Full Press Release Details
AURORA CANNABIS INC.
Condensed Consolidated Interim Financial
For the three and nine months ended March 31,
(in Canadian Dollars)
| Condensed Consolidated Interim Statements of Financial Position | 3 |
| Condensed Consolidated Interim Statements of Comprehensive Loss | 4 |
| Condensed Consolidated Interim Statements of Changes in Equity | 6 |
| Condensed Consolidated Interim Statements of Cash Flows | 8 |
| Notes to the Condensed Consolidated Interim Financial Statements |
| Note 1 | Nature of Operations | 9 | Note 14 | Convertible Debentures | 24 | |
| Note 2 | Significant Accounting Policies and Judgments | 9 | Note 15 | Loans and Borrowings | 25 | |
| Note 3 | Accounts Receivable | 12 | Note 16 | Share Capital | 27 | |
| Note 4 | Strategic Investments | 12 | Note 17 | Share-Based Compensation | 28 | |
| Note 5 | Marketable Securities and Derivatives | 15 | Note 18 | Earnings Per Share | 29 | |
| Note 6 | Investments in Associates and Joint Ventures | 17 | Note 19 | Other (Losses) Gains | 30 | |
| Note 7 | Biological Assets | 17 | Note 20 | Supplementary Cash Flow Information | 30 | |
| Note 8 | Inventory | 18 | Note 21 | Commitments and Contingencies | 30 | |
| Note 9 | Property, Plant and Equipment | 19 | Note 22 | Revenue | 32 | |
| Note 10 | Business Combinations | 20 | Note 23 | Segmented Information | 33 | |
| Note 11 | Non-Controlling Interests | 21 | Note 24 | Fair Value of Financial Instruments | 34 | |
| Note 12 | Assets Held for Sale | 21 | Note 25 | Financial Instruments Risk | 35 | |
| Note 13 | Intangible Assets and Goodwill | 22 | Note 26 | Subsequent Events | 36 |
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Financial Position
As at March 31, 2020 and June 30, 2019
(Unaudited - Amounts reflected in thousands of Canadian dollars)
| Notes | March 31, 2020 | June 30, 2019 | |||
| $ | $ | ||||
| Assets | |||||
| Current | |||||
| Cash and cash equivalents | 15(a) | 230,208 | 172,727 | ||
| Restricted cash | 15(a) | - | 46,066 | ||
| Accounts receivable | 3, 25(a) | 80,296 | 103,493 | ||
| Income taxes receivable | 51 | 8,833 | |||
| Marketable securities | 5(a) | 11,834 | 143,248 | ||
| Derivatives | 5(b) | 9,585 | - | ||
| Biological assets | 7 | 30,572 | 51,836 | ||
| Inventory | 8 | 251,189 | 113,641 | ||
| Prepaids and other current assets | 31,884 | 24,323 | |||
| Assets held for sale | 12 | 8,630 | - | ||
| 654,249 | 664,167 | ||||
| Property, plant and equipment | 9 | 1,054,862 | 765,567 | ||
| Derivatives | 5(b) | 39,909 | 86,409 | ||
| Deposits | 13,002 | 6,926 | |||
| Loan receivable | 3,312 | - | |||
| Investments in associates and joint ventures | 6 | 35,850 | 118,845 | ||
| Intangible assets | 13 | 500,950 | 688,366 | ||
| Goodwill | 13 | 2,415,522 | 3,172,550 | ||
| Total assets | 4,717,656 | 5,502,830 | |||
| Liabilities | |||||
| Current | |||||
| Accounts payable and accrued liabilities | 25(b) | 128,622 | 152,884 | ||
