XML 49 R15.htm IDEA: XBRL DOCUMENT
v3.21.2

Business Acquisitions | 12 Months Ended
--- | ---
May 31, 2021
Business Combinations [Abstract] |
Business Acquisitions |
10. | Business Acquisitions
Reverse Acquisition On December 15, 2020, Tilray entered into an Arrangement Agreement (as amended, the “Arrangement Agreement” with Aphria Inc. (“Aphria”), or the “Aphria-Tilray business combination”, pursuant to which Tilray acquired all of the issued and outstanding common shares of Aphria pursuant to a plan of arrangement (the “Plan of Arrangement”) under the Ontario Business Corporations Act (the “Arrangement”) with the primary objective to increase its scalable operational footprint, expand its portfolio of diverse medical and adult-use cannabis brands and products, expand its multi-continent distribution network, and gain a robust capital structure to fund a global expansion strategy. The transaction closed on April 30, 2021 (“Closing Date”). The fair value of the purchase price is, as follows:
|  | April 30, 2021 |
Number of Tilray common shares outstanding at acquisition date |  |  | 179,635,973 |
Conversion ratio |  |  | 0.8381 |
Tilray common shares issued at closing |  |  | 214,337,159 |
Market share price of Aphria converted stock units |  | $ | 14.62 |
Fair value of Tilray common stock transferred to Aphria shareholders |  |  | 3,133,609 |
Consideration related to stock-based compensation (1) |  |  | 71,297 |
Total fair value of consideration transferred |  | $ | 3,204,906 |
(1) | On acquisition date there was consideration in the form of 1,207,010 restricted stock units and 4,782,132 stock options that had been issued before the acquisition date to employees and non-employees of Tilray. The pre-combination fair value of these awards is $17,646 and $53,650, respectively. The consideration will be reassessed and adjusted to fair value each quarter through General and Administration Expense in the Statement of Loss and Comprehensive Loss.
The Company is in the process of assessing the fair value of the net assets acquired and, as a result, the fair value of the net assets acquired may be subject to adjustments pending completion of final valuations and post-closing adjustments. The table below summarizes preliminary estimated fair value of the assets acquired and the liabilities assumed at the effective acquisition date.
|  | April 30, 2021 |
Assets |  |  |  |
Cash and cash equivalents |  | $ | 375,673 |
Accounts receivable |  |  | 28,054 |
Inventory |  |  | 76,547 |
Prepaids and other current assets |  |  | 8,960 |
Capital assets |  |  | 136,637 |
Right-of-use assets, operating leases |  |  | 12,606 |
Definite-lived intangible assets (estimated useful life) |  |  |  |
Distribution channel (15 years) |  |  | 404,000 |
Customer relationships (15 years) |  |  | 59,000 |
Know how (5 years) |  |  | 115,000 |
Brands (10 to 25 years) |  |  | 301,000 |
Indefinite-lived intangible assets |  |  |  |
Licenses |  |  | 200,000 |
Goodwill |  |  | 2,221,613 |
Other assets |  |  | 22,879 |
Total assets |  |  | 3,961,969 |
Liabilities |  |  |  |
Accounts payable |  |  | 62,292 |
Accrued expenses and other current liabilities |  |  | 85,120 |
Accrued lease obligations |  |  | 21,962 |
Warrant liability |  |  | 79,402 |
Deferred tax liability |  |  | 236,391 |
Convertible notes |  |  | 267,862 |
Other liabilities |  |  | 4,034 |
Total liabilities |  |  | 757,063 |
Net assets acquired |  | $ | 3,204,906 |
In connection with the reverse acquisition, the Company incurred transaction costs of $42,000. The goodwill of $2,221,613 is primarily related to factors such as synergies and market share and reportable under the Company’s Cannabis and Wellness segment is as follows on a preliminary basis:
|  | Cannabis |  |  | Wellness |  |  | Total |
Goodwill related to Tilray |  |  | 2,144,143 |  |  |  | 77,470 |  |  |  | 2,221,613 |
Goodwill is not deductible for tax purposes. The financial results of Tilray are included in the Company’s financial statements since acquisition date. The Consolidated Statements of Loss and Comprehensive Loss include net revenue of $13,018 and net income of $645. Supplemental pro forma information (unaudited) The unaudited pro forma information for the periods set forth below gives effect to the reverse acquisition as if the reverse acquisition had occurred as of June 1, 2019. This pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the transactions been consummated as of that time.
