text stringlengths 198 2.89k |
|---|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Under Topic 606, revenue from the sale of medicinal and adult-use cannabis and derivative products has a single performance obligation and revenue is recognized at the point in time when control of the product transfers and the Company’s obligations have been fulfilled. This generally occurs upon delivery and acceptance by the customer. Amounts disclosed as revenue are net of allowances, discounts, and rebates. Sales taxes collected from customers are excluded from revenue.
For certain locations, we offer a loyalty program to dispensary customers. A portion of the revenue generated in a sale is allocated to the loyalty points earned and the amount allocated to the points earned is deferred until the loyalty points are redeemed or expire. The liability related to the loyalty program we offer dispensary customers at certain locations was $672 and $518 at December 31, 2022 and 2021, respectively, and is included in “Other current liabilities” on the accompanying Consolidated Balance Sheets.
Equity-Based Payments
Ascend Wellness Holdings, Inc. issues equity-based awards to employees and non-employee directors for services. Ascend Wellness Holdings, Inc. accounts for these awards in accordance with ASC Topic 718,
Compensation–Stock Compensation.
Awards are measured based on their fair value at the grant date and recognized as compensation expense over the requisite service period. Forfeitures are accounted
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
31, 2022 and 2021, respectively, and is included in “Other current liabilities” on the accompanying Consolidated Balance Sheets.
Equity-Based Payments
Ascend Wellness Holdings, Inc. issues equity-based awards to employees and non-employee directors for services. Ascend Wellness Holdings, Inc. accounts for these awards in accordance with ASC Topic 718,
Compensation–Stock Compensation.
Awards are measured based on their fair value at the grant date and recognized as compensation expense over the requisite service period. Forfeitures are accounted for as they occur. Ascend Wellness Holdings, Inc. issues new shares to satisfy the issuance of equity-based payments.
Basic and Diluted Loss per Share
Ascend Wellness Holdings, Inc. computes earnings (loss) per share (“EPS”) using the two-class method required for multiple classes of common stock. The rights, including the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, except for voting and conversion rights. As the liquidation and dividend rights are identical, undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both an individual and combined basis. EPS and weighted-average shares outstanding for
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, except for voting and conversion rights. As the liquidation and dividend rights are identical, undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both an individual and combined basis. EPS and weighted-average shares outstanding for the year ended December 31, 2021 and 2020 have been computed on the basis of treating the historical common unit equivalents previously outstanding as shares of Class A common stock, as such historical units converted into shares of Class A common stock in the Conversion.
122
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Basic EPS is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects potential dilution and is computed by dividing net loss by the weighted-average number of common shares outstanding during the period increased by the number of additional common shares that would have been outstanding if all potential common shares had been issued and were dilutive.
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
end Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Basic EPS is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects potential dilution and is computed by dividing net loss by the weighted-average number of common shares outstanding during the period increased by the number of additional common shares that would have been outstanding if all potential common shares had been issued and were dilutive. However, potentially dilutive securities are excluded from the computation of diluted EPS to the extent that their effect is anti-dilutive. Potential dilutive securities in the current year include incremental shares of common stock issuable upon the exercise of warrants, unvested restricted stock awards, unvested restricted stock units, in addition to stock options that are outstanding in the current year. Potential dilutive securities in the prior years include incremental shares of common stock issuable upon the exercise of warrants, vested incentive units, unvested restricted stock awards, unvested restricted stock units, and the conversion of convertible notes. At December 31, 2022, 2021, and 2020, 14,861, 11,513, and 37,181 shares
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
vested restricted stock units, in addition to stock options that are outstanding in the current year. Potential dilutive securities in the prior years include incremental shares of common stock issuable upon the exercise of warrants, vested incentive units, unvested restricted stock awards, unvested restricted stock units, and the conversion of convertible notes. At December 31, 2022, 2021, and 2020, 14,861, 11,513, and 37,181 shares of common stock equivalents, respectively, were excluded from the calculation of diluted EPS because their inclusion would have been anti-dilutive.
Shares of restricted stock granted by us are considered to be legally issued and outstanding as of the date of grant, notwithstanding that the shares remain subject to the risk of forfeiture if the vesting conditions for such shares are not met, and are included in the number of shares of Class A common stock outstanding disclosed on the cover page of this Annual Report on Form 10-K. Weighted-average common shares outstanding excludes time-based and performance-based unvested shares of restricted Class A common stock, as restricted shares are treated as issued and outstanding for financial statement presentation purposes only after such shares have vested and, therefore, have ceased to be subject to a risk of
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
risk of forfeiture if the vesting conditions for such shares are not met, and are included in the number of shares of Class A common stock outstanding disclosed on the cover page of this Annual Report on Form 10-K. Weighted-average common shares outstanding excludes time-based and performance-based unvested shares of restricted Class A common stock, as restricted shares are treated as issued and outstanding for financial statement presentation purposes only after such shares have vested and, therefore, have ceased to be subject to a risk of forfeiture.
Recently Adopted Accounting Standards
The following standards have been recently adopted by the Company. Recently effective standards that are not applicable to the Company or where it has been determined do not have a significant impact on us have been excluded herein.
Debt
In August 2020, the FASB issued ASU 2020-06,
Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
, which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
, the FASB issued ASU 2020-06,
Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
, which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. ASU 2020-06 became effective for us on January 1, 2022 and did not have a significant impact on out consolidated financial statements upon adoption.
Modification or Exchanges of Freestanding Equity-Classified Written Call Options
In May 2021, the FASB issued ASU 2021-04,
Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in an Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting For Certain Modifications or Exchanges of Freestanding
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Freestanding Equity-Classified Written Call Options
In May 2021, the FASB issued ASU 2021-04,
Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in an Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting For Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options,
(“ASU 2021-04”). ASU 2021-04 provides clarification and reduces diversity in an issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options, such as warrants, that remain equity classified after modification or exchange. ASU 2021-04 became effective for us on January 1, 2022 and did not have a significant impact on our consolidated financial statements upon adoption.
123
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Recently Issued Accounting Pronouncements
The following standards have been recently issued by the FASB. Pronouncements that are not applicable to the Company or where it
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
equity classified after modification or exchange. ASU 2021-04 became effective for us on January 1, 2022 and did not have a significant impact on our consolidated financial statements upon adoption.
123
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Recently Issued Accounting Pronouncements
The following standards have been recently issued by the FASB. Pronouncements that are not applicable to the Company or where it has been determined do not have a significant impact on us have been excluded herein.
Financial Instruments
In June 2016, the FASB issued ASU 2016-13,
Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
, (“ASU 2016-13”). ASU 2016-13 replaces the existing guidance surrounding measurement and recognition of credit losses on financial assets measured at amortized cost, including trade receivables and investments in certain debt securities, by requiring recognition of an allowance for credit losses expected to be incurred over an asset’s life based on relevant information about past events, current conditions, and supportable forecasts impacting its ultimate collectability. This current expected credit losses (“CECL”) model
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Instruments
, (“ASU 2016-13”). ASU 2016-13 replaces the existing guidance surrounding measurement and recognition of credit losses on financial assets measured at amortized cost, including trade receivables and investments in certain debt securities, by requiring recognition of an allowance for credit losses expected to be incurred over an asset’s life based on relevant information about past events, current conditions, and supportable forecasts impacting its ultimate collectability. This current expected credit losses (“CECL”) model will result in earlier recognition of credit losses than the current “as incurred” model, under which losses are recognized only upon the occurrence of an event that gives rise to the incurrence of a probable loss.
ASU 2019-05,
Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief
, was issued in May 2019 to provide target transition relief allowing entities to make an irrevocable one-time election upon adoption of the new credit losses standard to measure financial assets previously measured at amortized cost (except held-to-maturity securities) using the fair value option.
ASU 2019-11,
Codification Improvements to Topic 326, Financial Instruments – Credit Losses
, was issued in November 2019 to clarify
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Topic 326): Targeted Transition Relief
, was issued in May 2019 to provide target transition relief allowing entities to make an irrevocable one-time election upon adoption of the new credit losses standard to measure financial assets previously measured at amortized cost (except held-to-maturity securities) using the fair value option.
ASU 2019-11,
Codification Improvements to Topic 326, Financial Instruments – Credit Losses
, was issued in November 2019 to clarify, improve, and amend certain aspects of ASU 2016-13, such as disclosures related to accrued interest receivables and the estimation of credit losses associated with financial assets secured by collateral.
ASU 2020-03,
Codification Improvements to Financial Instruments
, was issued in March 2020 to improve and clarify various financial instruments topics, including the CECL standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to U.S. GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. Certain amendments contained within this update were effective upon issuance and had no material impact on our Financial Statements.
ASU 2022-02,
Financial Instruments
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
, was issued in March 2020 to improve and clarify various financial instruments topics, including the CECL standard issued in 2016. The ASU includes seven different issues that describe the areas of improvement and the related amendments to U.S. GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. Certain amendments contained within this update were effective upon issuance and had no material impact on our Financial Statements.
ASU 2022-02,
Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures
, was issued in March 2022 and eliminates the guidance on troubled debt restructurings for creditors and, instead, requires that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan. The amendments in this ASU also enhance disclosure requirements about loan modifications for borrowers experiencing financial difficulty and also require an entity to present gross write-offs by year of origination.
ASU 2016-13 and its related ASUs are effective for us beginning January 1, 2023 and are not expected to significantly impact our consolidated financial statements.
Reference Rate Reform
In March 2020, the FASB issued ASU 2020
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
new loan or a continuation of an existing loan. The amendments in this ASU also enhance disclosure requirements about loan modifications for borrowers experiencing financial difficulty and also require an entity to present gross write-offs by year of origination.
ASU 2016-13 and its related ASUs are effective for us beginning January 1, 2023 and are not expected to significantly impact our consolidated financial statements.
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04,
Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This guidance was effective upon issuance as of March 12, 2020 and could be adopted as reference rate reform activities occurred through December 31, 2022. In December 2022, the FASB issued ASU 2022-06,
Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848
, to extend the
sunset date of the transition guidance included in ASU
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
rate expected to be discontinued because of reference rate reform. This guidance was effective upon issuance as of March 12, 2020 and could be adopted as reference rate reform activities occurred through December 31, 2022. In December 2022, the FASB issued ASU 2022-06,
Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848
, to extend the
sunset date of the transition guidance included in ASU 2020-04 to December 31, 2024. This guidance can be adopted prospectively as reference rate reform activities occur, with early adoption permitted, and is not expected to have a material impact on our consolidated financial statements.
124
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
3. REPORTABLE SEGMENTS AND REVENUE
Ascend Wellness Holdings, Inc. operates under one operating segment, which is its only reportable segment: the production and sale of cannabis products. Ascend Wellness Holdings, Inc. prepares its segment reporting on the same basis that its Chief Operating Decision Maker manages the business and makes operating decisions. Ascend Wellness Holdings, Inc.’s measure of segment performance is net income and derives its revenue primarily from the sale of cannabis products. All
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
3. REPORTABLE SEGMENTS AND REVENUE
Ascend Wellness Holdings, Inc. operates under one operating segment, which is its only reportable segment: the production and sale of cannabis products. Ascend Wellness Holdings, Inc. prepares its segment reporting on the same basis that its Chief Operating Decision Maker manages the business and makes operating decisions. Ascend Wellness Holdings, Inc.’s measure of segment performance is net income and derives its revenue primarily from the sale of cannabis products. All of the Company’s operations are located in the United States.
