |
|
|
Loss on derecognition of right of use assets and lease termination |
|
|
|
|
|
||
Bad debt expense |
|
|
|
|
— |
|
|
Unrealized and realized foreign exchange loss (gain) |
|
|
|
|
( |
) |
|
Unrealized and realized loss on investments |
|
|
|
|
|
||
Changes in operating assets and liabilities |
|
|
|
|
|
||
Receivables |
|
|
|
|
|
||
Inventory |
|
|
|
|
( |
) |
|
Prepaid expense and other current assets |
|
|
|
|
|
||
Deposits |
|
|
|
|
|
||
Other assets |
|
( |
) |
|
|
( |
) |
Accounts payable and accrued liabilities and other payables |
|
( |
) |
|
|
|
|
Operating lease liability |
|
( |
) |
|
|
( |
) |
Other liability |
|
( |
) |
|
|
( |
) |
Uncertain tax position liabilities |
|
|
|
|
— |
|
|
Corporate income tax payable |
|
|
|
|
|
||
Deferred revenue |
|
|
|
|
( |
) |
|
Net cash provided by operating activities- continuing operations |
|
|
|
|
|
||
Net cash used in operating activities - discontinued operations |
|
|
|
|
( |
) |
|
Net cash provided by operating activities |
|
|
|
|
|
||
|
|
|
|
|
|
||
Investing activities |
|
|
|
|
|
||
Investment in property and equipment |
|
( |
) |
|
|
( |
) |
Investment in intangible assets |
|
( |
) |
|
|
( |
) |
Principal payments received on lease receivable |
|
— |
|
|
|
|
|
Success fees related to ATC and other investment |
|
— |
|
|
|
|
|
Payment for land contracts |
|
( |
) |
|
|
( |
) |
Cash portion of consideration paid in acquisitions, net of cash of acquired |
|
( |
) |
|
|
( |
) |
Net cash used in investing activities - continuing operations |
|
( |
) |
|
|
( |
) |
Net cash provided investing activities - discontinued operations |
|
|
|
|
|
||
Net cash used in investing activities |
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
||
Transfer of Employee Retention Credit |
|
— |
|
|
|
|
|
Proceeds from loan payable, net of transaction costs |
|
|
|
|
|
||
Proceeds from options and warrants exercised |
|
|
|
|
|
||
Loan principal paid |
|
( |
) |
|
|
( |
) |
Capital distributions paid to non-controlling interests |
|
( |
) |
|
|
( |
) |
Payments made for financing obligations and finance lease |
|
( |
) |
|
|
( |
) |
Net cash (used in) provided by financing activities- continuing operations |
|
( |
) |
|
|
|
|
Net cash used in financing activities- discontinued operations |
|
— |
|
|
|
( |
) |
Net cash (used in) provided by financing activities |
|
( |
) |
|
|
|
|
|
|
|
|
|
|
||
Net increase in cash and cash equivalents and restricted cash during the period |
|
|
|
|
|
||
Net effects of foreign exchange |
|
|
|
|
|
||
Cash and cash equivalents and restricted cash, beginning of the period |
|
|
|
|
|
||
Cash and cash equivalents and restricted cash, end of the period |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Supplemental disclosure with respect to cash flows |
|
|
|
|
|
||
Income taxes paid (refund received) |
$ |
|
|
$ |
( |
) |
|
Interest paid |
$ |
|
|
$ |
|
||
Lease termination fee paid |
$ |
|
|
$ |
— |
|
|
Non-cash transactions |
|
|
|
|
|
||
Equity and warrant liability issued for acquisitions and non-controlling interest |
$ |
|
|
$ |
|
||
Shares issued for Canopy USA arrangement |
$ |
— |
|
|
$ |
|
|
Accrued capital purchases |
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
4
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
1. Nature of operations
TerrAscend Corp. (the "Issuer") was incorporated under the Business Corporations Act (Ontario) on
The Company operates under one operating segment, which is the cultivation, production and sale of cannabis products.
The Company owns a portfolio of operating businesses, including:
The common shares in the capital of the Company ("Common Shares") commenced trading on the Canadian Securities Exchange ("CSE") on May 3, 2017 under the ticker symbol "TER" and continued trading on the CSE until the listing of the Common Shares on the Toronto Stock Exchange (the "TSX"). Effective July 4, 2023, the Common Shares commenced trading on the TSX under the ticker symbol "TSND". The Common Shares commenced trading on OTCQX on October 22, 2018 under the ticker symbol "TRSSF", which was subsequently changed to "TSNDF", effective July 6, 2023. The Company’s registered office is located at 77 City Centre Drive, Suite 501, Mississauga, Ontario, L5B 1M5, Canada.
These unaudited interim condensed consolidated financial statements included herein (the “Consolidated Financial Statements”) of the Company and its subsidiaries were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
The accompanying Consolidated Financial Statements contained in this report are unaudited. In the opinion of management, these Consolidated Financial Statements have been prepared on the same basis as the annual consolidated financial statements and notes thereto of the Company and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of the Company’s financial position and operating results. The results for the three months ended March 31, 2024 are not necessarily indicative of the operating results for the year ended December 31, 2024, or any other interim or future periods.
The accompanying Consolidated Financial Statements have been prepared on the going concern basis, under the historical cost convention, except for certain financial instruments that are measured at fair value as described herein. At March 31, 2024, the Company had an accumulated deficit of $
5
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
to loans maturing within the current year. Therefore, the Company expects that it may need to refinance this debt or access additional capital to continue to fund its operations.
The aforementioned indicators raise substantial doubt about the Company's ability to continue as a going concern for at least one year from the issuance of these Consolidated Financial Statements. The Company believes this concern is mitigated by steps it has taken, or intends to take to improve its operations and cash position, including: (i) identifying access to future capital required to pay down or refinance the Company’s maturing debt, (ii) improved cashflow growth from the Company's consolidated operations, particularly TerrAscend's operations in New Jersey and most recently Maryland with conversion to adult-use sales, and (iii) various cost and efficiency improvements. The Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amounts of and classification of liabilities that may result should the Company be unable to continue as a going concern.
The accompanying Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto of the Company for the year ended December 31, 2023 contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission (the "SEC") on March 14, 2024 (the "Annual Report). There were no significant changes to the policies disclosed in Note 2 of the summary of significant accounting policies of the Company’s audited consolidated financial statements for the year ended December 31, 2023 in the Company's Annual Report.
The Company consolidates entities in which it has a controlling financial interest by evaluating whether the entity is a voting interest entity (“VOE”) or a variable interest entity (“VIE”).
In connection with the listing of the Common Shares on the TSX, the Company reorganized its ownership structure to segregate the Company’s Canadian retail operations from TerrAscend's cultivation and manufacturing operations in the United States (the "Reorganization"). Following the completion of the Reorganization, the Company owns
Subsequent to the Reorganization, all operations in the United States have a functional currency of the U.S. dollar ("USD"). Canadian operations continue to have a functional currency of the Canadian dollar ("CAD").
Voting Interest Entities
A VOE is an entity in which (1) the total equity investment at risk is deemed sufficient to absorb the expected losses of the entity, (2) the at-risk equity holders, as a group, have all of the characteristics of a controlling financial interest and (3) the entity is structured with substantive voting rights. The Company consolidates the Canadian operations under a VOE model based on the controlling financial interest obtained through Common Shares with substantive voting rights.
Variable Interest Entities
A VIE is an entity that lacks one or more characteristics of a controlling financial interest defined under the voting interest model. The Company consolidates VIE when it has a variable interest that provide it with (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance (power) and (2) the obligation to absorb losses of the VIE that potentially could be significant to the VIE or the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits).
In connection with the Reorganization, TerrAscend issued and sold, on a private placement basis, Class A shares in the capital of TerrAscend ("Class A Shares") for aggregate gross proceeds of $
The Issuer determined that TerrAscend is a VIE, as all of the Company’s U.S. activities continue to be conducted on behalf of the Company which has disproportionately few voting rights. After conducting an analysis of the following VIE factors; purpose and design
6
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
of the VIE, the Protection Agreement in place, the structure of the Company's board of directors (the "Board"), and substantive kick-out rights of the holders of the Class A Shares, it was determined that the Company has the power to direct the activities of TerrAscend. In addition, given the structure of the Class A Shares where all of the losses and substantially all of the benefits of TerrAscend are absorbed by the Company, the Company consolidates as the primary beneficiary in accordance with Accounting Standards Codification ("ASC") 810, Consolidation.
The Company's U.S. operations are consolidated through the VIE model. Therefore, substantially all of the Company's current assets, non-current assets, current liabilities and non-current liabilities are consolidated through the VIE model. The Company's assets and liabilities that are not consolidated through the VIE model include convertible debt, and derivative liability. The Company also consolidates a minimal amount of assets and liabilities within Canada. See Note 21 for more information.
