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AURORA CANNABIS INC. Condensed Interim Consolidated Financial Statements (Unaudited) For the three months ended

Key Takeaway: Interim Consolidated Financial Statements For the three months ended September (In Canadian Dollars) Condensed Interim Consolidated Statements of Financial Position 1 Condensed Interim Consolidated Statements of Comprehensive Income 2 Condensed Interim Consolidated Statements

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Interim Consolidated Financial Statements
For the three months ended September
(In Canadian Dollars)
Condensed Interim Consolidated Statements of Financial Position 1
Condensed Interim Consolidated Statements of Comprehensive Income 2
Condensed Interim Consolidated Statements of Changes in Equity 3
Condensed Interim Consolidated Statements of Cash Flows 5
Notes to the Condensed Interim Consolidated Financial Statements
Note 1 Nature of Operations 7 Note 15 Assets Held for Distribution to Owners 27
Note 2 Significant Accounting Policies and Significant Judgments 7 Note 16 Intangible Assets and Goodwill 28
Note 3 Cash and Cash Equivalents 11 Note 17 Convertible Debentures 29
Note 4 Short-term Investments 11 Note 18 Loans and Borrowings 30
Note 5 Accounts Receivable 11 Note 19 Share Capital 32
Note 6 Marketable Securities and Derivatives 11 Note 20 Share-based Payments 36
Note 7 Convertible Debenture Investments 14 Note 21 Earnings Per Share 38
Note 8 Biological Assets 15 Note 22 Finance and Other Costs 38
Note 9 Inventory 17 Note 23 Related Party Transactions 39
Note 10 Property, Plant and Equipment 18 Note 24 Commitments and Contingencies 40
Note 11 Investments in Associates and Joint Venture 19 Note 25 Segmented Information 41
Note 12 Business Combinations 22 Note 26 Fair Value of Financial Instruments 42
Note 13 Asset Acquisitions 27 Note 27 Financial Instruments Risk 44
Note 14 Controlling Interest in Aurora Nordic Cannabis 27 Note 28 Capital Management 46
Note 29 Subsequent Events 46
AURORA CANNABIS INC.
Condensed Interim Consolidated Statements
of Financial Position
September 30, 2018 and 2017
(Unaudited - In thousands of Canadian dollars)
Notes September 30, 2018 June 30, 2018
$ $
Assets
Current
Cash and cash equivalents 3 147,797 89,193
Short term investments 4 1,240 990
Accounts receivable 5, 23(c), 27(a) 40,005 15,096
Income taxes receivable 3,010 -
Marketable securities 6 346,243 59,188
Biological assets 8 10,400 13,620
Inventory 9 74,953 29,595
Prepaids and other current assets 23,736 7,594
647,384 215,276
Assets held for distribution to owners 15 - 4,422
647,384 219,698
Property, plant and equipment 10 449,872 246,352
Convertible debenture investment 7 19,700 -
Derivatives 6 138,978 124,942
Investments in associates and joint venture 11 200,956 334,442
Intangible assets 16 617,829 256,232
Goodwill 16 2,880,642 729,050
Total assets 4,955,361 1,910,716
Liabilities
Current
Accounts payable and accrued liabilities 23(c), 27(b) 83,292 47,456
Income taxes payable - 1,659
Deferred revenue 1,835 2,266
Loans and borrowings 18 1,199 2,451
Contingent consideration payable 26(e) 12,612 21,333
98,938 75,165
Convertible debentures 17 199,788 191,528
Loans and borrowings 18 90,116 9,232
Deferred gain on derivatives 6, 26(d) 1,869 2,254
Deferred tax liability 161,733 69,406
Total liabilities 552,444 347,585
Shareholders' equity
Share capital 19 4,202,610 1,466,433
Reserves 78,719 4,920
Accumulated other comprehensive income (loss) 5,862 (533)
Retained earnings 112,328 87,749
Total equity attributable to shareholders of Aurora 4,399,519 1,558,569
Non-controlling interest 12(d)(e), 14 3,398 4,562
Total equity 4,402,917 1,563,131
Total liabilities and equity 4,955,361 1,910,716
Nature of Operations (Note 1)
Commitments and Contingencies (Note 24)
Subsequent Events (Notes 6(a), 17(c), 24(d) and 29)
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
AURORA CANNABIS INC.