Disaggregation of Revenue
Ascend Wellness Holdings, Inc. disaggregates its revenue from the direct sale of cannabis to customers as retail revenue and wholesale revenue. We have determined that disaggregating revenue into these categories best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
Year Ended December 31,
(in thousands)
2022
2021
2020
Retail revenue
305,935
231,930
103,859
Wholesale revenue
181,752
148,483
57,452
487,687
380,413
161,311
Elimination of inter-company revenue
(81,761)
(48,032)
(17,579
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
Year Ended December 31,
(in thousands)
2022
2021
2020
Retail revenue
305,935
231,930
103,859
Wholesale revenue
181,752
148,483
57,452
487,687
380,413
161,311
Elimination of inter-company revenue
(81,761)
(48,032)
(17,579)
Total revenue, net
405,926
332,381
143,732
4. ACQUISITIONS
Business Combinations
Ascend Wellness Holdings, Inc. has determined that the acquisitions discussed below are considered business combinations under ASC Topic 805,
Business Combinations
, (“ASC Topic 805”) and are accounted for by applying the acquisition method, whereby the assets acquired and the liabilities assumed are recorded at their fair values with any excess of the aggregate consideration over the fair values of the identifiable net assets allocated to goodwill. Operating results are included in these Financial Statements from the date of the acquisition.
The purchase price allocation for each acquisition reflects various preliminary fair value estimates and analyses, including certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, and goodwill, which are
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
805”) and are accounted for by applying the acquisition method, whereby the assets acquired and the liabilities assumed are recorded at their fair values with any excess of the aggregate consideration over the fair values of the identifiable net assets allocated to goodwill. Operating results are included in these Financial Statements from the date of the acquisition.
The purchase price allocation for each acquisition reflects various preliminary fair value estimates and analyses, including certain tangible assets acquired and liabilities assumed, the valuation of intangible assets acquired, and goodwill, which are subject to change within the measurement period as preliminary valuations are finalized (generally one year from the acquisition date). Measurement period adjustments are recorded in the reporting period in which the estimates are finalized and adjustment amounts are determined.
2022 Acquisitions
Effective October 14, 2022, the Company acquired Marichron Pharma LLC (“Marichron”), a medical cannabis processor in Ohio, for total consideration of $2,600, consisting of cash consideration of $1,750, of which $1,500 was previously funded under a promissory note, settlement of approximately $1,000 due under a working capital loan, less settlement of $150 of other pre-acquisition amounts. Acquisition-related costs incurred during the year ended December 31, 2022 were not
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
2, the Company acquired Marichron Pharma LLC (“Marichron”), a medical cannabis processor in Ohio, for total consideration of $2,600, consisting of cash consideration of $1,750, of which $1,500 was previously funded under a promissory note, settlement of approximately $1,000 due under a working capital loan, less settlement of $150 of other pre-acquisition amounts. Acquisition-related costs incurred during the year ended December 31, 2022 were not material.
125
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Preliminary Purchase Price Allocation
(in thousands)
Marichron
Assets acquired:
Accounts receivable
12
Inventory
524
License(1)
1,260
Goodwill(2)
804
Net assets acquired
2,600
Consideration transferred:
Cash
250
Settlement of note and working capital loan(3)
2,500
Settlement of pre-acquisition amounts
(150)
Total consideration
2,600
(1)
The amortization period for acquired licenses is 10 years.
(2)
Goodwill is largely attributable to the value we expect to obtain from long-term business growth and
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
License(1)
1,260
Goodwill(2)
804
Net assets acquired
2,600
Consideration transferred:
Cash
250
Settlement of note and working capital loan(3)
2,500
Settlement of pre-acquisition amounts
(150)
Total consideration
2,600
(1)
The amortization period for acquired licenses is 10 years.
(2)
Goodwill is largely attributable to the value we expect to obtain from long-term business growth and buyer-specific synergies. Ascend Wellness Holdings, Inc. is evaluating whether the goodwill is deductible for tax purposes, but does not expect it will be deductible under the limitations imposed under IRC Section 280E. See Note 14, “Income Taxes,” for additional information.
(3)
Includes settlement of $1,500 due under a promissory note and settlement of $1,000 due under a working capital line of credit. See Note 6, “Notes Receivable” for additional information regarding these note agreements.
2021 Acquisitions
Effective May 5, 2021, the Company completed the acquisition of the parent company of Hemma, LLC (“Hemma”), the owner of a medical cultivation site in Ohio. Total consideration of $10,381 consisted of a total cash payment
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
$1,500 due under a promissory note and settlement of $1,000 due under a working capital line of credit. See Note 6, “Notes Receivable” for additional information regarding these note agreements.
2021 Acquisitions
Effective May 5, 2021, the Company completed the acquisition of the parent company of Hemma, LLC (“Hemma”), the owner of a medical cultivation site in Ohio. Total consideration of $10,381 consisted of a total cash payment of $7,212, settlement of $2,500 due under a note receivable, and $669 due under a working capital loan. Acquisition-related costs incurred during the year ended December 31, 2021 were not material.
Effective October 1, 2021, the Company completed the acquisition of BCCO, LLC (“BCCO”), a medical dispensary license holder in Ohio. Total consideration of $5,561 consisted of a cash payment of $1,995, settlement of $1,750 due under a note receivable, and $1,816 due under a working capital loan. Acquisition-related costs incurred during the year ended December 31, 2021 were not material.
Effective December 22, 2021, the Company completed
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
, the Company completed the acquisition of BCCO, LLC (“BCCO”), a medical dispensary license holder in Ohio. Total consideration of $5,561 consisted of a cash payment of $1,995, settlement of $1,750 due under a note receivable, and $1,816 due under a working capital loan. Acquisition-related costs incurred during the year ended December 31, 2021 were not material.
Effective December 22, 2021, the Company completed the acquisition of Ohio Cannabis Clinic, LLC (“OCC”), a medical dispensary license holder in Ohio. Total consideration of $16,151 consisted of a total cash payment of $12,499 and the issuance of 664 shares of Class A common stock with a fair value of $3,652 at issuance. Acquisition-related costs incurred during the year ended December 31, 2021 were not material.
126
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Purchase Price Allocation
During the year ended December 31, 2022, we recorded measurement period purchase accounting adjustments based on changes to certain estimates and assumptions and their related impact to goodwill, as described below. The following table presents the
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
$3,652 at issuance. Acquisition-related costs incurred during the year ended December 31, 2021 were not material.
126
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Purchase Price Allocation
During the year ended December 31, 2022, we recorded measurement period purchase accounting adjustments based on changes to certain estimates and assumptions and their related impact to goodwill, as described below. The following table presents the final purchase price allocation for each of our 2021 acquisitions:
(in thousands)
Hemma
BCCO
OCC
Assets acquired (liabilities assumed):
Cash
44
2,144
84
Accounts receivable
41
Inventory
188
343
217
Property and equipment(1)
153
657
288
Other noncurrent assets
License(2)
6,928
1,797
8,342
Goodwill(3)
3,039
1,381
7,221
Accounts payable and accrued liabilities
(12)
(218)
(1)
Deferred tax liability
(548)
Net assets acquired
10,381
5,561
16,151
Consideration transferred:
Cash(4)
7,212
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Property and equipment(1)
153
657
288
Other noncurrent assets
License(2)
6,928
1,797
8,342
Goodwill(3)
3,039
1,381
7,221
Accounts payable and accrued liabilities
(12)
(218)
(1)
Deferred tax liability
(548)
Net assets acquired
10,381
5,561
16,151
Consideration transferred:
Cash(4)
7,212
1,995
12,499
Settlement of note and working capital loan(5)
3,169
3,566
Fair value of shares issued(6)
3,652
Total consideration
10,381
5,561
16,151
(1)
Consists of furniture, fixtures and equipment of $162 and leasehold improvements of $936.
(2)
The amortization period for acquired licenses is 10 years.
(3)
Goodwill is largely attributable to the value we expect to obtain from long-term business growth and buyer-specific synergies. During the year ended December 31, 2022, we recorded a measurement period purchase accounting adjustment of $51 for the final working capital adjustment related to the OCC acquisition and $548 for
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
1)
Consists of furniture, fixtures and equipment of $162 and leasehold improvements of $936.
(2)
The amortization period for acquired licenses is 10 years.
(3)
Goodwill is largely attributable to the value we expect to obtain from long-term business growth and buyer-specific synergies. During the year ended December 31, 2022, we recorded a measurement period purchase accounting adjustment of $51 for the final working capital adjustment related to the OCC acquisition and $548 for a pre-acquisition deferred tax liability due to finalization of certain income-tax related items related to the BCCO acquisition. Ascend Wellness Holdings, Inc. determined the goodwill was largely not deductible for tax purposes under the limitations imposed under IRC Section 280E. See Note 14, “Income Taxes,” for additional information.
(4)
Total cash consideration includes a $4,712 sellers’ note for Hemma that was paid in December 2021, and a $7,471 sellers’ note for OCC that was paid in 2022. See Note 11, “Debt,” for additional information.
(5)
Hemma includes settlement of $2,500 due under a note receivable and settlement of $669 due under a working capital line of credit. BCCO includes
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
,” for additional information.
(4)
Total cash consideration includes a $4,712 sellers’ note for Hemma that was paid in December 2021, and a $7,471 sellers’ note for OCC that was paid in 2022. See Note 11, “Debt,” for additional information.
(5)
Hemma includes settlement of $2,500 due under a note receivable and settlement of $669 due under a working capital line of credit. BCCO includes settlement of $1,750 due under a note receivable and settlement of $1,816 due under a working capital line of credit.
(6)
The sellers of OCC received 664 shares of Class A common stock with a fair value of $3,652 at issuance. Per the terms of the agreement with OCC, the number of shares issued was based on $3,798 divided by the volume weighted-average price per share of the Class A common stock as reported on the CSE for the ten consecutive trading days ending on the date immediately preceding the closing date.
127
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Financial and Pro Forma Information
The following tables summarize the revenue and net
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Per the terms of the agreement with OCC, the number of shares issued was based on $3,798 divided by the volume weighted-average price per share of the Class A common stock as reported on the CSE for the ten consecutive trading days ending on the date immediately preceding the closing date.
127
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Financial and Pro Forma Information
The following tables summarize the revenue and net income (loss) related to our acquisitions completed during 2022 and 2021 that are included in our consolidated results from the respective acquisition dates, as applicable.
Year Ended December 31, 2022
(in thousands)
Hemma
BCCO
OCC
Marichron
Revenue, net
701
7,196
5,371
122
Net income (loss)
(1,962)
1,547
635
22
Year Ended December 31, 2021
(in thousands)
Hemma
BCCO
OCC
Revenue, net
236
1,771
159
Net income (loss)
(565)
323
65
Pro forma financial information is not presented for Hemma, BCCO,
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Marichron
Revenue, net
701
7,196
5,371
122
Net income (loss)
(1,962)
1,547
635
22
Year Ended December 31, 2021
(in thousands)
Hemma
BCCO
OCC
Revenue, net
236
1,771
159
Net income (loss)
(565)
323
65
Pro forma financial information is not presented for Hemma, BCCO, OCC, or Marichron as such results are immaterial, individually and in aggregate, to both the current and prior periods.