The Company's accounts receivable, net consisted of the following:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Trade receivables |
|
$ |
|
|
$ |
|
||
Sales tax receivable |
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
||
Provision for current expected credit losses |
|
|
( |
) |
|
|
( |
) |
Total receivables, net |
|
$ |
|
|
$ |
|
||
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Trade receivables |
|
$ |
|
|
$ |
|
||
Less: provision for current expected credit losses |
|
|
( |
) |
|
|
( |
) |
Total trade receivables, net |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Of which |
|
|
|
|
|
|
||
Current |
|
|
|
|
|
|
||
31-90 days |
|
|
|
|
|
|
||
Over 90 days |
|
|
|
|
|
|
||
Less: current expected credit losses |
|
|
( |
) |
|
|
( |
) |
Total trade receivables, net |
|
$ |
|
|
$ |
|
||
The over 90 days aged balance relates mainly to
Contingent consideration
The balances of the Company's contingent considerations are as follows:
|
|
State Flower |
|
|
Apothecarium |
|
|
Peninsula |
|
|
Total |
|
||||
Carrying amount, December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Reduction of contingent consideration |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Loss (gain) on revaluation of contingent consideration |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Carrying amount, March 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: current portion |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Non-current contingent consideration |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
During the three months ended March 31, 2024, the Company issued an aggregate of
7
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
The Company’s inventory of dry cannabis and cannabis derived products includes both purchased and internally produced inventory. The Company’s inventory is comprised of the following items:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Finished goods |
|
|
|
|
|
|
||
Work in process |
|
|
|
|
|
|
||
Accessories, supplies and consumables |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
TerrAscend Canada operated out of a
The results of operations for the discontinued operations includes revenues and expenses directly attributable to the operations disposed. Corporate and administrative expenses, including interest expense, not directly attributable to the operations were not allocated to the Canadian Licensed Producer business. The results of discontinued operations were as follows:
|
For the Three Months Ended |
|
|||||
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
|
|
|
|
|
|
||
Revenue, net |
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
||
Cost of Sales |
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Gross profit |
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Operating expenses: |
|
|
|
|
|
||
General and administrative |
|
— |
|
|
|
|
|
Amortization and depreciation |
|
— |
|
|
|
|
|
Impairment of property and equipment |
|
— |
|
|
|
|
|
Total operating expenses |
|
— |
|
|
|
|
|
|
|
|
|
|
|
||
Loss from discontinued operations |
|
— |
|
|
|
( |
) |
Other expense |
|
|
|
|
|
||
Finance and other expenses |
|
— |
|
|
|
|
|
Net loss from discontinued operations |
$ |
— |
|
|
$ |
( |
) |
8
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
Property and equipment consisted of:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Land |
|
$ |
|
|
$ |
|
||
Assets in process |
|
|
|
|
|
|
||
Buildings & improvements |
|
|
|
|
|
|
||
Machinery & equipment |
|
|
|
|
|
|
||
Office furniture & equipment |
|
|
|
|
|
|
||
Assets under finance leases |
|
|
|
|
|
|
||
Total cost |
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Assets in process primarily represent construction in progress related to both cultivation and dispensary facilities not yet completed, or otherwise not placed in service.
As of March 31, 2024 and December 31, 2023, borrowing costs were
Depreciation expense was $
Intangible assets consisted of the following:
At March 31, 2024 |
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net Carrying Amount |
|
|||
Finite lived intangible assets |
|
|
|
|
|
|
|
|
|
|||
Software |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Licenses |
|
|
|
|
|
( |
) |
|
|
|
||
Non-compete agreements |
|
|
|
|
|
( |
) |
|
|
— |
|
|
Total finite lived intangible assets |
|
|
|
|
|
( |
) |
|
|
|
||
Indefinite lived intangible assets |
|
|
|
|
|
|
|
|
|
|||
Brand intangibles |
|
|
|
|
|
— |
|
|
|
|
||
Total indefinite lived intangible assets |
|
|
|
|
|
— |
|
|
|
|
||
Intangible assets, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
At December 31, 2023 |
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net Carrying Amount |
|
|||
Finite lived intangible assets |
|
|
|
|
|
|
|
|
|
|||
Software |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Licenses |
|
|
|
|
|
( |
) |
|
|
|
||
Brand intangibles |
|
|
|
|
|
( |
) |
|
|
— |
|
|
Non-compete agreements |
|
|
|
|
|
( |
) |
|
|
— |
|
|
Total finite lived intangible assets |
|
|
|
|
|
( |
) |
|
|
|
||
Indefinite lived intangible assets |
|
|
|
|
|
|
|
|
|
|||
Brand intangibles |
|
|
|
|
|
— |
|
|
|
|
||
Total indefinite lived intangible assets |
|
|
|
|
|
— |
|
|
|
|
||
Intangible assets, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
9
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
Amortization expense was $
Estimated future amortization expense for finite lived intangible assets for the next five years is as follows:
2024 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
As of March 31, 2024, the weighted average amortization period remaining on intangible assets was
The Company's goodwill is allocated to
Balance at December 31, 2023 |
|
$ |
|
|
Additions at acquisition date |
|
|
|
|
Impairment of goodwill |
|
|
|
|
Balance at March 31, 2024 |
|
$ |
|
The Company's loans payable consisted of the following:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Chicago Atlantic term loan due |
|
|
|
|
|
|
||
Principal amount |
|
$ |
|
|
$ |
|
||
Deferred financing cost |
|
|
— |
|
|
|
— |
|
Net carrying amount |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Ilera term loan due |
|
|
|
|
|
|
||
Principal amount |
|
$ |
|
|
$ |
|
||
Deferred financing cost |
|
|
( |
) |
|
|
( |
) |
Net carrying amount |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Stearns loan due |
|
|
|
|
|
|
||
Principal amount |
|
$ |
|
|
$ |
|
||
Deferred financing cost |
|
|
( |
) |
|
|
( |
) |
Net carrying amount |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Pelorus term loan due |
|
|
|
|
|
|
||
Principal amount |
|
$ |
|
|
$ |
|
||
Deferred financing cost |
|
|
( |
) |
|
|
( |
) |
Net carrying amount |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Maryland Acquisition loans (1) |
|
|
|
|
|
|
||
Principal amount |
|
$ |
|
|
$ |
|
||
Unamortized discount |
|
|
( |
) |
|
|
( |
) |
Net carrying amount |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other loans |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Short-term debt |
|
$ |
|
|
$ |
|
||
Current portion of long-term debt |
|
$ |
|
|
|
|
||
Loans payable, current |
|
$ |
|
|
|
|
||
|
|
|
|
|
|
|
||
Loans payable, non-current |
|
$ |
|
|
$ |
|
||
Total loans payable |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
(1) For maturity breakout, refer to Maryland Acquisition Loans section below. |
|
|
|
|
|
|
||
10
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
Total interest paid on all loan payables was $
Chicago Atlantic Term Loan
In connection with the acquisition of Gage Growth on March 10, 2022 (the "Gage Acquisition"), the Company assumed a senior secured term loan that was amended to provide an amount of $
As of March 31, 2024, there was an outstanding principal amount of $
Ilera Term Loan
On December 18, 2020, WDB Holding PA, a subsidiary of TerrAscend, entered into a senior secured term loan with a syndicate of lenders in the amount of $
On January 2, 2024, the Company completed a prepayment of the Ilera Term Loan of $
As of March 31, 2024, there was an outstanding principal amount of $
Stearns Loan
On June 26, 2023, the Company closed on a $
As of March 31, 2024, there was an outstanding principal amount of $
Pelorus Term Loan
On October 11, 2022, subsidiaries of, TerrAscend, among others, entered into a loan agreement with Pelorus Fund REIT, LLC ("Pelorus") for a single-draw senior secured term loan (the “Pelorus Term Loan") in an aggregate principal amount of $
As of March 31, 2024, there was an outstanding principal amount of $
Maryland Acquisition Loans
In connection with the acquisition Derby 1, LLC ("Peninsula"), Hempaid, LLC ("Blue Ridge"), and Herbiculture Inc. ("Herbiculture"), (collectively, the "Maryland Acquisitions"), the Company entered into promissory notes with an aggregate principal amount of $
As of March 31, 2024, there was an outstanding principal amount of $
11
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
Other loans
Stadium Ventures
In connection with the Gage Acquisition, the Company assumed existing indebtedness in the form of a promissory note in the amount of $
As of March 31, 2024, there was an outstanding principal amount of $
Class A Shares of TerrAscend Growth
