☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
British Columbia, Canada
|
|
98-1463868
|
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
||
366 Madison Avenue, 11th Floor
|
New York
|
New York
|
10017
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Large accelerated filer
|
o
|
Accelerated filer
|
o
|
Non-accelerated filer
|
x
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☒
|
PART I
|
Financial Information.
|
|
|
|
|
Item 1.
|
||
|
||
|
||
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||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
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PART II
|
Other Information.
|
|
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
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|
|
ACREAGE HOLDINGS, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
(in thousands)
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(unaudited)
|
|
(audited)
|
||||
ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
13,979
|
|
|
$
|
26,505
|
|
Restricted cash
|
22,095
|
|
|
95
|
|
||
Inventory
|
21,344
|
|
|
18,083
|
|
||
Notes receivable, current
|
2,094
|
|
|
2,146
|
|
||
Assets held-for-sale
|
68,040
|
|
|
—
|
|
||
Other current assets
|
11,811
|
|
|
8,506
|
|
||
Total current assets
|
139,363
|
|
|
55,335
|
|
||
Long-term investments
|
4,711
|
|
|
4,499
|
|
||
Notes receivable, non-current
|
94,302
|
|
|
79,479
|
|
||
Capital assets, net
|
96,819
|
|
|
106,047
|
|
||
Operating lease right-of-use assets
|
36,280
|
|
|
51,950
|
|
||
Intangible assets, net
|
145,660
|
|
|
285,972
|
|
||
Goodwill
|
26,675
|
|
|
105,757
|
|
||
Other non-current assets
|
3,401
|
|
|
2,638
|
|
||
Total non-current assets
|
407,848
|
|
|
636,342
|
|
||
TOTAL ASSETS
|
$
|
547,211
|
|
|
$
|
691,677
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
27,593
|
|
|
$
|
32,459
|
|
Taxes payable
|
10,365
|
|
|
4,740
|
|
||
Interest payable
|
1,020
|
|
|
291
|
|
||
Operating lease liability, current
|
2,283
|
|
|
2,759
|
|
||
Debt, current
|
47,009
|
|
|
15,300
|
|
||
Liabilities related to assets held-for-sale
|
26,352
|
|
|
—
|
|
||
Other current liabilities
|
6,643
|
|
|
1,604
|
|
||
Total current liabilities
|
121,265
|
|
|
57,153
|
|
||
Debt, non-current
|
43,859
|
|
|
28,186
|
|
||
Operating lease liability, non-current
|
35,058
|
|
|
47,522
|
|
||
Deferred tax liability
|
35,472
|
|
|
63,997
|
|
||
Other liabilities
|
2
|
|
|
25
|
|
||
Total non-current liabilities
|
114,391
|
|
|
139,730
|
|
||
TOTAL LIABILITIES
|
235,656
|
|
|
196,883
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
||||
Common stock, no par value (Note 11) - unlimited authorized, 98,566 and 90,646 issued and outstanding, respectively
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
693,425
|
|
|
615,678
|
|
||
Treasury stock, 842 SVS held in treasury
|
(21,054
|
)
|
|
(21,054
|
)
|
||
Accumulated deficit
|
(397,763
|
)
|
|
(188,617
|
)
|
||
Total Acreage Shareholders' equity
|
274,608
|
|
|
406,007
|
|
||
Non-controlling interests
|
36,947
|
|
|
88,787
|
|
||
TOTAL EQUITY
|
311,555
|
|
|
494,794
|
|
||
|
|
|
|
||||
TOTAL LIABILITIES AND EQUITY
|
$
|
547,211
|
|
|
$
|
691,677
|
|
ACREAGE HOLDINGS, INC.
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30, |
||||||||||||
(in thousands, except per share amounts)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
REVENUE
|
|
|
|
|
|
|
|
|
||||||||
Retail revenue, net
|
|
$
|
19,875
|
|
|
$
|
13,351
|
|
|
$
|
37,448
|
|
|
$
|
23,260
|
|
Wholesale revenue, net
|
|
7,167
|
|
|
4,128
|
|
|
13,715
|
|
|
6,943
|
|
||||
Other revenue, net
|
|
30
|
|
|
266
|
|
|
134
|
|
|
439
|
|
||||
Total revenues, net
|
|
27,072
|
|
|
17,745
|
|
|
51,297
|
|
|
30,642
|
|
||||
Cost of goods sold, retail
|
|
(11,981
|
)
|
|
(8,193
|
)
|
|
(22,870
|
)
|
|
(14,074
|
)
|
||||
Cost of goods sold, wholesale
|
|
(3,880
|
)
|
|
(1,939
|
)
|
|
(7,262
|
)
|
|
(3,635
|
)
|
||||
Total cost of goods sold
|
|
(15,861
|
)
|
|
(10,132
|
)
|
|
(30,132
|
)
|
|
(17,709
|
)
|
||||
Gross profit
|
|
11,211
|
|
|
7,613
|
|
|
21,165
|
|
|
12,933
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
||||||||
General and administrative
|
|
12,386
|
|
|
17,904
|
|
|
25,418
|
|
|
28,062
|
|
||||
Compensation expense
|
|
7,957
|
|
|
11,252
|
|
|
22,434
|
|
|
17,741
|
|
||||
Equity-based compensation expense
|
|
20,187
|
|
|
20,693
|
|
|
54,924
|
|
|
39,670
|
|
||||
Marketing
|
|
481
|
|
|
1,201
|
|
|
1,468
|
|
|
2,002
|
|
||||
Loss on impairment
|
|
—
|
|
|
—
|
|
|
187,775
|
|
|
—
|
|
||||
Loss on notes receivable
|
|
—
|
|
|
—
|
|
|
8,161
|
|
|
—
|
|
||||
Write down of assets held-for-sale
|
|
8,110
|
|
|
—
|
|
|
8,110
|
|
|
—
|
|
||||
Depreciation and amortization
|
|
1,425
|
|
|
2,223
|
|
|
3,492
|
|
|
3,131
|
|
||||
Total operating expenses
|
|
50,546
|
|
|
53,273
|
|
|
311,782
|
|
|
90,606
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net operating loss
|
|
$
|
(39,335
|
)
|
|
$
|
(45,660
|
)
|
|
$
|
(290,617
|
)
|
|
$
|
(77,673
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from investments, net
|
|
4
|
|
|
(499
|
)
|
|
238
|
|
|
2,228
|
|
||||
Interest income from loans receivable
|
|
1,830
|
|
|
1,001
|
|
|
3,477
|
|
|
1,731
|
|
||||
Interest expense
|
|
(3,733
|
)
|
|
(131
|
)
|
|
(4,959
|
)
|
|
(249
|
)
|
||||
Other loss, net
|
|
(23
|
)
|
|
(2,400
|
)
|
|
(197
|
)
|
|
(2,308
|
)
|
||||
Total other (loss) income
|
|
(1,922
|
)
|
|
(2,029
|
)
|
|
(1,441
|
)
|
|
1,402
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Loss before income taxes
|
|
$
|
(41,257
|
)
|
|
$
|
(47,689
|
)
|
|
$
|
(292,058
|
)
|
|
$
|
(76,271
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Income tax (expense) benefit
|
|
(3,113
|
)
|
|
(1,576
|
)
|
|
25,459
|
|
|
(3,798
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
$
|
(44,370
|
)
|
|
$
|
(49,265
|
)
|
|
$
|
(266,599
|
)
|
|
$
|
(80,069
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Less: net loss attributable to non-controlling interests
|
|
(7,178
|
)
|
|
(11,724
|
)
|
|
(57,453
|
)
|
|
(19,151
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to Acreage Holdings, Inc.
|
|
$
|
(37,192
|
)
|
|
$
|
(37,541
|
)
|
|
$
|
(209,146
|
)
|
|
$
|
(60,918
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share attributable to Acreage Holdings, Inc. - basic and diluted:
|
|
$
|
(0.38
|
)
|
|
$
|
(0.44
|
)
|
|
$
|
(2.19
|
)
|
|
$
|
(0.74
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding - basic and diluted
|
|
98,444
|
|
|
85,640
|
|
|
95,688
|
|
|
82,557
|
|
ACREAGE HOLDINGS, INC.