|  | Years ended May 31, |
|  | 2021 |  |  | 2020 |
Revenue |  | $ | 692,270 |  |  | $ | 624,950 |
Net loss |  | $ | (795,251 | ) |  | $ | (649,276 | )
Net loss per share - basic and diluted |  | $ | (1.77 | ) |  | $ | (1.71 | )
The above pro forma revenue and net loss include adjustments directly attributable to the business combination and related primarily non-recurring transaction costs of $37,000, increase in intangible assets amortization expense of $28,000 and decrease in interest expense associated with Tilray’s convertible senior notes of 5,000 Acquisition of SW Brewing Company, LLC On November 25, 2020, the Company, through its wholly-owned subsidiary Four Twenty Corporation, completed the purchase of all the shares of SW Brewing Company, LLC which is the holding company of 100% of the common shares of SweetWater. The purchase price consisted of cash consideration of $255,543, share consideration of 8,232,810 shares, and additional cash consideration of up to $66,000 contingent on SweetWater achieving specified EBITDA targets. The fair value of the shares on the date the Company closed the acquisition was $65,889, the fair value of the contingent consideration on the date the Company closed the acquisition was $58,959. The Company is in the process of assessing the fair value of the net assets acquired and, as a result, the fair value of the net assets acquired may be subject to adjustments pending completion of final valuations and post-closing adjustments. The table below summarizes preliminary estimated fair value of the assets acquired and the liabilities assumed at the effective acquisition date.
|  | Amount |
Consideration |  |  |  |
Cash |  | $ | 255,543 |
Shares |  |  | 65,889 |
Contingent consideration |  |  | 58,959 |
Total consideration |  |  | 380,391 |
Net assets acquired |  |  |  |
Current assets |  |  |  |
Cash and cash equivalents |  |  | 6,988 |
Accounts receivable |  |  | 3,810 |
Prepaids and other current assets |  |  | 528 |
Inventory |  |  | 4,815 |
Long-term assets |  |  |  |
Capital assets |  |  | 43,093 |
Customer relationships |  |  | 155,000 |
Intellectual property, trademarks & brands |  |  | 92,000 |
Non-compete agreements |  |  | 10,000 |
Goodwill |  |  | 100,202 |
Total assets |  |  | 416,436 |
Current liabilities |  |  |  |
Accounts payable and accrued liabilities |  |  | 5,289 |
Current portion of lease liabilities |  |  | 434 |
Long-term liabilities |  |  |  |
Lease liabilities |  |  | 30,322 |
Total liabilities |  |  | 36,045 |
Total net assets acquired |  | $ | 380,391 |
The contingent consideration from the acquisition of SweetWater is a fair value measurement and as such is carried at fair value. The fair value has been determined by discounting future expected cash outflows at a discount rate of 5%. The inputs into the future expected cash outflows are level 3 on the fair value hierarchy and are subject to volatility and uncertainty, which could significantly affect the fair value of the contingent consideration in future periods. As at May 31, 2021, the fair value of the contingent consideration was $60,657, expected to be paid in December 2023. The goodwill of $102,202 is primarily related to factors such as synergies and market opportunities and reportable under the Company’s Beverage Alcohol segment. Supplemental pro forma information (unaudited) The unaudited pro forma information for the periods set forth below gives effect to the acquisition of SW Brewing Company, LLC as if the transaction had occurred as of June 1, 2019. This pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the transactions been consummated as of that time.
|  | Years ended May 31, |
|  | 2021 |  |  | 2020 |
Revenue |  | $ | 542,000 |  |  | $ | 470,000 |
Net loss |  | $ | (328,000 | ) |  | $ | (80,000 | )
Net loss per share - basic and diluted |  | $ | (0.73 | ) |  | $ | (0.37 | )

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration