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)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
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(Address of principal executive offices) |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class |
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Name of each exchange on which registered |
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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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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 5, 2022, the registrant had
Trulieve Cannabis Corp.
Table of Contents
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PART I. |
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Item 1. |
1 |
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Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 |
1 |
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2 |
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3 |
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Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 |
4 |
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5 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
35 |
Item 3. |
44 |
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Item 4. |
44 |
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PART II. |
OTHER INFORMATION |
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Item 1. |
47 |
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Item 1A. |
47 |
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Item 2. |
47 |
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Item 3. |
47 |
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Item 4. |
47 |
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Item 5. |
47 |
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Item 6. |
48 |
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49 |
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may”, “will”, “would”, “could”, “should”, “believes”, “estimates”, “projects”, “potential”, “expects”, “plans”, “intends”, “anticipates”, “targeted”, “continues”, “forecasts”, “designed”, “goal”, or the negative of those words or other similar or comparable words. Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical facts may be deemed to be forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, results of operations and future growth prospects. The forward-looking statements contained herein are based on certain key expectations and assumptions, including, but not limited to, with respect to expectations and assumptions concerning receipt and/or maintenance of required licenses and third party consents and the success of our operations, are based on estimates prepared by us 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 this industry that we believe to be reasonable. These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and discussed elsewhere in this Quarterly Report on Form 10-Q and in “Part I, Item 1A – Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this Quarterly Report on Form 10-Q.
ii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Trulieve Cannabis Corp.
Condensed Consolidated Balance Sheets
(in thousands)
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March 31, 2022 |
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December 31, 2021 |
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(unaudited) |
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(audited) |
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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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— |
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Accounts receivable, net |
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Inventories, net |
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Notes receivable - current portion |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right of use assets - operating, net |
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Right of use assets - finance, net |
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Intangible assets, net |
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Goodwill |
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Notes receivable, net |
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Other assets |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES |
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Current liabilities: |
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Accounts payable and accrued liabilities |
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Income tax payable |
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Deferred revenue |
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Notes payable - current portion, net |
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Private placement notes - current portion |
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— |
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Operating lease liabilities - current portion |
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Finance lease liabilities - current portion |
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Construction finance liabilities - current portion |
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Contingencies |
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Total current liabilities |
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Long-term liabilities: |
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Notes payable |
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Private placement notes, net |
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Warrant liabilities |
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Operating lease liabilities |
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Finance lease liabilities |
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Construction finance liabilities |
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Deferred tax liabilities |
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Other long-term liabilities |
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TOTAL LIABILITIES |
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(see Note 21) |
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SHAREHOLDERS' EQUITY |
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Common stock, par value; shares authorized. |
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— |
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— |
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Additional paid-in-capital |
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Accumulated earnings |
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Non-controlling interest |
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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 condensed consolidated financial statements.
1
Trulieve Cannabis Corp.
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income
(in thousands, except per share data)
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Three Months Ended |
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March 31, 2022 |
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March 31, 2021 |
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(unaudited) |
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Revenues, net of discounts |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Expenses: |
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Sales and marketing |
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General and administrative |
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Depreciation and amortization |
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Impairment and disposal of long-lived assets |
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— |
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Total expenses |
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Income from operations |
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Other income (expense): |
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Interest expense, net |
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( |
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( |
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Change in fair value of derivative liabilities - warrants |
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— |
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Loss on divestment and sale of non-operating assets |
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( |
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— |
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Other income (expense), net |
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( |
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Total other expense |
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( |
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Income before provision for income taxes |
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Provision for income taxes |
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Net (loss) income and comprehensive (loss) income |
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( |
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Less: Net loss and comprehensive loss attributed to non-controlling interest |
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( |
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— |
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Net (loss) income and comprehensive (loss) income attributed to common shareholders |
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$ |
( |
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$ |
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Net (loss) income per share: |
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Basic |
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$ |
( |
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$ |
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Diluted |
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$ |
( |
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$ |
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Weighted average number of common shares used in computing net (loss) income per common share: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
Trulieve Cannabis Corp.
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(in thousands, except per share data)
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Super Voting Shares |
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Multiple Voting Shares |
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Subordinate Voting Shares |
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Total Common Shares |
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Additional Paid-in-Capital |
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Accumulated Earnings |
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Non-Controlling Interest |
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Total |
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Balance, January 1, 2021 (audited) |
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$ |
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$ |
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$ |
— |
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$ |
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Share-based compensation |
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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 for cash - warrant exercise |
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— |
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— |
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— |
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— |
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Conversion of warrants to Subordinate Voting Shares |
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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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Conversion of Multiple Voting to Subordinate Voting Shares |
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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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Conversion of Super Voting to Subordinate Voting Shares |
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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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Conversion of Super Voting to Multiple Voting Shares |
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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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Net income and comprehensive income |
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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, March 31, 2021 (unaudited) |
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— |
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$ |
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$ |
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$ |
— |
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$ |
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Super Voting Shares |
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Multiple Voting Shares |
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Subordinate Voting Shares |
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Total Common Shares |
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Additional Paid-in-Capital |
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Accumulated Earnings |
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Non-Controlling Interest |
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Total |
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Balance, January 1, 2022 (audited) |
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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 |
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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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Exercise of Stock Options |
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— |
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— |
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— |
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— |
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Shares issued for cash - warrant exercise |
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— |
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— |
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— |
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Shares issued under share compensation plans |
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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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Tax withholding related to net share settlements of equity awards |
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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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Conversion of Multiple Voting to Subordinate Voting Shares |
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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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Shares issued for PurePenn, Pioneer, and Solevo earnout |
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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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Distribution |
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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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Divestment of variable interest entity |
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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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Net (loss) income and comprehensive loss |
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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, March 31, 2022 (unaudited) |
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— |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Trulieve Cannabis Corp.
Condensed Consolidated Statements of Cash Flows
(in thousands)
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Three Months Ended |
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Three Months Ended |
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(unaudited) |
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Cash flow from operating activities |
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Net (loss) income and comprehensive (loss) income |
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$ |
( |
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$ |
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Adjustments to reconcile net (loss) income and comprehensive (loss) income to net cash provided by operating activities: |
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Depreciation and amortization |
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Depreciation included in cost of goods sold |
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Non-cash interest expense |
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( |
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Non-cash interest income |
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( |
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— |
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Loss on impairment and disposal of long-lived assets |
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— |
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Loss on settlement of held for sale assets, net |
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— |
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Loss on lease terminations |
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— |
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Amortization of operating lease right of use assets |
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Share-based compensation |
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Accretion of construction finance liabilities |
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Change in fair value of derivative liabilities - warrants |
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( |
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— |
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Change in legal contingencies |
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( |
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— |
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Allowance for credit losses |
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— |
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Deferred income tax expense |
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— |
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( |
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Changes in operating assets and liabilities: |
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Inventories |
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( |
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Accounts receivable |
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( |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Other assets |
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( |
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( |
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Accounts payable and accrued liabilities |
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Income tax payable |
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Operating lease liabilities |
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( |
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( |
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Deferred revenue |
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( |
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Other current liabilities |
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