10-Q 1 gtbif-20220331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

img168010778_0.jpg 

Commission file number 000-56132

 

GREEN THUMB INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

 

 

British Columbia

98-1437430

(State or other jurisdiction of

incorporation or organization)

(I.R.S. employer

identification no.)

 

 

325 West Huron Street,

Suite 700 Chicago, Illinois

60654

(Address of principal executive offices)

(zip code)

Registrant’s telephone number, including area code - (312) 471-6720

 

Securities registered pursuant to Section 12(g) of the Act:

Subordinate Voting Shares

Multiple Voting Shares

Super Voting Shares

(Title of each Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 day. Yes ☒ No ☐

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). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

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 Act). Yes No ☒

As of May 1, 2022, there were 203,592,801 shares of the registrant’s Subordinate Voting Shares, 3,853,100 shares of the registrant’s Multiple Voting Shares (on an as converted basis) and 28,003,100 shares of the registrant’s Super Voting Shares (on an as converted basis).

 

 


 

GREEN THUMB INDUSTRIES INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED March 31, 2022

TABLE OF CONTENTS

 

FINANCIAL

INFORMATION

Page

 

Part I

 

ITEM 1:

Unaudited Interim Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

4

 

Unaudited Interim Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021

5

 

Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2022 and 2021

6

 

Unaudited Interim Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021

7

 

Notes to Unaudited Interim Condensed Consolidated Financial Statements

9

ITEM 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

30

ITEM 3:

Quantitative and Qualitative Disclosure About Market Risk

37

ITEM 4:

Controls and Procedures

37

 

Part II

 

OTHER

INFORMATION

 

 

ITEM 1:

Legal Proceedings

38

ITEM 1a:

Risk Factors

38

ITEM 2:

Sale of Unregistered Securities

38

ITEM 3:

Defaults Upon Senior Securities

38

ITEM 4:

Mine Safety Disclosure

38

ITEM 5:

Other Information

38

ITEM 6:

Exhibits

39

Signatures

 

40

 

 


 

Use of Names

In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “we,” “us,” “our,” “Company,” “Corporation” or “Green Thumb” refer to Green Thumb Industries Inc. together with its wholly-owned subsidiaries.

Currency

Unless otherwise indicated, all references to “$” or “US$” in this document refer to United States dollars, and all references to “C$” refer to Canadian dollars.

Disclosure Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that we believe are, or may be considered to be, “forward-looking statements.” All statements other than statements of historical fact included in this document regarding the prospects of our industry or our prospects, plans, financial position or business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as “may,” “will,” “expect,” “intend,” “estimate,” “foresee,” “project,” “anticipate,” “believe,” “plan,” “forecast,” “continue” or “could” or the negative of these terms or variations of them or similar terms or expressions of similar meaning. Furthermore, forward-looking statements may be included in various filings that we make with the Securities and Exchange Commission (the “SEC”), and in press releases or oral statements made by or with the approval of one of our authorized executive officers. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These known and unknown risks include, without limitation: cannabis remains illegal under U.S. federal law, and enforcement of cannabis laws could change; the Company may be subject to action by the U.S. federal government; state regulation of cannabis is uncertain; the Company may be subject to heightened scrutiny by Canadian regulatory authorities; the Company may face limitations on ownership of cannabis licenses; the Company may become subject to U.S. Food and Drug Administration or the U.S. Bureau of Alcohol, Tobacco Firearms and Explosives regulation; cannabis businesses are subject to applicable anti-money laundering laws and regulations and have restricted access to banking and other financial services; the Company may face difficulties acquiring additional financing; the Company lacks access to U.S. bankruptcy protections; the Company operates in a highly regulated sector and may not always succeed in complying fully with applicable regulatory requirements in all jurisdictions where the Company carries on business; the Company may face difficulties in enforcing its contracts; the Company has limited trademark protection; cannabis businesses are subject to unfavorable tax treatment; cannabis businesses may be subject to civil asset forfeiture; the Company is subject to proceeds of crime statutes; the Company faces exposure to fraudulent or illegal activity; the Company’s use of joint ventures may expose it to risks associated with jointly owned investments; the Company faces risks due to industry immaturity or limited comparable, competitive or established industry best practices; the Company faces risks related to its products; the Company is dependent on the popularity of and consumer acceptance of the Company’s brand portfolio; the Company’s business is subject to the risks inherent in agricultural operations; the Company may be adversely impacted by rising or volatile energy costs; the Company faces risks related to its information technology systems and potential cyber-attacks and security breaches; the Company faces an inherent risk of product liability or similar claims; the Company’s products may be subject to product recalls; the Company may face unfavorable publicity or consumer perception; the Company’s voting control is concentrated; the Company’s capital structure and voting control may cause unpredictability; issuances of substantial amounts of Super Voting Shares, Multiple Voting Shares or Subordinate Voting Shares may result in dilution; and the Company is governed by corporate laws in British Columbia, Canada which in some cases have a different effect on shareholders than the corporate laws in Delaware, United States. Further information on these and other potential factors that could affect the Company’s business and financial condition and the results of operations are included in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and elsewhere in the Company’s filings with the SEC, which are available on the SEC’s website or at https://investors.gtigrows.com. Readers are cautioned not to place undue reliance on any forward-looking statements contained in this document, which reflect management’s opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures we make in our reports to the SEC. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this document.