Condensed Interim Consolidated Statements
of Comprehensive Income
Three months ended September 30, 2018 and 2017
(Unaudited - In thousands of
Canadian dollars, except per share amounts)
Notes 2018 2017
$ $
Revenue from sale of goods 26,458 7,315
Revenue from provision of services 3,216 934
Total revenue 29,674 8,249
Cost of sales 9,542 3,072
Gross profit before fair value adjustments 20,132 5,177
Changes in fair value of inventory sold 14,361 2,572
Unrealized gain on changes in fair value of biological assets 8 (2,279) (6,205)
Gross profit 8,050 8,810
Expense
General and administration 23(a) 35,943 2,993
Sales and marketing 29,376 3,668
Acquisition costs 14,980 340
Research and development 3,426 107
Depreciation and amortization 10, 16 15,122 634
Share-based payments 20(a), 23(b) 21,076 2,486
119,923 10,228
Loss from operations (111,873) (1,418)
Other income (expense)
Interest and other income 750 590
Finance and other costs 22 (8,527) (2,016)
Foreign exchange 129 (247)
Share of loss from investment in associates 11 (2,115) -
Gain on loss of control of subsidiary 11(a) 410 -
Unrealized loss on changes in contingent consideration fair value 26(e) (1,373) -
Unrealized gain on derivatives 6, 26(c) 85,848 817
Unrealized gain on convertible debenture investments 7, 26(c) 1,097 6,937
Gain on deemed disposal of significant influence investment 11(f) 144,368 -
220,587 6,081
Income before income taxes 108,714 4,663
Income tax expense
Deferred, net (4,533) (1,103)
(4,533) (1,103)
Net income 104,181 3,560
Other comprehensive income (loss)
Deferred tax (7,464) (1,632)
Unrealized gain on marketable securities 6 87,586 12,551
Foreign currency translation (3,256) (4)
76,866 10,915
Comprehensive income 181,047 14,475
Net income (loss) attributable to:
Aurora Cannabis Inc. 105,462 3,560
Non-controlling interests (1,281) -
Comprehensive income (loss) attributable to:
Aurora Cannabis Inc. 182,342 14,475
Non-controlling interests (1,295) -
Earnings per share
Basic 21 $0.12 $0.01
Diluted 21 $0.12 $0.01
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
AURORA CANNABIS INC.
Consolidated Statements of Changes in Equity
Three months ended September 30, 2018 and 2017
(Unaudited - In thousands of Canadian dollars, except
Share Capital Reserves AOCI
Note Common Shares Amount Share-Based Compensation Compensation Options/ Warrants Convertible Notes Change in Ownership Interest Total Reserves Fair Value Deferred Tax Foreign Currency Translation Total AOCI Retained Earnings (Deficit) Non-Controlling Interests Total
# $ $ $ $ $ $ $ $ $ $ $ $ $
Balance, June 30, 2018 568,113,131 1,466,433 38,335 307 41,792 (75,514) 4,920 (539) (55) 61 (533) 87,749 4,562 1,563,131
Shares issued for business combinations & asset acquisitions 19(b)(i) 384,033,926 2,655,341 75,490 19,556 - - 95,046 - - - - - - 2,750,387
Shares released for earn out payments 19(b)(ii) - 10,094 10,094
Conversion of notes 19(b)(iv) 20,994 86 - - (33) - (33) - - - - - - 53
Exercise of stock options 19(b)(iv), 12(d) 8,727,084 65,158 (41,875) - - - (41,875) - - - - - 127 23,410
Exercise of warrants 19(b)(iv) 906,156 4,046 - (70) - - (70) - - - - - - 3,976
Forfeited options - - (341) - - - (341) - - - - 341 - -
Share-based payments 20(a) - - 21,076 - - - 21,076 - - - - - - 21,076
Change in ownership interests in subsidiaries 12(d) - - - - - (4) (4) - - - - - 4 -
Australis Capital first tranche private placement proceeds 11(a) - 7,800 - - - - - - - - - - - 7,800
Australis Capital NCI reclass on loss of control - (6,348) - - - - - - - - - - 6,348 -
Spin-out of Australis Capital 6(b) - - - - - - - - - - - (151,695) (6,348) (158,043)
Reclass gain from Australis Capital shares on derecognition upon spin-out 6(b) - - - - - - - (76,873) 6,402 - (70,471) 70,471 - -
Comprehensive income (loss) for the period - - - - - - - 87,586 (7,464) (3,256) 76,866 105,462 (1,295) 181,033
Balance, September 30, 2018 961,801,291 4,202,610 92,685 19,793 41,759 (75,518) 78,719 10,174 (1,117) (3,195) 5,862 112,328 3,398 4,402,917
The accompanying notes are an integral part of these Condensed Interim
Consolidated Financial Statements.