Additionally, our consolidated results of operations for the year ended December 31, 2021 and 2020 include the incremental results summarized below related to our 2020 acquisitions from their respective acquisition dates. We acquired MOCA LLC (“MOCA”) effective August 1, 2020, which was consolidated as a VIE from the signing date until the final close date in December 2020. Effective September 29, 2020, we acquired the assets and liabilities of Greenleaf Compassion Center (“GCC”). Effective December 15, 2020, we entered into an agreement to acquire Chicago Alternative Health Center, LLC and Chicago Alternative
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
our 2020 acquisitions from their respective acquisition dates. We acquired MOCA LLC (“MOCA”) effective August 1, 2020, which was consolidated as a VIE from the signing date until the final close date in December 2020. Effective September 29, 2020, we acquired the assets and liabilities of Greenleaf Compassion Center (“GCC”). Effective December 15, 2020, we entered into an agreement to acquire Chicago Alternative Health Center, LLC and Chicago Alternative Health Center Holdings, LLC (together, “Midway”), which was consolidated as a VIE from the signing date through the final closing date in January 2022.
Year Ended December 31, 2021
Year Ended December 31, 2020
(in thousands)
MOCA
GCC
Midway
MOCA
GCC
Midway
Revenue, net
43,193
10,326
22,895
13,011
1,687
747
Net income (loss)
5,576
(955)
(714)
304
657
61
The table below summarizes the unaudited pro forma combined revenue and net income (loss) of AWH, MOCA, GCC, and Midway for the year ended December
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
thousands)
MOCA
GCC
Midway
MOCA
GCC
Midway
Revenue, net
43,193
10,326
22,895
13,011
1,687
747
Net income (loss)
5,576
(955)
(714)
304
657
61
The table below summarizes the unaudited pro forma combined revenue and net income (loss) of AWH, MOCA, GCC, and Midway for the year ended December 31, 2020 as if the respective acquisitions had occurred on January 1, 2019. The results for MOCA, GCC, and Midway are through their respective acquisition dates, as the results for each were included in our Financial Statements after such dates. These results do not reflect the cost of integration activities or benefits from expected revenue enhancements and synergies. Accordingly, the unaudited pro forma information is not necessarily indicative of the results that would have been achieved if the acquisitions had been effective on January 1, 2019.
Year Ended December 31, 2020
(in thousands)
AWH (as reported)
MOCA
GCC
Midway
Pro Forma Adjustments(1)
Pro FormaCombined
Revenue, net
143
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
results do not reflect the cost of integration activities or benefits from expected revenue enhancements and synergies. Accordingly, the unaudited pro forma information is not necessarily indicative of the results that would have been achieved if the acquisitions had been effective on January 1, 2019.
Year Ended December 31, 2020
(in thousands)
AWH (as reported)
MOCA
GCC
Midway
Pro Forma Adjustments(1)
Pro FormaCombined
Revenue, net
143,732
8,615
3,046
10,416
165,809
Net income (loss)
(23,841)
786
926
2,680
(10,897)
(30,346)
(1)
128
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Asset Acquisitions
Ascend Wellness Holdings, Inc. determined the acquisitions below did not meet the definition of a business and are therefore accounted for as asset acquisitions. When the Company acquires assets and liabilities that do not constitute a business or VIE of which the Company is the primary beneficiary, the cost of each acquisition, including certain transaction costs, is allocated to the assets acquired and liabilities assumed on a relative fair value basis
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Asset Acquisitions
Ascend Wellness Holdings, Inc. determined the acquisitions below did not meet the definition of a business and are therefore accounted for as asset acquisitions. When the Company acquires assets and liabilities that do not constitute a business or VIE of which the Company is the primary beneficiary, the cost of each acquisition, including certain transaction costs, is allocated to the assets acquired and liabilities assumed on a relative fair value basis. Contingent consideration associated with the acquisition is generally recognized only when the contingency is resolved.
When the Company acquires assets and liabilities that do not constitute a business but meet the definition of a VIE of which the Company is the primary beneficiary, the purchase is accounted for using the acquisition method described above for business combinations, except that no goodwill is recognized. To the extent there is a difference between the purchase consideration, including the estimated fair value of contingent consideration, plus the estimated fair value of any non-controlling interest and the VIE’s identifiable assets and liabilities recorded and measured at fair value, the difference is recognized as a gain or loss. A non-controlling interest represents the non-affiliated equity interest in the underlying entity. Transaction costs are expensed.
Story of PA
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
the acquisition method described above for business combinations, except that no goodwill is recognized. To the extent there is a difference between the purchase consideration, including the estimated fair value of contingent consideration, plus the estimated fair value of any non-controlling interest and the VIE’s identifiable assets and liabilities recorded and measured at fair value, the difference is recognized as a gain or loss. A non-controlling interest represents the non-affiliated equity interest in the underlying entity. Transaction costs are expensed.
Story of PA
The total acquisition cost was $137,594, as summarized in the table below, and was allocated to the license intangible asset acquired. This total includes an acquisition-related deferred tax liability of $37,391 that was recorded during the fourth quarter of 2022. Ascend Wellness Holdings, Inc. began to amortize the license when operations commenced during the fourth quarter of 2022.
(in thousands)
Equity Consideration(1)
42,957
Cash consideration
10,170
Geisinger funding commitment(2)
40,000
Other liabilities assumed(3)
5,130
Forgiveness of bridge loan(4)
1,349
Transaction costs
595
Cost of initial investment
Deferred tax liability(5)
37,391
Total
137,594
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Company began to amortize the license when operations commenced during the fourth quarter of 2022.
(in thousands)
Equity Consideration(1)
42,957
Cash consideration
10,170
Geisinger funding commitment(2)
40,000
Other liabilities assumed(3)
5,130
Forgiveness of bridge loan(4)
1,349
Transaction costs
595
Cost of initial investment
Deferred tax liability(5)
37,391
Total
137,594
(1)
Comprised of 12,900 shares of Class A common stock with a fair value of $42,957 at issuance.
(2)
Of the total funding commitment, $15,000 was paid in April 2022 and $15,000 is due in April 2023 and is included within “Accounts payable and other accrued liabilities” on the Consolidated Balance Sheet at December 31, 2022. An additional annual payment is due from the third anniversary of the transaction through the tenth anniversary based on a percentage of revenue (after operations commence) up to a total of $10,000, which is included within “Other non-current liabilities” on the Consolidated Balance Sheet at December 31, 2022.
(3)
Liabilities
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
in April 2023 and is included within “Accounts payable and other accrued liabilities” on the Consolidated Balance Sheet at December 31, 2022. An additional annual payment is due from the third anniversary of the transaction through the tenth anniversary based on a percentage of revenue (after operations commence) up to a total of $10,000, which is included within “Other non-current liabilities” on the Consolidated Balance Sheet at December 31, 2022.
(3)
Liabilities related to two consulting agreements assumed in the transaction. A total of $2,772 related to one agreement was paid during the second quarter of 2022. A total of $1,415 due under the second agreement was paid during the year ended
129
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
December 31, 2022 and a total of $943 is due, in quarterly payments, through June 2023 and is included within “Accounts payable and other accrued liabilities” on the Consolidated Balance Sheet at December 31, 2022.
(4)
Refer to Note 6, “Notes Receivable,” for additional information on the bridge loan agreement.
(5)
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
December 31, 2022 and a total of $943 is due, in quarterly payments, through June 2023 and is included within “Accounts payable and other accrued liabilities” on the Consolidated Balance Sheet at December 31, 2022.
(4)
Refer to Note 6, “Notes Receivable,” for additional information on the bridge loan agreement.
(5)
As goodwill is not recorded in an asset acquisition, the acquisition-related deferred tax liability arising from book/tax basis differences stemming from the transaction increased the value of the license acquired above the purchase price.
Ohio Patient Access
On August 12, 2022, the Company entered into a definitive agreement (the “Ohio Agreement”) that provides the Company the option to acquire 100% of the equity of Ohio Patient Access LLC (“OPA”), the holder of a license that grants it the right to operate three medical dispensaries in Ohio, which operations have not yet commenced. The Ohio Agreement is subject to regulatory review and approval. Once the regulatory approval is received, the Company may exercise the option, and the exercise is solely within the Company’s control. Ascend Wellness Holdings, Inc. may exercise the option until
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
a definitive agreement (the “Ohio Agreement”) that provides the Company the option to acquire 100% of the equity of Ohio Patient Access LLC (“OPA”), the holder of a license that grants it the right to operate three medical dispensaries in Ohio, which operations have not yet commenced. The Ohio Agreement is subject to regulatory review and approval. Once the regulatory approval is received, the Company may exercise the option, and the exercise is solely within the Company’s control. Ascend Wellness Holdings, Inc. may exercise the option until the fifth anniversary of the agreement date or can elect to extend the exercise period for an additional year. Under the Ohio Agreement, the Company will also acquire the real property of the three dispensary locations. In conjunction with the Ohio Agreement, the parties also entered into a support services agreement under which the Company will provide management and advisory services to OPA for a set monthly fee. The parties also entered into a working capital loan agreement under which the Company may, at its full discretion, loan OPA up to $10,000 for general working capital needs.
The purchase price per the Ohio Agreement consists of total cash consideration of $22,300. The Ohio Agreement also includes an earn-out provision of $7,300 that is dependent upon the commencement of adult-use cannabis sales in Ohio
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
under which the Company will provide management and advisory services to OPA for a set monthly fee. The parties also entered into a working capital loan agreement under which the Company may, at its full discretion, loan OPA up to $10,000 for general working capital needs.
The purchase price per the Ohio Agreement consists of total cash consideration of $22,300. The Ohio Agreement also includes an earn-out provision of $7,300 that is dependent upon the commencement of adult-use cannabis sales in Ohio. The sellers may elect to receive the earn-out payment as either cash or shares of the Company’s Class A common stock, or a combination thereof. If the sellers elect to receive any or all of the payment in shares, the number of shares issued will be equal to the earn-out payment amount, or portion thereof, divided by the thirty-day volume weighted average price of the Class A shares immediately preceding the date the earn-out provision is achieved. If the sellers elect to receive Class A shares for the earn-out, those shares would be issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
The estimated fair value of the contingent consideration was determined utilizing an income approach based on a probability-weighted estimate
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
-out payment amount, or portion thereof, divided by the thirty-day volume weighted average price of the Class A shares immediately preceding the date the earn-out provision is achieved. If the sellers elect to receive Class A shares for the earn-out, those shares would be issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
The estimated fair value of the contingent consideration was determined utilizing an income approach based on a probability-weighted estimate of the future payment discounted using the Company’s estimated incremental borrowing rate and is classified within Level 3 of the fair value hierarchy. As of December 31, 2022, the estimated fair value of this contingent consideration was $5,076 and is included within “Other non-current liabilities” on the accompanying Consolidated Balance Sheet at December 31, 2022. The $234 change in fair value is included within “General and administrative expenses” on the Consolidated Statement of Operations for the year ended December 31, 2022. Ascend Wellness Holdings, Inc. determined the fair value of any noncontrolling interest is
de minimis
The license intangible asset acquired was determined to have an estimated fair value of $21,684 and the three properties had an estimated fair value
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
-current liabilities” on the accompanying Consolidated Balance Sheet at December 31, 2022. The $234 change in fair value is included within “General and administrative expenses” on the Consolidated Statement of Operations for the year ended December 31, 2022. Ascend Wellness Holdings, Inc. determined the fair value of any noncontrolling interest is
de minimis
The license intangible asset acquired was determined to have an estimated fair value of $21,684 and the three properties had an estimated fair value of $2,448, which was determined using a market approach based on the total transaction consideration. The license acquired will be amortized in accordance with the Company’s policy once operations commence. Direct transaction expenses of $224 are included in “General and administrative expenses” on the accompanying Consolidated Statements of Operations for the year ended December 31, 2022. Refer to Note 8, “Variable Interest Entities,” for additional information regarding the Company’s VIEs.