 

 

3


 

Green Thumb Industries Inc.

Unaudited Interim Condensed Consolidated Balance Sheets

As of March 31, 2022 and December 31, 2021

(Amounts Expressed in United States Dollars)

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

(Audited)

 

 

 

(in thousands)

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

174,539

 

 

$

230,420

 

Accounts Receivable

 

 

27,808

 

 

 

22,099

 

Inventories

 

 

109,701

 

 

 

95,471

 

Prepaid Expenses

 

 

11,102

 

 

 

11,175

 

Other Current Assets

 

 

5,210

 

 

 

5,065

 

Total Current Assets

 

 

328,360

 

 

 

364,230

 

Property and Equipment, Net

 

 

453,114

 

 

 

409,074

 

Right of Use Assets, Net

 

 

178,193

 

 

 

176,327

 

Investments

 

 

90,731

 

 

 

94,902

 

Investments in Associates

 

 

28,202

 

 

 

30,337

 

Intangible Assets, Net

 

 

674,692

 

 

 

675,491

 

Goodwill

 

 

640,795

 

 

 

632,849

 

Deposits and Other Assets

 

 

3,035

 

 

 

2,641

 

TOTAL ASSETS

 

$

2,397,122

 

 

$

2,385,851

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts Payable

 

$

23,651

 

 

$

14,086

 

Accrued Liabilities

 

 

77,208

 

 

 

84,724

 

Acquisition Consideration Payable

 

 

 

 

 

31,732

 

Compensation Payable

 

 

15,055

 

 

 

12,022

 

Current Portion of Notes Payable

 

 

900

 

 

 

783

 

Current Portion of Lease Liabilities

 

 

8,947

 

 

 

9,221

 

Contingent Consideration Payable

 

 

20,592

 

 

 

50,284

 

Income Tax Payable

 

 

32,831

 

 

 

1,527

 

Total Current Liabilities

 

 

179,184

 

 

 

204,379

 

Long-Term Liabilities:

 

 

 

 

 

 

Lease Liabilities, Net of Current Portion

 

 

186,080

 

 

 

182,539

 

Notes Payable, Net of Current Portion and Debt Discount

 

 

243,336

 

 

 

239,151

 

Contingent Consideration Payable

 

 

34,767

 

 

 

33,581

 

Warrant Liability

 

 

16,948

 

 

 

24,877

 

Deferred Income Taxes

 

 

81,846

 

 

 

81,846

 

TOTAL LIABILITIES

 

 

742,161

 

 

 

766,373

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Subordinate Voting Shares (Shares Authorized, Issued and Outstanding at March 31, 2022:
   
Unlimited, 203,356,655, and 203,356,655, respectively, at December 31, 2021:
   
Unlimited, 201,768,312, and 201,768,312, respectively)

 

 

 

 

 

 

Multiple Voting Shares (Shares Authorized, Issued and Outstanding at March 31, 2022:
   
Unlimited, 38,531 and 38,531, respectively, at December 31, 2021:
   
Unlimited, 38,531 and 38,531, respectively)

 

 

 

 

 

 

Super Voting Shares (Shares Authorized, Issued and Outstanding at March 31, 2022:
   
Unlimited, 280,031 and 280,031, respectively, at December 31, 2021:
   
Unlimited, 285,031 and 285,031, respectively)

 

 

 

 

 

 

Share Capital

 

 

1,653,703

 

 

 

1,633,672

 

Contributed Surplus

 

 

5,966

 

 

 

21,245

 

Deferred Share Issuances

 

 

36,262

 

 

 

36,262

 

Accumulated Deficit

 

 

(41,124

)

 

 

(70,063

)

Equity of Green Thumb Industries Inc.

 

 

1,654,807

 

 

 

1,621,116

 

Noncontrolling interests

 

 

154

 

 

 

(1,638

)

TOTAL SHAREHOLDERS' EQUITY

 

 

1,654,961

 

 

 

1,619,478

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

2,397,122

 

 

$

2,385,851

 

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

 

4


 

Green Thumb Industries Inc.