AURORA CANNABIS INC.
Condensed Interim Consolidated Statements of
Three months ended September 30, 2018 and 2017
(Unaudited - In thousands of Canadian dollars, except
Share Capital Reserves AOCI
Note Common Shares Amount Share-Based Compensation Compensation Options/ Warrants Convertible Notes Change in Ownership Interest Total Reserves Fair Value Deferred Tax Foreign Currency Translation Total AOCI Retained Earnings (Deficit) Non-Controlling Interests Total
# $ $ $ $ $ $ $ $ $ $ $ $ $
Balance, June 30, 2017 366,549,244 221,447 7,591 3,420 9,734 - 20,745 6,077 (885) (25) 5,167 (28,426) - 218,933
Shares issued for acquisition 19(b)(i) 89,107 248 - - - - - - - - - - - 248
Warrants issued for acquisition 12 - - - 136 - - 136 - - - - - - 136
Shares issued for earn out payments 19(b)(ii) 3,178,177 6,785 - - - - - - - - - - - 6,785
Conversion of notes 19(b)(iv) 125,000 229 - - (37) - (37) - - - - - - 192
Deferred tax on convertible notes - 15 - - - - - - - - - - - 15
Exercise of stock options 19(b)(iv) 697,080 1,028 (402) - - - (402) - - - - - - 626
Exercise of warrants 19(b)(iv) 1,271,250 680 - (11) - - (11) - - - - - - 669
Forfeited options - - (242) - - - (242) - - - - 242 - -
Share-based payments 20(a) - - 2,837 - - - 2,837 - - - - - - 2,837
Comprehensive income (loss) for the period - - - - - - - 12,551 (1,632) (4) 10,915 3,560 - 14,475
Balance, September 30, 2017 371,909,858 230,432 9,784 3,545 9,697 - 23,026 18,628 (2,517) (29) 16,082 (24,624) - 244,916
Shares issued for acquisitions and investment in associates 19(b)(i) 78,680,600 824,837 - - - - - - - - - - - 824,837
Shares issued for earn out payments 19(b)(ii) 2,139,867 9,536 - - - - - - - - - - - 9,536
Shares issued for equity financings 19(b)(iii) 25,000,000 75,000 - - - - - - - - - - - 75,000
Share issue costs 19(b)(iii) - (6,646) - 2,285 - - 2,285 - - - - - - (4,361)
Conversion of notes 19(b)(iv) 42,348,435 176,898 - - (37,024) - (37,024) - - - - - - 139,874
Equity component of convertible notes - - - - 76,201 - 76,201 - - - - - - 76,201
Deferred tax on convertible notes - (15) - - (7,082) - (7,082) - - - - - - (7,097)
Deferred tax on share issuance and convertible debenture costs - 2,540 - - - - - - - - - - - 2,540
Exercise of stock options 19(b)(iv), 12(d) 4,112,363 10,978 (5,773) - - - (5,773) - - - - - 2,027 7,232
Exercise of warrants 19(b)(iv) 41,929,631 135,613 - (3,669) - - (3,669) - - - - - 1,669 133,613
Exercise of compensation options/warrants 19(b)(iv) 1,865,249 6,051 - (1,854) - - (1,854) - - - - - - 4,197
Exercise of restricted share units 19(b)(iv) 127,128 1,209 (351) - - - (351) - - - - - - 858
Forfeited options - - (289) - - - (289) - - - - 289 - -
Share-based payments 20(a) - - 34,964 - - - 34,964 - - - - - - 34,964
Non-controlling interest from acquisitions 12(d)(e), 14 - - - - - - - - - - - - 38,577 38,577
Change in ownership interests in subsidiaries 12(d)(e) - - - - - (75,514) (75,514) - - - - - (35,002) (110,516)
Unrealized gain on Cann Group marketable securities - - - - - - - 31,524 - - 31,524 - - 31,524
Cann Group marketable securities transferred to investments in associates - - - - - - - (50,463) - - (50,463) 50,463 - -