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
Attributable to shareholders of the parent
|
|
|
|
|
||||||||||||||||||||
(in thousands)
|
|
LLC Membership Units
|
|
Pubco Shares (as converted)
|
|
Share Capital
|
|
Treasury Stock
|
|
Accumulated Deficit
|
|
Shareholders’ Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
||||||||||||||
December 31, 2018
|
|
—
|
|
|
79,164
|
|
|
$
|
414,757
|
|
|
$
|
(21,054
|
)
|
|
$
|
(38,349
|
)
|
|
$
|
355,354
|
|
|
$
|
130,922
|
|
|
$
|
486,276
|
|
Issuances for business acquisitions/purchases of intangible assets
|
|
—
|
|
|
211
|
|
|
3,948
|
|
|
—
|
|
|
—
|
|
|
3,948
|
|
|
4,000
|
|
|
7,948
|
|
||||||
NCI adjustments for changes in ownership
|
|
—
|
|
|
643
|
|
|
3,640
|
|
|
—
|
|
|
—
|
|
|
3,640
|
|
|
(3,640
|
)
|
|
—
|
|
||||||
Other equity transactions
|
|
—
|
|
|
12
|
|
|
264
|
|
|
—
|
|
|
—
|
|
|
264
|
|
|
—
|
|
|
264
|
|
||||||
Equity-based compensation expense and related issuances
|
|
—
|
|
|
190
|
|
|
16,187
|
|
|
—
|
|
|
—
|
|
|
16,187
|
|
|
—
|
|
|
16,187
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,377
|
)
|
|
(23,377
|
)
|
|
(7,427
|
)
|
|
(30,804
|
)
|
||||||
March 31, 2019
|
|
—
|
|
|
80,220
|
|
|
$
|
438,796
|
|
|
$
|
(21,054
|
)
|
|
$
|
(61,726
|
)
|
|
$
|
356,016
|
|
|
$
|
123,855
|
|
|
$
|
479,871
|
|
Issuances for business acquisitions/purchases of intangible assets
|
|
—
|
|
|
4,770
|
|
|
95,266
|
|
|
—
|
|
|
—
|
|
|
95,266
|
|
|
356
|
|
|
95,622
|
|
||||||
NCI adjustments for changes in ownership
|
|
—
|
|
|
388
|
|
|
(15,820
|
)
|
|
—
|
|
|
—
|
|
|
(15,820
|
)
|
|
15,820
|
|
|
—
|
|
||||||
Capital distributions, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,298
|
)
|
|
(4,298
|
)
|
||||||
Other equity transactions
|
|
—
|
|
|
294
|
|
|
5,201
|
|
|
—
|
|
|
—
|
|
|
5,201
|
|
|
—
|
|
|
5,201
|
|
||||||
Equity-based compensation expense and related issuances
|
|
—
|
|
|
288
|
|
|
15,574
|
|
|
—
|
|
|
—
|
|
|
15,574
|
|
|
—
|
|
|
15,574
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,541
|
)
|
|
(37,541
|
)
|
|
(11,724
|
)
|
|
(49,265
|
)
|
||||||
June 30, 2019
|
|
—
|
|
|
85,960
|
|
|
$
|
539,017
|
|
|
$
|
(21,054
|
)
|
|
$
|
(99,267
|
)
|
|
$
|
418,696
|
|
|
$
|
124,009
|
|
|
$
|
542,705
|
|
|
|
|
|
|
|
Attributable to shareholders of the parent
|
|
|
|
|
||||||||||||||||||||
(in thousands)
|
|
LLC Membership Units
|
|
Pubco Shares (as converted)
|
|
Share Capital
|
|
Treasury Stock
|
|
Accumulated Deficit
|
|
Shareholders’ Equity
|
|
Non-controlling Interests
|
|
Total Equity
|
||||||||||||||
December 31, 2019
|
|
—
|
|
|
90,646
|
|
|
$
|
615,678
|
|
|
$
|
(21,054
|
)
|
|
$
|
(188,617
|
)
|
|
$
|
406,007
|
|
|
$
|
88,787
|
|
|
$
|
494,794
|
|
Issuances for private placement
|
|
—
|
|
|
6,085
|
|
|
27,887
|
|
|
—
|
|
|
—
|
|
|
27,887
|
|
|
—
|
|
|
27,887
|
|
||||||
NCI adjustments for changes in ownership
|
|
—
|
|
|
113
|
|
|
(6,564
|
)
|
|
—
|
|
|
—
|
|
|
(6,564
|
)
|
|
6,564
|
|
|
—
|
|
||||||
Capital distributions, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(18
|
)
|
||||||
Equity-based compensation expense and related issuances
|
|
—
|
|
|
586
|
|
|
34,737
|
|
|
—
|
|
|
—
|
|
|
34,737
|
|
|
—
|
|
|
34,737
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(171,954
|
)
|
|
(171,954
|
)
|
|
(50,275
|
)
|
|
(222,229
|
)
|
||||||
March 31, 2020
|
|
—
|
|
|
97,430
|
|
|
$
|
671,738
|
|
|
$
|
(21,054
|
)
|
|
$
|
(360,571
|
)
|
|
$
|
290,113
|
|
|
$
|
45,058
|
|
|
$
|
335,171
|
|
NCI adjustments for changes in ownership
|
|
3,861
|
|
|
272
|
|
|
977
|
|
|
—
|
|
|
—
|
|
|
977
|
|
|
(977
|
)
|
|
—
|
|
||||||
Beneficial conversion feature on convertible note (See Note 10)
|
|
—
|
|
|
—
|
|
|
523
|
|
|
—
|
|
|
—
|
|
|
523
|
|
|
—
|
|
|
523
|
|
||||||
Other equity transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
44
|
|
||||||
Equity-based compensation expense and related issuances
|
|
—
|
|
|
864
|
|
|
20,187
|
|
|
—
|
|
|
—
|
|
|
20,187
|
|
|
—
|
|
|
20,187
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,192
|
)
|
|
(37,192
|
)
|
|
(7,178
|
)
|
|
(44,370
|
)
|
||||||
June 30, 2020
|
|
3,861
|
|
|
98,566
|
|
|
$
|
693,425
|
|
|
$
|
(21,054
|
)
|
|
$
|
(397,763
|
)
|
|
$
|
274,608
|
|
|
$
|
36,947
|
|
|
$
|
311,555
|
|
ACREAGE HOLDINGS, INC.
