HARVEST HEALTH & RECREATION INC.

CIK:0001760439|SEC Filings

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
Revenue, net of discounts	$ 102,463	$ 55,661	$ 191,289	$ 99,896
Cost of goods sold	(50,201)	(32,246)	(91,109)	(58,332)
Gross profit	52,262	23,415	100,180	41,564
Expenses
General and administrative	33,126	26,940	59,202	53,172
General and administrative, related party operating lease expense	201	200	401	387
Sales and marketing	1,224	1,248	2,122	2,524
Share-based compensation	3,741	3,276	8,603	17,080
Depreciation and amortization	2,641	725	5,170	2,395
Total expenses	40,933	32,389	75,498	75,558
Operating income (loss)	11,329	(8,974)	24,682	(33,994)
Other (expense) income
Gain on sale of assets	(21)	(2,783)	1,774	(364)
Other income	269	1,205	1,773	10,255
Fair value of liability adjustment	(8,353)	(1,497)	(32,787)	5,448
Fair value of contingent consideration	(4,500)	0	(4,500)	0
Foreign currency gain (loss)	17	30	29	(108)
Interest expense (includes related party interest income of less than $0.1 million for the three months ended June 30, 2021 and 2020 respectively and $0.2 million and and $0.1million for the six months ended June 30, 2021 and 2020 respectively)	(9,182)	(9,169)	(17,899)	(13,719)
Contract asset impairment	0	(2,420)	0	(2,420)
Loss before taxes and non-controlling interest	(10,441)	(23,608)	(26,928)	(34,902)
Income taxes	(6,834)	(1,132)	(13,315)	(4,926)
Net loss from continuing operations before non-controlling interest	(17,275)	(24,740)	(40,243)	(39,828)
Net income (loss) from discontinued operations, net of tax	(1,954)	(905)	(1,954)	(1,289)
Net loss before non-controlling interest	(19,229)	(25,645)	(42,197)	(41,117)
Net income attributed to non-controlling interest	(276)	(1,929)	(430)	(1,841)
Net loss attributed to Harvest Health & Recreation Inc.	$ (19,505)	$ (27,574)	$ (42,627)	$ (42,958)
Net loss per share - basic and diluted	$ (0.04)	$ (0.07)	$ (0.10)	$ (0.12)
Attributable to Harvest Health and Recreation Inc.	(0.05)	(0.08)	(0.10)	(0.13)
Attributable to discontinued operations, net of tax	$ 0	$ 0	$ 0	$ 0
Weighted-average shares outstanding - basic and diluted	413,103,779	364,580,737	410,383,008	334,380,082