Deferred tax for marketable securities transferred to investment in associates - - - - - - - - 830 - 830 (6,755) - (5,925)
Unrealized gain on CanniMed marketable securities - - - - - - - 10,423 - - 10,423 - - 10,423
CanniMed marketable securities derecognized upon acquisition of control - - - - - - - (10,423) - - (10,423) 10,423 - -
Comprehensive income (loss) for the period - - - - - - - (228) 1,632 90 1,494 57,953 (2,709) 56,738
Balance, June 30, 2018 568,113,131 1,466,433 38,335 307 41,792 (75,514) 4,920 (539) (55) 61 (533) 87,749 4,562 1,563,131
The accompanying notes are an integral part of these Condensed Interim
Consolidated Financial Statements.
AURORA CANNABIS INC.
Condensed Interim Consolidated Statements
Three months ended September 30, 2018 and 2017
(Unaudited - In thousands of Canadian dollars)
Notes 2018 2017
$ $
Cash provided by (used in)
Operating activities
Net income for the period 104,181 3,560
Adjustments for non-cash items
Unrealized gain on changes in fair value of biological assets 8 (2,279) (9,577)
Changes in fair value included in inventory sold 14,361 5,696
Depreciation of property, plant and equipment 10 6,254 359
Amortization of intangible assets 16 9,770 417
Share-based payments 20(a) 21,076 2,486
Share of loss from investment in associates 11 2,115 -
Unrealized gain on derivatives 6, 26(c) (85,848) (7,754)
Unrealized gain on convertible debenture investments 7, 26 (c) (1,097) -
Unrealized gain on deemed disposal of significant influence investment 11(f) (144,368) -
Gain on loss of control of subsidiary 11(a) (410)
Loss on changes in fair value of contingent consideration 26(e) 1,373 -
Non-cash acquisition costs 12(c) 2,230 -
Accrued interest and accretion expense 7,378 1,947
Interest and other income (63) (59)
Deferred tax expense (recovery) 4,533 1,103
Changes in non-cash working capital
GST recoverable (12,390) (1,218)
Accounts receivable 2,178 224
Biological assets 7,154 -
Inventory (19,333) (1,173)
Prepaid and other current assets (8,281) (143)
Accounts payable and accrued liabilities 22,686 (861)
Income taxes payable 216 -
Deferred revenue (503) 19
Net cash used in operating activities (69,067) (4,974)
Investing activities
Short-term investments 4 (250) -
Marketable securities, derivatives and convertible debenture investments 6, 7 (19,772) -
Promissory notes receivable - (4,736)
Purchase of property, plant and equipment 10 (72,089) (21,061)
Acquisition of businesses, net of cash acquired 12 114,403 (2,635)
Investments in associates 11 962 -
Net cash provided by (used in) investing activities 23,254 (28,432)
Financing activities
Proceeds from long term loans 89,357 -
Repayment of long term loans (8,986) -
Repayment of short term loans (2,311) (17)
Shares issued for cash, net of share issue costs 27,367 1,296
Net cash provided by financing activities 105,427 1,279
Effect of foreign exchange on cash and cash equivalents (1,010) 246
Increase (decrease) in cash and cash equivalents 58,604 (31,881)
Cash and cash equivalents, beginning of year 89,193 159,796
Cash and cash equivalents, end of year 147,797 127,915
AURORA CANNABIS INC.
