Restatement

12 Months Ended

Dec. 31, 2021

Restatement

Restatement

Note 23 – Restatement

Select Acquisition

During the period ended December 31, 2021, management discovered an error related to purchase accounting that was identified subsequent to the measurement period for the Select acquisition. The Company purchased Select for its brand recognition in order to position the Company for its next phase of growth in the wholesale and recreational cannabis markets. Management determined that the Company’s initial identification and measurement of licenses and service agreements as the primary intangible assets acquired was not reflective of the purpose of the acquisition, and therefore updated purchase accounting to reflect the Select tradename as the primary asset acquired. The restatement resulted in an overall decrease in the value of intangible assets identified, which in turn also resulted in a decrease in the related deferred tax liability and amortization expense. The reduction in the consideration transferred allocated to intangible assets and deferred tax liability resulted in a net increase to goodwill, while the decrease in amortization expense increased pre-tax book income which resulted in an increase in tax expense (see adjustments below). As the discovery was made outside of the acquisition measurement period, in accordance with IFRS 3, the Company considered this change as an error related to the allocation of purchase consideration, and retrospectively updated purchase accounting to identify, distinguish, and revalue the separately identifiable intangible assets acquired in accordance with IAS 38.

Adjustments have been retrospectively made to the comparative period as of and for the year ended December 31, 2020, to reflect mandatory disclosures associated with the Select acquisition, as well as adjustments to correct differences associated with the accounting for business combinations. Refer to Note 4 – Acquisitions and Note 10 – Goodwill and intangible assets of these Financial Statements for disclosures related to these adjustments. The financial statements for the periods as of and ended between March 31, 2020 and September 30, 2021 were not adjusted and refiled at the time of discovery of the error, rather the comparative period as of and for the year ended December 31, 2020 is being corrected now with the filing of the Financial Statements as of and for the period ended December 31, 2021.

The effects of the immaterial restatement on the consolidated financial statements as of and for the year ended December 31, 2020 are summarized below:

Consolidated Statements of Financial Position – 2020 Restatement

	December 31,				December 31,
	2020			Adjustments	2020 (As Restated)
Assets
Current assets:
Cash and cash equivalents	$	73,542	$	—	$	73,542
Accounts receivable, net		28,830		—		28,830
Inventories, net		197,991		—		197,991
Biological assets		46,210		—		46,210
Assets held for sale		58,504		—		58,504
Prepaid expenses and other current assets		10,140		—		10,140
Current portion of notes receivable		2,645		—		2,645
Total current assets		417,862		—		417,862
Deferred tax asset		5,528		—		5,528
Notes receivable		2,000		—		2,000
Property, plant and equipment, net		242,855		—		242,855
Right-of-use assets, net		267,168		—		267,168
Intangible assets, net		797,401		(89,767)		707,634
Goodwill		470,144		68,681		538,825
Investments		16,264		—		16,264
Prepaid acquisition consideration		132,234		—		132,234
Other assets		35,135		—		35,135
Total assets	$	2,386,591	$	(21,086)	$	2,365,505
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	47,043	$	—	$	47,043
Accrued expenses		57,475		—		57,475
Income tax payable		79,649		—		79,649
Current portion of lease liability		15,710		—		15,710
Current portion of notes payable		6,500		—		6,500
Liabilities held for sale		7,181		—		7,181
Other current liabilities		6,568		—		6,568
Total current liabilities		220,126		—		220,126
Deferred tax liability		226,465		(25,660)		200,805
Notes payable		285,001		—		285,001
Lease liability		270,495		—		270,495
Non-controlling interest redemption liability		2,694		—		2,694
Contingent consideration liability		1,898		—		1,898
Other long term liability		3,698		—		3,698
Total liabilities		1,010,377		(25,660)		984,717
Shareholders’ equity:
Share capital		1,754,412		—		1,754,412
Treasury shares		(5,208)		—		(5,208)
Reserves		(177,744)		—		(177,744)
Accumulated deficit		(194,645)		4,574		(190,071)
Redeemable non-controlling interest contingency		(2,694)		—		(2,694)
Total Curaleaf Holdings, Inc. shareholders' equity		1,374,121		4,574		1,378,695
Non-controlling interest		2,093		—		2,093
Total shareholders’ equity		1,376,214		4,574		1,380,788
Total liabilities and shareholders’ equity	$	2,386,591	$	(21,086)	$	2,365,505

Consolidated Statements of Profits and Losses and Other Comprehensive Loss – 2020 Restatement