130
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Illinois Licenses
In August 2022, the Company entered into definitive agreements to acquire two additional licenses in Illinois. Neither of these licenses were associated with active operations
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Consolidated Statements of Operations for the year ended December 31, 2022. Refer to Note 8, “Variable Interest Entities,” for additional information regarding the Company’s VIEs.
130
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Illinois Licenses
In August 2022, the Company entered into definitive agreements to acquire two additional licenses in Illinois. Neither of these licenses were associated with active operations at signing and the transfer of each license is subject to regulatory review and approval.
One transaction was entered on August 11, 2022 for total cash consideration of $5,500. Ascend Wellness Holdings, Inc. accounted for this transaction as an asset acquisition and allocated the cash consideration as the cost of the license acquired. Of the total cash consideration, $3,000 was paid at signing and $2,500 is due at final closing and is included as a sellers’ note within “Long-term debt, net” on the accompanying Consolidated Balance Sheet at December 31, 2022; refer to Note 11, “Debt,” for additional information. Direct transaction expenses were immaterial.
The second transaction was entered on August 12, 2022 for total cash consideration of
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
of the license acquired. Of the total cash consideration, $3,000 was paid at signing and $2,500 is due at final closing and is included as a sellers’ note within “Long-term debt, net” on the accompanying Consolidated Balance Sheet at December 31, 2022; refer to Note 11, “Debt,” for additional information. Direct transaction expenses were immaterial.
The second transaction was entered on August 12, 2022 for total cash consideration of $5,600. Ascend Wellness Holdings, Inc. accounted for this transaction as an asset acquisition and allocated the cash consideration as the cost of the license acquired. The consideration will be paid at final closing and is included as a sellers’ note within “Long-term debt, net” on the accompanying Consolidated Balance Sheet at December 31, 2022. Direct transaction expenses were immaterial.
The licenses acquired will be amortized in accordance with the Company’s policy once the related operations commence.
5. INVENTORY
The components of inventory are as follows:
December 31,
(in thousands)
2022
2021
Materials and supplies
16,115
8,899
Work in process
49,586
28,235
Finished goods
31,831
28,454
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
ated Balance Sheet at December 31, 2022. Direct transaction expenses were immaterial.
The licenses acquired will be amortized in accordance with the Company’s policy once the related operations commence.
5. INVENTORY
The components of inventory are as follows:
December 31,
(in thousands)
2022
2021
Materials and supplies
16,115
8,899
Work in process
49,586
28,235
Finished goods
31,831
28,454
Total
97,532
65,588
131
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
6. NOTES RECEIVABLE
December 31,
(in thousands)
2022
2021
MMNY - working capital loan(1)
2,422
2,422
Other(2)
1,001
500
Marichron - note receivable(3)
1,500
Marichron - working capital loan(3)
78
Total
3,423
4,500
(1)
On February 25, 2021, the Company entered into a working capital advance agreement with MedMen NY, Inc. (“MMNY”), an unrelated third party
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
MMNY - working capital loan(1)
2,422
2,422
Other(2)
1,001
500
Marichron - note receivable(3)
1,500
Marichron - working capital loan(3)
78
Total
3,423
4,500
(1)
On February 25, 2021, the Company entered into a working capital advance agreement with MedMen NY, Inc. (“MMNY”), an unrelated third party, in conjunction with an Investment Agreement (as defined in Note 15, “Commitments and Contingencies”). The working capital advance agreement allows for initial maximum borrowings of up to $10,000, which may be increased to $17,500, and was issued to provide MMNY with additional funding for operations in conjunction with the Investment Agreement. Borrowings do not bear interest, but may be subject to a financing fee. The outstanding balance is due and payable at the earlier of the initial closing of the Investment Agreement or, if the Investment Agreement is terminated for certain specified reasons, three business days following such termination. Ascend Wellness Holdings, Inc. is pursuing collection of the amounts due under this working capital advance agreement through its legal proceedings against MMNY. Refer to Note 15, “Commit
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
provide MMNY with additional funding for operations in conjunction with the Investment Agreement. Borrowings do not bear interest, but may be subject to a financing fee. The outstanding balance is due and payable at the earlier of the initial closing of the Investment Agreement or, if the Investment Agreement is terminated for certain specified reasons, three business days following such termination. Ascend Wellness Holdings, Inc. is pursuing collection of the amounts due under this working capital advance agreement through its legal proceedings against MMNY. Refer to Note 15, “Commitments and Contingencies,” for additional information.
(2)
In November 2021, the Company issued a bridge loan to Story of PA that provided for maximum borrowings of up to $16,000 with an interest rate of 9% per annum, which had an outstanding balance of $500 at December 31, 2021. Repayment was due at maturity in November 2023 or upon an event of default (as defined in the bridge loan agreement). In April 2022, the Company acquired the outstanding equity interests of Story of PA (refer to Note 4, “Acquisitions”) and settled the balance of $1,349 due under the bridge loan as additional consideration at closing.
In May 2022 the Company issued a secured promiss
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
outstanding balance of $500 at December 31, 2021. Repayment was due at maturity in November 2023 or upon an event of default (as defined in the bridge loan agreement). In April 2022, the Company acquired the outstanding equity interests of Story of PA (refer to Note 4, “Acquisitions”) and settled the balance of $1,349 due under the bridge loan as additional consideration at closing.
In May 2022 the Company issued a secured promissory note to a retail dispensary license holder in Massachusetts providing up to $3,500 of funding (the “Massachusetts Note”), of which $1,001 is outstanding as of December 31, 2022. The Massachusetts Note accrues interest at a fixed annual rate of 11.5%. Following the opening of the borrower’s retail dispensary, the principal amount is due monthly through the maturity date of May 25, 2026. The borrower may prepay the outstanding principal amount, plus accrued interest thereon. Borrowings under the Massachusetts Note are secured by the assets of the borrower. The borrower is partially owned by an entity that is managed, in part, by one of the founders of the Company. Additionally, the Company transacts with the retail
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
of 11.5%. Following the opening of the borrower’s retail dispensary, the principal amount is due monthly through the maturity date of May 25, 2026. The borrower may prepay the outstanding principal amount, plus accrued interest thereon. Borrowings under the Massachusetts Note are secured by the assets of the borrower. The borrower is partially owned by an entity that is managed, in part, by one of the founders of the Company. Additionally, the Company transacts with the retail dispensary in the ordinary course of business.
(3)
In April 2019, the Company issued a $1,500 promissory note to Marichron, an unrelated third party, with a stated interest rate of 12% per year. Ascend Wellness Holdings, Inc. also entered into a working capital line of credit with Marichron, allowing for maximum borrowings of $1,000. The promissory note and working capital line of credit were issued in conjunction with a unit purchase option agreement that the parties entered into during 2019 and were issued to provide Marichron with additional funding for operations while awaiting state approval of the transaction. Ascend Wellness Holdings, Inc. submitted a license transfer application to the state in June 2022, which was approved in September 2022. Following
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
into a working capital line of credit with Marichron, allowing for maximum borrowings of $1,000. The promissory note and working capital line of credit were issued in conjunction with a unit purchase option agreement that the parties entered into during 2019 and were issued to provide Marichron with additional funding for operations while awaiting state approval of the transaction. Ascend Wellness Holdings, Inc. submitted a license transfer application to the state in June 2022, which was approved in September 2022. Following the approval, the Company exercised its option under the unit purchase agreement and acquired Marichron effective October 14, 2022, as further described in Note 4, “Acquisitions,” and the total amounts outstanding were settled at closing.
No impairment losses on notes receivable were recognized during the year ended December 31, 2022, 2021, or 2020.
132
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
7. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
December 31,
(in thousands)
2022
2021
Leasehold improvements
174,099
103,976
Buildings
71,951
45,
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
were recognized during the year ended December 31, 2022, 2021, or 2020.
132
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
7. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
December 31,
(in thousands)
2022
2021
Leasehold improvements
174,099
103,976
Buildings
71,951
45,663
Furniture, fixtures, and equipment
63,974
49,058
Construction in progress
9,633
60,986
Land
6,505
1,302
Property and equipment, gross
326,162
260,985
Less: accumulated depreciation
46,302
21,329
Property and equipment, net
279,860
239,656
In June 2022, the Company entered into a master lease agreement under which we may lease equipment pursuant to individual lease agreements, up to $15,000 in aggregate. The table above includes equipment rented under these finance leases with a gross value of $1,086 and accumulated amortization of $89 as of December 31, 2022. Refer to Note
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
accumulated depreciation
46,302
21,329
Property and equipment, net
279,860
239,656
In June 2022, the Company entered into a master lease agreement under which we may lease equipment pursuant to individual lease agreements, up to $15,000 in aggregate. The table above includes equipment rented under these finance leases with a gross value of $1,086 and accumulated amortization of $89 as of December 31, 2022. Refer to Note 10, “Leases,” for additional information regarding our lease arrangements.
During the year ended December 31, 2022, we recognized a loss of $874 related to the sale of three properties, net of a $72 gain on sale recognized during the year ended December 31, 2022, which is included within “General and administrative expenses” on the Consolidated Statements of Operations, and wrote-off a total of $401 of accumulated depreciation.
8. VARIABLE INTEREST ENTITIES
The following tables present the summarized financial information about the Company’s consolidated VIEs which are included in the Consolidated Balance Sheets as of December 31, 2022 and 2021 and Consolidated Statements of Operations for the year ended December 31, 2022,
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
31, 2022, which is included within “General and administrative expenses” on the Consolidated Statements of Operations, and wrote-off a total of $401 of accumulated depreciation.
8. VARIABLE INTEREST ENTITIES
The following tables present the summarized financial information about the Company’s consolidated VIEs which are included in the Consolidated Balance Sheets as of December 31, 2022 and 2021 and Consolidated Statements of Operations for the year ended December 31, 2022, 2021, and 2020. These entities were determined to be VIEs since the Company possesses the power to direct the significant activities of the VIEs and has the obligation to absorb losses or the right to receive benefits from the VIE. The information below excludes intercompany balances and activity that eliminate in consolidation.
In December 2022, following regulatory approvals for the title transfer of certain licenses, Ascend Illinois (including its subsidiaries) is wholly-owned by Ascend Wellness Holdings, Inc. and therefore is no longer considered a VIE as of December 31, 2022 and the balance sheet information is no longer reflected in the table below as of such date. Based on timing, the results of operations for the full year are reflected below.
133
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
intercompany balances and activity that eliminate in consolidation.
In December 2022, following regulatory approvals for the title transfer of certain licenses, Ascend Illinois (including its subsidiaries) is wholly-owned by Ascend Wellness Holdings, Inc. and therefore is no longer considered a VIE as of December 31, 2022 and the balance sheet information is no longer reflected in the table below as of such date. Based on timing, the results of operations for the full year are reflected below.