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Six Months Ended June 30,
|
||||||
(in thousands)
|
|
2020
|
|
2019
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net loss
|
|
$
|
(266,599
|
)
|
|
$
|
(80,069
|
)
|
Adjustments for:
|
|
|
|
|
||||
Depreciation and amortization
|
|
3,492
|
|
|
3,131
|
|
||
Equity-settled expenses, including compensation
|
|
54,924
|
|
|
44,874
|
|
||
Gain on business divestiture
|
|
(217
|
)
|
|
—
|
|
||
(Gain) loss on disposal of capital assets
|
|
(187
|
)
|
|
84
|
|
||
Loss on impairment
|
|
187,775
|
|
|
—
|
|
||
Loss on notes receivable
|
|
8,161
|
|
|
—
|
|
||
Bad debt expense
|
|
172
|
|
|
—
|
|
||
Non-cash interest expense
|
|
2,353
|
|
|
—
|
|
||
Non-cash operating lease expense
|
|
947
|
|
|
538
|
|
||
Deferred tax benefit
|
|
(31,955
|
)
|
|
(99
|
)
|
||
Non-cash income from investments, net
|
|
(238
|
)
|
|
(1,436
|
)
|
||
Write-down of assets held-for-sale
|
|
8,110
|
|
|
—
|
|
||
Change, net of acquisitions in:
|
|
|
|
|
||||
Inventory
|
|
(2,913
|
)
|
|
(3,901
|
)
|
||
Other assets
|
|
(1,522
|
)
|
|
(2,926
|
)
|
||
Interest receivable
|
|
(574
|
)
|
|
(2,246
|
)
|
||
Accounts payable and accrued liabilities
|
|
(7,849
|
)
|
|
5,899
|
|
||
Taxes payable
|
|
6,083
|
|
|
(111
|
)
|
||
Interest payable
|
|
729
|
|
|
(387
|
)
|
||
Other liabilities
|
|
(10
|
)
|
|
(597
|
)
|
||
Net cash used in operating activities
|
|
$
|
(39,318
|
)
|
|
$
|
(37,246
|
)
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Purchases of capital assets
|
|
$
|
(7,880
|
)
|
|
$
|
(20,291
|
)
|
Investments in notes receivable
|
|
(13,092
|
)
|
|
(14,574
|
)
|
||
Collection of notes receivable
|
|
192
|
|
|
3,024
|
|
||
Cash paid for long-term investments
|
|
—
|
|
|
(158
|
)
|
||
Proceeds from business divestiture
|
|
997
|
|
|
—
|
|
||
Proceeds from sale of capital assets
|
|
1,102
|
|
|
162
|
|
||
Business acquisitions, net of cash acquired
|
|
(9,983
|
)
|
|
(20,205
|
)
|
||
Purchases of intangible assets
|
|
—
|
|
|
(56,497
|
)
|
||
Deferred acquisition costs and deposits
|
|
—
|
|
|
(215
|
)
|
||
Distributions from investments
|
|
26
|
|
|
—
|
|
||
Proceeds from purchase of short-term investments
|
|
—
|
|
|
149,828
|
|
||
Net cash (used in) provided by investing activities
|
|
$
|
(28,638
|
)
|
|
$
|
41,074
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
Proceeds from related party debt
|
|
5,000
|
|
|
—
|
|
||
Repayment of related party loan
|
|
(20,000
|
)
|
|
—
|
|
||
Proceeds from financing
|
|
46,000
|
|
|
—
|
|
||
Deferred financing costs paid
|
|
(3,181
|
)
|
|
—
|
|
||
Proceeds from issuance of private placement units, net
|
|
27,887
|
|
|
—
|
|
||
Collateral received from financing agreement
|
|
22,000
|
|
|
—
|
|
||
Settlement of taxes withheld
|
|
—
|
|
|
(7,909
|
)
|
||
Repayment of debt
|
|
(276
|
)
|
|
(12,075
|
)
|
||
Capital distributions, net
|
|
—
|
|
|
(4,298
|
)
|
||
Net cash provided by (used in) financing activities
|
|
$
|
77,430
|
|
|
$
|
(24,282
|
)
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
$
|
9,474
|
|
|
$
|
(20,454
|
)
|
Cash, cash equivalents and restricted cash - Beginning of period
|
|
26,600
|
|
|
105,038
|
|
||
Cash, cash equivalents and restricted cash - End of period
|
|
$
|
36,074
|
|
|
$
|
84,584
|
|
|
|
Six Months Ended June 30,
|
||||||
(in thousands)
|
|
2020
|
|
2019
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
||||
Interest paid - non-lease
|
|
$
|
176
|
|
|
$
|
588
|
|
Income taxes paid
|
|
525
|
|
|
4,006
|
|
||
OTHER NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
||||
Capital assets not yet paid for
|
|
$
|
4,635
|
|
|
$
|
670
|
|
Issuance of Class D units for land
|
|
—
|
|
|
264
|
|
||
Exchange of intangible assets to notes receivable (Note 4)
|
|
18,800
|
|
|
—
|
|
||
Holdback of Maine HSCP notes receivable (Note 6)
|
|
917
|
|
|
—
|
|
||
Promissory note conversion to equity (Note 6)
|
|
10,087
|
|
|
—
|
|
||
Deferred tax liability related to business acquisition (Note 3)
|
|
3,425
|
|
|
—
|
|
||
Beneficial conversion feature (Note 10)
|
|
523
|
|
|
—
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
Purchase Price Allocation
|
|
CCF (1)
|
|
Assets acquired:
|
|
|
|
Cash and cash equivalents
|
|
17
|
|
Inventory
|
|
1,969
|
|
Other current assets
|
|
3,164
|
|
Capital assets, net
|
|
4,173
|
|
Operating lease ROU assets
|
|
4,455
|
|
Goodwill
|
|
—
|
|
Intangible assets - cannabis licenses
|
|
15,247
|
|
Other non-current assets
|
|
10
|
|
Liabilities assumed:
|
|
|
|
Accounts payable and accrued liabilities
|
|
(228
|
)
|
Taxes payable
|
|
(17
|
)
|
Other current liabilities
|
|
(4,248
|
)
|
Operating lease liability
|
|
(4,455
|
)
|
Fair value of net assets acquired
|
|
20,087
|
|
|
|
|
|
Consideration paid:
|
|
|
|
Cash
|
|
10,000
|
|
Settlement of pre-existing relationship
|
|
10,087
|
|
Total consideration
|
|
20,087
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
Purchase Price Allocation
|
|
Thames Valley
(1)
|
|
NCC
(2)
|
|
Form Factory
(3) |
|
Total
|
||||||||
Assets acquired:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
106
|
|
|
$
|
696
|
|
|
$
|
4,276
|
|
|
$
|
5,078
|
|
Inventory
|
|
39
|
|
|
170
|
|
|
520
|
|
|
729
|
|
||||
Other current assets
|
|
1
|
|
|
36
|
|
|
1,136
|
|
|
1,173
|
|
||||
Capital assets, net
|
|
—
|
|
|
539
|
|
|
3,988
|
|
|
4,527
|
|
||||
Operating lease ROU assets
|
|
—
|
|
|
—
|
|
|
10,477
|
|
|
10,477
|
|
||||
Goodwill
|
|
3,594
|
|
|
4,196
|
|
|
66,127
|
|
|
73,917
|
|
||||
Intangible assets - cannabis licenses
|
|
14,850
|
|
|
2,500
|
|
|
39,469
|
|
|
56,819
|
|
||||
Intangible assets - customer relationships
|
|
—
|
|
|
—
|
|
|
4,600
|
|
|
4,600
|
|
||||
Intangible assets - developed technology
|
|
—
|
|
|
—
|
|
|
3,100
|
|
|
3,100
|
|
||||
Other non-current assets
|
|
—
|
|
|
25
|
|
|
406
|
|
|
431
|
|
||||
Liabilities assumed:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts payable and accrued liabilities
|
|
(121
|
)
|
|
(24
|
)
|
|
(1,572
|
)
|
|
(1,717
|
)
|
||||
Other current liabilities
|
|
—
|
|
|
(621
|
)
|
|
—
|
|
|
(621
|
)
|
||||
Debt
|
|
—
|
|
|
—
|
|
|
(494
|
)
|
|
(494
|
)
|
||||
Operating lease liability
|
|
—
|
|
|
—
|
|
|
(10,477
|
)
|
|
(10,477
|
)
|
||||
Deferred tax liability
|
|
(3,397
|
)
|
|
(465
|
)
|
|
(14,517
|
)
|
|
(18,379
|
)
|
||||
Other liabilities
|
|
—
|
|
|
(175
|
)
|
|
(23
|
)
|
|
(198
|
)
|
||||
Fair value of net assets acquired
|
|
$
|
15,072
|
|
|
$
|
6,877
|
|
|
$
|
107,016
|
|
|
$
|
128,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consideration paid:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash
|
|
15,072
|
|
|
—
|
|
|
3,711
|
|
|
18,783
|
|
||||
Deferred acquisition costs and deposits
|
|
—
|
|
|
100
|
|
|
—
|
|
|
100
|
|
||||
Subordinate Voting Shares
|
|
—
|
|
|
3,948
|
|
|
95,266
|
|
|
99,214
|
|
||||
Settlement of pre-existing relationship
|
|
—
|
|
|
830
|
|
|
8,039
|
|
|
8,869
|
|
||||
Fair value of previously held interest
|
|
—
|
|
|
1,999
|
|
|
—
|
|
|
1,999
|
|
||||
Total consideration
|
|
$
|
15,072
|
|
|
$
|
6,877
|
|
|
$
|
107,016
|
|
|
$
|
128,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subordinate Voting Shares issued
|
|
—
|
|
|
211
|
|
|
4,770
|
|
|
4,981
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
|
|
June 30, 2020
|
||||||||||||||||||||||
|
|
Acreage Florida, Inc.
|
|
Kanna, Inc.
|
|
MMRC(1)
|
|
Michigan
|
|
Oregon
|
|
Total
|
||||||||||||
Inventory
|
|
$
|
1,017
|
|
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
1,657
|
|
|
$
|
2,704
|
|
Notes receivable, current
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
64
|
|
||||||
Other current assets
|
|
90
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
1
|
|
|
137
|
|
||||||
Total current assets classified as held-for-sale
|
|
1,107
|
|
|
—
|
|
|
76
|
|
|
—
|
|
|
1,722
|
|
|
2,905
|
|
||||||
Capital assets, net
|
|
6,480
|
|
|
1,172
|
|
|
286
|
|
|
7,469
|
|
|
2,951
|
|
|
18,358
|
|
||||||
Operating lease right-of-use assets
|
|
11,725
|
|
|
2,209
|
|
|
362
|
|
|
—
|
|
|
2,328
|
|
|
16,624
|
|
||||||
Intangible assets, net
|
|
26,190
|
|
|
970
|
|
|
801
|
|
|
—
|
|
|
—
|
|
|
27,961
|
|
||||||
Goodwill
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,192
|
|
|
2,192
|
|
||||||
Total assets classified as held for sale
|
|
$
|
45,502
|
|
|
$
|
4,351
|
|
|
$
|
1,525
|
|
|
$
|
7,469
|
|
|
$
|
9,193
|
|
|
$
|
68,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable and accrued liabilities
|
|
$
|
(1,281
|
)
|
|
$
|
(361
|
)
|
|
$
|
(50
|
)
|
|
$
|
—
|
|
|
$
|
(308
|
)
|
|
$
|
(2,000
|
)
|
Taxes payable
|
|
(7
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(469
|
)
|
|
(475
|
)
|
||||||
Operating lease liability, current
|
|
(501
|
)
|
|
(373
|
)
|
|
(29
|
)
|
|
—
|
|
|
(323
|
)
|
|
(1,226
|
)
|
||||||
Other current liabilities
|
|
(161
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
(158
|
)
|
||||||
Total current liabilities classified as held-for-sale
|
|
(1,950
|
)
|
|
(733
|
)
|
|
(79
|
)
|
|
—
|
|
|
(1,097
|
)
|
|
(3,859
|
)
|
||||||
Debt, non-current
|
|
(3,799
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,799
|
)
|
||||||
Operating lease liability, non-current
|
|
(14,348
|
)
|
|
(1,879
|
)
|
|
(342
|
)
|
|
—
|
|
|
(2,130
|
)
|
|
(18,699
|
)
|
||||||
Deferred tax liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||
Total liabilities classified as held-for-sale
|
|
$
|
(20,097
|
)
|
|
$
|
(2,612
|
)
|
|
$
|
(421
|
)
|
|
$
|
—
|
|
|
$
|
(3,222
|
)
|
|
$
|
(26,352
|
)
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
Intangibles
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Finite-lived intangible assets:
|
|
|
|
|
||||
Management contracts
|
|
$
|
19,580
|
|
|
$
|
52,438
|
|
Customer relationships
|
|
—
|
|
|
4,600
|
|
||
Developed technology
|
|
—
|
|
|
3,100
|
|
||
|
|
19,580
|
|
|
60,138
|
|
||
Accumulated amortization on finite-lived intangible assets:
|
|
|
|
|
||||
Management contracts
|
|
(4,180
|
)
|
|
(5,750
|
)
|
||
Customer relationships
|
|
—
|
|
|
(649
|
)
|
||
Developed technology
|
|
—
|
|
|
(114
|
)
|
||
|
|
(4,180
|
)
|
|
(6,513
|
)
|
||
Finite-lived intangible assets, net
|
|
15,400
|
|
|
53,625
|
|
||
|
|
|
|
|
||||
Indefinite-lived intangible assets
|
|
|
|
|
||||
Cannabis licenses
|
|
130,260
|
|
|
232,347
|
|
||
|
|
|
|
|
||||
Total intangibles, net
|
|
$
|
145,660
|
|
|
$
|
285,972
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
Amortization of Intangibles
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
||||||||||
Amortization expense
|
|
$
|
1,082
|
|
|
$
|
2,164
|
|
|
$
|
2,164
|
|
|
$
|
2,164
|
|
|
$
|
2,164
|
|
Goodwill
|
|
Total
|
||
December 31, 2019
|
|
$
|
105,757
|
|
Acquisitions
|
|
—
|
|
|
Impairment
|
|
(76,890
|
)
|
|
Less: Goodwill held for sale
|
|
(2,192
|
)
|
|
June 30, 2020
|
|
$
|
26,675
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
Investments
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Investments held at FV-NI
|
|
4,613
|
|
|
4,376
|
|
||
Equity method investments
|
|
98
|
|
|
123
|
|
||
Total long-term investments
|
|
$
|
4,711
|
|
|
$
|
4,499
|
|
Investment income
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Short-term investments
|
|
$
|
—
|
|
|
$
|
238
|
|
|
$
|
—
|
|
|
$
|
738
|
|
Investments held at FV-NI
|
|
23
|
|
|
(737
|
)
|
|
263
|
|
|
466
|
|
||||
Equity method investments
|
|
(19
|
)
|
|
—
|
|
|
(25
|
)
|
|
1,024
|
|
||||
Income (loss) from investments, net
|
|
$
|
4
|
|
|
$
|
(499
|
)
|
|
$
|
238
|
|
|
$
|
2,228
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Notes receivable
|
|
$
|
92,344
|
|
|
$
|
75,851
|
|
Interest receivable
|
|
4,052
|
|
|
5,774
|
|
||
Total notes receivable
|
|
$
|
96,396
|
|
|
$
|
81,625
|
|
Less: Notes receivable, current
|
|
2,094
|
|
|
2,146
|
|
||
Notes receivable, non-current
|
|
$
|
94,302
|
|
|
$
|
79,479
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
Lines of Credit
|
|
|
|
|
|
Balance as of
|
||||||||
Counterparty
|
|
Maximum Obligation
|
|
Interest Rate
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||
Greenleaf (1)
|
|
$
|
29,286
|
|
|
3.25% - 4.75%
|
|
$
|
28,336
|
|
|
$
|
22,569
|
|
CWG Botanicals, Inc. ("CWG") (2)
|
|
12,000
|
|
|
8%
|
|
9,767
|
|
|
9,152
|
|
|||
Compassionate Care Foundation, Inc. (“CCF”) (3)
|
|
12,500
|
|
|
18%
|
|
—
|
|
|
7,152
|
|
|||
Prime Alternative Treatment Center, Inc. ("PATC") (4)
|
|
4,650
|
|
|
15%
|
|
4,650
|
|
|
4,650
|
|
|||
Patient Centric of Martha’s Vineyard, Ltd. (“PCMV”) (5)
|
|
9,000
|
|
|
15%
|
|
6,069
|
|
|
5,758
|
|
|||
Health Circle, Inc. (6)
|
|
8,000
|
|
|
15%
|
|
4,331
|
|
|
3,988
|
|
|||
Total
|
|
$
|
75,436
|
|
|
|
|
$
|
53,153
|
|
|
$
|
53,269
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Land (1)
|
|
$
|
6,490
|
|
|
$
|
9,839
|
|
Building
|
|
34,366
|
|
|
34,522
|
|
||
Right-of-use asset, finance leases
|
|
5,954
|
|
|
5,954
|
|
||
Construction in progress
|
|
14,737
|
|
|
17,288
|
|
||
Furniture, fixtures and equipment
|
|
19,041
|
|
|
21,019
|
|
||
Leasehold improvements
|
|
23,398
|
|
|
22,682
|
|
||
Capital assets, gross
|
|
$
|
103,986
|
|
|
$
|
111,304
|
|
Less: accumulated depreciation
|
|
(7,167
|
)
|
|
(5,257
|
)
|
||
Capital assets, net
|
|
$
|
96,819
|
|
|
$
|
106,047
|
|
(1)
|
On May 8, 2020, the Company sold a parcel of land for a sale price of $1,081. In connection with the transaction, the Company recorded a $280 gain on sale at Other loss, net on the Statements of Operations.
|
Balance Sheet Information
|
|
Classification
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Right-of-use assets
|
|
|
|
|
|
|
||||
Operating
|
|
Operating lease right-of-use assets
|
|
$
|
36,280
|
|
|
$
|
51,950
|
|
Finance
|
|
Capital assets, net
|
|
5,657
|
|
|
5,832
|
|
||
Total right-of-use assets
|
|
|
|
$
|
41,937
|
|
|
$
|
57,782
|
|
|
|
|
|
|
|
|
||||
Lease liabilities
|
|
|
|
|
|
|
||||
Current
|
|
|
|
|
|
|
||||
Operating
|
|
Operating lease liability, current
|
|
$
|
2,283
|
|
|
$
|
2,759
|
|
Financing
|
|
Debt, current
|
|
73
|
|
|
49
|
|
||
Non-current
|
|
|
|
|
|
|
||||
Operating
|
|
Operating lease liability, non-current
|
|
35,058
|
|
|
47,522
|
|
||
Financing
|
|
Debt, non-current
|
|
5,925
|
|
|
6,083
|
|
||
Total lease liabilities
|
|
|
|
$
|
43,339
|
|
|
$
|
56,413
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
Statement of Operations Information
|
|
Classification
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Short-term lease expense
|
|
General and administrative
|
|
$
|
354
|
|
|
$
|
188
|
|
|
$
|
671
|
|
|
$
|
486
|
|
Operating lease expense
|
|
General and administrative
|
|
2,430
|
|
|
1,012
|
|
|
4,450
|
|
|
1,968
|
|
||||
Finance lease expense:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Amortization of right of use asset
|
|
Depreciation and amortization
|
|
89
|
|
|
17
|
|
|
(6
|
)
|
|
19
|
|
||||
Interest expense on lease liabilities
|
|
Interest expense
|
|
216
|
|
|
25
|
|
|
431
|
|
|
38
|
|
||||
Sublease income
|
|
Other loss, net
|
|
—
|
|
|
(5
|
)
|
|
(16
|
)
|
|
(48
|
)
|
||||
Net lease cost
|
|
|
|
$
|
2,735
|
|
|
$
|
1,049
|
|
|
$
|
4,859
|
|
|
$
|
1,977
|
|
Statement of Cash Flows Information
|
|
Classification
|
|
Six Months Ended
June 30, 2020 |
|
Six Months Ended
June 30, 2019 |
||||
Cash paid for operating leases
|
|
Net cash used in operating activities
|
|
$
|
3,503
|
|
|
$
|
1,430
|
|
Cash paid for finance leases - interest
|
|
Net cash used in operating activities
|
|
$
|
403
|
|
|
$
|
38
|
|
Maturity of lease liabilities
|
|
Operating Leases
|
|
Finance Leases
|
||||
2020 (1)
|
|
$
|
9,218
|
|
|
$
|
863
|
|
2021
|
|
6,186
|
|
|
883
|
|
||
2022
|
|
6,043
|
|
|
904
|
|
||
2023
|
|
6,207
|
|
|
925
|
|
||
2024
|
|
6,374
|
|
|
923
|
|
||
Thereafter
|
|
29,472
|
|
|
18,286
|
|
||
Total lease payments
|
|
$
|
63,500
|
|
|
$
|
22,784
|
|
Less: imputed interest
|
|
24,935
|
|
|
16,786
|
|
||
Present value of lease liabilities
|
|
$
|
38,565
|
|
|
$
|
5,998
|
|
|
|
|
|
|
||||
Weighted average remaining lease term (years)
|
|
10
|
|
23
|
||||
Weighted average discount rate
|
|
11%
|
|
14%
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
Retail inventory
|
|
$
|
1,369
|
|
|
$
|
1,784
|
|
Wholesale inventory
|
|
16,039
|
|
|
11,993
|
|
||
Cultivation inventory
|
|
2,364
|
|
|
3,021
|
|
||
Supplies & other
|
|
1,572
|
|
|
1,285
|
|
||
Total
|
|
$
|
21,344
|
|
|
$
|
18,083
|
|
Debt balances
|
June 30, 2020
|
|
December 31, 2019
|
||||
NCCRE loan
|
$
|
481
|
|
|
$
|
492
|
|
Seller’s notes
|
2,679
|
|
|
2,810
|
|
||
Related party debt
|
—
|
|
|
15,000
|
|
||
Financing liability (related party)
|
15,253
|
|
|
19,052
|
|
||
Finance lease liabilities
|
5,998
|
|
|
6,132
|
|
||
SAF loan
|
19,638
|
|
|
—
|
|
||
SAF loan collateral (related party)
|
23,358
|
|
|
—
|
|
||
Convertible note, net of debt discount
|
9,288
|
|
|
—
|
|
||
Bridge loan
|
14,173
|
|
|
—
|
|
||
Total debt
|
$
|
90,868
|
|
|
$
|
43,486
|
|
Less: current portion of debt
|
47,009
|
|
|
15,300
|
|
||
|
|
|
|
||||
Total long-term debt
|
$
|
43,859
|
|
|
$
|
28,186
|
|
Interest Expense
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
NCCRE loan
|
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
9
|
|
|
$
|
10
|
|
Seller’s notes
|
|
72
|
|
|
101
|
|
|
144
|
|
|
201
|
|
||||
Interest expense on financing liability
|
|
707
|
|
|
—
|
|
|
1,298
|
|
|
—
|
|
||||
Interest expense on finance lease liability
|
|
216
|
|
|
25
|
|
|
431
|
|
|
38
|
|
||||
Interest expense on SAF loan
|
|
387
|
|
|
—
|
|
|
476
|
|
|
—
|
|
||||
Interest expense on SAF loan collateral (related party)
|
|
1,103
|
|
|
—
|
|
|
1,357
|
|
|
—
|
|
||||
Interest expense on convertible note
|
|
753
|
|
|
—
|
|
|
753
|
|
|
—
|
|
||||
Interest expense on bridge loan
|
|
491
|
|
|
—
|
|
|
491
|
|
|
—
|
|
||||
Total interest expense
|
|
$
|
3,733
|
|
|
$
|
131
|
|
|
$
|
4,959
|
|
|
$
|
249
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
Shareholders’ Equity
|
|
Subordinate Voting Shares
|
|
Subordinate Voting Shares Held in Treasury
|
|
Proportionate Voting Shares (as converted)
|
|
Multiple Voting Shares
|
|
Total Shares Outstanding
|
|||||
December 31, 2019
|
|
68,177
|
|
|
(842
|
)
|
|
23,143
|
|
|
168
|
|
|
90,646
|
|
Issuances
|
|
7,535
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,535
|
|
NCI conversions
|
|
385
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
385
|
|
PVS conversions
|
|
883
|
|
|
—
|
|
|
(883
|
)
|
|
—
|
|
|
—
|
|
June 30, 2020
|
|
76,980
|
|
|
(842
|
)
|
|
22,260
|
|
|
168
|
|
|
98,566
|
|
Shareholders’ Equity
|
|
Subordinate Voting Shares
|
|
Subordinate Voting Shares Held in Treasury
|
|
Proportionate Voting Shares (as converted)
|
|
Multiple Voting Shares
|
|
Total Shares Outstanding
|
|||||
December 31, 2018
|
|
21,943
|
|
|
(842
|
)
|
|
57,895
|
|
|
168
|
|
|
79,164
|
|
Issuances
|
|
5,765
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,765
|
|
NCI conversions
|
|
1,031
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,031
|
|
PVS conversions
|
|
32,167
|
|
|
—
|
|
|
(32,167
|
)
|
|
—
|
|
|
—
|
|
June 30, 2019
|
|
60,906
|
|
|
(842
|
)
|
|
25,728
|
|
|
168
|
|
|
85,960
|
|
Warrants
|
|
Six Months Ended June 30,
|
||||
|
|
2020
|
|
2019
|
||
Beginning balance
|
|
2,040
|
|
|
2,259
|
|
Granted
|
|
6,085
|
|
|
4
|
|
Expired
|
|
(4
|
)
|
|
—
|
|
Ending balance
|
|
8,121
|
|
|
2,263
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
HSCP net asset reconciliation
|
June 30, 2020
|
|
December 31, 2019
|
||||
Current assets
|
$
|
134,934
|
|
|
$
|
55,296
|
|
Non-current assets
|
405,609
|
|
|
584,812
|
|
||
Current liabilities
|
(108,412
|
)
|
|
(46,434
|
)
|
||
Non-current liabilities
|
(73,471
|
)
|
|
(75,219
|
)
|
||
Other NCI balances
|
(539
|
)
|
|
(1,041
|
)
|
||
Accumulated equity-settled expenses
|
(168,498
|
)
|
|
(111,934
|
)
|
||
Net assets
|
$
|
189,623
|
|
|
$
|
405,480
|
|
HSCP/USCo2 ownership % of HSCP
|
19.2
|
%
|
|
21.64
|
%
|
||
Net assets allocated to USCo2/HSCP
|
$
|
36,408
|
|
|
$
|
87,746
|
|
Net assets attributable to other NCIs
|
539
|
|
|
1,041
|
|
||
Total NCI
|
$
|
36,947
|
|
|
$
|
88,787
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
HSCP Summarized Statement of Operations
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Net loss allocable to HSCP/USCo2
|
(41,867
|
)
|
|
(48,059
|
)
|
|
(277,070
|
)
|
|
(77,017
|
)
|
HSCP/USCo2 weighted average ownership % of HSCP
|
17.18
|
%
|
|
24.40
|
%
|
|
20.55
|
%
|
|
24.86
|
%
|
Net loss allocated to HSCP/USCo2
|
(7,193
|
)
|
|
(11,724
|
)
|
|
(56,938
|
)
|
|
(19,146
|
)
|
Net loss allocated to other NCIs
|
15
|
|
|
—
|
|
|
(515
|
)
|
|
(5
|
)
|
Net loss attributable to NCIs
|
(7,178
|
)
|
|
(11,724
|
)
|
|
(57,453
|
)
|
|
(19,151
|
)