| Deferred revenue | 22 | 3,841 | 749 | ||
| Convertible debentures | 14 | 31,880 | 235,909 | ||
| Loans and borrowings | 15 | 21,772 | 13,758 | ||
| Contingent consideration payable | 24 | 18,167 | 28,137 | ||
| Deferred gain on derivatives | 20 | 728 | |||
| Provisions | 21(a) | 2,135 | 4,200 | ||
| 206,437 | 436,365 | ||||
| Convertible debentures | 14 | 292,813 | 267,672 | ||
| Loans and borrowings | 15 | 246,246 | 127,486 | ||
| Derivative liability | 14(ii) | 2,571 | 177,395 | ||
| Other long-term liability | - | 11,979 | |||
| Deferred tax liability | 71,327 | 91,886 | |||
| Total liabilities | 819,394 | 1,112,783 | |||
| Shareholders' equity | |||||
| Share capital | 16 | 5,675,534 | 4,673,118 | ||
| Reserves | 142,923 | 139,327 | |||
| Accumulated other comprehensive loss | (182,570 | ) | (143,170 | ) | |
| Deficit | (1,717,812 | ) | (283,638 | ) | |
| Total equity attributable to Aurora shareholders | 3,918,075 | 4,385,637 | |||
| Non-controlling interests | 11 | (19,813 | ) | 4,410 | |
| Total equity | 3,898,262 | 4,390,047 | |||
| Total liabilities and equity | 4,717,656 | 5,502,830 |
Nature of Operations (Note 1)
Strategic Investments (Note 4)
Commitments and Contingencies (Note 21)
Subsequent Events (Note 26)
The accompanying notes are an integral part of these Condensed
Consolidated Interim Financial Statements.
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Comprehensive Loss
Three and nine months ended March 31, 2020 and 2019
(Unaudited - Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
| Three months ended March 31, | Nine months ended March 31, | ||||||||
| Notes | 2020 | 2019 | 2020 | 2019 | |||||
| $ | $ | $ | $ | ||||||
| Revenue from sale of goods | 22 | 88,596 | 72,239 | 235,576 | 158,108 | ||||
| Revenue from provision of services | 22 | 1,013 | 2,999 | 4,212 | 8,804 | ||||
| Excise taxes | (14,089 | ) | (10,093 | ) | (32,996 | ) | (17,915 | ) | |
| Net revenue | 75,520 | 65,145 | 206,792 | 148,997 | |||||
| Cost of sales | 43,632 | 28,914 | 109,585 | 68,676 | |||||
| Gross profit before fair value adjustments | 31,888 | 36,231 | 97,207 | 80,321 | |||||
| Changes in fair value of inventory sold | 15,380 | 17,407 | 56,692 | 48,968 | |||||
| Unrealized gain on changes in fair value of biological assets | 7 | (10,897 | ) | (33,798 | ) | (70,513 | ) | (61,461 | ) |
| Gross profit | 27,405 | 52,622 | 111,028 | 92,814 | |||||
| Expense | |||||||||
| General and administration | 56,790 | 50,786 | 186,662 | 130,350 | |||||
| Sales and marketing | 23,357 | 16,318 | 74,499 | 68,435 | |||||
| Acquisition costs | 1,300 | 2,183 | 4,323 | 22,855 | |||||
| Research and development | 5,601 | 3,516 | 18,424 | 8,753 | |||||
| Depreciation and amortization | 9, 13 | 14,721 | 18,182 | 53,777 | 52,567 | ||||
| Share-based compensation | 17(a)(b) | 9,204 | 39,254 | 53,924 | 79,534 | ||||
| 110,973 | 130,239 | 391,609 | 362,494 | ||||||
| Loss from operations | (83,568 | ) | (77,617 | ) | (280,581 | ) | (269,680 | ) | |
| Other (expense) income | |||||||||
| Interest and other income | 2,197 | 1,926 | 5,368 | 2,804 | |||||
| Finance and other costs | (6,678 | ) | (13,993 | ) | (48,466 | ) | (32,728 | ) | |
| Foreign exchange ("FX") loss | (11,678 | ) | (45 | ) | (16,386 | ) | (553 | ) | |
| Other (losses) gains | 19 | 170 | (70,390 | ) | (40,981 | ) | 38,749 | ||
| Impairment of property, plant and equipment | 9, 12 | (19,445 | ) | - | (71,370 | ) | - | ||
| Impairment of investment in associates | 6 | (28,176 | ) | - | (74,402 | ) | (69,957 | ) | |
| Impairment of intangible assets | 13 | - | (9,002 | ) | (158,695 | ) | (9,002 | ) | |
| Impairment of goodwill | 13 | - | - | (762,231 | ) | - | |||
| (63,610 | ) | (91,504 | ) | (1,167,163 | ) | (70,687 | ) | ||
| Loss before taxes | (147,178 | ) | (169,121 | ) | (1,447,744 | ) | (340,367 | ) | |
| Income tax recovery | |||||||||
| Current | 884 | 986 | 5,586 | 7,485 | |||||
| Deferred, net | 8,931 | 7,940 | 9,267 | 37,226 | |||||
| 9,815 | 8,926 | 14,853 | 44,711 | ||||||
| Net loss | (137,363 | ) | (160,195 | ) | (1,432,891 | ) | (295,656 | ) | |
| Other comprehensive (loss) income ("OCI") that will not be reclassified to net loss | |||||||||
| Deferred tax recovery | (888 | ) | (10,819 | ) | 2,197 | 7,700 | |||
| Unrealized loss on marketable securities | 5(a) | (14,314 | ) | 81,160 | (44,869 | ) | (25,600 | ) | |
| (15,202 | ) | 70,341 | (42,672 | ) | (17,900 | ) | |||
| Other comprehensive (loss) income that may be reclassified to net loss | |||||||||
| Share of loss from investment in associates | (102 | ) | - | (125 | ) | - | |||
| Foreign currency translation gain (loss) | 3,669 | (3,937 | ) | (1,828 | ) | (4,191 | ) | ||
| 3,567 | (3,937 | ) | (1,953 | ) | (4,191 | ) | |||
| Total other comprehensive loss | (11,635 | ) | 66,404 | (44,625 | ) | (22,091 | ) | ||
| Comprehensive loss | (148,998 | ) | (93,791 | ) | (1,477,516 | ) | (317,747 | ) |
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Comprehensive Loss
Three and nine months ended March 31, 2020 and 2019
(Unaudited - Amounts reflected in thousands of Canadian dollars, except share and per share amounts)
| Three months ended March 31, | Nine months ended March 31, | ||||||||
| Notes | 2020 | 2019 | 2020 | 2019 | |||||
| $ | $ | $ | $ | ||||||
| Net loss attributable to: | |||||||||
| Aurora Cannabis Inc. | (137,395 | ) | (158,354 | ) | (1,410,768 | ) | (290,644 | ) | |
| Non-controlling interests | 32 | (1,841 | ) | (22,123 | ) | (5,012 | ) | ||
| Comprehensive loss attributable to: | |||||||||
| Aurora Cannabis Inc. | (148,550 | ) | (86,596 | ) | (1,454,906 | ) | (307,359 | ) | |
| Non-controlling interests | (448 | ) | (7,195 | ) | (22,610 | ) | (10,388 | ) | |
| Net loss per share | |||||||||
| Basic and diluted | 1, 18 | ($1.37 | ) | ($1.89 | ) | ($15.34 | ) | ($3.70 | ) |
The accompanying notes are an integral part of these Condensed
Consolidated Interim Financial Statements.
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Changes in Equity
Nine months ended March 31, 2020
(Unaudited - Amounts reflected in thousands of Canadian dollars, except share amounts)
| Share Capital (1) | Reserves | AOCI | |||||||||||||||||||||||||||||||
| Note | Common Shares | Amount | Share-Based Compensation | Compensation Options/ Warrants | Convertible Notes | Change in Ownership Interest | Total Reserves | Fair Value | Deferred Tax | Associate OCI Pick-up | Foreign Currency Translation | Total AOCI | Retained Earnings (Deficit) | Non-Controlling Interests | Total | ||||||||||||||||||
| # | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance, June 30, 2019 | 84,786,562 | 4,673,118 | 143,947 | 40,495 | 41,685 | (86,800 | ) | 139,327 | (156,249 | ) | 18,295 | 352 | (5,568 | ) | (143,170 | ) | (283,638 | ) | 4,410 | 4,390,047 | |||||||||||||
| Shares released for earn out payments | 16(b) | 352,424 | 11,958 | - | (5,087 | ) | - | - | (5,087 | ) | - | - | - | - | - | - | - | 6,871 | |||||||||||||||
| Shares issued through equity financing | 16(b) | 18,193,530 | 535,761 | - | - | - | - | - | - | - | - | - | - | - | - | 535,761 | |||||||||||||||||
| Share issuance costs | - | (11,315 | ) | - | - | - | - | - | - | - | - | - | - | - | - | (11,315 | ) | ||||||||||||||||
| Deferred tax on share issuance costs | - | 2,621 | - | - | - | - | - | - | - | - | - | - | - | - | 2,621 | ||||||||||||||||||
| Conversion of convertible notes | 14(i) | 5,761,260 | 433,177 | - | - | (41,266 | ) | - | (41,266 | ) | - | - | - | - | - | - | - | 391,911 | |||||||||||||||
| Deferred tax on convertible notes | - | 1,888 | - | - | - | - | - | - | - | - | - | - | 82 | - | 1,970 | ||||||||||||||||||
| Exercise of stock options | 17(a) | 92,723 | 6,266 | (3,544 | ) | - | - | - | (3,544 | ) | - | - | - | - | - | - | - | 2,722 | |||||||||||||||
| Exercise of warrants | 16(c) | 986 | 102 | - | (29 | ) | - | - | (29 | ) | - | - | - | - | - | - | - | 73 | |||||||||||||||
| Exercise of RSUs | 17(b) | 31,300 | 1,595 | (1,595 | ) | - | - | - | (1,595 | ) | - | - | - | - | - | - | - | - | |||||||||||||||
| Share-based compensation (2) | 17 | - | - | 48,068 | 7,049 | - | - | 55,117 | - | - | - | - | - | - | - | 55,117 | |||||||||||||||||
| Change in ownership interests in subsidiaries | 11 | 217,554 | 20,363 | - | - | - | - | - | - | - | - | - | - | (18,263 | ) | (2,100 | ) | - | |||||||||||||||
| Choom marketable securities transferred to investment in associate | 4(g) | - | - | - | - | - | - | - | 5,225 | - | - | - | 5,225 | (5,225 | ) | - | - | ||||||||||||||||
| Comprehensive income (loss) for the period | - | - | - | - | - | - | - | (44,869 | ) | 2,197 | (125 | ) | (1,828 | ) | (44,625 | ) | (1,410,768 | ) | (22,123 | ) | (1,477,516 | ) | |||||||||||
| Balance, March 31, 2020 | 109,436,339 | 5,675,534 | 186,876 | 42,428 | 419 | (86,800 | ) | 142,923 | (195,893 | ) | 20,492 | 227 | (7,396 | ) | (182,570 | ) | (1,717,812 | ) | (19,813 | ) | 3,898,262 |
As at March 31, 2020, there are
50,282 shares in escrow (June 30, 2019 - 60,271 common shares). These securities were originally deposited in escrow on November 30,
2017 in connection with the acquisition of H2 Biopharma Inc. The escrowed common shares are to be released upon receipt of relevant
licenses to cultivate and sell cannabis. During the nine months ended March 31, 2020, the Company released 9,989 escrowed common
shares on achievement of the milestones (nine months ended March 31, 2019 - 2,099,257 common shares).