In connection with the Reorganization (see Note 3), TerrAscend issued $
Short-Term Debt
The average dollar amount of short-term debt for the three months ended March 31, 2024 was $
On January 15, 2024, the Company paid off the IHC Real Estate LP promissory note with a payment of $
Maturities of loans payable
Stated maturities of loans payable over the next five years are as follows:
|
|
March 31, 2024 |
|
|
2024 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Thereafter |
|
|
— |
|
Total principal payments |
|
$ |
|
|
12
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
The majority of the Company’s leases are operating leases used primarily for corporate offices, retail, cultivation and manufacturing. The operating lease periods generally range from
Amounts recognized in the consolidated balance sheet were as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Operating leases: |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Operating lease liability classified as current |
|
|
|
|
|
|
||
Operating lease liability classified as non-current |
|
|
|
|
|
|
||
Total operating lease liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Finance leases: |
|
|
|
|
|
|
||
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
||
Lease obligations under finance leases classified as current |
|
|
|
|
|
|
||
Lease obligations under finance leases classified as non-current |
|
|
|
|
|
|
||
Total finance lease obligations |
|
$ |
|
|
$ |
|
||
The Company recognized operating lease expense of $
Other information related to operating leases at March 31, 2024 and December 31, 2023 consisted of the following:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Weighted-average remaining lease term (years) |
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
|
||
Finance leases |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Weighted-average discount rate |
|
|
|
|
|
|
||
Operating leases |
|
|
% |
|
|
% |
||
Finance leases |
|
|
% |
|
|
% |
||
Supplemental cash flow information related to leases are as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Cash paid for amounts included in measurement of operating lease liabilities |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for operating lease obligations |
|
|
— |
|
|
|
|
|
Cash paid for amounts included in measurement of finance lease liabilities |
|
|
|
|
|
|
||
13
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
Undiscounted lease obligations are as follows:
|
|
Operating |
|
|
Finance |
|
|
Total |
|
|||
2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
2025 |
|
|
|
|
|
|
|
|
|
|||
2026 |
|
|
|
|
|
|
|
|
|
|||
2027 |
|
|
|
|
|
|
|
|
|
|||
2028 |
|
|
|
|
|
|
|
|
|
|||
Thereafter |
|
|
|
|
|
— |
|
|
|
|
||
Total lease payments |
|
|
|
|
|
|
|
|
|
|||
Less: interest |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total lease liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The Company's convertible debt consisted of the following:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Convertible debt proceeds, net of transaction costs - Maturing June 2026 |
|
$ |
|
|
$ |
|
||
Allocation to conversion option |
|
|
( |
) |
|
|
( |
) |
Allocation to debt |
|
|
|
|
|
|
||
Interest and accretion |
|
|
|
|
|
|
||
Net carrying amount |
|
$ |
|
|
$ |
|
||
The Company had accrued interest on convertible debt of $
Warrants
The following is a summary of the outstanding warrants for Common Shares:
|
|
Number of Common Share Warrants Outstanding |
|
|
Number of Common Share Warrants Exercisable |
|
|
Weighted Average Exercise Price $ |
|
|
Weighted Average Remaining Life (years) |
|
||||
Outstanding, December 31, 2023 |
|
|
|
|
|
|
|
$ |
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Expired |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Outstanding, March 31, 2024 |
|
|
|
|
|
|
|
$ |
|
|
|
|
||||
14
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
The weighted-average exercise price in the above table is denominated in a currency that is different from the functional currency of the Company and can influence the USD conversion.
The following is a summary of the outstanding warrant liabilities that are exchangeable into Common Shares:
|
|
Number of Common Share Warrants Outstanding |
|
|
Number of Common Share Warrants Exercisable |
|
|
Weighted Average Exercise Price $ |
|
|
Weighted Average Remaining Life (years) |
|
||||
Outstanding, December 31, 2023 |
|
|
|
|
|
— |
|
|
$ |
|
|
|
|
|||
Granted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Expired |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Outstanding, March 31, 2024 |
|
|
|
|
|
— |
|
|
$ |
|
|
|
|
|||
Share-based payments expense
Total share-based payments expense was as follows:
|
For the Three Months Ended |
|
||||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Stock options |
|
$ |
|
|
$ |
|
||
Restricted share units |
|
|
|
|
|
|
||
Total share-based payments |
|
$ |
|
|
$ |
|
||
Stock Options
The following table summarizes the stock option activity for the three months ended March 31, 2024:
|
Number of Stock Options |
|
|
Weighted average remaining contractual life (in years) |
|
Weighted Average Exercise Price (per share) $ |
|
Aggregate intrinsic value |
|
||||
Outstanding, December 31, 2023 |
|
|
|
|
|
$ |
|
$ |
|
||||
Granted |
|
|
|
|
— |
|
|
|
|
— |
|
||
Exercised |
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
Forfeited |
|
( |
) |
|
|
— |
|
|
|
|
— |
|
|
Expired |
|
( |
) |
|
|
— |
|
|
|
|
— |
|
|
Outstanding, March 31, 2024 |
|
|
|
|
|
$ |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Exercisable, March 31, 2024 |
|
|
|
|
|
$ |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
||||
Nonvested, March 31, 2024 |
|
|
|
|
|
$ |
|
$ |
|
||||
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Company’s closing stock price on March 31, 2024 and December 31, 2023, respectively, and the exercise price, multiplied by the number of the in-the-money options) that would have been received by the option holders had they exercised their in-the-money options on March 31, 2024 and December 31, 2023, respectively.
The total pre-tax intrinsic value (the difference between the market price of the Common Shares on the exercise date and the price paid by the option holder to exercise the option) related to stock options exercised is presented below:
15
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
|
For the Three Months Ended |
|
||||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Exercised |
|
$ |
|
|
$ |
|
||
The fair value of the various stock options granted were estimated using the Black-Scholes Model with the following assumptions:
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Volatility |
|
|
|
|
||||
Risk-free interest rate |
|
|
|
|
||||
Expected life (years) |
|
|
|
|
||||
Dividend yield |
|
|
% |
|
|
% |
||
Forfeiture rate |
|
|
% |
|
|
% |
||
Volatility was estimated by using the historical volatility of the Company's stock price. The expected life in years represents the period of time that the options issued are expected to be outstanding. The risk-free rate is based on U.S. treasury bond issues with a remaining term approximately equal to the expected life of the options. Dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay cash dividends in the foreseeable future.
The total estimated fair value of stock options that vested during the three months ended March 31, 2024 and 2023 was $
Restricted Share Units
The following table summarizes the activities for the RSUs for the three months ended March 31, 2024:
|
|
Number of RSUs |
|
|
Outstanding, December 31, 2023 |
|
|
|
|
Granted |
|
|
|
|
Vested |
|
|
( |
) |
Forfeited |
|
|
— |
|
Outstanding, March 31, 2024 |
|
|
|
|
As of March 31, 2024, there was $
Non-controlling interest consists mainly of TerrAscend's minority ownership interest in TerrAscend's New Jersey operations.
On January 19, 2024, the Company reduced its non-controlling interest through the acquisition of the remaining
The following table summarizes the non-controlling interest activity for the three months ended March 31, 2024:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Opening carrying amount |
|
$ |
( |
) |
|
$ |
|
|
Capital distributions |
|
|
( |
) |
|
|
( |
) |
Acquisition of non-controlling interest |
|
|
|
|
|
( |
) |
|
Net income attributable to non-controlling interest |
|
|
|
|
|
|
||
Ending carrying amount |
|
$ |
|
|
$ |
( |
) |
|
16
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
Parties are related if one party has the ability to control or exercise significant influence over the other party in making financing and operating decisions. At March 31, 2024, amounts due to/from related parties consisted of:
The Company's effective tax rate was (
The Company had an unrecognized tax benefits of $
Related to its 280E Tax Position, the Company has filed amended federal returns related to 2020 and 2021 and is in the process of completing various other federal and state amendments related to 2020, 2021 and 2022. The Company’s tax returns generally remain subject to examination by the U.S. Federal, U.S. State and non U.S. taxing authorities for years ending December 31, 2020 and forward.
The Company’s general and administrative expenses were as follows:
|
|
For the Three Months Ended |
|
|||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Office and general |
|
$ |
|
|
$ |
|
||
Professional fees |
|
|
|
|
|
|
||
Lease expense |
|
|
|
|
|
|
||
Facility and maintenance |
|
|
|
|
|
|
||
Salaries and wages |
|
|
|
|
|
|
||
Share-based compensation |
|
|
|
|
|
|
||
Sales and marketing |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
The Company’s disaggregated net revenue by source, primarily due to the Company’s contracts with its external customers was as follows:
|
For the Three Months Ended |
|
||||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Retail |
|
$ |
|
|
$ |
|
||
Wholesale |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
17
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
For the three months ended March 31, 2024, the Company did
The Company’s finance and other expenses included the following:
|
For the Three Months Ended |
|
||||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Interest and accretion |
|
$ |
|
|
$ |
|
||
Employee retention credits and transfer fee |
|
|
— |
|
|
|
|
|
Other income |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
||
Operating Segment
The Company determines its operating segments according to how the business activities are managed and evaluated by the Company’s chief operating decision maker. The Company operates under
Geography
The Company has subsidiaries located in Canada and the United States. For the three months ended March 31, 2024, net revenue was primarily generated from sales in the United States. As a result of the Reorganization (Note 3), the Company consolidated its retail location in Canada and generated net revenue of $
The Company had non-current assets by geography of:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
United States |
|
$ |
|
|
$ |
|
||
Canada |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
The Company’s objective in managing capital is to ensure a sufficient liquidity position to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders. In order to achieve this objective, the Company prepares a capital budget to manage its capital structure. The Company defines capital as borrowings, equity comprised of issued share capital, share-based payments, accumulated deficit, as well as funds borrowed from related parties.
Since inception, the Company has primarily financed its liquidity needs through the issuance of share capital and debt. The equity issuances are outlined in Note 13, debt modifications are outlined in Note 10, and debt financing are outlined in Note 12.
The Company is subject to financial covenants as a result of its loans payable with various lenders. The Company is in compliance with its debt covenants as of March 31, 2024. In the event that, in future periods, the Company’s financial results are below levels required to maintain compliance with any of its covenants, the Company will assess and undertake appropriate corrective initiatives with a view to allowing it to continue to comply with its covenants. Other than these items related to loans payable, the Company is not subject to externally imposed capital requirements.
18
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
Assets and liabilities measured at fair value
Cash and cash equivalents, net accounts receivable, accounts payable and accrued liabilities, loans payable, convertible debentures, and other current receivables and payables represent financial instruments for which the carrying amount approximates fair value due to their short-term maturities.
The following table represents the fair value amounts of financial assets and financial liabilities measured at estimated fair value on a recurring basis:
|
At March 31, 2024 |
|
At December 31, 2023 |
|
||||||||||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents |
|
$ |
|
|
|
— |
|
|
|
— |
|
|
$ |
|
|
|
— |
|
|
|
— |
|
||
Restricted cash |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Total Assets |
|
$ |
|
|
|
— |
|
|
|
— |
|
|
$ |
|
|
|
— |
|
|
$ |
— |
|
||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Contingent consideration payable |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Derivative liability |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Total Liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
There were
The valuation approaches and key inputs for each category of assets or liabilities that are classified within levels of the fair value hierarchy are presented below:
Level 1
Cash, cash equivalents, and restricted cash, net accounts receivable, accounts payable and accrued liabilities, and other current receivables and payables represent financial instruments for which the carrying amount approximates fair value due to their short-term maturities.
Level 2
The following table summarizes the changes in the derivative liability for the three months ended March 31, 2024:
Balance at December 31, 2023 |
|
$ |
|
|
Fair value gain on revaluation of warrants and conversion option |
|
|
|
|
Effects of movements in foreign exchange |
|
|
( |
) |
Balance at March 31, 2024 |
|
$ |
|
Warrant liability and conversion option
The Company's warrant liability consists of a detachable warrant issued through the private placement (Note 13), and a conversion option related to the convertible debenture offering (Note 12).
Detachable Warrants
The detachable warrants issued as a part of the June 2023 private placement (Note 13) have been measured at fair value as of March 31, 2024. Key inputs and assumptions used in the Black-Scholes Model were as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Common Stock Price of TerrAscend Corp. |
|
$ |
|
|
$ |
|
||
Option exercise price |
|
$ |
|
|
$ |
|
||
Annual volatility |
|
|
% |
|
|
% |
||
Annual risk-free rate |
|
|
% |
|
|
% |
||
Expected term (in years) |
|
|
|
|
|
|
||
19
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
Bifurcated conversion options
The conversion option issued as a part of the June and August 2023 private placement (Note 12) has been measured at fair value as of March 31, 2024. Key inputs and assumptions used in the Black-Scholes Model were as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Common Stock Price of TerrAscend Corp. |
|
$ |
|
|
$ |
|
||
Option exercise price |
|
$ |
|
|
$ |
|
||
Annual volatility |
|
|
% |
|
|
% |
||
Annual risk-free rate |
|
|
% |
|
|
% |
||
Expected term (in years) |
|
|
|
|
||||
Contingent Consideration Payable
The fair value of the Peninsula Contingent Consideration was calculated using the Black-Scholes Model. Key inputs and assumptions were as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Common Stock Price of TerrAscend Corp. |
|
$ |
|
|
$ |
|
||
Option exercise price |
|
$ |
|
|
$ |
|
||
Annual volatility |
|
|
% |
|
|
% |
||
Annual risk-free rate |
|
|
% |
|
|
% |
||
Expected term (in years) |
|
|
|
|
|
|
||
The fair value of the State Flower and The Apothecarium Contingent Considerations were calculated using the Black-Scholes Model. Key inputs and assumptions were as follows:
|
|
March 31, 2024 |
|
|
January 19, 2024 |
|
||
Common Stock Price of TerrAscend Corp. |
|
$ |
|
|
$ |
|
||
Option exercise price |
|
$ |
|
|
$ |
|
||
Annual volatility |
|
|
% |
|
|
% |
||
Annual risk-free rate |
|
|
% |
|
|
% |
||
Expected term (in years) |
|
|
|
|
|
|
||
Legal proceedings
In the ordinary course of business, the Company is involved in a number of lawsuits incidental to its business, including litigation related to intellectual property, product liability, employment, and commercial matters. Although it is difficult to predict the ultimate outcome of these matters, management believes that any ultimate liability would not have a material adverse effect on the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Income (Loss). Other than as set out below, at March 31, 2024, there were no pending lawsuits that could reasonably be expected to have a material effect on the results of the Company’s Consolidated Financial Statements, except for the proceedings described below.
Pure X Litigation
On August 9, 2023, AEY Capital LLC (“AEY”), a licensed subsidiary of TerrAscend, filed a lawsuit in Oakland County Circuit Court (the "Oakland Court") against Pure X, LLC (“Pure X”) seeking damages in the amount of $
20
TerrAscend Corp.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Amounts expressed in thousands of United States dollars, except for share and per share amounts)
On April 30, 2024, the Company made a prepayment of the Ilera Term Loan of $
21
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of operations of TerrAscend Corp. (the “Issuer”), its subsidiaries, TerrAscend Growth Corp. (“TerrAscend”) and its subsidiaries (collectively, the “Company”) should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial information and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission, (the “SEC”) , on March 14, 2024, (the “Annual Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q including information with respect to the Company's plans and strategy for its business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth under "Risk Factors" in the Company's Annual Report, its actual results could differ materially from the results described in or implied by the "Cautionary Note Regarding Forward-Looking Statements" contained in this Quarterly Report on Form 10-Q and in the following discussion and analysis.
Unless otherwise noted, dollar amounts in this Item 2 are in thousands of U.S. dollars.
This Management’s Discussion and Analysis (“MD&A”) of the financial condition and results of operations of the Company is for the three months ended March 31, 2024 and 2023 and the accompanying notes for each respective period.
Overview
The Company is a leading North American cannabis company. The Company has vertically integrated licensed operations in Pennsylvania, New Jersey, Michigan, Maryland and California. In addition, the Company has retail operations in Ontario, Canada with a majority-owned dispensary in Toronto, Ontario, Canada. Notwithstanding the fact that various states in the U.S. have implemented medical marijuana laws or have otherwise legalized the use of cannabis, the use of cannabis remains illegal under U.S. federal law for any purpose, by way of the Controlled Substances Act of 1970.
The Company operates under one operating segment, which is the cultivation, production and sale of cannabis products.
The Company owns a portfolio of operating businesses, including:
Recent Developments
22
Subsequent Transactions
Components of Results of Operations
The following discussion sets forth certain components of the Company's Unaudited Condensed Consolidated Statements of Comprehensive Loss as well as factors that impact those items.
Revenue, net
The Company generates revenue from the sale of cannabis products, brands, and services to the U.S. and Canadian markets. Revenues consist of wholesale and retail sales in the legal medical and adult-use market across Canada and in several U.S. states where cannabis has been legalized for medical or adult-use cannabis.
Cost of sales
Cost of sales primarily consists of expenses related to providing cannabis products and services to the Company's customers, including personnel-related expenses, the depreciation of property and equipment, amortization of acquired intangible assets, certain royalties, and other overhead costs.
Operating Expenses
General and administrative
General and administrative ("G&A") expenses consist primarily of personnel costs related to finance, human resources, legal, certain royalties, and other administrative functions. Additionally, G&A expenses include professional fees to third parties, as well as marketing expenses. Moreover, G&A expenses includes share-based compensation on options, restricted stock units and warrants. The Company expects that G&A expenses will increase in absolute dollars as the business grows.
Amortization and depreciation
Amortization and depreciation includes the amortization of intangible assets. Amortization is calculated on a straight-line basis over the following terms:
Brand intangibles- indefinite lives |
Indefinite useful lives |
Brand intangibles- definite lives |
3 years |
Software |
5 years |
Licenses |
5-30 years |
Non-compete agreements |
3 years |
Depreciation of property and equipment is calculated on a straight-line basis over the estimated useful life of the asset using the following terms:
Buildings and improvements |
15-30 years |
Land |
Not depreciated |
Machinery & equipment |
5-15 years |
Office furniture & production equipment |
3-5 years |
Right of use assets |
Lease term |
Assets in process |
Not depreciated |
Impairment of intangible assets and goodwill
Goodwill and indefinite lived intangible assets are reviewed for impairment annually and whenever there are events or changes in circumstances that indicate that the carrying amount has been impaired. The Company first performs a qualitative assessment. If based on the results of a qualitative assessment it has been determined that it is more likely than not that the fair value of a reporting unit
23
exceeds its carrying value, an additional quantitative impairment test is performed which compares the carrying value of the reporting unit to its estimated fair value. If the carrying value exceeds the estimated fair value, an impairment is recorded.
Definite lived intangible assets are tested for impairment when there are indications that an asset may be impaired. When indicators of impairment exist, the Company performs a quantitative impairment test which compares the carrying value of the assets for intangible assets to their estimated fair values. If the carrying value exceeds the estimated fair value, an impairment is recorded.
Impairment of property and equipment and right of use assets
The Company evaluates the recoverability of property and equipment and right of use assets whenever events or changes in circumstances indicate that the carrying value of the asset, or asset group, may not be recoverable. When the Company determines that the carrying value of the long-lived asset may not be recoverable based upon the existence of one or more indicators, the assets are assessed for impairment based on the estimate of future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the carrying value of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying value over its fair value.
(Gain) loss from revaluation of contingent consideration
As a result of some of its acquisitions, the Company recognizes a contingent consideration payable, which is an obligation to transfer additional assets to the seller if future events occur. The liability is revalued at the end of each reporting period to determine its fair value. A gain or loss is recognized as a result of the revaluation.
Loss (gain) on fair value of warrants and purchase option derivative asset
The Company issues warrants that are remeasured to fair value at the end of each reporting unit using the Black-Scholes Option Pricing Model. A gain or loss is recognized as a result of the revaluation.
Finance and other expenses
Finance and other expenses consist primarily of interest and accretion expense on the Company's outstanding debt obligations.
Transaction and restructuring costs
Transaction costs include costs incurred in connection with the Company's acquisitions, such as expenses related to professional fees, consulting, legal and accounting. Restructuring costs are those costs associated with severance and restructuring of business units.
Unrealized and realized foreign exchange (gain) loss
Unrealized and realized foreign exchange loss represents the loss recognized on the remeasurement of USD denominated cash and other assets recorded in the Canadian dollars functional currency at the Company's Canadian operations.
Unrealized and realized loss (gain) on investments
The Company accounts for its investment in equity securities without readily determinable fair values using a valuation technique which maximizes the use of relevant observable inputs, with subsequent holding changes in fair value recognized in unrealized gain or loss on investments in the Consolidated Statement of Comprehensive Loss.
Provision for income taxes
Provision for income taxes consists of U.S. federal and state income taxes in certain jurisdictions in which the Company conducts business.
24
Results from Operations - Three Months Ended March 31, 2024 and March 31, 2023
The following tables represent the Company’s results from operations for the three months ended March 31, 2024 and 2023.
Revenue, net
|
|
For the Three Months Ended |
|
|||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Revenue, net |
|
$ |
80,633 |
|
|
$ |
69,398 |
|
$ change |
|
$ |
11,235 |
|
|
|
|
|
% change |
|
|
16 |
% |
|
|
|
|
Revenue increased from $69,398 to $80,633 for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily driven by the implementation of adult-use sales in Maryland and the Company's four Maryland acquisitions in 2023, a doubling of wholesale sales in New Jersey, and an 80% increase in wholesale sales in Pennsylvania, partially offset by retail declines in New Jersey and Michigan.
Cost of sales
|
|
For the Three Months Ended |
|
|||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Cost of sales |
|
$ |
41,902 |
|
|
$ |
34,701 |
|
Non-cash adjustment of inventory |
|
|
- |
|
|
|
797 |
|
Total cost of sales |
|
$ |
41,902 |
|
|
$ |
35,498 |
|
$ change |
|
$ |
6,404 |
|
|
|
|
|
% change |
|
|
18 |
% |
|
|
|
|
Cost of sales as a % of revenue |
|
|
52 |
% |
|
|
51 |
% |
The increase of $6,404 in cost of sales for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 was mainly due to an increase in sales. Cost of sales as a percentage of revenue was relatively constant for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.
Loss from revaluation of contingent consideration
|
|
For the Three Months Ended |
|
|||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Loss from revaluation of contingent consideration |
|
$ |
1,393 |
|
|
$ |
- |
|
$ change |
|
$ |
1,393 |
|
|
|
|
|
% change |
|
|
100 |
% |
|
|
|
|
The loss from the revaluation of contingent consideration for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 was due to fair value changes of $1,915 relating to the settlement of the State Flower and The Apothecarium contingent consideration. This was offset by a gain on the revaluation of contingent liability for Peninsula acquisition of $522, resulting from the increase in the Company's share price from December 31, 2023, as compared to March 31, 2024.
Loss (gain) on fair value of warrants and purchase option derivative asset
|
For the Three Months Ended |
|
||||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Loss (gain) on fair value of warrants and purchase option derivative assets |
|
$ |
983 |
|
|
$ |
(438 |
) |
$ change |
|
$ |
1,421 |
|
|
|
|
|
% change |
|
|
-324 |
% |
|
|
|
|
The warrant liability was remeasured to fair value at March 31, 2024 using the Black-Scholes Model. The Company recognized a loss of $983 during the three months ended March 31, 2024 as a result of the rising share price from March 31, 2024, as compared to December 31, 2023.
During the three months ended March 31, 2023, the Company recognized a gain on fair value warrants of $438 as a result of the reduction of the Company's share price from March 31, 2023, as compared to December 31, 2022.
25
Impairment of property and equipment and right of use assets
|
|
For the Three Months Ended |
|
|||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Impairment of property and equipment and right of use assets |
|
$ |
2,438 |
|
|
$ |
335 |
|
$ change |
|
$ |
2,103 |
|
|
|
|
|
% change |
|
|
628 |
% |
|
|
|
|
During the three months ended March 31, 2024, the Company recorded an impairment of property and equipment of $2,438 due to the wind-down of one of its California dispensaries.
Provision for income taxes
|
|
For the Three Months Ended |
|
|||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Provision for income taxes |
|
$ |
9,671 |
|
|
$ |
12,664 |
|
$ change |
|
$ |
(2,993 |
) |
|
|
|
|
% change |
|
|
24 |
% |
|
|
|
|
The change in provision for income taxes from $12,664 for the three months ended March 31, 2023 as compared to a provision for income taxes of $9,671 for the three months ended March 31, 2024 was primarily driven by a return to provision adjustment.
Liquidity and Capital Resources
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
|
|
$ |
|
|
$ |
|
||
Cash and cash equivalents |
|
|
22,664 |
|
|
|
22,241 |
|
Restricted Cash |
|
|
3,110 |
|
|
|
3,106 |
|
Current assets |
|
|
97,655 |
|
|
|
102,889 |
|
Non-current assets |
|
|
557,884 |
|
|
|
563,629 |
|
Current liabilities |
|
|
199,116 |
|
|
|
207,000 |
|
Non-current liabilities |
|
|
224,314 |
|
|
|
218,778 |
|
Working capital |
|
|
(101,461 |
) |
|
|
(104,111 |
) |
Total shareholders' equity |
|
|
232,109 |
|
|
|
240,740 |
|
The calculation of working capital provides additional information and is not defined under GAAP. The Company defines working capital as current assets less current liabilities. This measure should not be considered in isolation or as a substitute for any standardized measure under GAAP.
Liquidity and going concern
At March 31, 2024, the Company had an accumulated deficit of $717,398. During the three months ended March 31, 2024, the Company incurred a net loss from continuing operations of $14,851. Additionally, as of March 31, 2024 the Company’s current liabilities exceed its current assets. Therefore, it is possible that the Company may need additional capital to continue to fund its operations.