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
|
|
Six Months Ended June 30,
|
||||
Convertible Units
|
|
2020
|
|
2019
|
||
Beginning balance
|
|
25,035
|
|
|
27,340
|
|
Issuance of NCI units
|
|
—
|
|
|
198
|
|
Vested LLC C-1s canceled
|
|
(1,310
|
)
|
|
(126
|
)
|
LLC C-1s vested
|
|
1,000
|
|
|
625
|
|
NCI units settled in cash
|
|
—
|
|
|
(58
|
)
|
NCI units converted to Pubco
|
|
(385
|
)
|
|
(1,027
|
)
|
Ending balance
|
|
24,340
|
|
|
26,952
|
|
Equity-based compensation expense
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Equity-based compensation - Plan
|
|
$
|
11,302
|
|
|
$
|
15,674
|
|
|
$
|
25,781
|
|
|
$
|
34,555
|
|
Equity-based compensation - Plan (CGC Awards)
|
|
7,181
|
|
|
314
|
|
|
11,992
|
|
|
314
|
|
||||
Equity-based compensation - other
|
|
1,704
|
|
|
4,705
|
|
|
17,151
|
|
|
4,801
|
|
||||
Total equity-based compensation expense
|
|
$
|
20,187
|
|
|
$
|
20,693
|
|
|
$
|
54,924
|
|
|
$
|
39,670
|
|
|
|
Six Months Ended June 30, 2020
|
|||||
Restricted Share Units
(Fair value information expressed in whole dollars)
|
|
RSUs
|
|
Weighted Average Grant Date Fair Value
|
|||
Unvested, beginning of period (1)
|
|
7,843
|
|
|
$
|
15.10
|
|
Granted
|
|
4,926
|
|
|
3.60
|
|
|
Forfeited
|
|
(2,052
|
)
|
|
13.15
|
|
|
Vested
|
|
(2,736
|
)
|
|
11.60
|
|
|
Unvested, end of period
|
|
7,981
|
|
|
$
|
9.70
|
|
Vested and unreleased
|
|
1,368
|
|
|
$
|
15.73
|
|
Outstanding, end of period
|
|
9,349
|
|
|
$
|
10.58
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
|
|
Six Months Ended June 30, 2020
|
|||||
Stock Options
(Exercise price expressed in whole dollars) |
|
Options
|
|
Weighted Average Exercise Price
|
|||
Options outstanding, beginning of period
|
|
5,607
|
|
|
$
|
21.56
|
|
Granted
|
|
191
|
|
|
5.75
|
|
|
Forfeited
|
|
(869
|
)
|
|
17.29
|
|
|
Exercised
|
|
—
|
|
|
—
|
|
|
Options outstanding, end of period
|
|
4,929
|
|
|
$
|
21.70
|
|
|
|
|
|
|
|||
Options exercisable, end of period
|
|
2,125
|
|
|
$
|
24.50
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
|
|
Six Months Ended June 30, 2020
|
|||||
Profits Interests
(Fair value information expressed in whole dollars)
|
|
Number of Units
|
|
Weighted Average Grant Date Fair Value
|
|||
Unvested, beginning of period
|
|
1,000
|
|
|
$
|
0.43
|
|
Class C-1 units granted
|
|
—
|
|
|
—
|
|
|
Class C-1 units canceled
|
|
—
|
|
|
—
|
|
|
Class C-1 vested
|
|
(1,000
|
)
|
|
0.43
|
|
|
Unvested, end of period
|
|
—
|
|
|
$
|
—
|
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
ACREAGE HOLDINGS, INC.
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
(in thousands, except per share data)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net loss attributable to common shareholders of the Company
|
$
|
(37,192
|
)
|
|
$
|
(37,541
|
)
|
|
$
|
(209,146
|
)
|
|
$
|
(60,918
|
)
|
Weighted average shares outstanding - basic
|
98,444
|
|
|
85,640
|
|
|
95,688
|
|
|
82,557
|
|
||||
Effect of dilutive securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average shares - diluted
|
98,444
|
|
|
85,640
|
|
|
95,688
|
|
|
82,557
|
|
||||
Net loss per share attributable to common shareholders of the Company - basic
|
$
|
(0.38
|
)
|
|
$
|
(0.44
|
)
|
|
$
|
(2.19
|
)
|
|
$
|
(0.74
|
)
|
Net loss per share attributable to common shareholders of the Company - diluted
|
$
|
(0.38
|
)
|
|
$
|
(0.44
|
)
|
|
$
|
(2.19
|
)
|
|
$
|
(0.74
|
)
|
•
|
the future implications to the business, financial results and performance of the Company arising, directly or indirectly, from COVID-19;
|
•
|
the ability of Acreage and Canopy Growth to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court and shareholders approvals relating to the proposed new arrangement (the “New Arrangement”);
|
•
|
the ability of the parties to satisfy, in a timely manner, the other conditions to the completion of the New Arrangement;
|
•
|
other expectations and assumptions concerning the transactions contemplated in the New Arrangement;
|
•
|
the anticipated benefits of the New Arrangement;
|
•
|
the occurrence or waiver of the Triggering Event (as described in Note 13), the ability of Acreage to meets its performance targets and financial thresholds agreed upon with Canopy Growth as part of the New Arrangement, including those that are conditions to closing the New Arrangement;
|
•
|
the likelihood of the Triggering Event being satisfied or waived by the outside date; in the event the New Arrangement is not adopted, the likelihood of completing the current plan of arrangement on the current terms;
|
•
|
in the event that the New Agreement is adopted, the likelihood of Canopy Growth completing the acquisition of the Fixed Shares and/or Floating Shares;
|
•
|
risks related to the ability to financing Acreage’s business and fund its obligations;
|
•
|
other expectations and assumptions concerning the transactions contemplated between Canopy Growth and Acreage;
|
•
|
the available funds of Acreage and the anticipated use of such funds;
|
•
|
the availability of financing opportunities for Acreage and the risks associated with the completion thereof;
|
•
|
regulatory and licensing risks;
|
•
|
changes in general economic, business and political conditions, including changes in the financial and stock markets;
|
•
|
risks related to infectious diseases, including the impacts of the novel coronavirus;
|
•
|
legal and regulatory risks inherent in the cannabis industry;
|
•
|
risks associated with economic conditions, dependence on management and currency risk;
|
•
|
risks relating to U.S. regulatory landscape and enforcement related to cannabis, including political risks;
|
•
|
risks relating to anti-money laundering laws and regulation;
|
•
|
other governmental and environmental regulation;
|
•
|
public opinion and perception of the cannabis industry;
|
•
|
risks related to contracts with third-party service providers;
|
•
|
risks related to the enforceability of contracts and lack of access to U.S. bankruptcy protections;
|
•
|
reliance on the expertise and judgment of senior management of Acreage;
|
•
|
risks related to proprietary intellectual property and potential infringement by third parties;
|
•
|
the concentrated voting control of Acreage’s founder and the unpredictability caused by Acreage’s capital structure;
|
•
|
risks relating to the management of growth;
|
•
|
increasing competition in the industry;
|
•
|
risks inherent in an agricultural business;
|
•
|
risks relating to energy costs;
|
•
|
risks associated to cannabis products manufactured for human consumption including potential product recalls;
|
•
|
reliance on key inputs, suppliers and skilled labor;
|
•
|
cybersecurity risks;
|
•
|
ability and constraints on marketing products;
|
•
|
fraudulent activity by employees, contractors and consultants;
|
•
|
tax and insurance related risks;
|
•
|
risks related to the economy generally;
|
•
|
risk of litigation;
|
•
|
conflicts of interest;
|
•
|
risks relating to certain remedies being limited and the difficulty of enforcement judgments and effecting service outside of Canada;
|
•
|
risks related to future acquisitions or dispositions;
|
•
|
sales by existing shareholders; and
|
•
|
limited research and data relating to cannabis.