133
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
December 31,
2022
2021
(in thousands)
Ohio Patient Access
Ascend Illinois
Current assets
111,118
Other noncurrent assets
24,675
171,566
Current liabilities
1,675
71,264
Noncurrent liabilities
126,397
Equity (deficit) attributable to AWH
(588)
41,873
Year Ended December 31,
2022
2021
2020
(in thousands)
Ascend Illinois
Ohio Patient Access
Ascend Illinois
Ascend Illinois
Ascend Michigan(2)
Revenue, net
261,503
265,872
120
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
assets
24,675
171,566
Current liabilities
1,675
71,264
Noncurrent liabilities
126,397
Equity (deficit) attributable to AWH
(588)
41,873
Year Ended December 31,
2022
2021
2020
(in thousands)
Ascend Illinois
Ohio Patient Access
Ascend Illinois
Ascend Illinois
Ascend Michigan(2)
Revenue, net
261,503
265,872
120,004
11,719
Net income attributable to non-controlling interests(1)
1,598
Net income (loss) attributable to AWH
32,206
(588)
36,152
14,363
(16,684)
Net income (loss)
32,206
(588)
36,152
15,961
(16,684)
(1)
Effective July 30, 2020, the Company purchased the non-controlling interests of Ascend Illinois. Subsequent to this transaction, there were no non-controlling interests as of December 31, 2021 and 2020 and for the year ended, December 31, 2021. The non-controlling interest acquired in connection with the OPA transaction during
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
)
32,206
(588)
36,152
15,961
(16,684)
(1)
Effective July 30, 2020, the Company purchased the non-controlling interests of Ascend Illinois. Subsequent to this transaction, there were no non-controlling interests as of December 31, 2021 and 2020 and for the year ended, December 31, 2021. The non-controlling interest acquired in connection with the OPA transaction during 2022 (see Note 4, “Acquisitions”) was determined to be
de minimis
(2)
In December 2020, the sole member of FPAW Michigan 2, Inc. (“Ascend Michigan”) assigned his interests to AWH, thereby making AWH the majority member, retaining 99.9% of the membership interests in Ascend Michigan. Following this assignment, Ascend Michigan is no longer considered a VIE.
Effective July 30, 2020, the Company purchased the non-controlling interests of Ascend Illinois for $11,000 of cash, to be paid quarterly through December 2023, and 3,635 historical AWH common units with a fair value of $1,018 at issuance. See
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
thereby making AWH the majority member, retaining 99.9% of the membership interests in Ascend Michigan. Following this assignment, Ascend Michigan is no longer considered a VIE.
Effective July 30, 2020, the Company purchased the non-controlling interests of Ascend Illinois for $11,000 of cash, to be paid quarterly through December 2023, and 3,635 historical AWH common units with a fair value of $1,018 at issuance. See Note 11, “Debt,” for additional information regarding the cash payment. The table below summarizes the activity related to the non-controlling interests within Ascend Illinois through the Company’s purchase of the non-controlling interests.
(in thousands)
Ascend Illinois
Balance, December 31, 2019
1,046
Changes in ownership
(2,644)
Net income
1,598
Balance, December 31, 2020
134
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
9. INTANGIBLE ASSETS AND GOODWILL
Intangible Assets
December 31,
(in thousands)
2022
2021
Finite-lived intangible assets
Licenses
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
31, 2019
1,046
Changes in ownership
(2,644)
Net income
1,598
Balance, December 31, 2020
134
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
9. INTANGIBLE ASSETS AND GOODWILL
Intangible Assets
December 31,
(in thousands)
2022
2021
Finite-lived intangible assets
Licenses and permits
226,919
55,281
In-place leases
19,963
19,963
Trade names
380
380
247,262
75,624
Accumulated amortization:
Licenses and permits
(13,035)
(5,415)
In-place leases
(12,754)
(10,558)
Trade names
(380)
(380)
(26,169)
(16,353)
Total intangible assets, net(1)
221,093
59,271
(1)
These intangible assets are being amortized over the expected period of benefit, with a weighted-average remaining life of approximately 9.3 years as of December 31, 2022.
Amortization expense was
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
,415)
In-place leases
(12,754)
(10,558)
Trade names
(380)
(380)
(26,169)
(16,353)
Total intangible assets, net(1)
221,093
59,271
(1)
These intangible assets are being amortized over the expected period of benefit, with a weighted-average remaining life of approximately 9.3 years as of December 31, 2022.
Amortization expense was
$9,816, $6,753, and $7,531 during the year
ended December 31, 2022, 2021, and 2020, respectively. Total amortization expense capitalized to inventory was $1,804, $1,404, and $350 during
the year
ended December 31, 2022, 2021, and 2020, respectively.
At December 31, 2022 and 2021, $1,101 and $502, respectively, of amortization expense remained capitalized as part of inventory.
No impairment indicators were noted during the
year
ended December 31, 2022, 2021, or 2020 and, as such, w
e did not
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
, and $350 during
the year
ended December 31, 2022, 2021, and 2020, respectively.
At December 31, 2022 and 2021, $1,101 and $502, respectively, of amortization expense remained capitalized as part of inventory.
No impairment indicators were noted during the
year
ended December 31, 2022, 2021, or 2020 and, as such, w
e did not record any impairment charges.
Estimated Annual Amortization Expense for Each of the Next Five Years
2023
2024
2025
2026
2027
Estimated amortization expense(1)
21,885
24,017
23,468
23,468
23,468
(1)
These amounts could vary as acquisitions of additional intangible assets occur in the future or due to changes in anticipated commencement of operations for certain locations.
135
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Goodwill
(in thousands)
Balance, December 31, 2020
22,798
Acquisitions
11,042
Adjustments to purchase price allocation(1)
9
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
23,468
(1)
These amounts could vary as acquisitions of additional intangible assets occur in the future or due to changes in anticipated commencement of operations for certain locations.
135
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Goodwill
(in thousands)
Balance, December 31, 2020
22,798
Acquisitions
11,042
Adjustments to purchase price allocation(1)
9,127
Balance, December 31, 2021
42,967
Acquisitions(1)
804
Adjustments to purchase price allocation(1)
599
Balance, December 31, 2022
44,370
(1)
See Note 4, “Acquisitions,” for additional information.
10. LEASES
The components of lease assets and lease liabilities and their classification on our Consolidated Balance Sheets were as follows:
December 31,
(in thousands)
Classification
2022
2021
Lease assets
Operating leases
Operating lease right-of-use assets
108,810
103,958
Finance leases
Property and equipment, net
997
Total lease assets
109,807
103,958
Lease liabilities
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
, “Acquisitions,” for additional information.
10. LEASES
The components of lease assets and lease liabilities and their classification on our Consolidated Balance Sheets were as follows:
December 31,
(in thousands)
Classification
2022
2021
Lease assets
Operating leases
Operating lease right-of-use assets
108,810
103,958
Finance leases
Property and equipment, net
997
Total lease assets
109,807
103,958
Lease liabilities
Current liabilities
Operating leases
Operating lease liabilities, current
2,633
2,665
Finance leases
Current portion of debt, net
207
Noncurrent liabilities
Operating leases
Operating lease liabilities, noncurrent
229,816
197,295
Finance leases
Long-term debt, net
695
Total lease liabilities
233,351
199,960
The components of lease costs and classification within the Consolidated Statements of Operations were as follows:
Year Ended December 31,
(in thousands)
2022
2021
2020
Operating lease costs
Capitalized to inventory
29,177
19,844
11,958
General and administrative expenses
2,617
4,819
4,645
Total operating lease costs
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Long-term debt, net
695
Total lease liabilities
233,351
199,960
The components of lease costs and classification within the Consolidated Statements of Operations were as follows:
Year Ended December 31,
(in thousands)
2022
2021
2020
Operating lease costs
Capitalized to inventory
29,177
19,844
11,958
General and administrative expenses
2,617
4,819
4,645
Total operating lease costs
31,794
24,663
16,603
Finance lease costs
Amortization of leased assets(1)
89
Interest on lease liabilities
43
Total finance lease costs
132
(1)
Included as a component of depreciation expense within “General and administrative expenses” on the accompanying Consolidated Statements of Operations.
136
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
At December 31, 2022 and 2021, $6,660 and $4,393, respectively, of lease costs remained capitalized in inventory. We recognized a gain of $145 during the year ended December 31, 2022 related to lease terminations, which is included in “
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
expenses” on the accompanying Consolidated Statements of Operations.
136
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
At December 31, 2022 and 2021, $6,660 and $4,393, respectively, of lease costs remained capitalized in inventory. We recognized a gain of $145 during the year ended December 31, 2022 related to lease terminations, which is included in “General and administrative expenses” on the Consolidated Statements of Operations.
The following table presents information on short-term and variable lease costs:
Year Ended December 31,
(in thousands)
2022
2021
2020
Total short-term and variable lease costs
4,970
2,540
2,615
Sublease income generated during the year ended December 31, 2022, 2021, and 2020 was immaterial.
The following table includes supplemental cash and non-cash information related to our leases:
Year Ended December 31,
(in thousands)
2022
2021
2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
31,251
22,439
12,895
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
2,540
2,615
Sublease income generated during the year ended December 31, 2022, 2021, and 2020 was immaterial.
The following table includes supplemental cash and non-cash information related to our leases:
Year Ended December 31,
(in thousands)
2022
2021
2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
31,251
22,439
12,895
Operating cash flows from finance leases
43
Financing cash flows from finance leases
69
ROU assets obtained in exchange for new lease obligations
Operating leases
35,991
41,917
91,367
Financing leases
971
The following table summarizes the weighted-average remaining lease term and discount rate:
December 31,
2022
2021
Weighted-average remaining term (years)
Operating leases
15.1
15.8
Finance leases
3.7
Weighted-average discount rate
Operating leases
14.8
12.7
Finance leases
13.6
137
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
The amounts of
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
the weighted-average remaining lease term and discount rate:
December 31,
2022
2021
Weighted-average remaining term (years)
Operating leases
15.1
15.8
Finance leases
3.7
Weighted-average discount rate
Operating leases
14.8
12.7
Finance leases
13.6
137
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
The amounts of future undiscounted cash flows related to the lease payments over the lease terms and the reconciliation to the present value of the lease liabilities as recorded on our Consolidated Balance Sheet as of December 31, 2022 are as follows:
(in thousands)
Operating Lease Liabilities
Finance Lease Liabilities
2023
33,879
315
2024
34,833
315
2025
35,812
315
2026
36,428
195
2027
37,380
Thereafter
441,121
Total lease payments
619,453
1,140
Less: imputed interest
387,004
238
Present value of lease liabilities
232,449
902
As of December 31, 2022,
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Lease Liabilities
2023
33,879
315
2024
34,833
315
2025
35,812
315
2026
36,428
195
2027
37,380
Thereafter
441,121
Total lease payments
619,453
1,140
Less: imputed interest
387,004
238
Present value of lease liabilities
232,449
902
As of December 31, 2022, we entered into operating lease arrangements which are effective for future periods with a total amount of ROU lease assets and lease liabilities of approximately $3,100. Subsequent to December 31, 2022, we entered into operating lease arrangements which are effective for future periods with a total amount of ROU lease assets and lease liabilities of approximately $1,900.
Lease Amendments
In March 2022, we amended the leases related to our Athol, Massachusetts and Lansing, Michigan cultivation facilities to increase the tenant improvement allowance for each, which resulted in increased rent amounts. We accounted for the amendments as lease modifications and remeasured each ROU asset and lease liability as of the amendment dates. The modifications resulted in a total additional tenant improvement allowance of $19,300
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
total amount of ROU lease assets and lease liabilities of approximately $1,900.
Lease Amendments
In March 2022, we amended the leases related to our Athol, Massachusetts and Lansing, Michigan cultivation facilities to increase the tenant improvement allowance for each, which resulted in increased rent amounts. We accounted for the amendments as lease modifications and remeasured each ROU asset and lease liability as of the amendment dates. The modifications resulted in a total additional tenant improvement allowance of $19,300, a reduction of $22,483 to total ROU assets, and a reduction of $3,183 to total lease liabilities.
Effective September 15, 2021, we amended the lease of our Barry, Illinois cultivation facility to increase the tenant improvement allowance to $52,000, which resulted in increased rent amounts. We accounted for the amendment as a lease modification and remeasured the ROU asset and liability as of the amendment date, which resulted in an additional ROU asset of $2,750, an additional tenant improvement allowance of $20,000, and an additional lease liability of $22,750.
Sale Leaseback Transactions
The following table presents cash payments due under transactions that did not qualify for sale-leaseback treatment. The cash payments are
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
,000, which resulted in increased rent amounts. We accounted for the amendment as a lease modification and remeasured the ROU asset and liability as of the amendment date, which resulted in an additional ROU asset of $2,750, an additional tenant improvement allowance of $20,000, and an additional lease liability of $22,750.
Sale Leaseback Transactions
The following table presents cash payments due under transactions that did not qualify for sale-leaseback treatment. The cash payments are allocated between interest and liability reduction, as applicable. The “sold” assets remain within land, buildings, and leasehold improvements, as appropriate, for the duration of the lease and a financing liability equal to the amount of proceeds received is recorded within “Long-term debt, net” on the accompanying Consolidated Balance Sheets.
(in thousands)
2023
2024
2025
2026
2027
Thereafter
Total
Cash payments due under financing liabilities
2,308
2,416
2,525
2,599
2,676
9,477
22,001
138
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
2022 Activity
In February
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
on the accompanying Consolidated Balance Sheets.
(in thousands)
2023
2024
2025
2026
2027
Thereafter
Total
Cash payments due under financing liabilities
2,308
2,416
2,525
2,599
2,676
9,477
22,001
138
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
2022 Activity
In February 2022, the Company sold and subsequently leased back one of its capital assets in New Jersey for total proceeds of $35,400, excluding transaction costs. The transaction met the criteria for sale leaseback treatment. The lease was recorded as an operating lease and resulted in a lease liability of $33,707 and an ROU asset of $29,107, which was recorded net of a $4,600 tenant improvement allowance
In October 2022, the Company sold and subsequently leased back certain real estate and related assets of a commercial property located in New Bedford, Massachusetts for a total purchase price of $350, pursuant to a definitive agreement that was entered into during 2021. The transaction did not meet the criteria for sale-leaseback treatment.
11. DEBT
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
of $33,707 and an ROU asset of $29,107, which was recorded net of a $4,600 tenant improvement allowance
In October 2022, the Company sold and subsequently leased back certain real estate and related assets of a commercial property located in New Bedford, Massachusetts for a total purchase price of $350, pursuant to a definitive agreement that was entered into during 2021. The transaction did not meet the criteria for sale-leaseback treatment.
11. DEBT
December 31,
(in thousands)
2022
2021
2021 Credit Facility
275,000
210,000
Sellers’ Notes
27,606
39,116
Financing Agreement
19,364
Finance liabilities
18,100
17,750
Finance leases
902
Total debt
340,972
266,866
Current portion of debt
11,347
27,980
Less: unamortized deferred financing costs
18
40
Current portion of debt, net
11,329
27,940
Long-term debt
329,625
238,886
Less: unamortized deferred financing costs
10,328
8,040
Long-term debt, net
319,297
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
,750
Finance leases
902
Total debt
340,972
266,866
Current portion of debt
11,347
27,980
Less: unamortized deferred financing costs
18
40
Current portion of debt, net
11,329
27,940
Long-term debt
329,625
238,886
Less: unamortized deferred financing costs
10,328
8,040
Long-term debt, net
319,297
230,846
2021 Credit Facility
On August 27, 2021, the Company entered into a credit agreement with a group of lenders (the “2021 Credit Agreement”) that provided for an initial term loan of $210,000, which was borrowed in full. The 2021 Credit Agreement provided for an expansion feature that allowed the Company to request an increase in the term loan outstanding up to $275,000 if the then-existing lenders (or other lenders) agreed to provide such additional term loans. During the second quarter of 2022, the Company borrowed an additional $65,000 pursuant to this expansion feature (the “2022 Loans” and, together with the initial term loan, the “2021 Credit Facility”) for total borrowings
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
full. The 2021 Credit Agreement provided for an expansion feature that allowed the Company to request an increase in the term loan outstanding up to $275,000 if the then-existing lenders (or other lenders) agreed to provide such additional term loans. During the second quarter of 2022, the Company borrowed an additional $65,000 pursuant to this expansion feature (the “2022 Loans” and, together with the initial term loan, the “2021 Credit Facility”) for total borrowings of $275,000 outstanding under the 2021 Credit Facility.
139
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
The 2021 Credit Facility matures on August 27, 2025 and does not require scheduled principal amortization payments. Borrowings under the 2021 Credit Facility bear interest at a rate of 9.5% per annum, payable quarterly and, as to any portion of the term loan that is prepaid, on the date of prepayment. The 2021 Credit Agreement permits the Company to request an extension of the maturity date for 364 days, subject to the lenders’ discretion.
Mandatory prepayments are required from the proceeds of (i) indebtedness
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
and does not require scheduled principal amortization payments. Borrowings under the 2021 Credit Facility bear interest at a rate of 9.5% per annum, payable quarterly and, as to any portion of the term loan that is prepaid, on the date of prepayment. The 2021 Credit Agreement permits the Company to request an extension of the maturity date for 364 days, subject to the lenders’ discretion.
Mandatory prepayments are required from the proceeds of (i) indebtedness that is not permitted by the 2021 Credit Agreement, and (ii) asset sales and casualty events, subject to customary reinvestment rights. Ascend Wellness Holdings, Inc. may prepay the 2021 Credit Facility at any time, subject to (a) a customary make-whole payment if paid prior to February 27, 2023 (which did not occur), (b) a prepayment premium equal to 4.75% of the principal amount prepaid if paid after February 27, 2023 but prior February 27, 2024, and (c) a prepayment premium of 2.375% if paid after February 27, 2024 but prior to February 27, 2025. No prepayment premium is required for prepayment on
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
paid prior to February 27, 2023 (which did not occur), (b) a prepayment premium equal to 4.75% of the principal amount prepaid if paid after February 27, 2023 but prior February 27, 2024, and (c) a prepayment premium of 2.375% if paid after February 27, 2024 but prior to February 27, 2025. No prepayment premium is required for prepayment on or after February 27, 2025. Once repaid, amounts borrowed under the 2021 Credit Facility may not be re-borrowed.
Ascend Wellness Holdings, Inc. is required to comply with two financial covenants under the 2021 Credit Agreement. Ascend Wellness Holdings, Inc. may not permit its liquidity (defined as unrestricted cash and cash equivalents pledged under the 2021 Credit Facility plus any future revolving credit availability) to be below $20,000 as of the last day of any fiscal quarter. Additionally, the Company may not permit the ratio of Consolidated EBITDA (as defined in the 2021 Credit Agreement) to consolidated cash interest expense for any period of four consecutive fiscal quarters to be less than 2.00:1.00 for the period ending December 31
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
its liquidity (defined as unrestricted cash and cash equivalents pledged under the 2021 Credit Facility plus any future revolving credit availability) to be below $20,000 as of the last day of any fiscal quarter. Additionally, the Company may not permit the ratio of Consolidated EBITDA (as defined in the 2021 Credit Agreement) to consolidated cash interest expense for any period of four consecutive fiscal quarters to be less than 2.00:1.00 for the period ending December 31, 2021 and increased to not less than 2.50:1.00 for the period ending June 30, 2022 and thereafter. Ascend Wellness Holdings, Inc. has a customary equity cure right for each of these financial covenants. Ascend Wellness Holdings, Inc. is in compliance with these covenants as of December 31, 2022.
The 2021 Credit Agreement requires the Company to make certain representations and warranties and to comply with customary covenants, including restrictions on the payment of dividends, repurchase of stock, incurrence of indebtedness, dispositions, and acquisitions. The 2021 Credit Agreement also contains customary events of default including: non-payment of principal or interest; violations of covenants; bankruptcy; change of control; cross defaults to other debt
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
covenants as of December 31, 2022.
The 2021 Credit Agreement requires the Company to make certain representations and warranties and to comply with customary covenants, including restrictions on the payment of dividends, repurchase of stock, incurrence of indebtedness, dispositions, and acquisitions. The 2021 Credit Agreement also contains customary events of default including: non-payment of principal or interest; violations of covenants; bankruptcy; change of control; cross defaults to other debt; and material judgments. The 2021 Credit Facility is guaranteed by all of the Company’s subsidiaries and is secured by substantially all of the assets of the Company and its subsidiaries.
We incurred financing costs of $8,806 related to the initial term loan and additional financing costs of $7,606 related to the 2022 Loans, which includes warrants issued to certain lenders to acquire 3,130 shares of Class A common stock that had a fair value of $2,639 at issuance (refer to Note 12, “Stockholders’ Equity,” for additional information). The financing costs are being amortized to interest expense over the term of 2021 Credit Facility using the straight-line method, which approximates the interest rate method.
Proceeds from the initial term loan
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
$7,606 related to the 2022 Loans, which includes warrants issued to certain lenders to acquire 3,130 shares of Class A common stock that had a fair value of $2,639 at issuance (refer to Note 12, “Stockholders’ Equity,” for additional information). The financing costs are being amortized to interest expense over the term of 2021 Credit Facility using the straight-line method, which approximates the interest rate method.
Proceeds from the initial term loan under the 2021 Credit Facility were used, in part, to repay certain then-outstanding debt obligations, as further described below, and, together with the 2022 Loans, fund working capital and general corporate matters, including, but not limited to, growth investments, acquisitions, capital expenditures, and other strategic initiatives.
The 2022 Loans were funded by a combination of new and existing lenders. Borrowings from the existing lenders were accounted for as a modification of existing debt, with the exception of one lender that was considered an extinguishment. We recognized a loss on extinguishment of $2,180 as a component of interest expense during the year ended December 31, 2022, comprised of the write-off of $337 related to the lender’s initial term loan
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
, capital expenditures, and other strategic initiatives.
The 2022 Loans were funded by a combination of new and existing lenders. Borrowings from the existing lenders were accounted for as a modification of existing debt, with the exception of one lender that was considered an extinguishment. We recognized a loss on extinguishment of $2,180 as a component of interest expense during the year ended December 31, 2022, comprised of the write-off of $337 related to the lender’s initial term loan and $1,843 related to the lender’s new loan, which included the estimated fair value of the warrants issued to the lender.