The aforementioned indicators raise substantial doubt about the Company's ability to continue as a going concern for at least one year from the issuance of the Consolidated Financial Statements included elsewhere in this Quarterly Report on From 10-Q. The Company believes this concern is mitigated by steps it has taken, or intends to take to improve its operations and cash position, including: (i) identifying access to future capital required to pay down or refinance the Company’s maturing debt, (ii) improved cashflow growth from the Company's consolidated operations, particularly TerrAscend's operations in New Jersey and most recently Maryland with conversion to adult-use sales, and (iii) various cost and efficiency improvements. The Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amounts of and classification of liabilities that may result should the Company be unable to continue as a going concern.
Since its inception, the Company's primary sources of capital have been through the issuance of equity securities or debt facilities, and the Company has received aggregate net proceeds from such transactions totaling $656,143 as of March 31, 2024.
The Company expects to fund any additional future requirements through the following sources of capital:
26
Capital requirements
The Company has $197,184 in principal amounts of loans payable at March 31, 2024. Of this amount, $136,291 are due within the next twelve months.
The Company has entered into leases for certain premises and offices for which it owes monthly lease payments. The Company has $92,716 in lease obligations. Of this amount, $9,479 are due in the next twelve months.
The Company's undiscounted contingent consideration payable is $2,914 at March 31, 2024, of which, $1,490 is due in the next twelve months. The contingent consideration payable relates to the Company's acquisitions of Peninsula and the remaining 50.1% equity in both State Flower and three Apothecarium dispensaries in California. The contingent considerations are based upon the price protection of Common Shares issued under the terms of the applicable acquisition agreements. The contingent considerations are measured at fair value using the Black-Scholes Model and revalued at the end of each reporting period.
At March 31, 2024, the Company had accounts payable and accrued liabilities of $49,673 and corporate income taxes payable of $5,143.
The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company's results of operations or financial condition, including and without limitation, such consideration as liquidity and capital resources.
The Company intends to meet its capital commitments through any or all of the sources of capital noted above. The Company's objective with respect to its capital management is to ensure it has sufficient cash resources to maintain its ongoing operations and finance future obligations.
Debt facilities
Ilera Term Loan
On December 18, 2020, WDB Holding PA, a subsidiary of TerrAscend, entered into a senior secured term loan with a syndicate of lenders in the amount of $120,000 (the “Ilera Term Loan”). The Ilera Term Loan is solely secured by Ilera. The Ilera Term Loan bears interest at 12.875% per annum and matures on December 17, 2024. Subject to certain conditions of the agreement, the Company has the ability to increase the facility by up to $30,000. WDB Holding PA's obligations under the Ilera Term Loan and related transaction documents are guaranteed by the Company, TerrAscend USA, Inc. ("TerrAscend USA"), and certain subsidiaries of WDB Holding PA, and secured by TerrAscend USA's equity interest in WDB Holding PA and substantially all of the assets of WDB Holding PA and the subsidiary guarantors party thereto. The loan can be refinanced at the option of the WDB Holding PA after 18 months from the closing date subject to a premium payment due. Of the total proceeds received, $105,767 was used to satisfy the remaining Ilera earn-out payments.
On April 28, 2022, the Ilera Term Loan was amended to provide WDB Holding PA with greater flexibility by resetting the minimum consolidated interest coverage ratio levels that must be satisfied at the end of each measurement period and extending the date in which WDB Holding PA is required to deliver its budget for the fiscal year ending December 31, 2021. In addition, the no-call period was extended from 18 months to 30 months, subject to a premium payment. This modification was not considered extinguishments of debt under ASC 470, Debt.
On November 11, 2022, WDB Holding PA, the Company, TerrAscend USA and the subsidiary guarantors party to the Ilera Term Loan and the PA Agent (on behalf of the required lenders) entered into an amendment to the Ilera Term Loan, pursuant to which the parties agreed that WDB Holding PA’s obligation to maintain the consolidated interest coverage ratio as set forth in the Ilera Term Loan for the period ended September 30, 2022, shall not apply, subject to certain conditions, including (but not limited to) an obligation to enter into a subsequent amendment agreement on or before December 15, 2022, documenting certain enhancements and amendments to the Ilera Term Loan. In addition, WDB Holding PA offered a prepayment of $5,000 pro rata to all lenders holding outstanding loans thereunder at a price equal to 103.22% of the principal amount prepaid, plus accrued and unpaid interest.
On December 21, 2022, WDB Holding PA completed an amendment to reduce the Company’s principal debt by $35,000 and annual interest expense by $5,000. The Company agreed to make a $35,000 payment at the original prepayment price of 103.22% to par, and
27
agreed to use commercially reasonable efforts to add certain collateral to the Ilera Term Loan, collectively by March 15, 2023. The amendment further provided that should WDB Holding PA fail to maintain the prescribed interest coverage ratio, the Company shall be required to deposit funds, as outlined in the amendment, into a restricted account, and no event of default shall occur. This amendment was not considered an extinguishment of debt under ASC 470, Debt.
On March 15, 2023, WDB Holding PA, in exchange for a fee in the amount of 1% of the then outstanding principal loan balance, agreed to an amendment to, among other things: (i) extend the obligation date to prepay the Company’s debt from March 15, 2023 to June 30, 2023, during which WDB Holding PA agreed to use commercially reasonable efforts to add additional collateral to the Ilera Term Loan, (ii) increase the amount of debt to be reduced by up to $37,000, subject to certain reductions in amount based on meeting certain time based milestones, at a prepayment price of 103.22% to par, and (iii) extend the next test date in respect of the interest coverage ratio until June 30, 2023. This amendment was not considered an extinguishment of debt under ASC 470, Debt.
On April 14, 2023, WDB Holding PA entered into an amendment to the Ilera Term Loan to, among other things, (i) permit changes necessary for the TSX Transaction (as defined in the Ilera Term Loan), and (ii) to waive certain tax provisions.
On June 8, 2023, June 15, 2023, and June 29, 2023, WBD Holding PA made repayments of principal in the amounts of $7,896, $442, and $28,236, respectively.
On June 22, 2023, WDB Holding PA entered into a further amendment to the Ilera Term Loan to, among other things, (i) extend the next test date for the interest coverage ratio from June 30, 2023 to September 30, 2023, and (ii) amend the terms for which WDB Holding PA may incur certain indebtedness and liens. This amendment was not considered extinguishment of debt under ASC 470, Debt.
On October 2, 2023, the Company made a mandatory prepayment of the Ilera Term Loan of $1,500 at the original prepayment price of 103.22% to par.
On December 4, 2023, the parties entered into an amendment that requires WDB Holding PA to make a prepayment of $4,800 by January 2, 2024 and a prepayment of $3,200 by April 30, 2024, at the prepayment price of 100% to par. On January 2, 2024, the Company made a prepayment of $4,800 of the Ilera Term Loan, at the prepayment price of 100% to par.
On April 30, 2024, the Company made a prepayment of the Ilera Term Loan of $3,200 of the Ilera Term Loan, at the prepayment price of 100% to par.
As of March 31, 2024, there was an outstanding principal amount of $72,127 under the Ilera Term Loan. Subsequently, the Company paid an additional $3,200 which resulted in a current outstanding principal amount of $68,927.
Chicago Atlantic Term Loan
In connection with the Gage Acquisition, the Company assumed a senior secured term loan (the "Chicago Atlantic Term Loan") with an acquisition date fair value of $53,857. The credit agreement bears interest at a rate equal to the greater of (i) the Prime Rate plus 7% or (ii) 10.25%. The term loan was payable monthly and had a maturity date of November 30, 2022. The Chicago Atlantic Term Loan was secured by a first lien on all Gage Growth assets. As a result of the amendment, the Company paid a loan amendment fee of $1,109 which was capitalized.
On August 10, 2022, the Chicago Atlantic Term Loan was amended as a result of the corporate restructure in conjunction with the Gage Acquisition. The amendment to the Chicago Atlantic Term Loan includes the addition of a borrower and guarantor under the term loan and a right of first offer in favor of the administrative agent for a refinancing of the term loan. This amendment was not considered extinguishment of debt under ASC 470, Debt.
On November 29, 2022, the Company repaid $30,000 outstanding principal amount on the Chicago Atlantic Term Loan. On November 30, 2022, the remaining loan principal amount of $25,000 on the Chicago Atlantic Term Loan was amended (the "Amended Chicago Atlantic Term Loan"). The Amended Chicago Atlantic Term Loan bears interest on $25,000 at a per annum rate equal to the greater of (i) the U.S. "prime rate" plus 6.00%, and (ii) 13.0% and matures on November 1, 2024. Commencing on May 31, 2023, the Company will make monthly principal repayments of 0.40% of the aggregate principal amount outstanding. Additionally, the unpaid principal amount of the loan shall bear paid in kind interest at a rate of 1.50% per annum. No prepayment fees are owed if the Company voluntarily prepays the loan after 18 months. If such prepayment occurs prior to 18 months, a prepayment fee equal to all of the interest on the loans that would be due after the date of such prepayment, is owed. Under the Amended Chicago Atlantic Term Loan, the Company has the ability to borrow incremental term loans of $30,000 at the option of the Company and subject to consents from the required lenders. The additional $30,000 incremental term loans available under the amendment have not been drawn as of December 31, 2023. This loan represents a loan syndication, and therefore the Company assessed each of the lenders separately under ASC 470, Debt to determine if
28
this represents a modification, or an extinguishment of debt. For three of the four remaining lenders, it was determined that this was a modification. For the remaining lender, it was determined that this represented an extinguishment of debt and therefore the fees paid to the lenders on modification were expensed. As a result of this transaction, the Company expensed $1,907 of fees paid to the lenders and third parties as they did not meet the criteria for capitalization under ASC 470, Debt.
On June 9, 2023, the Company agreed to an amendment, among other things, to (i) permit changes necessary for the TSX Transaction (as defined therein) and (ii) to permit certain indebtedness and waive certain tax provisions. This amendment was not considered extinguishment of debt under ASC 470, Debt.
As of March 31, 2024, there was an outstanding principal amount of $24,404 under the Chicago Atlantic Term Loan.
Pinnacle Loans
The Pinnacle Acquisition purchase price included two promissory notes in an aggregate amount of $10,000 to pay down all Pinnacle liabilities and encumbrances. The promissory note matures on June 30, 2023 and bears interest rates of 6%. On June 27, 2023, Spartan Partners Properties, LLC, agreed to an amendment among other things, to extend the obligation date of the loan until December 1, 2023. As of March 31, 2024, there was an outstanding principal amount of $5,582 on the two promissory notes. The obligations are subject to restructuring upon the resolution of indemnity claims.
Pelorus Term Loan
On October 11, 2022, subsidiaries of TerrAscend, among others, entered into a loan agreement with Pelorus Fund REIT, LLC ("Pelorus") for a single-draw senior secured term loan ("Pelorus Term Loan") in an aggregate principal amount of $45,478. The Pelorus Term Loan bears interest at a variable rate tied to the one month SOFR, subject to a base rate, plus 9.5%, with interest-only payments for the first 36 months. The base rate is defined as, on any day, the greatest of (a) 2.5%, (b) the effective federal funds rate in effect on such day plus 0.5%, and (c) SOFR in effect on such day. The obligations of the borrowers under the Pelorus Term Loan are guaranteed by the Company, TerrAscend USA and certain other subsidiaries of TerrAscend and are secured by all of the assets of the Company's Maryland and New Jersey businesses, including certain real estate in Maryland and New Jersey, but excludes all Maryland dispensaries. The Pelorus Term Loan matures on October 11, 2027.
On April 17, 2023, TerrAscend NJ, LLC agreed to an amendment to the Pelorus Term Loan to, among other things, (i) permit changes necessary for the TSX Transaction (as defined therein), and (ii) to waive certain tax provisions.
On June 22, 2023, TerrAscend NJ, LLC further agreed to an amendment to the Pelorus Term Loan to permit the Company to incur certain indebtedness. This amendment was not considered an extinguishment of debt under ASC 470, Debt. As of March 31, 2024, there was an outstanding principal amount of $45,478 under the Pelorus Term Loan.
Stearns Loan
On June 26, 2023, the Company closed on a $25,000 commercial loan with Stearns Bank, secured by the Company's cultivation facility in Pennsylvania and its Allegany Medical Marijuana Dispensary ("AMMD") dispensary in Cumberland, Maryland (the “Stearns Loan”). The Company was required to hold $5,000 on deposit in a restricted account, of which $2,500 of the restricted cash was released on July 28, 2023 upon meeting certain criteria pursuant to the terms of the Stearns Loan. The Stearns Loan bears interest at a rate of prime plus 2.25% and matures on December 26, 2024. The proceeds from the loan were used to pay down the Company's higher interest rate debt, thereby lowering the Company's overall interest expense. As of March 31, 2024, there was an outstanding principal amount of $24,721 under the Stearns Loan.
Maryland Acquisition Loans
On June 28, 2023, in connection with the Peninsula Acquisition, the Company assumed existing indebtedness in the form of a promissory note in the amount of $7,698, which matures on June 28, 2025. The promissory note bears interest at a rate of 8.25%. The Company will make monthly payments of principal and interest totaling $157 beginning on July 28, 2023. The Company is required to make a mandatory prepayment of 50% of the outstanding principal balance on January 28, 2025. The consideration also included a promissory note in the amount of $3,927. The promissory note interest at a rate of 7.25% and is payable in twelve quarterly installments, maturing on June 28, 2026.
29
On June 30, 2023, in connection with the Blue Ridge Acquisition, the Company entered into a promissory note in the amount of $3,750 payable in four quarterly installments of accrued interest commencing on September 30, 2023 and twelve equal quarterly installments of principal and accrued interest commencing on September 30, 2024. The remaining amount of the principal and accrued interest is due on June 30, 2027, the maturity date. The promissory note bears interest at a rate of 7.0%.
On July 10, 2023, in connection with the Herbiculture Acquisition, the Company entered into a promissory note in the amount of $5,250. The promissory note bears interest at a rate of 10.50%. Commencing on September 30, 2023, and thereafter until December 31, 2024, all accrued interest during each quarter will be added to the outstanding principal balance on the last day of each fiscal quarter. Beginning on March 31, 2025, and thereafter until March 31, 2026, only interest payments will be due on the last day of each fiscal quarter. The entire outstanding balance of the principal and accrued interest is due on June 30, 2026, the maturity date of the promissory note.
As of March 31, 2024, there was an outstanding principal amount of $19,495 under the promissory notes related to the Maryland acquisitions.
Stadium Ventures
In connection with the Gage Acquisition, the Company assumed existing indebtedness in the form of a promissory note in the amount of $4,065, which matures on December 31, 2024. The promissory note bears interest at a rate of 6%. As of March 31, 2024, there was an outstanding principal amount of $1,322 on the promissory note.
Class A Share of TerrAscend Growth
In connection with the Reorganization (see Note 3), TerrAscend Growth Corp. ("TerrAscend") issued $1,000 of Class A shares with a 20% guaranteed annual dividend ("Class A Shares") to an investor (the “Investor”) pursuant to the terms of a subscription agreement between TerrAscend and the Investor dated April 20, 2023 (the “Subscription Agreement”). Pursuant to the terms of the Subscription Agreement, TerrAscend holds a call right to repurchase all of the Class A Shares issued to the Investor for an amount equal to the sum of: (a) the Repurchase/Put Price (as defined in the Subscription Agreement); plus (b) the amount equal to 40% of the subscription amount less the aggregate dividends paid to the Investor as of the date of the exercise of the option. In addition, the Investor holds a put right that is exercisable at any time after four months’ advanced written notice following the five-year anniversary of the closing of the investment to put all (and only all) of the Class A Shares owned by the Investor to TerrAscend at the Repurchase/Put Price, payable in cash or shares. The instrument is considered as a debt for accounting purposes due to the economic characteristics and risks. As of March 31, 2024, there was an outstanding principal amount of $1,000.
IHC Real Estate LP Loan
On June 26, 2023, the Company bought out the minority interest in IHC Real Estate LP and entered into a promissory note of $7,500. The promissory note carries an interest rate of 15% and matures on January 15, 2024. On June 28, 2023 and July 31, 2023, the Company made a payment of $1,500 and $1,000, respectively. On January 15, 2024, the Company paid off all amounts owed under the promissory note with a payment of $5,000.
Cash Flows
Cash flows provided by operating activities
|
|
For the Three Months Ended |
|
|||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Net cash provided by operating activities |
|
$ |
13,251 |
|
|
$ |
8,434 |
|
The increase of $4,826 in net cash provided by operating activities for the three months ended March 31, 2024 as compared to three months ended March 31, 2023 is due primarily to growth in revenue and gross margin while maintaining SG&A expenses relatively flat.
Cash flows used in investing activities
|
|
For the Three Months Ended |
|
|||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Net cash used in investing activities |
|
$ |
(3,423 |
) |
|
$ |
(11,581 |
) |
30
The net cash used in investing activities for the three months ended March 31, 2024 primarily relates to investment in property and equipment of $2,796.
Net cash used in investing activities for the three months ended March 31, 2023 primarily relates to the cash paid to AMMD of $9,611. Additionally, investment in property and equipment was $2,497 during the three months ended March 31, 2023.
