Annual report pursuant to Section 13 and 15(d)

ACQUISITIONS (Tables)

v3.24.1
ACQUISITIONS (Tables)
 12 Months Ended
Dec. 31, 2023
Business Combination and Asset Acquisition [Abstract]  
Schedule of Business Acquisitions
The Company had the following acquisitions during the year ended December 31, 2022: (i) Apothecarium; and (ii) NuLeaf (each as defined below). The following table summarizes the preliminary purchase price allocations as of their respective acquisition dates:
NuLeaf Apothecarium Total
Assets Acquired:
Cash and cash equivalents $ 618  $ 25  $ 643 
Prepaids and other assets 278  32  310 
Accounts receivable, net 39  —  39 
Inventory 5,334  699  6,033 
Indemnification assets (1)
5,734  —  5,734 
Property, plant and equipment 11,880  498  12,378 
Right-of-use assets - finance lease 4,598  2,333  6,931 
Right-of-use assets - operating lease 1,067  —  1,067 
Intangible assets (2)
14,097  8,600  22,697 
Deposits 110  301  411 
Total assets acquired $ 43,755  $ 12,488  $ 56,243 
Liabilities Assumed:
Accounts payable and accrued liabilities $ 584  $ 497  $ 1,081 
Finance lease obligations 5,054  2,323  7,377 
Operating lease obligations 1,067  —  1,067 
Deferred tax liabilities 5,518  2,283  7,801 
Uncertain tax positions 5,734  —  5,734 
Total liabilities assumed $ 17,957  $ 5,103  $ 23,060 
Net assets acquired $ 25,798  $ 7,385  $ 33,183 
Goodwill (3)
24,474  7,834  32,308 
Total $ 50,272  $ 15,219  $ 65,491 
Consideration:
Consideration paid in cash, net of working capital adjustments $ 14,918  $ 6,703  $ 21,621 
Consideration payable in cash (customary hold back liability) 932  —  932 
Consideration paid in promissory notes (fair value) 12,860  6,922  19,782 
Consideration paid in shares 13,573  1,594  15,167 
Contingent consideration 7,989  —  7,989 
Fair value of consideration $ 50,272  $ 15,219  $ 65,491 
(1)As part of the NuLeaf acquisition agreement, the sellers contractually agreed to indemnify the Company for certain amounts that may become payable, including for taxes that relate to periods prior to the date of acquisition. Accordingly, the Company recorded indemnification assets and corresponding estimated accrued tax liabilities, at fair value, for a total of $5,734 as of the date of the acquisition. Subsequent changes in the amounts recognized for the indemnification assets may occur in relation to the provision for the corresponding tax liabilities, according to changes in the range of outcomes or the assumptions used to develop the estimates of the liabilities at the time of the acquisition.
(2)Included licenses acquired of $10,400 and $8,600 for NuLeaf and Apothecarium, respectively, which have indefinite useful lives. The estimated fair values of the licenses were determined using the multi-period excess earnings method under the income approach based on projections extended to 2036.
(3)The goodwill recognized from the acquisitions is attributable to synergies expected from integrating the acquired businesses into the Company’s existing business. The goodwill acquired is not deductible for tax purposes.
The Company had the following acquisitions during the year ended December 31, 2021: (i) Nature’s Remedy; (ii) OSD; (iii) OhiGrow; and (iv) Grover Beach (each as defined below). The following table summarizes the purchase price allocations as of their respective acquisition dates:
Business Combinations Asset Acquisitions
Nature’s Remedy OSD OhiGrow Grover Beach Total
Assets Acquired:
Cash and cash equivalents $ 3,195  $ 259  $ —  $ —  $ 3,454 
Prepaids 325  53  —  —  378 
Accounts receivable, net 263  —  —  —  263 
Inventory 15,882  184  —  —  16,066 
Indemnification assets (1)
1,322  1,411  —  —  2,733 
Property, plant and equipment 19,470  —  3,165  269  22,904 
Right-of-use assets - finance leases 27,305  —  —  2,050  29,355 
Right-of-use assets - operating leases 1,337  1,859  —  —  3,196 
Intangible assets - license (2)
56,000  2,160  1,817  3,654  63,631 
Intangible assets - tradenames (2)
4,400  —  —  —  4,400 
Intangible assets - customer database (2)
2,100  —  —  —  2,100 
Deposits 20  6  —  19  45 
  Total assets acquired
 $ 131,619  $ 5,932  $ 4,982  $ 5,992  $ 148,525 
Liabilities Assumed:
Accounts payable and accrued liabilities $ 7,004  $ 190  $ —  $ —  $ 7,194 
Finance lease obligations 27,052  —  —  2,032  29,084 
Operating lease obligations 1,267  1,859  —  —  3,126 
Deferred tax liabilities
 21,462  648  —  —  22,110 
Uncertain tax positions 1,322  1,411  —  —  2,733 
Total liabilities assumed
 $ 58,107  $ 4,108  $ —  $ 2,032  $ 64,247 
Net assets acquired (3)
$ 73,512  $ 1,824  $ 4,982  $ 3,960  $ 84,278 
Goodwill (3)
26,086  2,432  —  —  28,518 
Total $ 99,598  $ 4,256  $ 4,982  $ 3,960  $ 112,796 
Consideration:
Consideration paid in cash, as adjusted for working capital adjustments $ 40,360  $ 1,827  $ 4,949  $ 3,592  $ 50,728 
Consideration paid in promissory notes (fair value) 15,345  2,429  —  —  17,774 
Consideration paid in shares 35,670  —  —  368  36,038 
Contingent consideration 8,223  —  —  —  8,223 
Capitalized costs —  —  33  —  33 
  Fair value of consideration $ 99,598  $ 4,256  $ 4,982  $ 3,960  $ 112,796 
(1)     As part of the OSD and Nature’s Remedy acquisition agreements, the sellers contractually agreed to indemnify the Company for certain amounts that may become payable, including for taxes that relate to periods prior to the date of acquisition. Accordingly, the Company recorded indemnification assets and corresponding estimated accrued tax liabilities, at fair value, for a total of $2,733 as of the dates of the acquisitions. Additional subsequent changes in the amounts recognized for the indemnification assets may occur in relation to the provision for the corresponding tax liabilities, according to changes in the range of outcomes or the assumptions used to develop the estimates of the liabilities at the time of the acquisition.