|
•
|
Overview—This section provides a general description of the Company’s businesses, as well as developments that occurred during the three and six months ended June 30, 2020 and 2019 that the Company believes are important in understanding its results of operations and financial condition or to disclose known trends.
|
•
|
Results of Operations—This section provides an analysis of the Company’s results of operations for the three and six months ended June 30, 2020 and 2019. This analysis is presented on a consolidated basis. In addition, a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed.
|
•
|
Liquidity and Capital Resources—This section provides an analysis of the Company’s cash flows for the six months ended June 30, 2020 and 2019, as well as a discussion on the Company’s outstanding debt and commitments that existed as of June 30, 2020. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to fund the Company’s future commitments and obligations, as well as a discussion of other financing arrangements.
|
•
|
We began adult-use sales at our dispensary in Illinois; the significantly increased sales have exceeded internal expectations. We also received zoning approval to open a dispensary in Chicago.
|
•
|
The Company closed a refinancing transaction and conversion related to Northeast Patients Group, operating as Wellness Connection of Maine (“WCM”), a medical cannabis business in Maine, resulting in ownership of WCM by three Maine residents, as required by Maine law. In connection with the transaction, WCM converted from a non-profit corporation to a for-profit corporation.
|
•
|
We raised $48,887, net of issuance costs, as part of a series of financing transactions that were announced on February 7, 2020.
|
•
|
We launched Leaf Trade, an e-commerce ordering and fulfillment platform to manage and market wholesale cannabis and hemp in Illinois.
|
•
|
We received Cannabis Control Commission provisional approval for adult-use sales at The Botanist locations in Worcester and Shrewsbury, Massachusetts.
|
•
|
We closed our acquisition of Compassionate Care Foundation, Inc. (“CCF”), a medical cannabis cultivator and dispenser in New Jersey.
|
Summary Results of Operations
|
|
|
|
|
|
Better/(Worse)
|
|
|
|
|
|
Better/(Worse)
|
||||||||||||||||||
in thousands, except per share amounts
|
|
Three Months Ended
June 30, |
|
2020 vs. 2019
|
|
Six Months Ended June 30,
|
|
2020 vs. 2019
|
||||||||||||||||||||||
|
|
2020
|
|
2019
|
|
$
|
|
%
|
|
2020
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
Revenues, net
|
|
$
|
27,072
|
|
|
$
|
17,745
|
|
|
$
|
9,327
|
|
|
53
|
%
|
|
$
|
51,297
|
|
|
$
|
30,642
|
|
|
$
|
20,655
|
|
|
67
|
%
|
Operating loss
|
|
(39,335
|
)
|
|
(45,660
|
)
|
|
6,325
|
|
|
14
|
%
|
|
(290,617
|
)
|
|
(77,673
|
)
|
|
(212,944
|
)
|
|
(274
|
)%
|
||||||
Net loss attributable to Acreage
|
|
(37,192
|
)
|
|
(37,541
|
)
|
|
349
|
|
|
1
|
%
|
|
(209,146
|
)
|
|
(60,918
|
)
|
|
(148,228
|
)
|
|
(243
|
)%
|
||||||
Basic and diluted loss per share attributable to Acreage
|
|
$
|
(0.38
|
)
|
|
$
|
(0.44
|
)
|
|
$
|
0.06
|
|
|
14
|
%
|
|
$
|
(2.19
|
)
|
|
$
|
(0.74
|
)
|
|
$
|
(1.45
|
)
|
|
(196
|
)%
|
Gross profit
|
|
|
|
|
|
Better/(Worse)
|
|
|
|
|
|
Better/(Worse)
|
||||||||||||||||||
in thousands
|
|
Three Months Ended
June 30, |
|
2020 vs. 2019
|
|
Six Months Ended June 30,
|
|
2020 vs. 2019
|
||||||||||||||||||||||
|
|
2020
|
|
2019
|
|
$
|
|
%
|
|
2020
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
Retail revenue, net
|
|
$
|
19,875
|
|
|
$
|
13,351
|
|
|
$
|
6,524
|
|
|
49
|
%
|
|
$
|
37,448
|
|
|
$
|
23,260
|
|
|
$
|
14,188
|
|
|
61
|
%
|
Wholesale revenue, net
|
|
7,167
|
|
|
4,128
|
|
|
3,039
|
|
|
74
|
%
|
|
13,715
|
|
|
6,943
|
|
|
6,772
|
|
|
98
|
%
|
||||||
Other revenue, net
|
|
30
|
|
|
266
|
|
|
(236
|
)
|
|
(89
|
)%
|
|
134
|
|
|
439
|
|
|
(305
|
)
|
|
(69
|
)%
|
||||||
Total revenues, net
|
|
$
|
27,072
|
|
|
$
|
17,745
|
|
|
$
|
9,327
|
|
|
53
|
%
|
|
$
|
51,297
|
|
|
$
|
30,642
|
|
|
$
|
20,655
|
|
|
67
|
%
|
Cost of goods sold, retail
|
|
(11,981
|
)
|
|
(8,193
|
)
|
|
(3,788
|
)
|
|
(46
|
)%
|
|
(22,870
|
)
|
|
(14,074
|
)
|
|
(8,796
|
)
|
|
(62
|
)%
|
||||||
Cost of goods sold, wholesale
|
|
(3,880
|
)
|
|
(1,939
|
)
|
|
(1,941
|
)
|
|
(100
|
)%
|
|
(7,262
|
)
|
|
(3,635
|
)
|
|
(3,627
|
)
|
|
(100
|
)%
|
||||||
Total cost of goods sold
|
|
$
|
(15,861
|
)
|
|
$
|
(10,132
|
)
|
|
$
|
(5,729
|
)
|
|
(57
|
)%
|
|
$
|
(30,132
|
)
|
|
$
|
(17,709
|
)
|
|
$
|
(12,423
|
)
|
|
(70
|
)%
|
Gross profit
|
|
$
|
11,211
|
|
|
$
|
7,613
|
|
|
$
|
3,598
|
|
|
47
|
%
|
|
$
|
21,165
|
|
|
$
|
12,933
|
|
|
$
|
8,232
|
|
|
64
|
%
|
Gross margin
|
|
41
|
%
|
|
43
|
%
|
|
|
|
(2
|
)%
|
|
41
|
%
|
|
42
|
%
|
|
|
|
(1
|
)%
|
Operating expenses
|
|
|
|
|
|
Better/(Worse)
|
|
|
|
|
|
Better/(Worse)
|
||||||||||||||||||
in thousands
|
|
Three Months Ended
June 30, |
|
2020 vs. 2019
|
|
Six Months Ended June 30,
|
|
2020 vs. 2019
|
||||||||||||||||||||||
|
|
2020
|
|
2019
|
|
$
|
|
%
|
|
2020
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
General and administrative
|
|
$
|
12,386
|
|
|
$
|
17,904
|
|
|
$
|
5,518
|
|
|
31
|
%
|
|
$
|
25,418
|
|
|
$
|
28,062
|
|
|
$
|
2,644
|
|
|
9
|
%
|
Compensation expense
|
|
7,957
|
|
|
11,252
|
|
|
3,295
|
|
|
29
|
%
|
|
22,434
|
|
|
17,741
|
|
|
(4,693
|
)
|
|
(26
|
)%
|
||||||
Equity-based compensation expense
|
|
20,187
|
|
|
20,693
|
|
|
506
|
|
|
2
|
%
|