Cash flows (used in) provided by financing activities
|
|
For the Three Months Ended |
|
|||||
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
||
Net cash (used in) provided by financing activities |
|
$ |
(9,599 |
) |
|
$ |
9,398 |
|
Net cash used in financing activities for the three months ended March 31, 2024 was primarily due to net loan principal payments of $9,078 and distributions to minority partners of $337.
Net cash provided by financing activities for the three months ended March 31, 2023 was primarily due to cash inflow of $12,677 as a result of transfer with recourse of Employee Retention Credit, offset by principal payments on loans of $1,204 and capital contributions paid to non-controlling interest holders of $1,884.
Reconciliation of Non-GAAP Measures
In addition to reporting the financial results in accordance with GAAP, the Company reports certain financial results that differ from what is reported under GAAP. Non-GAAP measures used by management do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies. The Company believes that certain investors and analysts use these measures to measure a company’s ability to meet other payment obligations or as a common measurement to value companies in the cannabis industry, and the Company calculates (i) Free cash flow from net cash provided by (used in) operating activities from continuing operations less capital expenditures for property and equipment which management believes is an important measurement of the Company's ability to generate additional cash from its business operations, and (ii) Adjusted EBITDA from continuing operations as net (loss) income, adjusted to exclude provision for income taxes, finance expenses, depreciation and amortization, relief of fair value upon acquisition, share-based compensation, gain on extinguishment of debt, restructuring related charges, impairment of goodwill and intangible assets and certain other items, which management believes is not reflective of the ongoing operations and performance. Such information is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
The Company believes Adjusted EBITDA from continuing operations is a useful performance measure to assess the performance of the Company as it provides more meaningful ongoing operating results by excluding the effects of expenses that are not reflective of the Company’s underlying business performance and other one-time or non-recurring expenses. The table below reconciles net loss to
31
EBITDA from continuing operations and Adjusted EBITDA from continuing operations for the three months ended March 31, 2024 and 2023:
|
|
|
|
|
|
|
|
|
||
|
Notes |
|
March 31, 2024 |
|
|
|
March 31, 2023 |
|
||
Net loss |
|
|
$ |
(14,851 |
) |
|
|
$ |
(22,769 |
) |
Loss from discontinued operations |
|
|
|
— |
|
|
|
|
3,591 |
|
Loss from continuing operations |
|
|
|
(14,851 |
) |
|
|
|
(19,178 |
) |
|
|
|
|
|
|
|
|
|
||
Add (deduct) the impact of: |
|
|
|
|
|
|
|
|
||
Provision for income taxes |
|
|
|
9,671 |
|
|
|
|
12,664 |
|
Finance expenses |
|
|
|
8,872 |
|
|
|
|
7,875 |
|
Amortization and depreciation |
|
|
|
5,000 |
|
|
|
|
4,771 |
|
EBITDA from continuing operations |
(a) |
|
|
8,692 |
|
|
|
|
6,132 |
|
Add (deduct) the impact of: |
|
|
|
|
|
|
|
|
||
Share-based compensation |
(b) |
|
|
1,485 |
|
|
|
|
1,713 |
|
Loss from revaluation of contingent consideration |
(c) |
|
|
1,393 |
|
|
|
|
— |
|
Other one-time items |
(d) |
|
|
958 |
|
|
|
|
1,358 |
|
Employee Retention Credits and Transfer Fee |
(e) |
|
|
— |
|
|
|
|
2,235 |
|
Loss on lease termination and derecognition of right of use assets |
(f) |
|
|
— |
|
|
|
|
205 |
|
Loss (gain) on fair value of warrants and purchase option derivative asset |
(g) |
|
|
983 |
|
|
|
|
(438 |
) |
Impairment of property and equipment and right of use assets |
(h) |
|
|
2,438 |
|
|
|
|
335 |
|
Unrealized and realized loss on investments |
(i) |
|
|
— |
|
|
|
|
699 |
|
Unrealized and realized foreign exchange loss (gain) |
(j) |
|
|
285 |
|
|
|
|
(31 |
) |
Adjusted EBITDA from continuing operations |
|
|
$ |
16,234 |
|
|
|
$ |
12,208 |
|
The table below reconciles net cash provided by (used in) operating activities from continuing operations to free cash flow for the three months ended March 31, 2024 and 2023:
|
|
|
For the Three Months Ended |
|
||||||
|
Notes |
|
March 31, 2024 |
|
|
|
March 31, 2023 |
|
||
Net cash provided by operating activities - continuing operations |
|
|
$ |
13,251 |
|
|
|
$ |
10,454 |
|
Capital expenditures for property and equipment |
|
|
|
(2,796 |
) |
|
|
|
(2,497 |
) |
Free Cash Flow |
|
|
$ |
10,455 |
|
|
|
$ |
7,957 |
|
The increase in Adjusted EBITDA from continuing operations for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily due to the implementation of adult-use sales in Maryland and the Company's four Maryland acquisitions in 2023 while cost of sales for the Company remained constant.
Critical Accounting Estimates and Policies
32
The condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. The Company bases its estimates on historical experience and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and actual results, the Company's future financial statements will be affected.
There have been no significant changes to the critical accounting estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", as contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the Company's Consolidated Financial Statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
The Company will remain an emerging growth company until the earlier to occur of: (i) December 31, 2027 (a) in which the Company has total annual gross revenue of $1,235,000 or more, or (b) in which the Company is deemed to be a large accelerated filer, which means the market value of the Company's Common Stock that is held by non-affiliates exceeds $700,000 as of the last business day of the Company’s most recent second fiscal quarter; and (ii) the date on which the Company has issued more than $1,000,000 in non-convertible debt during the prior three-year period.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in the Company's primary risk exposures or management of market risks from those disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company's management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2024, the Company's disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the Company's disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
33
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
In the ordinary course of business, the Company is involved in a number of lawsuits incidental to its business, including litigation related to intellectual property, product liability, employment, and commercial matters. Although it is difficult to predict the ultimate outcome of these matters, management believes that any ultimate liability would not have a material adverse effect on the Company’s Consolidated Balance Sheets or results of operations. As of March 31, 2024, there were no pending lawsuits that could reasonably be expected to have a material effect on the results of the Company’s consolidated financial statements, except for the proceedings described below.
Pure X Litigation
On August 9, 2023, AEY Capital LLC (“AEY”), a licensed subsidiary of the Company, filed a lawsuit in Oakland County Circuit Court (the “Oakland Court”) against Pure X, LLC (“Pure X”) seeking damages in the amount of $14,969 (the “AEY Claim”). The AEY Claim alleges breach of contract, quantum meruit/unjust enrichment, account stated and statutory conversion. AEY’s alleged damages are related to Pure X’s failure to pay for various cannabis products sold by AEY. This matter is still pending.
Item 1A. Risk Factors.
Investing in the Company's Common Shares involves a high degree of risk. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors described in Part I, Item 1.A. “Risk Factors” in the Company's Annual Report. The Company may disclose changes to risk factors or disclose additional factors from time to time in its future filings with the SEC. Additional risks and uncertainties not presently known to the Company or that the Company currently deems immaterial may impair its business operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits.
Exhibit |
|
|
|
Description of Exhibit Incorporated Herein by Reference |
Filed |
34
Number |
|
Description |
|
Form |
File No. |
Exhibit |
Filing Date |
Herewith |
|
|
|
|
|
|
|
|
|
3.1 |
|
|
10-12G
|
000-56363 |
3.1 |
11/02/2021 |
|
|
|
|
|
|
|
|
|
|
|
3.2 |
|
Articles of Amendment to the Articles of TerrAscend Corp., dated November 30, 2018. |
|
10-12G/A
|
000-56363 |
3.2 |
12/22/2021
|
|
|
|
|
|
|
|
|
|
|
3.3 |
|
Articles of Amendment to the Articles of TerrAscend Corp., dated May 22, 2020. |
|
10-12G/A |
000-56363 |
3.3 |
12/22/2021
|
|
|
|
|
|
|
|
|
|
|
3.4 |
|
|
10-12G
|
000-56363 |
3.3 |
11/02/2021 |
|
|
10.1 |
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
31.1 |
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
31.2 |
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
32.1* |
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
32.2* |
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document |
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
|
|
|
X |
* This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of TerrAscend Corp. under the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.
35
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
TerrAscend Corp. |
|
|
|
|
|
Date: May 9, 2024 |
|
By: |
/s/ Ziad Ghanem |
|
|
|
Ziad Ghanem |
|
|
|
President and Chief Executive Officer (Principal Executive Officer) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date: May 9, 2024 |
|
By: |
/s/ Keith Stauffer |
|
|
|
Keith Stauffer |
|
|
|
Chief Financial Officer (Principal Financial Officer) |
36