Curaleaf Holdings Inc. announced in a press release that it will be making adjustments to its previously issued audited annual consolidated financial statements for the fiscal year ended December 31, 2021, and unaudited interim consolidated financial statements for the first, second and third quarters of the fiscal year ended December 31, 2022, as well as other related adjustments. The company’s Audit Committee, with the assistance of outside counsel and consultants, conducted a review of certain purchases and sales of products through its wholesale channel to determine whether they had commercial substance and to confirm the timing and appropriateness of revenue recognition from those transactions, mainly in the last quarter of 2021 and the first and second quarters of 2022.
Curaleaf has determined that adjustments will result in a reduction of aggregate revenue for the full 2021 fiscal year of approximately 1.25%, and a reduction of expected aggregate revenue for the full 2022 fiscal year of approximately 0.75%. The company expects its revenue for the fourth quarter of 2022 to be approximately US$352 million, and its aggregate revenue for the full 2022 fiscal year to be approximately US$1.337 billion.
Due to the findings of the Audit Committee review, the company has determined, on the Audit Committee’s recommendation and after consultation with its independent registered public accounting firms for 2021 and 2022, that its previously issued financial statements should be restated and reissued and should no longer be relied upon. Similarly, any previously filed or furnished reports, related earnings releases, related management’s discussion and analysis, investor presentations or similar communications of Curaleaf describing the company’s financial results or other financial information for the fiscal year ended December 31, 2021, or the quarters of 2022, and any previously issued forecast or guidance for the fiscal year ended December 31, 2022, should no longer be relied upon. In addition, Curaleaf determined that there were additional material weaknesses in its internal controls at the time of its prior financial statements.
The company’s 2021 Annual Financial Statements and 2022 Interim Financial Statements will be restated to effect the revenue adjustments described above, as well as other related flow through adjustments. Additionally, the 2022 Interim Financial Statements will be restated to reflect the company’s transition from IFRS to U.S. generally accepted accounting principles (GAAP), as required under Canadian securities legislation.
Curaleaf began implementing and enhancing certain procedures and controls early in the fourth quarter of 2022 under the leadership of a new executive accounting team. In consultation with the Audit Committee and its outside counsel and consultants, the company will continue to enhance its procedures and controls based on information identified during the review and restatement process.
According to Ed Kremer, Curaleaf’s chief financial officer, the company is committed to accurate and transparent financial reporting. Kremer stated that they have begun taking a number of remediation steps and are committed to taking additional steps to enhance their controls so that this situation does not repeat in the future. He added that the company remains focused on executing its strategies and continuing to expand its product innovations to strengthen its overall position.
Curaleaf plans to file its audited annual consolidated financial statements for the fiscal year ended December 31, 2022, and related management’s discussion and analysis by May 1, 2023. The company also expects to release its unaudited interim consolidated financial statements for the three months ended March 31, 2023, on or about May 17, 2023.
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