Consolidated Statements of Cash Flows
Three months ended September 30, 2018 and 2017
(Unaudited - In thousands of Canadian dollars)
2018 2017
$ $
Supplementary information:
Property, plant and equipment in accounts payable 11,097 8,148
Capitalized borrowing costs 935 1,245
Interest paid 257 4
Interest received 239 496
The accompanying notes are an integral part of these Condensed
Interim Consolidated Financial Statements.
AURORA CANNABIS INC.
Notes to the Condensed Interim Consolidated
Financial Statements
Three months ended September 30, 2018 and 2017
(Unaudited - In thousands of Canadian dollars, except share
and per share amounts)
Aurora Cannabis Inc. (the "Company"
or "Aurora") was incorporated under the Business Corporations Act (British Columbia) on December 21, 2006. The
Company's shares are listed on the New York Stock Exchange under the symbol "ACB", on the Toronto Stock Exchange
under the symbol "ACB", and on the Frankfurt Stock Exchange under the symbol "21P".
The head office and principal address of the
Company 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 business is the
production and distribution of cannabis in Canada pursuant to the Cannabis Act, the distribution of wholesale medical cannabis
in the European Union pursuant to the German Medicinal Products Act and German Narcotic Drugs Act, and the production of
medical cannabis in Denmark under the Danish Medicines Act. Through its recent acquisitions (Note 12), the Company expanded
its business to include research and development, the production and sale of indoor cultivation systems, and the production and
sale of hemp related food products.
Aurora does not engage in any U.S. cannabis-related
activities as defined in Canadian Securities Administrators Staff Notice 51-352. While the Company previously held an interest
in a U.S. based company, Australis Holdings LLP ("Australis Holdings" or "AHL")(Note 11(a)), AHL has not
engaged in any cannabis-related activities for the periods presented. AHL was spun-out to Aurora shareholders as part of the Australis
Capital Inc. spin-out completed on September 19, 2018 (Note 6(b)).
Accounting Policies and Significant Judgments
The condensed interim consolidated financial
statements of the Company have been prepared in accordance with International Accounting Standards 34, "Interim Financial
Reporting" ("IAS 34"), using accounting policies consistent with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations of the
IFRS Interpretations Committee ("IFRIC").
The condensed interim consolidated financial
statements do not include all of the information required for full annual financial statements. The accounting policies and critical
estimates used in preparing these condensed interim consolidated financial statements are the same as those applied in the Company's
annual consolidated financial statements as at and for the year ended June 30, 2018, except for the adoption of new accounting
standards described in Note 2(f).
The Company has reclassified certain immaterial
items on the comparative condensed interim consolidated statement of financial position and the condensed interim consolidated
statement of comprehensive income to conform with current period's presentation.
These condensed interim consolidated financial
statements were approved and authorized for issue by the Board of Directors of the Company on November 9, 2018.
These condensed interim consolidated financial
statements include the accounts of the Company and its subsidiaries with intercompany balances and transactions eliminated on consolidation.
Subsidiaries are those entities over which Aurora has the power over the investee, is exposed, or has rights, to variable returns
from its involvement with the investee, and has the ability to use its power to affect its returns. As of September 30, 2018, major
subsidiaries over which the Company has control include:
Major subsidiaries Percentage ownership
Anandia Laboratories Inc. ("Anandia") 100%
Aurora Cannabis Enterprises Inc. ("ACE") 100%
Aurora Deutschland GmbH ("Aurora Deutschland", formerly Pedanios GmbH) 100%
Aurora Larssen Projects Ltd. ("ALPS") 100%
B.C. Northern Lights Enterprises Ltd. ("BCNL") 100%
CanniMed Therapeutics Inc. ("CanniMed") 100%
CanvasRx Inc. ("CanvasRx") 100%
MedReleaf Corp. ("MedReleaf") 100%
Prairie Plant Systems Inc. ("PPS") 100%
UAB Agropro ("Agropro") 100%
UAB Borela ("Borela") 100%
Urban Cultivator Inc. ("UCI") 100%
Hempco Food and Fiber Inc. ("Hempco") 52.33%
Aurora Nordic Cannabis A/S ("Aurora Nordic") 51%
AURORA CANNABIS INC.
Last updated: Nov 13, 2018