The accompanying notes are an integral part
of these Condensed Consolidated Interim Financial Statements.
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Changes in Equity
Nine months ended March 31, 2019
(Unaudited - Amounts reflected in thousands of Canadian dollars, except share amounts)
| Share Capital (1) | Reserves | AOCI | |||||||||||||||||||||||||||||||
| Common Shares | Amount | Share-Based Compensation | Compensation Options/ Warrants | Convertible Notes | Change in Ownership Interest | Total Reserves | Fair Value | Deferred Tax | Associate OCI Pick-up | Foreign Currency Translation | Total AOCI | Retained Earnings | Non-Controlling Interests | Total | |||||||||||||||||||
| # | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance, June 30, 2018 | 47,342,761 | 1,466,433 | 38,335 | 307 | 41,792 | (85,719 | ) | (5,285 | ) | (539 | ) | (55 | ) | - | 61 | (533 | ) | 87,749 | 4,562 | 1,552,926 | |||||||||||||
| Shares issued for business combinations & asset acquisitions | 35,863,343 | 3,049,871 | 75,490 | 27,111 | - | - | 102,601 | - | - | - | - | - | - | - | 3,152,472 | ||||||||||||||||||
| Shares issued for earn out payments | 20,311 | 18,227 | - | - | - | - | - | - | - | - | - | - | - | - | 18,227 | ||||||||||||||||||
| Conversion of convertible notes | 27,611 | 1,539 | - | - | (469 | ) | - | (469 | ) | - | - | - | - | - | - | - | 1,070 | ||||||||||||||||
| Deferred tax on convertible notes | - | - | - | - | 425 | - | 425 | - | - | - | - | - | - | - | 425 | ||||||||||||||||||
| Exercise of stock options | 1,114,911 | 100,799 | (58,923 | ) | - | - | - | (58,923 | ) | - | - | - | - | - | - | 415 | 42,291 | ||||||||||||||||
| Exercise of warrants | 133,766 | 10,049 | - | (1,554 | ) | - | - | (1,554 | ) | - | - | - | - | - | - | - | 8,495 | ||||||||||||||||
| Exercise of compensation options | 12 | 2 | - | (1 | ) | - | - | (1 | ) | - | - | - | - | - | - | - | 1 | ||||||||||||||||
| Exercise of RSUs | 57,682 | 1,966 | (1,966 | ) | - | - | - | (1,966 | ) | - | - | - | - | - | - | - | - | ||||||||||||||||
| Forfeited options | - | - | (541 | ) | - | - | - | (541 | ) | - | - | - | - | - | 541 | - | - | ||||||||||||||||
| Share-based compensation | - | - | 71,133 | 8,401 | - | - | 79,534 | - | - | - | - | - | - | - | 79,534 | ||||||||||||||||||
| Contribution from NCI | - | - | - | - | - | - | - | - | - | - | - | - | - | 5,850 | 5,850 | ||||||||||||||||||
| Change in ownership interests in subsidiaries | - | - | - | - | - | (4 | ) | (4 | ) | - | - | - | - | - | - | 4 | - | ||||||||||||||||
| Australis Capital first tranche private placement | - | 7,800 | - | - | - | - | - | - | - | - | - | - | - | - | 7,800 | ||||||||||||||||||
| Australis Capital non-controlling interest reclass on loss of control | - | (6,348 | ) | - | - | - | - | - | - | - | - | - | - | - | 6,348 | - | |||||||||||||||||
| Spin-out of Australis Capital | - | - | - | - | - | - | - | - | - | - | - | - | (151,695 | ) | (6,348 | ) | (158,043 | ) | |||||||||||||||
| Reclass gain from Australis Capital shares on derecognition upon spin-out | - | - | - | - | - | - | - | (76,873 | ) | 6,402 | - | - | (70,471 | ) | 70,471 | - | - | ||||||||||||||||
| Comprehensive income (loss) for the period | - | - | - | - | - | - | - | (25,600 | ) | 7,700 | - | (4,191 | ) | (22,091 | ) | (290,644 | ) | (5,012 | ) | (317,747 | ) | ||||||||||||
| Balance, March 31, 2019 | 84,560,397 | 4,650,338 | 123,528 | 34,264 | 41,748 | (85,723 | ) | 113,817 | (103,012 | ) | 14,047 | - | (4,130 | ) | (93,095 | ) | (283,578 | ) | 5,819 | 4,393,301 |
Common share amounts have been retrospectively restated for all prior periods to reflect the Share Consolidation
effected on May 11, 2020. Refer to Note 2(a) - Basis of Presentation and Measurement for more information.
The accompanying notes are an integral part of these Condensed
Consolidated Interim Financial Statements.
AURORA CANNABIS INC.
Condensed Consolidated Interim Statements of Cash Flows
Nine months ended March 31, 2020 and 2019
(Unaudited - Amounts reflected in thousands of Canadian dollars)
| Nine months ended March 31, | |||||
| Notes | 2020 | 2019 | |||
| $ | $ | ||||
| Operating activities | |||||
| Net loss for the period | (1,432,891 | ) | (295,656 | ) | |
| Adjustments for non-cash items: | |||||
| Unrealized gain on changes in fair value of biological assets | 7 | (70,513 | ) | (61,461 | ) |
| Changes in fair value included in inventory sold | 56,692 | 48,968 | |||
| Depreciation of property, plant and equipment | 9 | 57,746 | 35,501 | ||
| Amortization of intangible assets | 13 | 31,127 | 35,863 | ||
| Share-based compensation | 53,924 | 79,534 | |||
| Non-cash acquisition costs | - | 4,243 | |||
| Impairment of property, plant and equipment | 9 | 71,370 | - | ||
| Impairment of investment in associate | 6 | 74,402 | 69,957 | ||
| Impairment of intangible assets | 13 | 158,695 | 9,002 | ||
| Impairment of goodwill | 13 | 762,231 | - | ||
| Accrued interest and accretion expense | 14, 15 | 2,921 | 22,126 | ||
| Interest and other income | (1,834 | ) | 332 | ||
| Deferred tax expense (recovery) | (14,853 | ) | (37,226 | ) | |
| Other (losses) gains | 19 | 40,981 | (38,749 | ) | |
| Foreign exchange loss | 16,386 | 508 | |||
| Changes in non-cash working capital | 20 | (94,686 | ) | (60,579 | ) |
| Net cash used in operating activities | (288,302 | ) | (187,637 | ) | |
| Investing activities | |||||
| Marketable securities, derivatives and convertible debenture investments | 5 | (2,000 | ) | (50,055 | ) |
| Proceeds from disposal of marketable securities | 5 | 84,770 | 46,663 | ||
| Loan receivable | (3,312 | ) | - | ||
| Purchase of property, plant and equipment and intangible assets | 9 | (321,058 | ) | (246,850 | ) |
| Disposal of property, plant and equipment | 2,100 | - | |||
| Acquisition of businesses, net of cash acquired | 10 | - | 117,091 | ||
| Payment of contingent consideration | (1,993 | ) | (1,608 | ) | |
| Deposits | (5,117 | ) | (2,011 | ) | |
| Investments in associates | 6 | - | 959 | ||
| Net cash used in investing activities | (246,610 | ) | (135,811 | ) | |
| Financing activities | |||||
| Proceeds from long-term loans | 86,394 | 611,570 | |||
| Repayment of long-term loans | (57,354 | ) | (19,142 | ) | |
| Repayment of short-term loans | - | (175 | ) | ||
| Payments of lease liabilities | 15(b) | (12,926 | ) | - | |
| Restricted cash | 46,064 | (30,159 | ) | ||
| Financing fees | (1,789 | ) | (21,226 | ) | |
| Shares issued for cash, net of share issue costs | 527,241 | 50,783 | |||
| Capital contribution from non-controlling interest | - | 5,854 | |||
| Net cash provided by financing activities | 587,630 | 597,505 | |||
| Effect of foreign exchange on cash and cash equivalents | 4,763 | (2,937 | ) | ||
| Increase in cash and cash equivalents | 57,481 | 271,120 | |||
| Cash and cash equivalents, beginning of period | 172,727 | 76,785 | |||
| Cash and cash equivalents, end of period | 230,208 | 347,905 |
Supplemental cash flow information (Note 20)
The accompanying notes are an integral part of these Condensed
Consolidated Interim Financial Statements.