Sellers’ Notes
140
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
debt, net at December 31, 2022. The $11,000 OPA sellers’ note was recorded net of an initial discount of $3,010 that was calculated as of the transaction date utilizing the Company’s estimated incremental borrowing rate based on the anticipated close date and is being accreted to interest expense over the expected term.
Additionally, as of December 31, 2022, a total of $3,140 remains due for the purchase of a
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
unit data)
debt, net at December 31, 2022. The $11,000 OPA sellers’ note was recorded net of an initial discount of $3,010 that was calculated as of the transaction date utilizing the Company’s estimated incremental borrowing rate based on the anticipated close date and is being accreted to interest expense over the expected term.
Additionally, as of December 31, 2022, a total of $3,140 remains due for the purchase of a non-controlling interest and is included in “Current portion of debt, net” on the Consolidated Balance Sheet. At December 31, 2021, $3,140 and $3,136 is included in “Current portion of debt, net” and “Long-term debt, net” respectively.
Financing Agreement
In December 2022, the Company received $19,364 pursuant to a financing agreement with a third-party lender (the “Financing Agreement”), which is included in “Long-term debt, net” at December 31, 2022. Ascend Wellness Holdings, Inc. assigned to the lender its interests in an employee retention tax credit claim (the “ERTC Claim”) that it submitted in November 2022 for approximately $22,800. If the Company
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
debt, net” respectively.
Financing Agreement
In December 2022, the Company received $19,364 pursuant to a financing agreement with a third-party lender (the “Financing Agreement”), which is included in “Long-term debt, net” at December 31, 2022. Ascend Wellness Holdings, Inc. assigned to the lender its interests in an employee retention tax credit claim (the “ERTC Claim”) that it submitted in November 2022 for approximately $22,800. If the Company does not receive the ERTC Claim, in whole or in part, the Company is required to repay the related portion of the funds received plus interest of 10% accrued from the date of the Financing Agreement through the repayment date. The Financing Agreement does not have a stated maturity date and the discount is being accreted to interest expense over an expected term. Ascend Wellness Holdings, Inc.’s obligations under the Financing Agreement will be satisfied upon receipt of the ERTC Claim or other full repayment. Ascend Wellness Holdings, Inc. determined the ERTC Claim did not meet the criteria to record as a receivable as of December 31, 2022 because of the uncertain nature of the ERTC Claim.
Finance Liabilities
Finance liabilities consist of amounts related to failed sale leaseback transactions. See Note 10, “
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
and the discount is being accreted to interest expense over an expected term. Ascend Wellness Holdings, Inc.’s obligations under the Financing Agreement will be satisfied upon receipt of the ERTC Claim or other full repayment. Ascend Wellness Holdings, Inc. determined the ERTC Claim did not meet the criteria to record as a receivable as of December 31, 2022 because of the uncertain nature of the ERTC Claim.
Finance Liabilities
Finance liabilities consist of amounts related to failed sale leaseback transactions. See Note 10, “Leases,” for additional information.
Finance Leases
Finance leases consist of liabilities related to finance lease arrangements. See Note 10, “Leases,” for additional information.
Other Activity
2021 Repayments
In August 2021, the Company utilized proceeds from the initial term loan under the 2021 Credit Facility to repay certain then-outstanding debt obligations, as further described below.
Ascend Wellness Holdings, Inc. prepaid $11,624 of principal outstanding and accrued interest of $1,007 related to a loan and security agreement that was entered into in May 2019, which borrowings were used for the purchase of a building and related renovation expenses. This loan had an initial maturity date of May 29, 2024, was secured by the related property, and accrued
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
initial term loan under the 2021 Credit Facility to repay certain then-outstanding debt obligations, as further described below.
Ascend Wellness Holdings, Inc. prepaid $11,624 of principal outstanding and accrued interest of $1,007 related to a loan and security agreement that was entered into in May 2019, which borrowings were used for the purchase of a building and related renovation expenses. This loan had an initial maturity date of May 29, 2024, was secured by the related property, and accrued interest at a rate of 14% per annum, compounded monthly. The prepayment was considered a debt extinguishment and the Company recognized a loss on extinguishment of $355, resulting from a $375 prepayment penalty less a final interest adjustment.
de minimis
, was recorded as a discount to the notes, and was being amortized to interest expense over the exercise term of three years. In April 2021, these warrants were cancelled in exchange for a payment of $4,156 (refer to Note 12, “Stockholders’ Equity,” for additional details). The prepayment was considered a debt extinguishment and the Company recognized a loss on extinguishment of $34, resulting from a final interest adjustment.
141
Ascend Wellness Holdings, Inc.
Notes
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
recorded as a discount to the notes, and was being amortized to interest expense over the exercise term of three years. In April 2021, these warrants were cancelled in exchange for a payment of $4,156 (refer to Note 12, “Stockholders’ Equity,” for additional details). The prepayment was considered a debt extinguishment and the Company recognized a loss on extinguishment of $34, resulting from a final interest adjustment.
141
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Ascend Wellness Holdings, Inc. prepaid $4,750 of principal that remained due under a secured promissory note that was entered into in September 2019, which was due September 10, 2022 and had an interest rate of 10% per annum that was paid monthly. Ascend Wellness Holdings, Inc. previously prepaid $500 of principal due under this note in January 2021, without penalty. The prepayment in August 2021 was considered a debt extinguishment and the Company recognized a gain on extinguishment of $290, resulting from partial forgiveness of principal and the final interest payment due.
two additional years upon satisfaction of certain conditions. The interest rate was
142
Ascend Wellness Holdings, Inc.
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
and had an interest rate of 10% per annum that was paid monthly. Ascend Wellness Holdings, Inc. previously prepaid $500 of principal due under this note in January 2021, without penalty. The prepayment in August 2021 was considered a debt extinguishment and the Company recognized a gain on extinguishment of $290, resulting from partial forgiveness of principal and the final interest payment due.
two additional years upon satisfaction of certain conditions. The interest rate was
142
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Convertible Promissory Notes
In January 2021 the Company entered into a convertible note purchase agreement under which the Company issued $49,500 notes (the “2021 AWH Convertible Promissory Notes”). Each note had an interest rate of 8% for the first twelve months, 10% for months thirteen through fifteen, and 13% thereafter through maturity. Interest was to be paid-in-kind and added to the outstanding balance of the note, to be paid at maturity or upon conversion.
Prior to the Conversion, the 2021 AWH Convertible Promissory Notes were convertible into common units of the Company on occurrence of certain events, such as a change
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
ible Promissory Notes”). Each note had an interest rate of 8% for the first twelve months, 10% for months thirteen through fifteen, and 13% thereafter through maturity. Interest was to be paid-in-kind and added to the outstanding balance of the note, to be paid at maturity or upon conversion.
Prior to the Conversion, the 2021 AWH Convertible Promissory Notes were convertible into common units of the Company on occurrence of certain events, such as a change of control or an initial public offering. Pursuant to the terms of the notes, upon the occurrence of an initial public offering, each note, including interest thereon less applicable withholding taxes, would automatically convert into equity securities issued in connection with such initial public offering, with the number of securities issued on the basis of a price equal to the lesser of: (a)(i) a 20% discount to the issue price if an initial public offering occurred on or before 12 months from each note issuance; (ii) a 25% discount to the issue price if an initial public offering occurred after 12 months of each note issuance, but before maturity; and (b) the conversion price then in effect based on a defined pre-money valuation of the Company. In conjunction
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
of securities issued on the basis of a price equal to the lesser of: (a)(i) a 20% discount to the issue price if an initial public offering occurred on or before 12 months from each note issuance; (ii) a 25% discount to the issue price if an initial public offering occurred after 12 months of each note issuance, but before maturity; and (b) the conversion price then in effect based on a defined pre-money valuation of the Company. In conjunction with the Company’s IPO on May 4, 2021, the total principal outstanding under the 2021 AWH
143
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
Convertible Promissory Notes, plus accrued interest thereon, automatically converted into 8,910 shares of Class A common stock based on a conversion price of $6.00 per share in accordance with the terms of the agreement. Per the terms of the notes, the 2021 AWH Convertible Promissory Notes received a full twelve months of interest at conversion.
Debt Maturities
As of December 31, 2022, the following cash payments are required under our debt arrangements:
(in
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
ory Notes, plus accrued interest thereon, automatically converted into 8,910 shares of Class A common stock based on a conversion price of $6.00 per share in accordance with the terms of the agreement. Per the terms of the notes, the 2021 AWH Convertible Promissory Notes received a full twelve months of interest at conversion.
Debt Maturities
As of December 31, 2022, the following cash payments are required under our debt arrangements:
(in thousands)
2023
2024
2025
2026
2027
Total
Sellers’ notes(1)
11,143
8,100
11,000
30,243
Term note maturities
275,000
275,000
(1)
Certain cash payments include an interest accretion component. The timing of certain payments may vary based on regulatory approval of the underlying transactions.
The table above excludes the Financing Arrangement, as the timing of the repayment is uncertain.
Interest Expense
Interest expense during 2022, 2021, and 2020 consisted of the following:
Year Ended December 31,
(in thousands)
2022
2021
2020
Cash interest
24,524
17,638
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
(1)
Certain cash payments include an interest accretion component. The timing of certain payments may vary based on regulatory approval of the underlying transactions.
The table above excludes the Financing Arrangement, as the timing of the repayment is uncertain.
Interest Expense
Interest expense during 2022, 2021, and 2020 consisted of the following:
Year Ended December 31,
(in thousands)
2022
2021
2020
Cash interest
24,524
17,638
6,204
Accretion
3,576
9,710
5,398
Loss on extinguishment of debt(1)
2,180
6,637
Interest on financing liabilities(2)
2,113
2,643
1,391
Interest on finance leases
43
Non-cash interest related to beneficial conversion feature(3)
27,361
Total
32,436
63,989
12,993
(1)
The amount recorded for the year ended December 31, 2021 includes $1,656 of pre-payment fees and additional cash interest payments and $4,981 of non-cash components, including the write-off of unamortized deferred financing costs.
(2)
Interest on financing liabilities related
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Interest on finance leases
43
Non-cash interest related to beneficial conversion feature(3)
27,361
Total
32,436
63,989
12,993
(1)
The amount recorded for the year ended December 31, 2021 includes $1,656 of pre-payment fees and additional cash interest payments and $4,981 of non-cash components, including the write-off of unamortized deferred financing costs.
(2)
Interest on financing liabilities related to failed sale leasebacks. See Note 10, “Leases,” for additional details.
(3)
See Note 12, “Stockholders’ Equity,” for additional details.
144
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
12. STOCKHOLDERS’ EQUITY
Holders of each share of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to 1,000 votes per share. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law or our certificate of
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
except per share or per unit data)
12. STOCKHOLDERS’ EQUITY
Holders of each share of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to 1,000 votes per share. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters (including the election of directors) submitted to a vote of stockholders, unless otherwise required by law or our certificate of incorporation. Each share of Class B common stock is convertible at any time into one share of Class A common stock at the option of the holder. In addition, each share of Class B common stock will automatically convert into one share of Class A common stock on May 4, 2026, the final conversion date. Each share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain transfers described in our certificate of incorporation, including, without limitation, transfers for tax and estate planning purposes, so long as the transferring holder of Class B common stock continues to hold exclusive voting and dispositive power with respect to any such transferred shares. Once converted into a share of Class A common stock, a
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
2026, the final conversion date. Each share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain transfers described in our certificate of incorporation, including, without limitation, transfers for tax and estate planning purposes, so long as the transferring holder of Class B common stock continues to hold exclusive voting and dispositive power with respect to any such transferred shares. Once converted into a share of Class A common stock, a converted share of Class B common stock will not be reissued, and following the conversion of all outstanding shares of Class B common stock, no further shares of Class B common stock will be issued.