Unaudited Interim Condensed Consolidated Statements of Operations

Three Months Ended March 31, 2022 and 2021

(Amounts Expressed in United States Dollars, Except Share Amounts)

 

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

 

(in thousands)

 

Revenues, net of discounts

$

242,600

 

 

$

194,431

 

Cost of Goods Sold, net

 

(119,660

)

 

 

(83,566

)

Gross Profit

 

122,940

 

 

 

110,865

 

Expenses:

 

 

 

 

 

Selling, General, and Administrative

 

68,388

 

 

 

59,331

 

Total Expenses

 

68,388

 

 

 

59,331

 

Income From Operations

 

54,552

 

 

 

51,534

 

Other Income (Expense):

 

 

 

 

 

Other Income (Expense), net

 

11,435

 

 

 

(5,150

)

Interest Income, net

 

900

 

 

 

50

 

Interest Expense, net

 

(6,070

)

 

 

(4,123

)

Total Other Income (Expense)

 

6,265

 

 

 

(9,223

)

Income Before Provision for Income Taxes And Non-Controlling Interest

 

60,817

 

 

 

42,311

 

Provision For Income Taxes

 

31,131

 

 

 

30,856

 

Net Income Before Non-Controlling Interest

 

29,686

 

 

 

11,455

 

Net Income Attributable to Non-Controlling Interest

 

747

 

 

 

1,086

 

Net Income Attributable To Green Thumb Industries Inc.

$

28,939

 

 

$

10,369

 

Net Income per share - basic

$

0.12

 

 

$

0.05

 

Net Income per share - diluted

$

0.12

 

 

$

0.05

 

Weighted average number of shares outstanding - basic

 

235,838,947

 

 

 

216,210,429

 

Weighted average number of shares outstanding - diluted

 

238,225,420

 

 

 

221,616,157

 

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

 

 

5


 

Green Thumb Industries Inc.

Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity

Three Months Ended March 31, 2022 and 2021

(Amounts Expressed in United States Dollars)

 

 

 

 

Share
Capital

 

 

Contributed
Surplus (Deficit)

 

 

Deferred Share
Issuance

 

 

Accumulated
Earnings (Deficit)

 

 

Non-Controlling
Interest

 

 

Total

 

 

 

(in thousand)

 

Balance, January 1, 2021

$

 

1,048,640

 

$

 

4,893

 

$

 

2,587

 

$

 

(145,499

)

$

 

3,537

 

$

 

914,158

 

Issuance of shares under business
   combinations and investments

 

 

1,038

 

 

 

(38

)

 

 

 

 

 

 

 

 

 

 

 

1,000

 

Shares issued as contingent consideration

 

 

12,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,673

 

Distribution of deferred shares

 

 

1,826

 

 

 

 

 

 

(1,835

)

 

 

 

 

 

 

 

 

(9

)

Issuance of registered shares pursuant to
   Form S-1

 

 

155,803

 

 

 

(305

)

 

 

 

 

 

 

 

 

 

 

 

155,498

 

Exercise of options, RSUs and warrants

 

 

17,008

 

 

 

(11,369

)

 

 

 

 

 

 

 

 

 

 

 

5,639

 

Stock-based compensation

 

 

 

 

 

4,031

 

 

 

 

 

 

 

 

 

 

 

 

4,031

 

Distributions to third party and limited liability
   company unit holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,675

)

 

 

(1,675

)

Net income

 

 

 

 

 

 

 

 

 

 

 

10,369

 

 

 

1,086

 

 

 

11,455

 

Balance, March 31, 2021

$

 

1,236,988

 

$

 

(2,788

)

$

 

752

 

$

 

(135,130

)

$

 

2,948

 

$

 

1,102,770

 

 

Balance, January 1, 2022

$

 

1,633,672

 

$

 

21,245

 

$

 

36,262

 

$

 

(70,063

)

$

 

(1,638

)

$

 

1,619,478

 

Noncontrolling interests adjustment for change in
   ownership

 

 

2,379

 

 

 

(17,735

)

 

 

 

 

 

 

 

 

15,356

 

 

 

 

Issuance of shares under business
   combinations and investments

 

 

1,406

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,406

 

Shares issued as contingent consideration

 

 

13,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,111

 

Exercise of options, RSUs and warrants

 

 

3,135

 

 

 

(2,195

)

 

 

 

 

 

 

 

 

 

 

 

940

 

Stock-based compensation

 

 

 

 

 

4,651

 

 

 

 

 

 

 

 

 

 

 

 

4,651

 

Distributions to limited liability company unit
   holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,311

)

 

 

(14,311

)

Net income

 

 

 

 

 

 

 

 

 

 

 

28,939

 

 

 

747

 

 

 

29,686

 

Balance, March 31, 2022

$

 

1,653,703

 

$

 

5,966

 

$

 

36,262

 

$

 

(41,124

)

$

 

154

 

$

 

1,654,961

 

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

 

6


 

Green Thumb Industries Inc.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2022 and 2021

(Amounts Expressed in United States Dollars)

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

CASH FLOW FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income attributable to Green Thumb Industries Inc.