Aurora was incorporated under the Business
Corporations Act (British Columbia) on December 21, 2006 as Milk Capital Corp. Effective October 2, 2014,
the Company changed its name to Aurora Cannabis Inc. The Company's shares are listed on the New York Stock Exchange ("NYSE")
and the Toronto Stock Exchange ("TSX") under the trading symbol "ACB", and on the Frankfurt Stock Exchange
("FSE") under the trading symbol "21P".
The Company's head office and principal
address is Suite 500 - 10355 Jasper Avenue, Edmonton, Alberta, Canada, T5J 1Y6. The Company's registered and records office
address is Suite 1500 - 1055 West Georgia Street, Vancouver, BC V6E 4N7.
The Company's principal strategic
business lines are focused on the production, distribution and sale of cannabis in Canada and internationally. Aurora currently
conducts the following key business activities in the jurisdictions listed below:
The United States ("U.S.") represents
the largest cannabis and hemp-derived cannabidiol ("CBD") market globally and as such, Aurora continues to evaluate
its alternatives to establishing an operating footprint in the U.S. As part of the U.S. market strategy, we are considering how
various state and federal regulations will affect the Company's business prospects. The Company is committed to only engage
in activities which are permissible under both state and federal laws.
Accounting Policies and Judgments
The condensed consolidated interim financial
statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS")
and International Accounting Standards 34, "Interim Financial Reporting" ("IAS34") as issued by
the International Accounting Standards Board ("IASB"), and interpretations of the IFRS Interpretations Committee ("IFRIC").
Unless otherwise noted, all amounts are presented in thousands of Canadian dollars, except share and per share data.
The condensed consolidated interim financial
statements are presented in Canadian dollars and are prepared in accordance with the same accounting policies, critical estimates
and methods described in the Company's annual consolidated financial statements, except for the adoption of new accounting
standards and/or estimates identified in Note 2(d), Note 12 and Note 13. Given that certain information and footnote disclosures,
which are included in the annual audited consolidated financial statements, have been condensed or excluded in accordance with
IAS 34, these financial statements should be read in conjunction with our annual audited consolidated financial statements as at
and for the year ended June 30, 2019, including the accompanying notes thereto.
For comparative purposes, the Company has
reclassified certain immaterial items on the comparative consolidated statement of financial position and the consolidated statement
of comprehensive loss to conform with current period's presentation.
On May 11, 2020, the Company completed a
one-for-twelve (1:12) reverse share split of all of its issued and outstanding common shares ("Share Consolidation"),
resulting in a reduction in the issued and outstanding shares from 1,321,072,394 to approximately 110,089,366. Shares reserved
under the Company's equity and incentive plans were adjusted to reflect the Share Consolidation. All share and per share
data presented in the Company's consolidated financial statements have been retroactively adjusted to reflect the Share Consolidation
unless otherwise noted.
In March 2020, the World Health Organization
declared the outbreak of COVID-19 a global pandemic. Government measures to limit the spread of COVID-19, including the closure
of non-essential businesses, did not materially disrupt the Company's operations during the third quarter of 2020. The production
and sale of cannabis have been recognized as essential services across Canada and Europe. As at March 31, 2020, we have also not