Acquisition of Emerald Health Therapeutics, Inc. |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Business Combination and Asset Acquisition [Abstract] | |
| Acquisition of Emerald Health Therapeutics, Inc. | Acquisition of Emerald Health Therapeutics, Inc. On May 11, 2022, the Company entered into the Arrangement Agreement, as amended on June 14, 2022, July 15, 2022 and October 14, 2022 with EHT, pursuant to a plan of arrangement under the Business Corporations Act (British Columbia). The Acquisition was consummated on November 10, 2022 (the "Closing Date").
The primary purpose of the Acquisition was to utilize EHT's remaining cash and cash equivalents and liquidate the primary real estate asset owned by EHT in order to fund the Company's operations. EHT is currently in the final stages of its realization process to wind down all prior operations and liquidate substantially all of its remaining assets, including AVI (Note 13). As of March 31, 2023, the Company has divested both of EHT's former operating entities and are in the process of resolving legacy tax matters with the Canadian tax authorities. In negotiating the Exchange Ratio, the Company performed a review of EHT's assets and the costs expected to wind down operations. The remaining wind-down costs consist primarily of legal fees related to divesting of EHT’s assets and post-closing general corporate matters, other professional fees for accounting and tax, tax payments, insurance, contract termination costs and operational costs through the cease operations date at each site. As of March 31, 2023, the Company estimates that EHT will incur an additional $307,000 in wind-down costs. However, there are inherent risks and uncertainties around the ultimate liquidation value of EHT.
Divestiture of Verdélite
On November 10, 2022, EHT and C3, a third-party, entered into the Verdélite SPA, as amended, effective November 8, 2022, pursuant to which C3 would acquire all of the outstanding shares of VDL, the holder of EHT's most significant real estate asset.
Upon closing the transactions contemplated by the Verdélite SPA on February 9, 2023, the Company sold all of the outstanding shares of VDL for an aggregate purchase price of approximately $9,385,064. Prior to closing the Acquisition EHT received a $553,800 cash deposit. Upon closing, the Company received gross proceeds, net of legal and advisory fees of $5,532,266. The remainder of the purchase price will be paid as follows: (i) $369,200 will be payable in five (5) equal monthly installments payable on the last day of each month beginning on December 31, 2023 and ending April 30, 2024, with interest in accordance with the terms of the Verdélite SPA and (ii) $2,769,000 will be payable in three (3) equal installments on each of the 18-month, 30-month, and 42-month anniversaries of the VDL Closing Date, with interest in accordance with the terms of the Verdélite SPA. The Company recognized the sale of VDL when control transferred on February 9, 2023. In accordance with recognition guidance, the Company has determined to fully reserve for the remaining receivables and will record a gain on the sale when additional cash payments are received. For the three months ended March 31, 2023, the Company has recorded a loss on sale of $307,086 based on the difference between the carrying amount of the assets sold and the net cash proceeds.
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