|
54,924
|
|
|
39,670
|
|
|
(15,254
|
)
|
|
(38
|
)%
|
||||||
Marketing
|
|
481
|
|
|
1,201
|
|
|
720
|
|
|
60
|
%
|
|
1,468
|
|
|
2,002
|
|
|
534
|
|
|
27
|
%
|
||||||
Loss on impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
n/m
|
|
|
187,775
|
|
|
—
|
|
|
(187,775
|
)
|
|
n/m
|
|
||||||
Loss on notes receivable
|
|
—
|
|
|
—
|
|
|
—
|
|
|
n/m
|
|
|
8,161
|
|
|
—
|
|
|
(8,161
|
)
|
|
n/m
|
|
||||||
Write down of assets held-for-sale
|
|
8,110
|
|
|
—
|
|
|
(8,110
|
)
|
|
n/m
|
|
|
8,110
|
|
|
—
|
|
|
(8,110
|
)
|
|
n/m
|
|
||||||
Depreciation and amortization
|
|
1,425
|
|
|
2,223
|
|
|
798
|
|
|
36
|
%
|
|
3,492
|
|
|
3,131
|
|
|
(361
|
)
|
|
(12
|
)%
|
||||||
Total operating expenses
|
|
$
|
50,546
|
|
|
$
|
53,273
|
|
|
$
|
2,727
|
|
|
5
|
%
|
|
$
|
311,782
|
|
|
$
|
90,606
|
|
|
$
|
(221,176
|
)
|
|
(244
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
n/m - Not Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
|
|
|
Better/(Worse)
|
|
|
|
|
|
Better/(Worse)
|
||||||||||||||||||
in thousands
|
|
Three Months Ended
June 30, |
|
2020 vs. 2019
|
|
Six Months Ended June 30,
|
|
2020 vs. 2019
|
||||||||||||||||||||||
|
|
2020
|
|
2019
|
|
$
|
|
%
|
|
2020
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
Income (loss) from investments, net
|
|
$
|
4
|
|
|
$
|
(499
|
)
|
|
$
|
503
|
|
|
n/m
|
|
|
$
|
238
|
|
|
$
|
2,228
|
|
|
$
|
(1,990
|
)
|
|
(89
|
)%
|
Interest income from loans receivable
|
|
1,830
|
|
|
1,001
|
|
|
829
|
|
|
83
|
%
|
|
3,477
|
|
|
1,731
|
|
|
1,746
|
|
|
101
|
%
|
||||||
Interest expense
|
|
(3,733
|
)
|
|
(131
|
)
|
|
(3,602
|
)
|
|
n/m
|
|
|
(4,959
|
)
|
|
(249
|
)
|
|
(4,710
|
)
|
|
n/m
|
|
||||||
Other loss, net
|
|
(23
|
)
|
|
(2,400
|
)
|
|
2,377
|
|
|
99
|
%
|
|
(197
|
)
|
|
(2,308
|
)
|
|
2,111
|
|
|
91
|
%
|
||||||
Total other (loss) income
|
|
$
|
(1,922
|
)
|
|
$
|
(2,029
|
)
|
|
$
|
107
|
|
|
5
|
%
|
|
$
|
(1,441
|
)
|
|
$
|
1,402
|
|
|
$
|
(2,843
|
)
|
|
n/m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
n/m - Not Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
Better/(Worse)
|
|
|
|
|
|
Better/(Worse)
|
||||||||||||||||||
in thousands
|
|
Three Months Ended
June 30, |
|
2020 vs. 2019
|
|
Six Months Ended June 30,
|
|
2020 vs. 2019
|
||||||||||||||||||||||
|
|
2020
|
|
2019
|
|
$
|
|
%
|
|
2020
|
|
2019
|
|
$
|
|
%
|
||||||||||||||
Net loss
|
|
$
|
(44,370
|
)
|
|
$
|
(49,265
|
)
|
|
$
|
4,895
|
|
|
10
|
%
|
|
$
|
(266,599
|
)
|
|
$
|
(80,069
|
)
|
|
$
|
(186,530
|
)
|
|
(233
|
)%
|
Less: net loss attributable to non-controlling interests
|
|
(7,178
|
)
|
|
(11,724
|
)
|
|
4,546
|
|
|
39
|
%
|
|
(57,453
|
)
|
|
(19,151
|
)
|
|
(38,302
|
)
|
|
(200
|
)%
|
||||||
Net loss attributable to Acreage Holdings, Inc.
|
|
$
|
(37,192
|
)
|
|
$
|
(37,541
|
)
|
|
$
|
349
|
|
|
1
|
%
|
|
$
|
(209,146
|
)
|
|
$
|
(60,918
|
)
|
|
$
|
(148,228
|
)
|
|
(243
|
)%
|
Cash flows
|
|
|
|
|
|
Better/(Worse)
|
|||||||||
in thousands
|
|
Six Months Ended June 30,
|
|
2020 vs. 2019
|
|||||||||||
|
|
2020
|
|
2019
|
|
$
|
|
%
|
|||||||
Net cash used in operating activities
|
|
$
|
(39,318
|
)
|
|
$
|
(37,246
|
)
|
|
$
|
(2,072
|
)
|
|
(6
|
)%
|
Net cash (used in) provided by investing activities
|
|
(28,638
|
)
|
|
41,074
|
|
|
(69,712
|
)
|
|
n/m
|
|
|||
Net cash provided by (used in) financing activities
|
|
77,430
|
|
|
(24,282
|
)
|
|
101,712
|
|
|
n/m
|
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
$
|
9,474
|
|
|
$
|
(20,454
|
)
|
|
$
|
29,928
|
|
|
n/m
|
|
n/m - Not Meaningful
|
|
|
|
|
|
|
|
|
Debt balances
|
June 30, 2020
|
||
NCCRE loan
|
$
|
481
|
|
Seller’s notes
|
2,679
|
|
|
Financing liability (related party)
|
15,253
|
|
|
Finance lease liabilities
|
5,998
|
|
|
SAF loan
|
19,638
|
|
|
SAF loan collateral (related party)
|
23,358
|
|
|
Convertible note, net of debt discount
|
9,288
|
|
|
Bridge loan
|
14,173
|
|
|
Total debt
|
$
|
90,868
|
|
Less: current portion of debt
|
47,009
|
|
|
Total long-term debt
|
$
|
43,859
|
|
(i)
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;
|
(ii)
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and
|
(iii)
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
|
•
|
Compassionate Care Foundation, Inc. (“CCF”) (acquired June 26, 2020)
|
|
|
Incorporated by Reference
|
|
|
||||||||||||
Exhibit No.
|
Description of Document
|
Schedule Form
|
File Number
|
Exhibit
|
|
Filing Date
|
|
Filed or Furnished Herewith
|
||||||||
10.1
|
|
|
|
|||||||||||||
31.1
|
|
|
|
|
|
|
X
|
|||||||||
31.2
|
|
|
|
|
|
|
X
|
|||||||||
32.1
|
|
|
|
|
|
|
X
|
|||||||||
101
|
Attached as Exhibit 101 to this report are the following documents formatted in iXBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Financial Position as of June 30, 2020 (unaudited) and December 31, 2019 (audited), (ii) Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020 and June 30, 2019, (iii) Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and June 30, 2019, (iv) Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2020 and June 30, 2019 and (v) Notes to Unaudited Condensed Consolidated Financial Statements.
|
|
|
|
|
|
|
X
|
||||||||
|
|
|
|
|
|
|
|
|
|
Acreage Holdings, Inc.
|
||
|
(Registrant)
|
||
|
|
|
|
|
By:
|
|
/s/ Glen Leibowitz
|
|
|
|
Glen Leibowitz
|
|
|
|
Chief Financial Officer
|
|
|
|
|
/s/ William C. Van Faasen
|
William C. Van Faasen
|
Interim Chief Executive Officer
|
|
|
|
|
/s/ Glen S. Leibowitz
|
Glen S. Leibowitz
|
Chief Financial Officer
|