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$ (42,197)	$ (41,117)
Net loss from discontinued operations, net of tax	1,954	1,289
Adjustments to reconcile net loss to net cash from operating activities
Depreciation and amortization	7,051	4,257
Amortization of right-of-use assets	3,348	2,559
Amortization of debt issuance costs	1,755	1,997
Amortization of debt discount	754	2,585
Amortization of warrant expense	1,867	2,236
Noncash gain on earnout	0	(13,897)
Noncash gain on deconsolidation	0	(6,244)
Noncash loss on derecognition of asset	0	4,141
Gain on North Dakota divestment	(573)	0
Gain on sale leaseback transaction	(1,058)	0
Gain on legal settlements	(1,089)	0
(Gain) loss on lease derecognition	(351)	311
Change in fair value of financial liability	32,787	(5,448)
Fair value of contingent consideration	4,500	0
Gain on held for sale	0	(2,150)
Change in deferred income tax	0	(945)
Share-based compensation	8,603	17,080
Noncash transaction expenses	544	0
Provision for bad debts and credit losses	115	2,420
Changes in operating assets and liabilities:
Accounts receivable	(3,854)	(3,205)
Inventory	(8,271)	1,733
Other assets	2,384	(1,557)
Income taxes payable	(6,862)	1,354
Accrued expenses and other liabilities	(6,894)	12,738
Accounts payable	(2,515)	3,535
Operating lease liabilities	(1,818)	(324)
Prepaid expenses and other current assets	(2,393)	(3,827)
NET CASH USED IN CONTINUING OPERATING ACTIVITIES	(12,213)	(20,479)
NET CASH USED IN DISCONTINUED OPERATING ACTIVITIES	(1,954)	(740)
NET CASH USED IN OPERATING ACTIVITIES	(14,167)	(21,219)
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired	0	(14,397)
Sale leaseback transaction	22,280	0
Acquisitions/advances of intangibles	(2,022)	(1,180)
Divestment of California entities	0	2,358
Prepayment of acquisition consideration	(50)	4,697
Purchases of property, plant and equipment	(27,199)	(16,993)
Proceeds from divestments	2,122	0
Issuance of notes receivable	(1,617)	(1,159)
Payments received on notes receivable	963	825
NET CASH USED IN INVESTING ACTIVITIES	(5,523)	(30,565)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of equity	0	58,999
Proceeds from exercise of warrants	10,262	0
Proceeds from issuance of notes payable	5,525	40,773
Repayment of notes payable	(4,603)	(6,538)
Proceeds from stock option exercises	664	0
Distributions from noncontrolling interests	(604)
Payment of finance lease liabilities	(87)	(24)
Fees paid for debt financing activities	0	(1,894)
NET CASH PROVIDED BY CONTINUING FINANCING ACTIVITIES	11,157	91,316
NET CASH USED IN DISCONTINUED FINANCING ACTIVITIES	0	(549)
NET CASH PROVIDED BY FINANCING ACTIVITIES	11,157	90,767
NET INCREASE/(DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(8,533)	38,983
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	78,055	22,685
RESTRICTED CASH, BEGINNING OF PERIOD	4,542	8,000
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD	82,597	30,685
CASH AND CASH EQUIVALENTS, END OF PERIOD	71,064	61,668
RESTRICTED CASH, END OF PERIOD	3,000	8,000
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	74,064	69,668
Supplemental disclosure with respect to cash flows
Interest paid	2,131	13,352
Taxes paid	$ 20,218	$ 4,833
Supplemental disclosure of non-cash activities
Shares issued for business acquisition	0	59,627
Notes receivables issued upon North Dakota divestment	$ 850	$ 0
Notes receivable (net book value) settlement in exchange for investment	21,833
Financing obtained in exchange for property, plant, and equipment	5,996
Right-of-use assets obtained in exchange of operating lease liabilities	$ 53,950	$ 10,803

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 71,064	$ 78,055
Restricted cash	3,000	4,542
Accounts receivable, net of allowance of $222 and $824, respectively	8,788	5,051
Notes receivable, current portion	9,593	21,556
Related party notes receivable, current portion	10,276	10,052
Inventory, net	44,608	36,862
Other current assets	8,125	5,280
Total current assets	155,454	161,398
Notes receivable, net of current portion	10,516	18,211
Property, plant and equipment, net	179,182	176,827
Right-of-use assets for operating leases, net	113,395	60,843
Related party right-of-use assets for operating leases, net	5,541	5,621
Intangible assets, net	272,083	272,118
Corporate investments	40,924	19,091
Acquisition deposits	50	50
Goodwill	115,541	116,041
Assets held for sale	3,689	6,585
Other assets	19,672	19,850
TOTAL ASSETS	916,047	856,635
Current liabilities:
Accounts payable	7,988	10,755
Other current liabilities	30,434	28,896
Contingent consideration, current portion	10,398	17,985
Income tax payable	10,642	17,504
Operating lease liability, current portion	1,910	2,906
Related party operating lease liability, current portion	150	135
Notes payable, current portion	134,394	20,910
Total current liabilities	195,916	99,091
Notes payable, net of current portion	144,248	244,066
Warrant liability	3,438	20,908
Operating lease liability, net of current portion	112,731	58,637
Related party operating lease liability, net of current portion	5,518	5,595
Deferred tax liability	53,082	53,082
Total liabilities associated with assets held for sale	28	718
Other long-term liabilities	11	63
TOTAL LIABILITIES	514,972	482,160
Commitments and contingencies (Note 16)
STOCKHOLDERS' EQUITY
Capital stock	736,901	667,248
Accumulated deficit	(336,234)	(293,607)
Stockholders' equity attributed to Harvest Health & Recreation Inc.	400,667	373,641
Non-controlling interest	408	834
TOTAL STOCKHOLDERS' EQUITY	401,075	374,475
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	916,047	856,635
Subordinate Voting Shares
STOCKHOLDERS' EQUITY
Common stock, value	0	0
Multiple Voting Shares
STOCKHOLDERS' EQUITY
Common stock, value	0	0
Super Voting Shares
STOCKHOLDERS' EQUITY
Common stock, value	$ 0	$ 0