 

$

28,939

 

 

$

10,369

 

Net income attributable to non-controlling interest

 

 

747

 

 

 

1,086

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

22,990

 

 

 

14,994

 

Amortization of operating lease assets

 

 

9,821

 

 

 

7,751

 

Loss on disposal of property and equipment

 

 

85

 

 

 

46

 

Loss (earnings) on equity method investment

 

 

1,203

 

 

 

(623

)

Bad debt expense

 

 

117

 

 

 

(74

)

Deferred income taxes

 

 

 

 

 

1,690

 

Stock-based compensation

 

 

4,651

 

 

 

4,031

 

Increase in fair value of investments

 

 

(4,664

)

 

 

(392

)

Interest on contingent consideration payable and acquisition liabilities

 

 

1,081

 

 

 

 

(Decrease) increase in fair value of contingent consideration

 

 

(16,477

)

 

 

413

 

(Decrease) increase in fair value of warrants

 

 

(7,929

)

 

 

5,851

 

Amortization of debt discount

 

 

2,279

 

 

 

1,103

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(5,941

)

 

 

3,256

 

Inventories

 

 

(13,817

)

 

 

(2,737

)

Prepaid expenses and other current assets

 

 

12

 

 

 

(5,318

)

Deposits and other assets

 

 

(395

)

 

 

(363

)

Accounts payable

 

 

9,555

 

 

 

(11,191

)

Accrued liabilities

 

 

235

 

 

 

1,755

 

Operating lease liabilities

 

 

(8,420

)

 

 

(6,010

)

Income tax payable

 

 

31,304

 

 

 

14,019

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

55,376

 

 

 

39,656

 

CASH FLOW FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Purchases of property and equipment

 

 

(56,831

)

 

 

(19,422

)

Proceeds from disposal of assets

 

 

32

 

 

 

60

 

Investments in securities

 

 

(5,444

)

 

 

(6,002

)

Proceeds from sale of investments

 

 

160

 

 

 

18,123

 

Settlement of acquisition consideration payable

 

 

(31,732

)

 

 

 

Purchase of businesses, net of cash acquired

 

 

(6,586

)

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

(100,401

)

 

 

(7,241

)

CASH FLOW FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Distributions to third parties and limited liability company unit holders

 

 

(14,311

)

 

 

(1,675

)

Contributions from unconsolidated subsidiaries

 

 

550

 

 

 

350

 

Net proceeds from issuance of registered shares pursuant to Form S-1

 

 

 

 

 

155,498

 

Proceeds from exercise of options and warrants

 

 

940

 

 

 

5,639

 

Proceeds from issuance of notes payable

 

 

2,102

 

 

 

 

Principal repayment of notes payable

 

 

(137

)

 

 

(86

)

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

 

 

(10,856

)

 

 

159,726

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

 

 

(55,881

)

 

 

192,141

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD

 

 

230,420

 

 

 

83,758

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH END OF PERIOD

 

$

174,539

 

 

$

275,899

 

 

 

 

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7


 

 

Green Thumb Industries Inc.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2022 and 2021

(Amounts Expressed in United States Dollars)

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

 

 

Interest paid

 

$

4,467

 

 

$

3,183

 

NONCASH INVESTING AND FINANCING ACTIVITIES

 

 

 

 

 

 

Accrued capital expenditures

 

$

(5,366

)

 

$

(3,406

)

Noncash increase in right of use asset

 

$

(3,855

)

 

$

(5,770

)

Noncash increase in lease liability

 

$

3,855

 

 

$

5,770

 

Shares issued for purchase of noncontrolling interest

 

$

2,379

 

 

$

 

Issuance of shares associated with contingent consideration

 

$

13,111

 

 

$

12,673

 

Deferred share issuances

 

$

 

 

$

1,835

 

Issuance of shares under business combinations

 

$

1,406

 

 

$

1,000

 

Acquisitions

 

 

 

 

 

 

Inventory

 

$

413

 

 

$