Subject to preferences that may apply to any shares of preferred stock outstanding at the time and any contractual limitations, such as our credit agreements, the holders of our common stock will be entitled to receive dividends out of funds then legally available, if any, if our board of directors (the “Board”), in its discretion, determines to issue dividends and then only at the times and in the amounts that our Board may determine. If a dividend is paid in the form of a Class A common stock or Class B common stock, then holders of Class A common stock shall receive Class A common stock and
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
any contractual limitations, such as our credit agreements, the holders of our common stock will be entitled to receive dividends out of funds then legally available, if any, if our board of directors (the “Board”), in its discretion, determines to issue dividends and then only at the times and in the amounts that our Board may determine. If a dividend is paid in the form of a Class A common stock or Class B common stock, then holders of Class A common stock shall receive Class A common stock and holders of Class B common stock shall receive Class B common stock.
In the event of a liquidation, dissolution, or winding up, holders of Class A common stock and Class B common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all our debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then-outstanding shares of preferred stock.
In the event of any change of control transaction in respect of the Company, shares of our Class A common stock and Class B common stock shall be treated equally, ratably, and identically, on a per share basis, with respect to any consideration into which such shares are converted or any consideration paid or otherwise distributed to stockholders
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
holders after the payment of all our debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then-outstanding shares of preferred stock.
In the event of any change of control transaction in respect of the Company, shares of our Class A common stock and Class B common stock shall be treated equally, ratably, and identically, on a per share basis, with respect to any consideration into which such shares are converted or any consideration paid or otherwise distributed to stockholders of the Company, unless different treatment of the shares of each class is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock and Class B common stock, each voting separately as a class.
145
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
total of 26,221 shares of Class A common stock. The additional 3,420 shares issued per the conversion feature was considered a contingent beneficial conversion feature and was recognized when the conversion event occurred and the contingency was resolved, for a total non-cash interest charge of $27,361. Each Series Seed Preferred Unit and Series Seed+ Preferred Unit converted into shares of Class A common stock on a one
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
total of 26,221 shares of Class A common stock. The additional 3,420 shares issued per the conversion feature was considered a contingent beneficial conversion feature and was recognized when the conversion event occurred and the contingency was resolved, for a total non-cash interest charge of $27,361. Each Series Seed Preferred Unit and Series Seed+ Preferred Unit converted into shares of Class A common stock on a one-for-one basis. Additionally, the then-outstanding convertible promissory notes, plus accrued interest, converted into a total of 37,388 shares of Class A common stock, as further described in Note 11, “Debt.”
The following table summarizes the total shares of Class A common stock and Class B common stock outstanding as of December 31, 2022 and 2021:
December 31,
(in thousands)
2022
2021
Shares of Class A common stock
187,999
171,521
Shares of Class B common stock
65
65
Total
188,064
171,586
In August 2021, the Company issued 1,986 shares of Class A common stock in conjunction with the prepayment of the
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
Class A common stock and Class B common stock outstanding as of December 31, 2022 and 2021:
December 31,
(in thousands)
2022
2021
Shares of Class A common stock
187,999
171,521
Shares of Class B common stock
65
65
Total
188,064
171,586
In August 2021, the Company issued 1,986 shares of Class A common stock in conjunction with the prepayment of the October 2020 Credit Facility, as further described in Note 11, “Debt.”
Warrants
The following table summarizes the warrants activity during the year ended December 31, 2022 and 2021:
Number of Warrants(in thousands)(1)
Weighted-Average Exercise Price
Weighted-Average Remaining Exercise Period(years)
Aggregate Intrinsic Value(in thousands)(2)
Balance, December 31, 2020
4,625
3.81
2.4
Cancelled(3)
(1,094)
3.20
Balance, December 31, 2021
3,531
4.00
2.0
9,216
Granted(4)
3,318
3.07
Expired/Cancelled
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
-Average Exercise Price
Weighted-Average Remaining Exercise Period(years)
Aggregate Intrinsic Value(in thousands)(2)
Balance, December 31, 2020
4,625
3.81
2.4
Cancelled(3)
(1,094)
3.20
Balance, December 31, 2021
3,531
4.00
2.0
9,216
Granted(4)
3,318
3.07
Expired/Cancelled
(1,109)
4.00
Balance, December 31, 2022
5,740
3.46
2.7
(1)
(2)
Amount by which the closing market price of our Class A common stock exceeds the exercise price for the referenced dates. No intrinsic value is presented when the fair value of the warrants outstanding does not exceed the exercise price for the referenced dates.
(3)
(4)
In June 2022, in connection with the 2022 Loans (refer to Note 11, “Debt”), the Company issued warrants to purchase up to 3,130 shares of Class A common stock (the “2022 Warrants”). Each warrant is exercisable for one share of Class A common stock at an
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
the referenced dates. No intrinsic value is presented when the fair value of the warrants outstanding does not exceed the exercise price for the referenced dates.
(3)
(4)
In June 2022, in connection with the 2022 Loans (refer to Note 11, “Debt”), the Company issued warrants to purchase up to 3,130 shares of Class A common stock (the “2022 Warrants”). Each warrant is exercisable for one share of Class A common stock at an exercise price of $3.10 per share. The 2022 Warrants are immediately exercisable and have a four year term. The
146
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
2022 Warrants had a total estimated fair value of $2,639 at issuance, which was calculated using a Black-Scholes model and included significant assumptions such as volatility of 70% and a risk-free rate of 3.0%. Cashless exercise was permitted only if there was no effective registration statement registering the resale of the shares issued upon exercise, which registration statement was declared effective in December 2022 prior to any exercise. Ascend Wellness Holdings, Inc. will have the option to require the holders to
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
2022 Warrants had a total estimated fair value of $2,639 at issuance, which was calculated using a Black-Scholes model and included significant assumptions such as volatility of 70% and a risk-free rate of 3.0%. Cashless exercise was permitted only if there was no effective registration statement registering the resale of the shares issued upon exercise, which registration statement was declared effective in December 2022 prior to any exercise. Ascend Wellness Holdings, Inc. will have the option to require the holders to exercise the 2022 Warrants if, after the first anniversary of the issuance, the 30-day volume-weighted average price of the Company’s Class A common stock exceeds $6.50 per share. The 2022 Warrants are equity-classified instruments, are subject to customary anti-dilution adjustments, are stand-alone instruments, and are not part of the notes with which they were issued.
13. EQUITY-BASED COMPENSATION EXPENSE
Equity Incentive Plans
2020 Equity Incentive Plan
Ascend Wellness Holdings, Inc. adopted an incentive plan in November 2020 (the “2020 Plan”) which authorized the issuance of incentive common unit options and restricted common units (collectively, “Awards”). The maximum number of Awards to
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
to customary anti-dilution adjustments, are stand-alone instruments, and are not part of the notes with which they were issued.
13. EQUITY-BASED COMPENSATION EXPENSE
Equity Incentive Plans
2020 Equity Incentive Plan
Ascend Wellness Holdings, Inc. adopted an incentive plan in November 2020 (the “2020 Plan”) which authorized the issuance of incentive common unit options and restricted common units (collectively, “Awards”). The maximum number of Awards to be issued under the 2020 Plan is 10,031 and any Awards that expire or are forfeited may be re-issued. A total of 9,994 Awards had been granted under the plan as of December 31, 2022. The Awards generally vest over two or three years. The estimated fair value of the Awards at issuance is recognized as compensation expense over the related vesting period. Upon adoption of the 2020 Plan, a total of 1,619 incentive units that were granted under a previous incentive plan were cancelled and converted into restricted common units that were considered fully issued and outstanding.
In conjunction with the Conversion, the holders of the restricted common units issued under the 2020 Plan received one restricted share of Class A common stock (a
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
over two or three years. The estimated fair value of the Awards at issuance is recognized as compensation expense over the related vesting period. Upon adoption of the 2020 Plan, a total of 1,619 incentive units that were granted under a previous incentive plan were cancelled and converted into restricted common units that were considered fully issued and outstanding.
In conjunction with the Conversion, the holders of the restricted common units issued under the 2020 Plan received one restricted share of Class A common stock (a “Restricted Common Share”) for each restricted common unit held immediately prior to the Conversion.
The following table summarizes the restricted common shares activity during the year ended December 31, 2022 and 2021:
(in thousands)
Restricted Common Shares
Unvested, December 31, 2020
7,280
Granted
50
Vested(1)
(5,543)
Forfeited
(134)
Unvested, December 31, 2021
1,653
Vested
(995)
Forfeited
(41)
Unvested, December 31, 2022
617
(1)
Includes 126 vested restricted common shares were withheld to cover tax obligations and subsequently cancelled during the year ended December 31,
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
, 2020
7,280
Granted
50
Vested(1)
(5,543)
Forfeited
(134)
Unvested, December 31, 2021
1,653
Vested
(995)
Forfeited
(41)
Unvested, December 31, 2022
617
(1)
Includes 126 vested restricted common shares were withheld to cover tax obligations and subsequently cancelled during the year ended December 31, 2021.
As of December 31, 2022, total unrecognized compensation cost related to restricted common shares was $67, which is expected to be recognized over a weighted-average remaining period of 0.4 years.
147
Ascend Wellness Holdings, Inc.
Notes to Consolidated Financial Statements
(in thousands, except per share or per unit data)
2021 Equity Incentive Plan
In July 2021, the Company adopted a new stock incentive plan (the “2021 Plan”), pursuant to which 17,000 shares of Class A common stock are reserved for issuance thereunder, subject to certain adjustments and other terms. Following the adoption of the 2021 Plan, no additional awards are expected to be issued under the 2020 Plan. The
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
YOU are a financial analyst. You are reading a report of a company.
The report is about the company's financial status.
to Consolidated Financial Statements
(in thousands, except per share or per unit data)
2021 Equity Incentive Plan
In July 2021, the Company adopted a new stock incentive plan (the “2021 Plan”), pursuant to which 17,000 shares of Class A common stock are reserved for issuance thereunder, subject to certain adjustments and other terms. Following the adoption of the 2021 Plan, no additional awards are expected to be issued under the 2020 Plan. The 2021 Plan authorized the issuance of stock appreciation rights (“SAR Awards”), stock options, restricted stock, restricted stock units (“RSUs”), and other stock-based awards (collectively the “2021 Plan Awards”), as further described below. Any 2021 Plan Awards that expire or are forfeited may be re-issued. The estimated fair value of the 2021 Plan Awards at issuance is recognized as compensation expense over the related vesting, exercise, or service periods, as applicable. As of December 31, 2022, there were 5,859 shares of Class A common stock available for grant for future equity-based compensation awards under the 2021 Plan. Activity related to awards issued under the 2021 Plan is further described below.
Stock Apprec
cik:1756390
ticker:AAWH
name:Ascend Wellness Holdings, Inc.
exchange:OTC
filing_type:10-K
|
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.