	Year ended
	December 31,				December 31,
	2020			Adjustments	2020 (As Restated)
Revenues:
Retail and wholesale revenues	$	586,219	$	—	$	586,219
Management fee income		40,418		—		40,418
Total revenues		626,637		—		626,637
Cost of goods sold		311,148		—		311,148
Gross profit before impact of biological assets		315,489		—		315,489
Realized fair value amounts included in inventory sold		(149,586)		—		(149,586)
Unrealized fair value gain on growth of biological assets		224,610		—		224,610
Gross profit		390,513		—		390,513
Operating expenses:
Selling, general and administrative		227,274		—		227,274
Share-based compensation		30,879		—		30,879
Depreciation and amortization		68,676		(8,753)		59,923
Total operating expenses		326,829		(8,753)		318,076
Income (loss) from operations		63,684		8,753		72,437
Other income (expense):
Interest income		6,484		—		6,484
Interest expense		(47,903)		—		(47,903)
Interest expense related to lease liabilities		(21,099)		—		(21,099)
Gain on investment		37,560		—		37,560
Loss on impairment of goodwill and other intangible assets		(23,659)		—		(23,659)
Other expense		6,976		—		6,976
Total other expense		(41,641)		—		(41,641)
Income (loss) before provision for income taxes		22,043		8,753		30,796
Income tax expense		(83,371)		(4,179)		(87,550)
Net loss		(61,328)		4,574		(56,754)
Less: Net income (loss) attributable to non-controlling interest		407		—		407
Net loss attributable to Curaleaf Holdings, Inc.	$	(61,735)	$	4,574	$	(57,161)
Loss per share attributable to Curaleaf Holdings, Inc. – basic and diluted	$	(0.11)	$	0.01	$	(0.10)
Weighted average common shares outstanding – basic and diluted		557,192,899		—		557,192,899

Consolidated Statements of Cash Flows – 2020 Restatement

	Year ended
	December 31,				December 31,
	2020			Adjustments	2020 (As Restated)
Cash flows from operating activities:
Net loss	$	(61,328)	$	4,574	$	(56,754)
Adjustments to reconcile loss to net cash provided (used) in operating activities:
Depreciation and amortization		88,466		(8,753)		79,713
Share-based compensation		29,361		—		29,361
Non-cash bonus		1,518		—		1,518
Non-cash interest expense		6,590		—		6,590
Unrealized gain on changes in fair value of biological assets		(224,610)		—		(224,610)
Realized fair value amounts included in inventory sold		149,586		—		149,586
Impairment loss		23,659		—		23,659
(Gain)/loss on sale of property, plant and equipment		550		—		550
Deferred taxes		7,541		4,179		11,720
Gain on investment		(37,566)		—		(37,566)
Changes in operating assets and liabilities
Accounts receivable		5,956		—		5,956
Biological assets		55,707		—		55,707
Inventories		(92,384)		—		(92,384)
Prepaid expenses and other current assets		4,748		—		4,748
Other assets		(17,702)		—		(17,702)
Accounts payable		9,958		—		9,958
Income taxes payable		57,753		—		57,753
Accrued expenses		4,552		—		4,552
Net cash provided (used) in operating activities		12,355		—		12,355
Cash flows from investing activities:
Purchases of property and equipment		(126,273)		—		(126,273)
Proceeds from sale of entity		1,004		—		1,004
Payments made on completion on acquisitions		(59,695)		—		(59,695)
Prepayment for acquisition consideration		(7,500)		—		(7,500)
Payment in connection with option to acquire an entity		—		—		—
Amounts advanced for notes receivable		(4,646)		—		(4,646)
Net cash used in investing activities		(197,110)		—		(197,110)
Cash flows from financing activities:
Cash received from financing agreement		186,235		—		186,235
Proceeds from sale leaseback		42,466		—		42,466
Minority buyouts		(2,508)		—		(2,508)
Lease liability payments		(26,762)		—		(26,762)
Cash received in private placement		24,552		—		24,552
Principal payments on notes payable		(2,920)		—		(2,920)
Exercise of stock options		3,013		—		3,013
Net cash provided by financing activities		224,076		—		224,076
Net change in cash		39,321		—		39,321
Cash at beginning of period		42,310		—		42,310
Cash held for sale		(8,089)		—		(8,089)
Cash at end of period	$	73,542	$	—	$	73,542

Specifically, as it relates to purchase price allocation, the effects of the restatement of the allocation of purchase consideration are summarized below:

	December 31,				December 31,
	2020				2020 (As Restated)
Purchase price allocation	Cura			Adjustments	Cura
Assets acquired:
Cash	$	12,755	$	—	$	12,755
Accounts receivable, net		11,027		—		11,027
Prepaid expenses and other current assets		2,232		—		2,232
Inventory		22,074		—		22,074
Biological assets		—		—		—
Property, plant and equipment, net		7,465		—		7,465
Right-of-use assets		9,047		—		9,047
Other assets		832		—		832
Intangible assets :
Licenses		135,060		(134,420)		640
Trade name		28,340		94,300		122,640
Service agreements		59,030		(59,030)		—
Know-how		—		—		—
Non-compete agreements		4,950		630		5,580
Goodwill		113,252		68,681		181,933
Deferred tax liabilities		(58,971)		29,839		(29,132)
Liabilities assumed		(22,652)		—		(22,652)
Consideration transferred	$	324,441	$	—	$	324,441

Number of Share Options & RSUs

During the period ended December 31, 2021, management determined that prior period financial statements needed to be restated to correct an error related to disclosures around the number of share options and RSUs forfeited, expired, and outstanding as of December 31, 2020.

Adjustments have been retrospectively made to the comparative period as of and for the year ended December 31, 2020, to reflect mandatory disclosures associated with the reconciliation of share options and RSUs. Refer to Note 13 – Share-based payment arrangements of these Financial Statements for disclosures that reflect these adjustments. The correction of this error did not result in any changes to the Company’s consolidated statements of financial position, consolidated statements of profits and losses and other comprehensive loss, or consolidated statements of cash flows.