(2)     The licenses acquired have indefinite useful lives. The customer relationships have a useful life of 15 years and the tradenames have a useful life of 5 years.
(3)    The goodwill recognized from the acquisitions is attributable to synergies expected from integrating the acquired businesses into the Company’s existing business. The goodwill acquired is not deductible for tax purposes.
Schedule of Asset Acquisitions
The Company had the following acquisitions during the year ended December 31, 2021: (i) Nature’s Remedy; (ii) OSD; (iii) OhiGrow; and (iv) Grover Beach (each as defined below). The following table summarizes the purchase price allocations as of their respective acquisition dates:
Business Combinations Asset Acquisitions
Nature’s Remedy OSD OhiGrow Grover Beach Total
Assets Acquired:
Cash and cash equivalents $ 3,195  $ 259  $ —  $ —  $ 3,454 
Prepaids 325  53  —  —  378 
Accounts receivable, net 263  —  —  —  263 
Inventory 15,882  184  —  —  16,066 
Indemnification assets (1)
1,322  1,411  —  —  2,733 
Property, plant and equipment 19,470  —  3,165  269  22,904 
Right-of-use assets - finance leases 27,305  —  —  2,050  29,355 
Right-of-use assets - operating leases 1,337  1,859  —  —  3,196 
Intangible assets - license (2)
56,000  2,160  1,817  3,654  63,631 
Intangible assets - tradenames (2)
4,400  —  —  —  4,400 
Intangible assets - customer database (2)
2,100  —  —  —  2,100 
Deposits 20  6  —  19  45 
  Total assets acquired
 $ 131,619  $ 5,932  $ 4,982  $ 5,992  $ 148,525 
Liabilities Assumed:
Accounts payable and accrued liabilities $ 7,004  $ 190  $ —  $ —  $ 7,194 
Finance lease obligations 27,052  —  —  2,032  29,084 
Operating lease obligations 1,267  1,859  —  —  3,126 
Deferred tax liabilities
 21,462  648  —  —  22,110 
Uncertain tax positions 1,322  1,411  —  —  2,733 
Total liabilities assumed
 $ 58,107  $ 4,108  $ —  $ 2,032  $ 64,247 
Net assets acquired (3)
$ 73,512  $ 1,824  $ 4,982  $ 3,960  $ 84,278 
Goodwill (3)
26,086  2,432  —  —  28,518 
Total $ 99,598  $ 4,256  $ 4,982  $ 3,960  $ 112,796 
Consideration:
Consideration paid in cash, as adjusted for working capital adjustments $ 40,360  $ 1,827  $ 4,949  $ 3,592  $ 50,728 
Consideration paid in promissory notes (fair value) 15,345  2,429  —  —  17,774 
Consideration paid in shares 35,670  —  —  368  36,038 
Contingent consideration 8,223  —  —  —  8,223 
Capitalized costs —  —  33  —  33 
  Fair value of consideration $ 99,598  $ 4,256  $ 4,982  $ 3,960  $ 112,796 
(1)     As part of the OSD and Nature’s Remedy acquisition agreements, the sellers contractually agreed to indemnify the Company for certain amounts that may become payable, including for taxes that relate to periods prior to the date of acquisition. Accordingly, the Company recorded indemnification assets and corresponding estimated accrued tax liabilities, at fair value, for a total of $2,733 as of the dates of the acquisitions. Additional subsequent changes in the amounts recognized for the indemnification assets may occur in relation to the provision for the corresponding tax liabilities, according to changes in the range of outcomes or the assumptions used to develop the estimates of the liabilities at the time of the acquisition.
(2)     The licenses acquired have indefinite useful lives. The customer relationships have a useful life of 15 years and the tradenames have a useful life of 5 years.
(3)    The goodwill recognized from the acquisitions is attributable to synergies expected from integrating the acquired businesses into the Company’s existing business. The goodwill acquired is not deductible for tax purposes.
Business Acquisition, Pro Forma Information
The following table summarizes unaudited consolidated pro forma revenue and unaudited consolidated pro forma net income (loss) as if the business combinations had occurred at the beginning of the year prior to their actual acquisition for the periods presented.
Year Ended December 31,
2022 2021
Revenue $ 293,947  $ 284,026 
Net income (loss)
 $ (197,743) $ 20,681